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  • Writer's pictureLaurent DECORY

MedTech &Pharma need to bring value-based solutions, adapt capabilities, embrace omni-channel

Updated: Mar 24, 2020

In a disrupted market, Life Science companies need to move from products and features to solutions and value, adapt their commercial model to multiple stakeholders, and embrace coordinated omni-channel.



Healthcare industry is at a crossroads.

According to IQVIA, global Pharmaceutical market will enjoy 4-5% CAGR, reaching $1.5 trillion in 2023, although down from 6.3% CAGR during 2014-2018.

See: "The Global Use of Medicine in 2019 and Outlook to 2023"

Similarly, according to Evaluate, global MedTech industry shows a 5.6% CAGR, and is to reach $595b sales in 2024, driven by +4.9% growth in R&D investments.

However, situation vary significantly by geography: strong dynamic in the US, with accelerated FDA approvals and questionable price sustainability, increasing regulatory, data privacy barriers and cost containment measures in Europe (MDR, GPDR, reference pricing...), volume growth and affordability limitations in Asia.

Based on analysis by EY, Life Science companies still use conventional strategies such as buybacks and acquisitions to create scale; however, as the shift of power from providers to payers and patients continues, the business-as-usual approach no longer works, and Life Science companies must invest in new data and customer-centric capabilities to build stronger ties with consumers, or risk being ousted by technology companies and other entrants from outside the sector.

See: "Long-term global MedTech growth under threat from tech competitors, underinvestment in digital capabilities"

In a recent video, Janssen EMEA chairman Kris Sterkens shared why, despite 18% growth, Janssen believe business model transformation is essential to reduce risk of being disrupted by tech companies.

See: "The Eisenbahnscheinbewegung Risk that Pharma is Faced with"


There needs to be a shift from selling products to integrating them with services and delivering measurable results to customers, sometimes referred to as the “output economy”.

As customers’ expectations evolve, companies need to adapt their offering, redesign their go-to-market to reach relevant decision makers. Stakeholders are now looking for more powerful levers to remove unnecessary costs from the value chain, as illustrated by value-based procurement.

According to ZS, life science organizations often tend to focus on improving product’s features and benefits to help clinicians and patients. Value-added services are often afterthoughts, patched onto the offering at launch at best. However, majority of customers agree that MedTech or Pharma companies can differentiate themselves by becoming more solution-oriented and providing a broad range of value-added services: education and training, inventory & process management, clinical protocol support, patient services, operational consulting...

Until recently, companies could rely on incremental feature improvements and sales reps’ relationships with clinicians to drive sales. But as recently shown by another ZS study, 90% of hospital executives in US and Europe think that manufacturers can’t succeed with product innovation alone. Customers are demanding something different. They are much more selective about what innovations they’re willing to pay for, as shrinking budgets have driven them to economically driven decision-making in many cases.

This is why it is so critical to move from “feature innovation” to “value innovation", and to drive the commercial strategy and execution at the region and country level.

See: "MedTech needs to be solutions-oriented, not product-driven"


According to BCG, the industry has made little progress in remaking its commercial model and upgrading its skill levels. However, the few companies that have acted in this direction are winning in the market and generating vastly superior shareholder returns.

Power continues to shift from individual clinicians to institutional decision makers at standalone hospitals, centralized bodies and committees in large hospital systems and buying groups, and regional and national government agencies and private payers that control access to an entire market.

In response to this accelerating trend, Life Science companies need to demonstrate the value of their products and services to a diverse group of stakeholders. They must satisfy differing interests, and deliver relevant value stories to payers, prescribers, nurses or patients. While the size of field teams will go down, customer facing roles need to become more specialized: Strategic Account Managers driving strategic partnership and commercial negotiations, Field Market Access driving health economic evidence, Medical Science Liaison discussing clinical proof, Digital Communication and Community managers working closely with patients and associations...


According to EY, to succeed in the digital future, Life Science companies will be judged not only on the safety and efficacy of their drugs, devices or tests, but on their ability to capture and deploy insights from these products to inform care delivery, with a growing emphasis on coordinated care.

This is why Technology companies such as Amazon or Apple, with strong expertise in data analytics, customer engagement and service personalization required to deliver satisfying customer experiences, are increasingly investing in new health offerings.

Smaller pure tech players such as eHealth app or digital therapy start-ups might lack the infrastructure and capabilities to have their offers approved by health authorities.

This is why Pharma and MedTech have a unique opportunity to capitalize on digital transformation. As more and more medical devices are connected, they have a built-in advantage.

Both MedTech and Pharma have strong connections with health care ecosystem stakeholders and are well-placed to develop new business models. What they lack have is in-house capabilities to develop personalized health care offerings. To change this, life science companies need to invest in digital capabilities and collaborations, expand their customer experience, data and analytic capabilities in order to get even closer to patients.

See: "Long-term global MedTech growth under threat from tech competitors, underinvestment in digital capabilities"

According to McKinsey, digital adoption is among the lowest in healthcare industry due to a lack of a customer orientation, companies paying too little attention to the customer decision journeys that patients and healthcare providers undertake to access, interact with, and benefit from their products.

Digital offer is now mature: real world evidence, wearables, compliance apps, machine learning, online communities, and the first digital therapies are being built. But digital initiatives are often run as "pilots" or operating independently of business strategy. 60 percent of pharma companies recently admitted their digital initiatives were only partly linked to their broader strategy.

Defining optimal value offer to each stakeholder, delivering it through a coordinated mix of field based and digital activities, and integrating outcome data to improve this offer, should be the ultimate goal for life science companies.

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