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  • Traditional MedTechs should swiftly upgrade their human capital if they wish to keep pace with rapidly advancing technologies and changing markets
  • Priority lies in aligning in-house capabilities with technology-driven strategies and the progression of healthcare systems
  • Emerging technologies like AI-driven big data solutions and services are set to transform MedTech offerings
  • Enterprises need to adjust to decentralised care models within evolving healthcare ecosystems 
  • To flourish in the next decade, MedTechs must cultivate a culture of continuous enhancement to bolster their innovation capabilities
 
Optimising MedTechs’ People Operations for AI and Market Changes
 
In today's dynamic healthcare landscape characterised by rapid technological advancements and shifting market trends, traditional MedTechs find themselves at a turning point. Maintaining competitiveness demands a proactive stance to manage change through strategic investment in human capital development. Prioritising the rejuvenation of a company’s workforce is important, as an organisation's future sustainability and success hinge on its ability to adapt and innovate. This need for transformation is driven by factors influencing healthcare, including the rise of disruptive technologies and the continuous evolution of market conditions.
 
In this Commentary

This Commentary stresses the need for traditional MedTech firms to modernise their people operations amid the growing influence of AI, automation, and market dynamics. It stresses aligning human capital capabilities with organisational strategies to effectively leverage technological advancements, market shifts, and evolving healthcare systems. By showcasing the transformative potential of AI-powered big data-driven solutions and services, it draws attention to the importance of empowering people to manage challenges and drive innovation that provide access to new revenue streams. Furthermore, it highlights the shift towards decentralised care, prioritising prevention, and patient-centricity, prompting enterprises to realign their internal capabilities accordingly. Addressing challenges posed by off-patent products, the Commentary advocates a proactive approach in equipping workforces with essential skills and a mindset conducive to excelling in an era of heightened automation and efficiency. Lastly, it underscores refocusing company operations on value creation while fostering a culture of continuous improvement and innovation, guiding MedTechs to maintain their competitive edge in the evolving healthcare ecosystem.
 
Technological Advancements and Market Dynamics
 
The healthcare industry is undergoing a transformation fuelled by rapid technological advancements and market changes. Emerging automation technologies are disrupting traditional workflows and processes, promising heightened efficiency, accuracy, and improved patient outcomes. Concurrently, there is a notable surge in the adoption of digital health solutions, preventive measures, diagnostics, and value-based care. Digital health platforms offer opportunities for remote patient monitoring, personalised interventions, and data-driven decision-making, while preventive healthcare, driven by wearable devices and predictive analytics, aims to anticipate and mitigate illnesses before they escalate, thus promoting wellbeing and alleviating strain on healthcare systems. Moreover, diagnostics are evolving with greater sophistication, incorporating technologies like genomics and molecular imaging to enable earlier detection and targeted treatment strategies. In this changing technological terrain, traditional MedTech companies must shift their people towards a tech-savvy, forward-thinking mindset. Employees must be adept at leveraging disruptive technologies to develop and deliver innovative solutions and services that align with the evolving needs of patients, thereby providing access to new revenue streams. Achieving this necessitates a concerted effort to upskill existing talent, recruit individuals with expertise in AI, data analytics, and digital health, and cultivate a culture of continuous learning and adaptation. While the allure of seeking external expertise from consulting firms may be strong, the most sustainable approach is to invest in enhancing in-house capabilities, empowering the workforce to adeptly navigate transitions and foster innovation and sustainable growth from within.
 
Changing Healthcare Systems

Healthcare worldwide is shifting towards decentralised care, preventive measures, and patient-centricity and is characterised by innovative care delivery models, heightened emphasis on patient outcomes, value, and stringent regulatory standards. Decentralised care models, such as telemedicine, home healthcare, and community-health, are gaining traction. Such models prioritise accessibility, convenience, and cost-effectiveness, necessitating companies to develop solutions and services tailored to support remote monitoring, virtual consultations, and effective data exchange between healthcare providers and patients.
 
The growing recognition of the importance of preventive healthcare in reducing disease burdens and rising healthcare costs is likely to oblige MedTechs to adapt by shifting some of their focus towards developing technologies that enable early detection, personalised interventions, and health promotion initiatives. This requires people equipped with the expertise to manage complex healthcare ecosystems, collaborate with diverse stakeholders, and leverage data analytics to drive actionable insights. Further, patient-centricity has emerged as a guiding principle shaping healthcare delivery and product development strategies. Traditional enterprises, mostly focused on health professionals in hospitals, must enhance their understanding of patient needs, preferences, and experiences to design offerings that empower individuals to actively participate in their care journeys. This demands a workforce with an understanding of individual-centred design principles, empathy, and the ability to co-create solutions with patients and caregivers. MedTechs must increase investments to bolster cross-functional collaboration, nurture entrepreneurial mindsets, and deepen comprehension of regulatory compliance, quality production, value-based care, and market dynamics. These efforts are crucial for businesses to position themselves as catalysts of innovation and value creation within evolving healthcare ecosystems.
 
Impact of Off-Patent Products

As we approach 2030, numerous corporations are on the verge of encountering patent expirations that currently safeguard revenues of a substantial portion of their product offerings, including pacemakers, implantable defibrillators, insulin pumps, and certain stents. This impending wave of expirations suggests an imminent surge in competition from generic and biosimilar alternatives, posing a challenge to the established dominance of traditional firms. These enterprises, often hesitant to invest in innovative R&D initiatives, now face a critical decision point where they must evolve or risk losing their competitive edge. To effectively manage this impending challenge, companies need to revamp their people operations and talent management strategies.
 
In the race to swiftly bring new products to market, speed is critical. Traditional firms that have been slow to adapt must streamline their processes, remove bureaucratic bottlenecks, and cultivate a culture of rapid prototyping and iteration. This necessitates a workforce characterised by adaptability, resilience, and a commitment to excellence. Individuals must be empowered to foster innovation, embrace ambiguity, and view failure as an aspect of the innovation journey. Essentially, the impact of off-patent products suggests a new era of heightened competition and significant challenges for some traditional businesses. To excel in this environment, they should consider restructuring their people operations to foster innovation, differentiation, and agility. Only through such a culture can MedTechs hope to maintain their leading position amidst the evolving healthcare landscape.
 
Enhanced Efficiency through Automation

Projections from the Organisation for Economic Co-operation and Development (OECD) paint a concerning picture of the transformative impact of technology on the global workforce, with the healthcare sector positioned at the forefront of this anticipated evolution. As technological advancements become more prevalent, traditional roles within healthcare are likely to undergo transformations. Repetitive tasks, which have historically defined many healthcare professions, are progressively being assigned to automated systems. This shift liberates professionals to focus on tasks that necessitate human expertise and empathy.
 
For conventional firms, embracing this shift is not just a suggestion but a necessity for survival and prosperity. They must proactively equip their people with the necessary skills and proficiencies. This goes beyond technical competence and requires a shift in mindset and approach. Human capital strategies should foster a culture of collaboration with intelligent systems, leveraging individual talents to fuel innovation and boost productivity. Traditional enterprises must enhance their operations and services through advanced technologies. By integrating smart solutions throughout manufacturing, supply chain management, and product development workflows, MedTechs can unlock significant degrees of efficiency, scalability, and adaptability. Moreover, this integration can enhance the performance and functionalities of services, delivering added value to healthcare providers and patients. However, the rise of intelligent systems presents both challenges and opportunities for corporations. Embracing these advancements and investing in the necessary skills and technologies allow organisations to broaden their horizons and generate additional value, which is essential for sustained growth.
 
Cost Pressures and Value-Based Care

The significant rise in global healthcare spending, now exceeding an annual sum of US$8trn, has catalysed a transformative shift towards value-based care. This innovative approach prioritises the improvement of patient outcomes together with efforts to contain costs, marking a departure from the traditional reimbursement model, which is based on the provision of medical services. Within the framework of value-based care, conventional measures of success, like procedure volumes or sales figures, give way to more comprehensive evaluations that encompass patient wellbeing, enhancements in quality of life, and the effective reduction of expenses.
 
For traditional corporations, adapting to this new reality necessitates a reorientation of their people towards value creation. This goes beyond innovating products and requires a fresh approach that integrates considerations of efficacy, efficiency, and patient-centeredness into all operational facets. Employees must be empowered to transcend conventional boundaries and collaborate across functions to develop solutions that meet the needs of patients and healthcare providers. Additionally, MedTechs should invest in their human capital to enable all staff to illustrate the value proposition of the company’s products in tangible terms. This may involve employing data analytics to quantify the impact of products on patient outcomes, conducting real-world studies to validate effectiveness across various clinical settings, and adopting transparent pricing practices aligned with the value delivered. Moreover, fostering a culture of continuous improvement and innovation is important, where employees are encouraged to challenge conventions, experiment with new methods, and learn from both successes and setbacks. By embracing this mindset, companies are better positioned to drive sustained value creation, ensuring their relevance and competitiveness in an increasingly value-driven healthcare landscape.
 
Takeaways

With technological advancements and market shifts, the need for traditional MedTech companies to upgrade their capabilities cannot be emphasised enough. The convergence of automation technologies, evolving healthcare systems, patent expirations, and the transition to value-based care present both challenges and opportunities. Failure to adapt quickly to such shifts puts these companies at risk of being relegated to obscurity in an increasingly competitive market. The rapid pace of technological advancement, exemplified by emerging automation tools driven by AI and big data, requires people capable of harnessing these technologies to drive forward efficiencies and innovations. Furthermore, as healthcare systems evolve towards decentralised care, preventative measures, and patient-centric approaches, a deep understanding of new care paradigms and patient requirements becomes increasingly necessary. The expiration of patents emphasises the urgency for companies to cultivate innovation, differentiation, and adaptability. This entails empowering all employees to take ownership of change, think disruptively, and accelerate product development cycles. Moreover, the transition to value-based care necessitates a pivot towards outcome-driven, cost-effective, and patient-centric models. Traditional success metrics should be replaced with more nuanced measures of value, with people equipped with the necessary skills to demonstrate tangible value propositions. In essence, the transformation of traditional human capital policies is not just strategic, but a requirement for survival. By investing in people operations focused on innovation, collaboration, and value creation, enterprises can position themselves as leaders in the healthcare systems of tomorrow. Only by fully embracing this transformative journey can MedTechs succeed amidst the disruptive forces reshaping the industry.
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  • MedTech ESG reporting is transitioning from compliance to strategic value creation
  • Increasingly MedTech leaders recognise ESG's role beyond compliance, focusing on sustainability and social responsibility
  • The significance of ESG criteria in healthcare procurement decisions is increasingly acknowledged
  • MedTech leaders are embracing circularity, energy efficiency, and waste reduction to differentiate their companies, capture market share and add value
 
The Shifting Landscape of ESG Reporting in the MedTech Industry
 
The MedTech industry is witnessing an evolution in its attitudes and practices regarding ESG reporting. ESG, short for environmental, social, and governance reporting, encompasses a set of standards defining criteria within these areas. These criteria serve as benchmarks for socially conscious individuals and stakeholders to evaluate the ethical stance of organisations. In their analysis, those engaging in investments are increasingly integrating these non-financial factors to assess both risks and growth prospects. Once considered primarily as a means of compliance, ESG reporting is now emerging as a strategic imperative for value creation and differentiation. This transformation reflects a broader societal shift towards sustainability, ethics, and responsible corporate behaviour. However, despite this momentum, the MedTech sector faces challenges and opportunities in fully integrating ESG considerations into its operations.
 
In this Commentary
 
This Commentary describes the evolving landscape of ESG reporting within the MedTech industry, highlighting its transformation from a compliance-driven activity to a strategic imperative for value creation and differentiation. We mention how increasing pressure from stakeholders and a broader societal shift towards sustainability have influenced this change in mindset, despite the sector's historical focus on regulatory compliance and product innovation. Through insights from recent surveys and industry analysis, we uncover the growing recognition of ESG's relevance among healthcare providers and the opportunities it presents for MedTech leaders to differentiate their enterprises. Additionally, we address the challenges faced by the industry in fully integrating ESG considerations into its operations, ranging from complex supply chains to regulatory constraints. Finally, we make some suggestions for enhancing the effectiveness of ESG reporting, emphasising the importance of standardisation, enhanced disclosure, and investor engagement. Through this exploration, we describe some actionable insights for MedTech leaders navigating the shifting landscape of ESG reporting to drive sustainable growth and long-term value creation.
 
Navigating the Evolving Landscape of ESG Reporting in MedTechs

Historically, the MedTech industry has lagged sectors like industrials and technology in prioritising ESG reporting. While these industries have long recognised the importance of sustainability and ethical business practices, MedTechs have traditionally focused more on regulatory compliance and product innovation. However, recent years have witnessed a significant change in this narrative.
 
Driven by increasing pressure from investors, customers, and regulatory bodies, the industry is now acknowledging the importance of addressing sustainability and social responsibility concerns. This shift in mindset is further driven by the realisation of the potential impact of MedTech products and operations on environmental and social issues. Despite progress, the industry grapples with challenges such as complex supply chains, regulatory constraints, and unique ethical dilemmas inherent in healthcare delivery.
 
A recent (2023) survey undertaken by Bain, a consulting firm, underscores the growing recognition of ESG's significance among healthcare providers. The findings reveal a widespread anticipation of an uptick in the importance of ESG criteria in procurement decisions over the next five years. Notably, while certain factors like corruption, transparency, and employee safety are already deemed essential, others such as diversity, equity, inclusion, and environmental sustainability are positioned to gain prominence.
 
In this rapidly changing ecosystem, MedTech companies have an opportunity to distinguish themselves by embracing ESG initiatives that deliver tangible value. Practices such as circularity [production and consumption, which involves sharing, reusing, and repairing existing materials and products], energy efficiency improvements, and waste reduction resonate strongly with customers across different regions. Moreover, the Bain research highlights a spectrum of ESG leadership among MedTech companies, suggesting room for differentiation and competitive advantage.
 
As ESG continues to increase in importance, industry leaders should consider adopting a proactive approach to value creation. This involves strategic decisions on meeting minimum requirements to mitigate risk while also investing in areas that exceed industry standards. By focusing on selected areas of ESG differentiation, companies can not only win over procurement leaders but also capture significant market share in the evolving environment of healthcare procurement.
 
ESG Reporting in MedTechs

For MedTechs, ESG reporting serves the purpose of ensuring socially responsible and sustainable operations while driving healthcare innovation. Environmental concerns involve minimising waste, energy consumption, and carbon emissions, as well as encouraging eco-friendly materials and sustainable packaging practices. Social considerations encompass labour practices, diversity and inclusion, community engagement, and the imperative of prioritising employee wellbeing while maintaining standards across supply chains. Governance pertains to internal policies, leadership structures, transparency, and accountability mechanisms, ensuring ethical behaviour and regulatory compliance. By integrating ESG principles, enterprises not only mitigate risks but also enhance their reputation, attract investors, and contribute positively to society and the environment while advancing healthcare innovation. ESG reporting is pivotal for MedTechs, showcasing accountability, transparency, and sustainability efforts. It enhances reputation and trust among stakeholders, aids in effective risk management, provides access to capital, drives innovation and competitive advantage, ensures regulatory compliance, and fosters shareholder engagement. Ultimately, ESG reporting aligns financial performance with positive social and environmental impacts, supporting MedTech's pursuit of sustainable growth and long-term value creation for all stakeholders.
 
Challenges in ESG Reporting

The absence of standardised frameworks and metrics hinders comparison of ESG performance among MedTech companies, making it difficult for stakeholders to assess sustainability and social responsibility accurately. Without clear standards and oversight, there is a risk of greenwashing where companies exaggerate or misrepresent their environmental or social initiatives to appear more responsible than they are, undermining the credibility of ESG reporting. Despite its increased emphasis, some MedTechs provide limited or selective information, particularly regarding social and governance practices, complicating stakeholders' ability to gauge a company's societal impact fully.
 
Implementing effective ESG reporting faces several challenges, including cost and complexity. It can be expensive and resource-intensive, particularly for smaller companies with limited budgets and capacity. It requires investment in data collection, analysis, and reporting systems, as well as specialised expertise to interpret and communicate ESG performance effectively. Furthermore, ESG ratings and assessments frequently involve subjectivity and depend on various methodologies and criteria, resulting in discrepancies and confusion among those involved. This absence of standardisation presents challenges for investors, consumers, and other interested parties in accurately comparing the ESG performance of various companies.
 
Furthermore, ESG reporting is largely unregulated, allowing companies to choose what and how they disclose information, leading to inconsistencies in reporting practices and undermining the credibility and reliability of ESG disclosures. Conflicts of interest, such as consulting relationships between rating agencies and the companies they evaluate, may influence ESG ratings and assessments, raising concerns about objectivity and independence. Data collection can be challenging, particularly for MedTechs with complex operations and supply chains, requiring robust data collection processes, verification mechanisms, and transparency in reporting practices.
 
Integrating ESG considerations into business strategy and decision-making entails alignment across various functions and levels of the organisation, which can be demanding, particularly if ESG goals clash with short-term financial objectives or if there is limited comprehension of the business case for sustainability. Effective ESG reporting also demands meaningful engagement with various parties, including investors, employees, customers, communities, and civil society organisations. However, practices related to engaging stakeholders may exhibit inconsistencies or inadequacies, resulting in gaps in understanding and addressing key ESG issues.
 
Tackling these challenges necessitates concerted efforts from companies, investors, regulators, and other interested parties to enhance transparency, standardisation, and accountability in ESG reporting practices. This might entail establishing industry-wide standards and guidelines, reinforcing regulatory oversight, improving data quality and verification processes, and promoting increased collaboration and engagement among involved parties.
 
Enhancing the Effectiveness of ESG Reporting

To enhance the effectiveness of ESG reporting and leverage it as a strategic tool for positive change and to add value, consider: (i) Fostering the development and adoption of standardised frameworks and reporting guidelines for ESG disclosure. Collaborate with industry associations, regulatory bodies, and standard-setting organisations to promote consistency and comparability in ESG reporting practices. Support initiatives aimed at harmonising its requirements across jurisdictions to streamline compliance and enable meaningful cross-border comparisons. (ii) Advocate for stronger regulatory mandates regarding ESG disclosure, including the mandatory reporting of material ESG risks, opportunities, and performance indicators. Encourage your company to provide detailed and transparent ESG disclosures, encompassing quantitative data, targets, and progress toward sustainability objectives. Promote the adoption of integrated reporting frameworks that merge financial and ESG information to offer a comprehensive view of your company's performance and value creation. (iii) Develop educational programmes and training initiatives to underscore the significance of ESG factors in decision-making, risk management, and the establishment of long-term strategic value. Cultivate productive dialogue and interaction between your company and interested parties on ESG matters, encouraging avenues for shareholder resolutions, proxy voting, and direct engagement with board members and management. Advocate the integration of ESG considerations into investment processes, asset allocation strategies, and stewardship activities, including the integration of ESG criteria into investment policies and portfolio construction.
 
By implementing these recommendations, stakeholders can collaborate to bolster ESG reporting practices, enhance transparency and accountability, and foster sustainable business approaches that deliver enduring value for investors, companies, and society at large.
 
Takeaways

The MedTech industry is experiencing a shift in its approach to ESG reporting, moving beyond compliance to embrace it as a strategic tool for value creation and differentiation. This transformation reflects a broader societal trend towards sustainability, ethics, and responsible corporate behaviour. While historically lagging other sectors in prioritising ESG reporting, recent years have seen MedTech companies recognising the significance of sustainability and social responsibility, driven by pressure from investors, customers, and regulators. Despite facing unique challenges such as complex supply chains and regulatory constraints, the industry is increasingly acknowledging the potential impact of its products and operations on environmental and social issues. The growing recognition of ESG's relevance, as evidenced by surveys indicating its increasing importance in procurement decisions, underscores the need for companies to embrace ESG initiatives that deliver tangible value. By focusing on areas such as circularity, energy efficiency, and waste reduction, MedTechs can differentiate themselves in the market and gain a competitive advantage. Furthermore, there are opportunities for leaders in the field to proactively invest in surpassing prevailing standards, thus seizing market share, and fostering sustained value creation in the evolving landscape of healthcare procurement. As ESG continues to rise in importance, embracing these principles will not only enhance the reputation and sustainability of MedTech companies but also contribute to positive societal and environmental outcomes.
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  • Effective MedTech leadership in the next decade requires adept navigation of companies through evolving markets, technological advancements, and simultaneous management of established legacy businesses
  • Historically, MedTech leaders have been drawn from a limited pool, potentially slowing effective adaptation to new technologies, and markets
  • This has allowed tech giants to disrupt the sector, emphasising a shift from the development of physical devices to integrated healthcare solutions
  • The 4th industrial revolution (Industry 4.0) is crucial in facilitating the transformation, breaking down traditional boundaries between medical devices, pharmaceuticals, software, and patient data
  • Executives with experience in service-based sectors adjacent to MedTech may be better equipped to lead, leveraging their tech-centric background to capitalise on digital technologies and big data strategies for successful adaptation and thriving in the evolving healthcare ecosystem
 
Is MedTech Entering a New Era of Leadership and Purpose-Driven Innovation?
 
MedTech leadership is at a crossroads, demanding a strategic overhaul to tackle unprecedented sector changes anticipated over the next decade. Navigating this evolving landscape requires reconciling traditional manufacturing expertise and cutting-edge digital capabilities. A forward-thinking CEO with digital acumen is pivotal for innovation, yet the complexities of manufacturing and stringent regulatory frameworks remain crucial. In response, it seems reasonable to suggest that a collaborative leadership approach would be optimal, pairing a visionary CEO with digital expertise alongside a seasoned COO well-versed in manufacturing and regulatory compliance. This, would not only alleviate the burden on a single leader but also combine the strengths of both domains, fostering a more resilient leadership model. By strategically aligning these skill sets, MedTech companies would be better positioned to adeptly bridge the gap between tradition and digital evolution amid the complexities of an increasingly competitive market.

Historically, MedTech leadership, drawn from a limited pool of individuals, may fall short in ensuring commercial success in the coming decade. The sector's reluctance to swiftly embrace emerging technologies has created an opening for tech giants to disrupt it, mirroring the upheavals witnessed in financial markets.
 To thrive, MedTech companies must shift from developing physical devices to strategically promoting integrated healthcare solutions and services. The 4th Industrial Revolution, (Industry 4.0) plays a pivotal role in this evolution, breaking down traditional boundaries between medical devices, pharmaceuticals, software, and patient data. It reshapes connections among the physical, biological, and digital realms within the healthcare sector, emphasising advanced data and digitalisation strategies.

In this paradigm shift, traditional MedTech executives may find themselves ill-equipped to lead effectively. Executives from adjacent service-based sectors, with a tech-centric background, seem better positioned to spearhead this transformation. Leveraging their expertise, these leaders can adeptly capitalise on digital technologies and utilise big data strategies to navigate and adapt business models. Strategic leadership from executives with a tech-centric background is essential for MedTech companies to survive and thrive in the future.
 
In this Commentary
 
This Commentary has two parts. Part 1: The MedTech Market describes opportunities and challenges within the evolving dynamic global market. Part 2: Navigating MedTech’s Evolutionary Challenges, examines the limitations of current MedTech leadership, suggesting a shift towards diverse skills, backgrounds, and perspectives. Future MedTech leaders need expertise in digital technologies, data analytics, and innovative business models, coupled with an understanding of global markets and a compelling sense of purpose to engage and inspire Generation Zs. Takeaways raise the likelihood that existing MedTech executives may be ill-equipped for upcoming industry transformations, highlighting the potential of leaders from service-based sectors with proven strategic agility and innovation.
 
Part 1
The MedTech Market

Currently, MedTech is undergoing a transformation, and shedding its traditional conservative image. The industry's growth is driven by various factors, such as the aging global population, an uptick in chronic diseases, and an increasing trust in medical devices among clinicians and consumers, which has fostered stronger collaborations between MedTech and pharmaceutical companies. Although the US and the EU continue to be significant contributors to MedTech markets, they face hurdles, including increasingly stringent regulations, shifts in reimbursement policies, and elevated costs linked to advanced medical technologies.
 
About two decades ago, foreseeing constraints, some large MedTechs like Johnson & Johnson (J&J), Abbott, and Medtronic, strategically established manufacturing and research and development (R&D) centres in emerging markets such as Brazil, China, and India. Back then, these markets were undergoing substantial growth, fuelled by burgeoning middle-class populations with an increasing demand for improved healthcare services. This situation not only presented strategic opportunities for continuous expansion but also served as a buffer against the escalating difficulties experienced by MedTechs in the more mature Western markets.
 
Despite facing challenges, the global MedTech market continues to be a promising arena for growth and innovation, extending its reach across diverse sectors and geographies. Projections indicate that its global revenues will reach ~US$610bn in 2024, with an anticipated compound annual growth rate (CAGR) of ~5.2%. This trajectory points towards a substantial market volume of ~US$748bn by 2028. The US stands as the primary revenue contributor, expected to reach ~US$216bn in 2024. Historically, MedTech business models have predominantly targeted affluent markets in the US, Western Europe, and Japan, comprising only ~13% of the world's population but holding a significant market share. This historical skew allowed MedTech leaders to focus their marketing efforts on healthcare providers in prosperous developed regions, benefitting from favourable fee for service reimbursement policies. Notwithstanding, recent years have witnessed a tightening of the wealthy Western markets.
In the coming decade, MedTech sectors in emerging regions are set to experience significant growth. For example, in 2024 China's MedTech revenues are anticipated to realise ~US$46bn, with a projected CAGR to 2028 of ~7.5%. This growth trajectory is expected to culminate in a market volume of ~US$61bn in the near term. In the face of dynamic shifts, MedTech leaders are confronted with the challenge of recalibrating their strategies to ensure sustained success amid challenging global politico-economic conditions and the use of more demanding outcome-based healthcare reimbursement models in traditional wealthy Western markets.


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Healthcare 2040


 
Following a peak in late 2021, MedTech stocks faced a setback around mid-2022, losing a significant portion of the gains accumulated during the Covid-19 pandemic. By July 2023, growth had slowed, with MedTech valuations showing only a modest increase of ~22% compared to January 2020. During this period, trading multiples experienced a decline, dropping from a peak of ~16x in September 2021 to ~7x by mid-2023, falling below the industry's 10-year average of ~8x.
 
Although there have been some recent improvements, the 2023 EY, Pulse of the MedTech Industry Report raised concerns about challenges ahead for the sector. In the post-Covid landscape, the industry is grappling with significant hurdles, including a notable decline in public valuations and ~30% decrease in financing. These challenges manifest in various aspects, such as a downturn in special-purpose acquisition company (SPAC) deals, a substantial decrease in the total value of initial public offerings (IPOs), and a slump of ~21% in venture capital (VC) funding. Compounding these issues is a decline of ~44% in merger and acquisition (M&A) activity.
 
Traditionally, M&A has played a crucial role for MedTechs, contributing to scale, operational leverage, financial performance, product portfolio diversification, improved therapeutic solutions, and international expansion - all while maintaining core manufacturing structures and strategies. Moreover, post-Covid, revenue growth has experienced a significant dip, dropping from ~16% in 2021 to ~3.5% in 2022, and remaining flat in 2023. The anticipated future growth of ~5% may encounter challenges due to a potential scarcity of new disruptive product offerings. These challenges have implications for equity investment, which hit a seven-year low in 2023, declining by ~27% to ~US$14bn. Notably this impacts smaller, innovation-driven firms.


A positive recent trend is the rapid growth of digital health with expected global revenues set to reach ~US$194bn by 2024, with a projected CAGR of ~9% from 2024 to 2028, which would deliver a market volume of ~US$275bn by 2028. China leads in global revenue generation for digital health, reaching ~US$53bn in 2024. However, many large diversified MedTechs with legacy products in slow-growing markets have yet to capitalise on this trend.
 
MedTech stands at a critical juncture, navigating challenges that necessitate a strategic overhaul for sustained success. The decline in key financial indicators and the sluggish pace of innovation pose significant threats, obliging leaders to embrace transformative strategies and capitalise on emerging trends, particularly in digital health, to secure a resilient future.

 
Part 2
Navigating MedTech’s Evolutionary Challenges

Changes in the MedTech landscape introduce difficulties for executives striving to stay abreast of technological advances and transformative shifts, particularly in emerging economies. Compounding these obstacles is the prevalence of middle-aged men in leadership roles, perpetuating traditional management styles that may impede the necessary adaptations required for growth.

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Redefining Leadership In The Evolving Landscape Of MedTech

Despite women constituting >50% of the MedTech workforce and significantly influencing healthcare decisions, they are underrepresented in executive positions. Addressing these disparities is not just a moral obligation but a strategic imperative to unlock the full potential by embracing diverse perspectives and talents. The historical contributions of women in healthcare underscores the urgency of closing the gender gap in MedTech leadership.
Further complicating matters is the median age of C-suite executives; ~56. This demographic nearing retirement, suggests that many company leaders embarked on their professional journeys before the pervasive influence of the Internet, email, and the rise of social media platforms, creating a technological generation gap. The sector's historical reliance on affluent markets in the US and Europe, coupled with fee-for-service healthcare policies, poses challenges in adapting to emerging markets and reimbursement policies centred on patient outcomes.
 
The integration of artificial intelligence (AI) and machine learning (ML) into medical devices adds another layer of complexity, necessitating a paradigm shift. However, this transformation proves challenging for traditional leaders, given that these impactful changes unfolded during the mature phases of their careers. Notably, out of ~691 FDA-approved algorithms functioning as medical devices, ~35% received clearance in 2022 and 2023. Despite the urgent need for adaptation, persistent leadership obstacles hinder progress, particularly in understanding and aligning with the fluidity of rapidly evolving technologies in new markets.
 
MedTech leaders face challenges in understanding the dynamics of emerging markets, especially in economically vibrant regions like Brazil, India, China, and sizable African nations. These areas experience economic development and a growing middle class, leading to increased demand for advanced healthcare. The global acumen gap is further intensified by a lack of first-hand experience among these professionals in these regions, presenting a hurdle to effective guidance. Consequently, many MedTech executives seem to struggle with delivering impactful direction, given the disconnect with transformative trends in emerging markets and advancing technologies. Addressing these perspective and knowledge gaps requires more than incremental adjustments; it calls for a shift in mindset and a recalibration.
 
Significant changes in MedTech call for a departure from traditional top-down directives towards an empowering leadership style. The sector now demands a new breed of leaders - tech savvy individuals with global experience capable of understanding and connecting with the needs and aspirations of Generation Z employees. This demographic shift in the workforce requires leaders who not only comprehend evolving technologies but also align with the values and expectations of today's highly skilled, young professionals. Beyond the pursuit of shareholder value, this demographic craves purpose-driven leadership and seeks companies with a clear sense of mission and societal impact. In this context, MedTech companies face a stark choice: adapt to lead with purpose or risk being left behind.
 
Takeaways

The future leadership of MedTech companies stands at a critical juncture as it is potentially faced with unprecedented changes over the next decade. While the necessity of a forward-looking CEO with digital acumen is essential for strategic innovation, the persisting challenges of manufacturing and regulatory frameworks highlight the need for a more collaborative leadership approach. To address this, we have proposed a strategic collaboration between a visionary CEO equipped with digital expertise and a seasoned COO skilled in manufacturing and compliance. It seems reasonable to assume that this would not only ease the burden on a single individual but also harness the strengths of both, fostering a more resilient leadership approach. Further, it recognises that navigating change demands a balance between embracing digital evolution and maintaining a strong foundation in traditional manufacturing and regulatory compliance. Future MedTech leaders must be able to bridge knowledge and perspective gaps, align with emerging technologies, and connect with the aspirations of the evolving workforce. The shift towards a more empowering leadership style, coupled with an understanding of Industry 4.0 principles and the dynamics of emerging markets, is essential for sustained success in a rapidly evolving market.

The urgency for MedTech leaders to adopt a forward-thinking, adaptable, and purpose-driven approach cannot be overstressed. The industry's capacity to allure and retain talent, foster innovation, and make substantial contributions to global healthcare pivots on a commitment to purposeful leadership and the incorporation of transformative strategies. In this demanding journey, the judicious collaboration between a forward-looking CEO and a traditional COO emerges as a strategic imperative, ensuring a comprehensive and resilient leadership model that can thrive in the next decade. 
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  • Since 2000 healthcare has been transformed by genomics, AI, the internet, robotics, and data-driven solutions
  • Traditional providers, anchored in outdated technologies, struggle to keep pace with the evolving healthcare landscape
  • Over the next two decades anticipate another seismic shift, bringing further disruptions to medical technology and healthcare delivery
  • In the face of this imminent transformation, risk-averse leaders may cling to outdated portfolios, showing little interest in adapting to a 2040 healthcare ecosystem
  • Providers must decide; embrace change now and thrive in a transformed healthcare landscape, or stick to the status quo and risk losing value and competitiveness
 
Healthcare 2040
 
Abstract

By 2040, the landscape of healthcare will have undergone a seismic shift, discarding antiquated models in favour of cutting-edge AI-genomic-data-driven approaches that will radically change both medical technology and healthcare delivery. This transformation signifies a departure from the conventional one-size-fits-all system, ushering in an era of targeted therapies grounded in molecular-level insights that challenge entrenched healthcare paradigms. The evolving healthcare narrative emphasises prevention, wellbeing, personalised care, and heightened accessibility. This departure from the norm is not a trend but a significant reconfiguration, where the fusion of biomedical science, technology, and expansive datasets merge to facilitate early detection and proactive interventions. This not only deepens our comprehension of diseases but also elevates the efficacy of therapies. At the core of this transformation is the empowerment of individuals within a framework that champions choice and fosters virtual communities. Genetic advancements, far from just addressing hereditary conditions, play an important role in enhancing diagnostic accuracy, optimising patient outcomes, and fundamentally shifting the focus from reactive diagnosis and treatment to a proactive commitment to prevention and holistic wellbeing. The indispensable roles played by genomics and AI-driven care in reshaping healthcare are not isolated occurrences; they will catalyse the emergence of new data-intensive R&D enterprises, which are poised to redefine the healthcare landscape against a backdrop of multifaceted influencing factors. Successfully navigating this transformative period necessitates a distinct set of capabilities and strategic alignment with an envisioned 2040 healthcare environment.

Providers find themselves at a crossroads, confronted with a choice: adapt and thrive or risk losing value and competitiveness in a rapidly evolving landscape. Recognising potential resistance to change and the scarcity of pertinent capabilities, leaders of traditional enterprises must acknowledge that immediate strategic action is not just beneficial but a prerequisite for success in the redefined healthcare ecosystem of 2040. The urgency of this call to action cannot be overstated, as the window of opportunity for adaptation narrows with each passing moment.

 
In this Commentary

This Commentary aims to help healthcare professionals to strategically reposition their organizations for success in the next two decades. Leaders must evaluate their strengths and weaknesses in the context of an envisioned future and implement strategies to align their organisations with the demands of a rapidly changing health ecosystem. Failure to do so will dent enterprises’ competitiveness and threaten their survival. Leaders should anticipate and address resistance to change among executives with a preference for the status quo. The Commentary has two sections: Part 1, Looking Back 20 Years, describes the scale and pace of change since 2000 and emphasises how genomics, the internet, AI, digitalization, data-driven solutions, robotics, telehealth, outpatient services, personalised care, ubiquitous communications, and strategic responses to demographic shifts have transformed medical technology and healthcare delivery. Part 2, Looking Forward 20 Years, seeks to stimulate discussions about the future of healthcare. While we highlight a range of factors positioned to impact medical technology and healthcare deliver in the future, we emphasise the significance of genomics, varied and vast datasets, and AI. We suggest the emergence of specialised agile, AI-driven research boutiques with capabilities to leverage untapped genomic, personal, and medical data. The proliferation of such entities will oblige traditional healthcare enterprises to reduce their R&D activities and concentrate on manufacturing. Over the next 20 years, anticipate an accelerated shift towards patient-centric, cell-based prevention and wellbeing care modalities, large hospitals replaced with smaller hubs of medical excellence, the rapid growth of outpatient centres, and the acceleration of home care and care-enabled virtual communities. The future dynamic healthcare ecosystem necessitates stakeholders to change immediately if they are to survive and prosper. Takeaways posit a choice for healthcare leaders: either stick to the status quo and risk losing value and competitiveness or embrace change and stay relevant.
 
Part 1
 
Looking Back 20 Years

Reflecting on the past two decades shows the rapid evolution and interplay of factors shaping medical technology and healthcare delivery. Appreciating the speed and scale of change helps to envision the future. Factors such as genomics, the Internet, AI, robotics, digitalisation, data-driven health solutions, telehealth, outpatient services, home care, personalised wellbeing, ubiquitous personal telephony, and strategic responses to demographic shifts have all influenced medical technology and healthcare delivery and will continue to do so in the future. Here we describe a few of these factors.

The completion of the Human Genome Project in 2003 was a pivotal moment in the direction of medical advancement, laying the foundations for the emergence of genomics. Genomics, encapsulating the mapping, sequencing, and analysis of DNA, is a pivotal tool for unravelling molecular information, variations, and their implications in both traits and diseases. This achievement not only transformed biomedical research but also changed healthcare, shifting it from a generic one-size-fits-all approach to finely tuned care tailored to the unique genetic makeup of individuals.

Over the past two decades, the decoding of the human genetic blueprint has provided unprecedented insights into diseases at the molecular level, triggering a paradigm shift in medicine. This ushered in an era of personalised and precision approaches to diagnoses, treatments, and prevention. From the advent of targeted therapies to the implementation of genetic screening, genomic research has had a transformative influence and is positioned to continue its impact on healthcare.

Indeed, genomic testing has become a standard practice, and US Food and Drug Administration (FDA)-approved genomic care modalities have advanced medicine. For example, pharmacogenonics tailors drug treatments to individual patients by utilising genetic information, with FDA-approved tests for specific biomarkers that predict medication responses. Hereditary assessments evaluate an individual's cancer risk based on genetic makeup, such as identifying BRCA gene mutations linked to elevated risks of breast and ovarian cancers. Gene expression profiling analyses a patient's tumour genetics to guide targeted cancer therapies, with FDA-approved companion diagnostic tests for specific cancer treatments. Carrier testing identifies genetic mutations that could be passed on to children, which contribute to family planning and prenatal care. Pharmacodiagnostic tests help pinpoint patients that would benefit from specific drug treatments, predicting responses, especially in cancer therapies.

In 2012, the UK government inaugurated Genomics England, an initiative designed to spearhead the 100,000 Genomes Project, which aimed to sequence the genomes of 100,000 patients with infectious diseases and specific cancers. The project’s goals included the enhancement of our understanding of various genetic factors in diseases, the facilitation of targeted treatments and establishing a framework for the integration of genomics into everyday clinical practice. The successful completion of the project in 2018, provided a basis for genomic medicine and a deeper understanding of the genetic framework influencing health and disease.

In addition to genomic data, since 2000, there has been a significant increase in health-related data, driven by the proliferation of electronic health records (EHRs), developments in information management technologies, initiatives to improve healthcare efficiency, and enhanced communications among stakeholders. The growth in data has, in turn, created opportunities for the utilisation of AI and machine learning (ML) algorithms. Over the last two decades, AI has changed medical technology and healthcare delivery by enhancing diagnostics, personalising treatment plans, streamlining administrative tasks, and facilitating research through efficient data analysis, which has improved patient outcomes, and advanced the field. As of January 2023, the FDA has approved >520 AI and ML algorithms for medical use, which are primarily related to the analysis of medical images and videos. Indeed, the rise of algorithms has transformed healthcare, with many of them focusing on predictions using EHRs that do not require FDA approval.

In addition to EHRs there has been the evolution of wearable technologies like the Apple Watch and Fitbit, which have transformed personal health. Initially focusing on fitness tracking, these devices have expanded to monitor an array of health metrics. Over the years, they have amassed vast amounts of personalised data, ranging from activity levels to heart rate patterns. These data reservoirs are a goldmine for healthcare and wellbeing strategies, enabling individuals, healthcare professionals and providers to gain unprecedented insights into health trends, customised care routines, and the early detection of health issues. This combination of technology and health data has created opportunities for proactive healthcare management and personalised wellbeing interventions.

Targeted medicine not only benefitted from AI but also from personalised telephony, which experienced a significant boost in the early 2000s by the widespread internet access in households across the globe. The period was marked by the introduction of the iPad in 2001, closely followed by the launch of the iPhone. These innovations triggered widespread smartphone use and accessible internet connectivity, laying the foundations for the emergence of telehealth and telemedicine. In the early 2000s, global cell phone subscriptions numbered ~740m. Today, the figure is >8bn, surpassing the world's population. This increase was driven by the proliferation of broadband, the evolution of mobile technologies and the rise of social media, all contributing to the ubiquitous presence of the internet. By the 2010s, the internet had integrated into the daily lives of a substantial portion of the global population. Initially, in 2000, ~7% of the world’s population had access online. Contrastingly, today, >50% enjoy internet connectivity. In a similar vein, broadband access in American homes has surged from ~50% in 2000 to >90% in the present day. Personal telephony has evolved into an omnipresent force, and has become an integral part of billions of lives, actively enhancing health and wellbeing on a global scale. After 2010, patient-centric wellbeing evolved and later was helped by Covid-19 pandemic lockdowns, with telehealth and telemedicine offering remote consultations and treatments, empowering patients, and emphasising shared decision-making between healthcare providers and patients.

On a more prosaic level, consider how robotics has changed surgery over the past two decades by offering enhanced precision, reduced invasiveness, and improved recovery times. The use of robotic systems, like the da Vinci Surgical System, which gained FDA-approval in 2000, has allowed surgeons to perform complex procedures with greater accuracy. Between 2012 and 2022, the percentage of surgical procedures using robotic systems rose from 1.8% to 17%. Robotic surgery is becoming increasingly popular, with an annual growth rate of ~15%. In 2020, its global volume was 1.24m, with the US accounting for >70% of all robotic surgeries.

The shifting demographics over the past few decades, marked by decreasing birth rates, prolonged life expectancy, and immigration, has transformed prosperous industrial economies, resulting in a substantial rise in the proportion of the elderly population. For instance, in the US in 2000, there were ~35m citizens ≥65; today, this figure has risen to ~56m, ~17% of the population. Concurrently, there has been an increase of chronic lifetime illnesses such as heart disease, diabetes, cancer, and respiratory disorders. In 2000, ~125m Americans suffered from at least one chronic condition. Today, this figure has increased to ~133m - ~50% of the population. Simultaneously, there is a shrinking pool of health professionals. Research suggests that by 2030, there will be ~5m fewer physicians than society will require. This, together with ageing populations, the growing burden of chronic diseases and rising costs of healthcare globally are challenging governments, payers, regulators, and providers to innovate and transform medical technology and healthcare delivery.

 
Part 2
 
Looking Forward 20 Years

This section aims to encourage healthcare professionals to envision the future. Over the next two decades, medical technology and healthcare delivery are likely to be affected by numerous interconnected factors, which include: (i) continued progress in AI and ML, internet of things (IoT), robotics, nanotechnology, and biotechnology, (ii) advances in genomics, (iii) increasing availability of multi-modal data (genomics, economic, demographic, clinical and phenotypic) coupled with technology innovations, (iv) accelerated adoption of telemedicine and virtual monitoring technologies, (v) changes in healthcare regulations, (vi) an increase of patient-cantered care and greater patient involvement in decision-making, (vii) emerging infectious diseases, antimicrobial resistance, and other global health issues, (viii) Investments in healthcare infrastructure, both physical and digital, (ix) an evolving and shrinking healthcare workforce, including the further integration of AI technologies and changes in roles, (x) economic conditions and healthcare funding, (xi) the ethical use of technology, privacy concerns, and societal attitudes towards healthcare innovations, and (xii) environmental changes and their impact on health and wellbeing. Such factors and their interconnectivity are expected to drive significant healthcare transformation over the next two decades. Healthcare systems throughout the world are tasked with: (i) improving population health, (ii) enhancing patients’ therapeutic journeys and outcomes, (iii) strengthening caregivers’ experience and (iv) reducing the rising cost of care. There appears to be unanimous agreement among healthcare leaders that these goals will not be achieved by business as usual.
 
In November 2023, BTIG, a leading global financial services firm, organised its Digital Health Forum, bringing together >30 healthcare companies that offer a diverse range of products and services. During the event, executives discussed business models, reimbursement, and commercial strategies, and unanimously agreed that: "The market is primed for the mainstream integration of digital diagnostics and therapeutics."  Here we focus on the anticipated accelerated convergence of genomics and AI technologies, and foresee the emergence of agile, AI-driven R&D boutiques as key players in reshaping medical technology and healthcare delivery.
 
These dynamic research entities thrive on the power of data. Currently, ~79% of the hospital data generated annually goes untapped, and medical information is doubling every 73 days. This emphasises the vast latent potential within these repositories. Traditional enterprises and healthcare professionals, constrained by a dearth of data management capabilities, have struggled to unlock the full potential inherent in these vast stores of information. By contrast, the adept data processing capabilities of these new innovative enterprises position them strategically to harness untapped data sources, extracting valuable insights into disease states and refining treatment modalities. Moreover, they boast advanced technology stacks, seamless connections between semiconductors, software, and systems, and are well-prepared to leverage specialised generative AI applications as they emerge in the market. Armed with cutting-edge technology and extensive datasets, they stand ready to enhance diagnostic precision, streamline treatment approaches, and reduce overall healthcare costs. Private equity firms will be eager to invest in these disruptive AI start-ups, anticipating M&A activities focused on specific therapeutic areas that will make them appealing to public markets.

These innovative entities are set to expedite the introduction of disruptive solutions, improve patients' therapeutic journeys, and optimise outcomes while driving operational efficiencies. Anticipate them to overshadow their traditional counterparts, many of which have outdated legacy offerings and historically have treated R&D as small adjustments to existing portfolios. Given that many conventional healthcare enterprises have: (i) failed to keep pace with technological developments, (ii) a dearth of in-house data-handling capabilities, and (iii) no experience in data-heavy disruptive R&D, it seems reasonable to suggest that they will most likely retreat into their core manufacturing activities, relinquish their R&D roles and lose value.

In the forefront of seismic change, the integration of digitalisation, AI, and cutting-edge decision support tools propels the emerging agile, data-driven R&D enterprises into a pivotal role within the landscape of well-informed, personalised healthcare. Meticulously safeguarding sensitive information, these enterprises not only adhere to the highest standards of privacy but also elevate security measures through state-of-the-art encryption techniques and decentralised storage solutions. As staunch guardians of privacy, they go beyond conventional approaches, crafting data repositories that not only shield confidential information but also facilitate the seamless flow of critical insights crucial for advancing medical technology and elevating care delivery. The seamless synergy between vast genomic, economic, demographic, clinical, and phenotypic data repositories and advanced AI techniques is poised to radically change healthcare R&D, redirecting it away from refining traditional products towards disruptive endeavours. Moreover, these agile research entities are anticipated to encourage widespread industry cooperation, harnessing the power of diverse data sources to innovate health solutions and services that transcend boundaries, thereby playing an important role in shaping a borderless health and wellbeing ecosystem.

In the regulatory arena, a transformation is anticipated by 2040. Regulators are likely to evolve from enforcers to stewards of progress, collaborating with industry stakeholders to promote a consumer-centric healthcare. Advocating transparency, patients' rights, and ethical innovation, regulators will become influential drivers of progress, contributing to a shared and equitable healthcare future. This collaborative effort is expected to contribute to a data-driven healthcare ecosystem that prioritises individual wellbeing, innovation, and accessibility in equal measure.

By 2040, expect healthcare payers to have undergone a transformative change, fuelled by a seismic shift in medical technology and healthcare delivery. New payment models will prioritise individualised therapies and patient outcomes, leveraging real-time health data for customised coverage. AI will streamline administration, reduce costs, and enhance overall healthcare efficiency. Increased patient engagement and collaboration among payers, providers, and patients will drive a holistic, patient-centred approach, ultimately improving the quality and accessibility of healthcare services.


This section has emphasised the transformative forces of genomics and AI shaping a personalised healthcare ecosystem. While traditional medical technology and healthcare delivery may be predicated upon physical devices and a one-size-fits-all approach, the future lies in the fusion of data and smart software to accelerate targeted care, which marks a significant departure from the conventional.
 
Takeaways

The shift towards genomic-driven healthcare marks a transformation in the medical landscape expected by 2040. Moving away from outdated models, the trend towards personalised care, rooted in molecular insights, necessitates a revaluation from health professionals. This shift, facilitated by the fusion of biomedical science, advanced technologies, and vast amounts of varied data, foresees a future where prevention, individualised wellbeing, and improved accessibility become the new norm. The convergence of genomics and AI not only improves diagnostics and treatments but also points to prevention and overall wellness. This Commentary has highlighted the transformative impact of genomics and AI-driven healthcare at the cellular level, making way for data-intensive R&D enterprises that will shape the future of medical technology and healthcare delivery. The path to 2040 demands a departure from conventional norms of the past, requiring strategic realignment and specific capabilities. Traditional providers find themselves at a juncture: those that adapt to an envisioned care environment of 2040 are more likely to succeed, while those that resist risk becoming obsolete. By acknowledging potential obstacles to change and the scarcity of relevant capabilities, leaders are encouraged to recognise the urgency of strategic action as a prerequisite for success in the redefined healthcare landscape of 2040. The future is imminent, and the time for transformative readiness is now.
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MedTechs Battle with AI for Sustainable Growth and Enhanced Value
 
Preface
 
The medical technology industry has experienced significant growth, consistently surpassing the S&P index by ~15 percentage points. This success is rooted in the early 1990s, a time when capital was costly, with interest rates ~10%. However, as we moved closer to 1998, interest rates began to recede, settling just below 7%. This early era of growth was not devoid of challenges. The US was still grappling with the aftermath of the oil embargo imposed in 1973 by the Organization of the Petroleum Exporting Countries (OPEC), which was a response to the American government's support for Israel during the Yom Kippur War and had lasting consequences. The oil crisis triggered hyperinflation, leading to a rapid escalation in the prices of goods and services. In response, the US Federal Reserve (Fed) raised interest rates to a historic high of 17% in 1981, which was aimed at curbing inflation but came at the price of increasing the cost of borrowing. As we entered the 1990s, the landscape shifted. The Fed’s monetary policies began to work, inflation started to decline, and interest rates fell to ~10%, eventually dipping below 7% in 1998. This created conditions for increased investments in research and development (R&D) and the American economy blossomed and benefitted from the internet becoming mainstream. It was during this period that many medical technology companies developed innovative medical devices, which were not only disruptive but also found a receptive global market characterized by significant unmet needs and substantial entry barriers. In the ensuing years, the industry thrived and matured. Fast-forward to the present (2023), and we find ourselves in a different scenario. Over the past five years, numerous large, diversified MedTechs have struggled to deliver value. One explanation for this is that growth of these enterprises over the past three decades, except for the early years, was primarily driven by mergers and acquisitions (M&A), often at the expense of prioritizing R&D. Consequently, many large MedTechs did not leverage evolving technologies to update and renew their offerings and are now heavily reliant on slow-growth markets and aging product portfolios. Navigating a successful path forward would be helped by a comprehensive embrace of artificial intelligence (AI) and machine learning (ML) strategies, since these technologies possess the potential to transform how MedTechs operate, innovate, and serve their stakeholders.
 
In this Commentary

This Commentary explores the role of artificial intelligence (AI) in reshaping the future landscape of the MedTech industry in pursuit of sustainable growth and added value. We focus on the impact AI can have on transforming operational methodologies, fostering innovation, and enhancing stakeholder services. Our aim is to address five key areas: (i) Defining Artificial Intelligence (AI): Describes how AI differs from any other technology in history and sheds light on its relevance within the MedTech sector. (ii) Highlighting AI-Driven MedTech Success: In this section, we preview three leading corporations that have utilized AI to gain access to new revenue streams. (iii) Showcasing a Disruptive AI-Powered Medical Device: Here, we provide an overview of the IDx-DR system, an innovation that has brought disruptive change to the field of ophthalmology. (iv) The Potential Benefits of Full AI Integration for MedTechs: This section briefly describes 10 potential benefits that can be expected from a comprehensive embrace of AI by MedTechs. (v) Potential Obstacles to the Adoption of AI by MedTechs: Finally, we describe some obstacles that help to explain some MedTechs reluctance to embrace AI strategies. Despite the substantial advantages that AI offers, not many large, diversified enterprises have fully integrated these transformative technologies into their operations. Takeaways outline the options facing enterprises.
 
Part 1

Defining Artificial Intelligence (AI)

Artificial Intelligence (AI) is a ground-breaking concept that transcends the simulation of human intelligence. Unlike human cognition, AI operates devoid of consciousness, emotions, and feelings. Thus, it is indifferent to victory or defeat, tirelessly working without rest, sustenance, or encouragement. AI empowers machines to perform tasks once exclusive to human intelligence, including deciphering natural language, recognizing intricate patterns, making complex decisions, and iterating towards self-improvement. AI is significantly different to any technology that precedes it. It is the first instance of a tool with the unique capabilities of autonomous decision making and the generation of novel ideas. While all predecessor technologies augment human capabilities, AI takes power away from individuals.
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AI employs various techniques, including machine learning (ML), neural networks, natural language processing, and robotics, enabling computers to autonomously tackle increasingly complex tasks. ML, a subset of AI, develops algorithms that learn, adapt, and improve through experience, rather than explicit programming. The technology’s versatile applications span image and speech recognition, recommendation systems, and predictive analytics. In the quest to comprehend the intersection of artificial and human intelligence, we encounter Large Language Models (LLMs), like ChatGPT, which recently have gained prominence in corporate contexts. These advanced AI models grasp and generate human-like text by discerning patterns and context from extensive textual datasets. LLMs excel in language translation, content generation, and engaging in human-like conversations, effectively harnessing our linguistic abilities.


Part 2

Highlighting AI-Driven MedTech Success

This section briefly describes three examples of MedTechs that have successfully leveraged AI technologies to illustrate how AI’s growing influence drives improvements in accuracy, efficiency, patient outcomes and in the reduction of costs, which together, and in time, are positioned to transform healthcare.
 
Merative, formally Watson Health, a division of IBM that specialised in applying AI and data analytics to healthcare. In 2022, the company was acquired by Francisco Partners, an American  private equity firm, and rebranded Merative. The company leverages AI, ML, and LLMs to analyse extensive medical datasets that encompass patient records, clinical trials, medical literature, and genomic information. These technologies empower healthcare professionals by facilitating more informed decisions, identifying potential treatment options, and predicting disease outcomes. For instance, Merative employs ML to offer personalised treatment recommendations for cancer patients based on their medical histories and the latest research. Integrating LLMs enables natural language processing to extract insights from medical literature, helping healthcare providers stay current with scientific and medical advancements.
 
Google Health, a subsidiary of Alphabet Inc., focuses on using AI and data analysis to improve healthcare services and patient outcomes. It employs AI and ML to develop predictive models that can identify patterns and trends in medical data, which improve early disease detection and prevention. One notable application is in medical imaging, where the company's algorithms can assist radiologists to identify anomalies in X-rays, MRIs, and other images. LLMs are used to interpret and summarize medical documents, making it easier for healthcare professionals to access relevant information quickly. Google Health also works on projects related to drug discovery and genomics, leveraging ML to analyze molecular structures and predict potential drug candidates.
Medtronic is a global leader in medical technology, specializing in devices and therapies to treat various medical conditions. The company incorporates AI, ML, and LLMs into their devices and systems to enhance patient care. For instance, in the field of cardiology, Medtronic's pacemakers and defibrillators collect data on a patient's heart rhythms, which are then analyzed using AI algorithms to detect irregularities and adjust device settings accordingly. This real-time analysis helps to optimize patient treatment. Medtronic also employs AI in insulin pumps for diabetes management that can learn from a patient's blood sugar patterns and adjust insulin delivery accordingly. Additionally, LLMs are used to extract insights from electronic health records (EHR) and clinical notes, which help healthcare providers to make more personalized treatment decisions.
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Part 3

Showcasing a Disruptive AI-Powered Medical Device

AI has been applied to various medical imaging tasks, including interpreting radiological images like X-rays, CT scans, and MRIs and there are numerous AI-driven medical devices and systems that have emerged and evolved in recent years. As of January 2023, the US Federal Drug Administration (FDA) has approved >520 AI medical algorithms, the majority of which are related to medical imaging. Here we describe just one, the IDx-DR system, which was developed by Digital Diagnostics. In 2018, it became the first FDA-approved AI-based diagnostic system for detecting diabetic retinopathy. If left untreated, the condition can lead to blindness. Globally, the prevalence of the disease among people living with diabetes is ~27% and every year, >0.4m people go blind from the disorder. In 2021, globally there were ~529m people with diabetes, which is expected to double to ~1.31bn by 2050.
 
The IDx-DR device utilizes AI algorithms to analyze retinal images taken with a specialized camera and accurately detects the presence of retinopathy that occurs in individuals with diabetes when high blood sugar levels cause damage to blood vessels in the retina. Significantly, the device produces decisions without the need for retinal images to be interpreted by either radiologists or ophthalmologists, which allows the system to be used outside specialist centres, such as in primary care clinics. Advantages of the system include: (i) Early detection, which can improve outcomes and quality of life for individuals with diabetes. (ii) Efficiency. The system analyzes images quickly and accurately, providing results within minutes, which allows healthcare providers to screen a larger number of patients in a shorter amount of time. (iii) Reduced healthcare costs. By detecting retinopathy at an early stage, the system helps prevent costly interventions, such as surgeries and treatments for advanced stages of the disease, which can lead to significant cost savings for healthcare systems. (iv) Patient convenience. Patients undergo retinal imaging as part of their regular diabetes check-ups, reducing the need for separate appointments with eye specialists, which encourages enhanced compliance.

 
Part 4

The Potential Benefits of Full AI Integration for MedTechs

Large, diversified MedTechs stand to gain significant benefits by fully embracing AI technologies that extend across all aspects of their operations, innovation, and overall value propositions. In this section we briefly describe 10 such advantages, which include enhanced innovation, improved patient outcomes, increased operational efficiency, cost savings, and access to new revenue streams. Companies that harness the full potential of AI will be better positioned to thrive in the highly competitive and rapidly evolving healthcare industry.
 
1. Enhanced innovation and product development
AI technologies have the potential to enhance R&D endeavours. They accomplish this through the ability to dig deep into vast repositories of complex medical data, identifying patterns, and forecasting outcomes. This translates into a shorter timeline for the conception and creation of novel medical technologies, devices, and therapies. In essence, AI quickens the pace of innovation in healthcare. The capabilities of AI-driven simulations and modeling further amplifies its impact. These virtual tools enable comprehensive testing in a digital environment, obviating the need for protracted physical prototyping and iterative cycles, which can shorten the development phase and conserve resources, making the innovation process more cost-effective, and environmentally sustainable.
 
2. Improved patient outcomes
Beyond improving the research landscape, AI improves the quality of patient care by enhancing diagnostic precision through the analysis of medical images, patient data, and clinical histories. Early detection of diseases becomes more precise and reliable, leading to timelier intervention and improved patient outcomes. Additionally, AI facilitates the personalization of treatment recommendations, tailoring them to individual patient profiles and current medical research. This optimizes therapies and increases the chances of successful outcomes and improved patient wellbeing.
 
3. Efficient clinical trials
Increasingly AI algorithms are being used in clinical studies to identify suitable patient cohorts for participation in trials, effectively addressing recruitment challenges and streamlining participant selection. Further, predictive analytics play a role in enhancing the efficiency of trial design. By providing insights into trial protocols and patient outcomes, AI reduces both the time and costs associated with bringing novel medical technologies to market, which speeds up the availability of treatments and facilitates the accessibility of healthcare innovations to a broader population.
 
4. Operational efficiency
Operational efficiency is improved with the integration of AI technologies by refining operations. AI-driven supply chains and inventory management systems play a significant role in optimizing procurement processes. They analyze demand patterns, reduce wastage, and ensure the timely availability of critical supplies. By doing so, companies can maintain uninterrupted operations, enhancing their overall efficiency and responsiveness. Another component of operational efficiency lies in predictive maintenance, which can be improved by AI. Through continuous monitoring and data analysis, AI can predict equipment failures before they occur. Such a proactive approach minimizes downtime and ensures manufacturing facilities remain compliant and in optimal working condition. Consequently, healthcare providers experience improved operational efficiency, strengthened compliance, and a reduction in costly disruptions. The automation of routine tasks and processes via AI relieves healthcare professionals from repetitive duties and frees up resources that can be redirected towards more strategic and patient-centric initiatives. This reallocation reduces operational costs while enhancing the quality of care provided.
 
5. Cost savings
Beyond automation, AI-driven insights further uncover cost efficiencies within healthcare organizations. AI identifies areas where resource allocation and utilization can be optimized, which can result in cost reduction strategies that are both data-informed and effective. AI's potential extends to the generation of innovative revenue streams. Corporations can develop data-driven solutions and services that transcend traditional medical devices. For instance, offering AI-driven diagnostic services or remote patient monitoring solutions provides access to new revenue streams. Such services improve patient care and contribute to the financial sustainability of enterprises. Further, AI-enabled healthcare services lend themselves to subscription-based models, ensuring consistent and reliable revenue over time. Companies can offer subscription services that provide access to AI-powered diagnostics, personalized treatment recommendations, or remote monitoring, which have the capacity to diversify revenue streams and enhance longer-term financial stability.
 
6. New revenue streams
AI's ability to analyze vast datasets positions MedTechs to unravel the interplay of genetic, environmental, and lifestyle factors that shape individual health profiles. With such knowledge, personalized treatment plans and interventions can be developed, ensuring that medical care is tailored to each patient's unique needs and characteristics. This level of customization optimizes outcomes and minimizes potential side effects and complications. AI's ability to process vast amounts of patient data and detect patterns, anomalies, and correlations, equips healthcare professionals with the knowledge needed to make more informed decisions. Such insights extend beyond individual care, serving as the basis for effective population health management and proactive disease prevention strategies. In short, AI transforms data into actionable intelligence, creating a basis for more proactive and efficient healthcare practices.
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7. Regulatory compliance and safety
In an era of stringent healthcare regulations, AI is a reliable ally to ensure compliance and enhance safety standards. Through automation, AI streamlines documentation, data tracking, and quality control processes, reducing the risk of errors and oversights. Also, AI-powered systems excel in the early detection of anomalies and potential safety issues, which increase patient safety and the overall quality of healthcare solutions and services. This safeguards patient wellbeing and protects the reputation and credibility of companies.
8. Competitive advantage
MedTechs that are early adopters of AI stand to gain a distinct competitive advantage. They can offer AI-powered solutions and services that deliver superior clinical outcomes and improve overall patient experience. By harnessing the potential of AI, companies can position themselves as leaders in innovation and technological capabilities, likely drawing a loyal customer base, valuable partnerships, collaborations, and investments.
 
9. Talent attraction and retention
Embracing AI technologies also has an impact on talent attraction and retention. The allure of working on novel AI projects that improve lives attracts scarce tech-savvy professionals who seek to be part of dynamic, purposeful, and forward-thinking teams. Such talent contributes to a skilled workforce capable of extending the boundaries of AI innovation within MedTech companies. Further, fostering a culture of innovation through AI adoption encourages employee engagement and job satisfaction, leading to improved talent retention.
 
10. Long-term sustainability
The integration of AI goes beyond immediate advantages; it positions MedTechs for longer-term strategic growth and resilience. As the healthcare landscape continues to evolve, adaptability and innovation become more important. AI enables companies to adapt to changing market dynamics, navigate regulatory challenges, and remain relevant amidst industry transformations. By staying at the forefront of technological advancements, companies ensure their relevance and contribute to shaping the future healthcare landscape.
 
Part 5

Potential Obstacles to the Adoption of AI by MedTechs

The integration of AI technologies into numerous industries has demonstrated its potential to significantly enhance operations, improve R&D, and create new revenue streams. However, despite AI’s potential to contribute significant benefits for business enterprises, its adoption by many large, diversified medical technology companies has been limited and slow. This section describes some factors that help to explain the reluctance of senior MedTech executives to fully embrace AI technologies, which include an interplay of organizational, technical, and industry-specific issues. Without overcoming these obstacles, MedTechs risk losing the growth and value creation they once experienced in an earlier era.

Demographics of senior leadership teams
According to Korn Ferry, an international consultancy and search firm, the average age for a C-suite member is 56 and their average tenure is 4.9 years, although the numbers vary depending on the industry. The average age of a CEO across all industries is 59. If we assume that the MedTech industry mirrors this demographic, it seems reasonable to suggest that many corporations have executives approaching retirement who may be more risk averse and oppose the comprehensive introduction of AI technologies due to a fear of losing benefits they stand to receive upon retirement.

Organizational inertia and risk aversion
Large medical technology companies often have well-established structures, processes, and cultures that resist rapid change. In such an environment, executives might be hesitant to introduce AI technologies due to concerns about disrupting existing workflows, employee resistance to learning new skills, and the fear of failure. The risk-averse nature of the medical technology industry, where patient safety is critical, further amplifies executives' cautious approach to implementing unproven AI solutions.
 

Technical challenges and skill gaps
AI implementation requires technical expertise and resources. Many MedTech executives might lack a deep understanding of AI's technical capabilities, making it difficult for them to evaluate potential applications. Further, attracting and retaining AI talent is highly competitive, and the scarcity of professionals skilled in both medical technology and AI can hinder successful implementation.
Regulatory and ethical concerns
The medical field is heavily regulated to ensure patient safety and data privacy. Incorporating AI technologies introduces additional layers of complexity in terms of regulatory compliance and ethical considerations. Executives might hesitate to navigate these legal frameworks, fearing potential liabilities and negative consequences if AI systems are not properly controlled or if they lead to adverse patient outcomes.
Long development cycles and uncertain ROI
The R&D cycle in the medical technology industry is prolonged due to rigorous testing, clinical trials, and regulatory approvals. Although AI technologies have the capabilities to enhance R&D efficiency, they can introduce additional uncertainty and complexity, potentially extending development timelines. Executives could be apprehensive about the time and resources required to integrate AI into their R&D processes, especially if the return on investment (ROI) remains uncertain or delayed.
 

Industry-specific challenges
The medical technology industry has unique challenges compared to other sectors. Patient data privacy concerns, interoperability issues, and the need for rigorous clinical validation can pose barriers to AI adoption. Executives might view these complexities as additional hurdles that could hinder the successful implementation and deployment of AI solutions.
  

Existing Revenue Streams and Incremental Innovation
Many large, diversified MedTechs generate substantial revenue from their existing products and services. Executives might be reluctant to divert resources towards AI-based ventures, fearing that these investments could jeopardize their core revenue streams. Additionally, a culture of incremental innovation prevalent in the industry might discourage radical technological shifts like those associated with AI.

 
Takeaways
 
Hesitation among MedTechs to integrate AI technologies poses the threat of missed opportunities, diminished competitiveness, and sluggish growth. This reluctance hinders innovation and limits the potential for enhanced patient care. Embracing AI is not an option but a strategic imperative. Failure to do so means missing opportunities to address unmet medical needs, explore new markets, and access new revenue streams. The potential for efficiency gains, streamlined operations, and cost reductions across R&D, manufacturing and supply chains is significant. Companies fully embracing AI gain a competitive advantage, delivering innovative solutions and services that improve patient outcomes and cut healthcare costs. Conversely, those resisting AI risk losing market share to more agile rivals. AI’s impact on analysing vast amounts of complex medical data, accelerating discovery, and enhancing diagnostics is well established. MedTechs slow to leverage AI may endure prolonged R&D cycles, fewer breakthroughs, and suboptimal resource allocation, jeopardising competitiveness and branding them as ‘outdated’. In today’s environment, attracting top talent relies on being perceived as innovative, a quality lacking in AI-resistant MedTechs. As AI disrupts industries, start-ups and smaller agile players can overtake established corporations failing to adapt. A delayed embrace of AI impedes progress in patient care, diagnosis, treatment, and outcomes, preventing companies from realising their full potential in shaping healthcare. The time to embrace AI is now to avoid irreversible setbacks in a rapidly evolving MedTech ecosystem.
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  • The MedTech industry has undergone a transformative journey marked by prolific mergers and acquisitions (M&A)
  • Between 2006 and 2016, the industry witnessed 2,680 acquisitions totaling US$607.8bn
  • In the pursuit of efficient integrations corporations often overlooked the significance of fostering a distinct organisational culture
  • In many cases this resulted in cultural dissonance, which is a silent but substantial obstacle to growth and value creation
  • Stories can overcome this obstacle and help to bridge gaps, align interests, and cultivate a shared sense of purpose among employees and stakeholders for long-term MedTech success
 
 The Silent Obstacle to MedTech Growth and Value Creation
 
The MedTech industry, marked by decades of prolific mergers and acquisitions (M&A), has undergone a transformative journey fuelled by factors like the pursuit of economies of scale, technological access, and navigating regulatory challenges. While strategic consolidations have yielded financial and organisational benefits, often they have inadvertently overlooked the softer facet of corporate identity - organisational culture.
 
Illustrating the magnitude of M&A within the industry, the decade from 2006 to 2016 witnessed 2,680 acquisitions with a value totaling US$607.8bn. Noteworthy is the consistency in the frequency of these acquisitions, juxtaposed against the variability in the consideration of individual deals.
                                                                                                                     
By 2023, a notable shift occurred within the MedTech M&A landscape. The deceleration of M&A activity led to a saturation in market segments with products and services, which intensified competition for market share and exerted pressure on pricing and profit margins. As the M&A market cooled, the accessibility to cutting-edge technologies became more elusive, putting companies at a disadvantage in terms of product development and maintaining competitiveness. Simultaneously, heightened geopolitical tensions and trade restrictions further complicated supply chains and distribution channels. The constrained M&A environment raised hurdles for expanding into emerging markets, which narrowed potential growth opportunities. Integrating talent from acquired companies, a common practice in M&A, also faced challenges amid the slowdown, which impacted the ability to sustain a competitive edge in expertise and innovation. Without the efficiency gains typically associated with M&A, numerous companies encountered escalating cost pressures, which encompassed R&D costs, manufacturing expenses, and other operational outlays that adversely affected overall profitability. The heighted expectations from shareholders for consistent growth, a hallmark for large diversified MedTechs, faced added difficulties due to the deceleration of M&A activity, potentially influencing stock prices and investor confidence.
 
Periods of integrating acquired enterprises tend to be dominated by the pursuit of efficiency, cost savings, and regulatory compliance, which often means relegating the significance of cultivating a distinct and cohesive organisational culture. In the current landscape, where M&A activity has decelerated and corporate values have plateaued, the ramifications of this neglect are becoming increasingly evident. Some enterprises are finding themselves with fragmented cultures, which have low levels of solidarity: employees disagree about organisational objectives, critical success factors, and performance standards. This can make organisations challenging to manage, and leaders unable to affect change. Organisational culture is not simply rhetoric; it is a critical element that molds how employees perceive their roles, comprehend their company's mission, and ultimately contribute to innovation and value creation. Further, a robust and distinctive culture plays a role in attracting and retaining top talent. In an industry driven by innovation, retaining the brightest minds is important for success. When employees sense a misalignment between their personal values and the organisational culture, it can result in disengagement, increased turnover rates, and a depletion of institutional knowledge - all of which undermine long-term growth.
 
Consider this scenario: A MedTech company with a clear and supportive culture is well equipped to navigate the intricacies of the industry. Such an environment fosters a shared sense of purpose and identity among employees, creating a collaborative space where diverse talents can thrive. This, in turn, augments a company's capacity to adapt to industry changes, respond to emerging healthcare needs, and drive sustainable value creation.
 
Culture embodies community; it is the essence of how individuals connect with each other. Flourishing communities arise from shared interests, mutual obligations, and a foundation of cooperation and camaraderie. A common oversight in certain management literature concerning corporate culture is the assumption that organisations are inherently homogeneous. However, just as one organisation differs from another, so do its internal units. Consider the contrasting nature of, for instance, the R&D function compared to manufacturing within a MedTech company. Moreover, hierarchical distinctions within an enterprise add layers of diversity; the cultural dynamics of senior leadership teams may differ markedly from those of middle managers and blue-collar workers.
 
In the MedTech industry, where financial and organisational factors maintain their importance, a strategy that develops a distinctive organisational culture is equally important. Overlooking cultural integration presents a nuanced yet potentially significant barrier to growth and value creation. This challenge manifests itself through indicators such as disengaged employees, talent attrition, and a lack of adaptability in meeting the evolving demands of the industry. Recognizing and addressing this cultural deficit extends beyond employee satisfaction; it emerges as a strategic imperative for long-term success in the dynamic landscape of MedTech.
 
Further, as corporations expand globally they encounter challenges to unite and motivate their constituencies. Internationalization means transcending geographical, linguistic, cultural, and religious boundaries. Multinational corporations operate in a world where employees are from various countries, speak different languages, and possess diverse cultural backgrounds, which emphasises the significance of establishing common ground and fostering a sense of belonging. Moreover, modern organisations are linked to an array of stakeholders, including governments, patients, insurance firms, advocacy groups, and a wide spectrum of customers. These often hold distinct interests and priorities, occasionally leading to conflicts with both each other, and the organisation's objectives.
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The power of stories

In this interconnected ecosystem, a cohesive and inspiring narrative emerges as a potential remedy for dissonance. A well-crafted story has the capacity to bridge divides, align interests, and instil a collective sense of purpose among both employees and stakeholders. This, in turn, contributes to a corporation's overall success.
The impact of a unifying narrative does not confine itself to an organisation's internal boundaries. It acts as a catalyst for collective action, motivating employees, and stakeholders alike toward shared objectives. This shared story becomes the driving force behind innovation, it bolsters problem-solving capabilities, and shapes the organisation into a responsive and adaptable entity. In a world where trust, differentiation, innovation, talent attraction, stakeholder engagement, and customer loyalty wield substantial influence, a captivating narrative emerges as a positive force for a diversified MedTech company. It adeptly communicates the company's mission, values, and impact, establishing trust, distinguishing the brand, fostering innovation, attracting top talent, engaging stakeholders, and cultivating customer loyalty. Ultimately, it solidifies a company's brand identity, nurtures relationships, and fuels long-term commercial success.
 
The potency of an inspiring company narrative lies in its ability to weave a common thread through the diverse interests of employees, creating unity and a shared company culture. A compelling story acts as a connective tissue, transcending departmental and hierarchical boundaries, resonating universally regardless of individual roles or backgrounds. Such narratives instill a collective sense of purpose and pride, fostering a shared identity embraced by every employee. When everyone is tethered to a common story, it encourages a cohesive culture where values and goals are not just communicated but lived and upheld by each member of the organisation. This shared narrative becomes a wellspring of motivation, aligning the workforce toward a singular vision and propelling the company forward as a unified and harmonious entity.
 
These claims may seem exaggerated when applied to a company narrative. However, to grasp the potential impact of storytelling, let us briefly examine the realms of religion, politics, finance, and the women’s movement. All these domains are predicated upon narratives that not only inspire and motivate diverse groups of individuals but also make them reshape their lives and dedicate their time and energy to the causes these narratives portray.
 
Religion

Religion plays an important part in the spiritual lives of billions of people around the world. Religious stories hold a significant influence over the beliefs and practices of faith communities, providing them with a sense of meaning and purpose. The potency of a narrative's impact is exemplified in the case of Jerusalem, a city that embodies the enduring power of stories.
 
For Jews, Jerusalem is a testament to the divine intervention of their narrative, where God commanded Abraham not to sacrifice his son Isaac. For Christians, Jerusalem holds multifaceted significance across various church factions, but it universally marks the hallowed ground where Jesus Christ delivered his teachings and shared the Last Supper with his disciples before his crucifixion. Similarly, for Muslims, Jerusalem bears importance as the place where the Prophet Mohammad started his mission and experienced a divine vision.
 
What is striking about these narratives is that they have endured through centuries, despite the absence of any scientific evidence, relying on the power of spiritual belief. This emphasises the influence of storytelling. People hold these stories dear to their hearts, embracing them with unwavering faith. Such narratives have the power to shape cultures, societies, and even geopolitical landscapes. The enduring power of religious narratives, like those surrounding Jerusalem, teaches us that stories are more than tales, but the scaffolding upon which belief systems are constructed, and they have the potential to move nations and shape destinies.
 
Politics

Consider politics. Political ideologies are founded upon stories that individuals hold so firmly that they are prepared to resolutely defend their convictions, even at the cost of armed conflict. These ideologies shape the governance, policies, and destinies of nations, and their power lies in the stories they tell.
 
Consider democracy, for instance. It is a powerful narrative that extols the virtues of power vested in the hands of the people or their elected representatives. Democracy's story emphasizes principles of equality, individual rights, and the regular exercise of those rights through elections. It speaks to the idea that citizens should actively participate in shaping their government and society through voting and civic engagement. This narrative has led people to fight for democratic values, even in the face of oppressive regimes, as they believe in the story of democracy's inherent worth.
 
Socialism is another political ideology grounded in a compelling narrative. It advocates for collective or state ownership and control of the means of production, distribution, and exchange. The story of socialism centres on reducing economic inequality and ensuring that resources and wealth are more equitably distributed among society's members. This narrative has inspired revolutions, social movements, and political changes across the world, as believers are motivated by the story of a fairer and more just society.
 
In contrast, authoritarian states are political systems characterised by centralised power and limited political freedoms. They too are predicated on stories. Such states often feature a single leader or a small group of individuals with substantial control over the government, little or no opposition, restricted civil liberties, and limited or no free elections. They prioritize order and control over individual rights and freedoms, often relying on censorship, propaganda, and coercion to maintain their authority. Despite its repressive nature, it has garnered fervent adherents who are willing to defend their vision of a disciplined and ordered society, sometimes at great human cost.
 
These political narratives are strong forces that shape the world we live in. They are stories that compel people to action, and at times, to support and engage in conflict. Understanding the power of these narratives is essential for comprehending the dynamics of political movements, governance, and global affairs. It emphasises that the stories we believe in are not just words; they are forces capable of reshaping societies and history itself.
 
Money

Money, in its essence, is a symbol devoid of inherent value. Take a $100 bill, for instance. It possesses no intrinsic worth; you cannot eat it, clothe yourself with it, or find shelter beneath its folds. In today's digital age, most monetary transactions occur virtually, further emphasizing that money is not a tangible commodity but a representation of value. What makes money intriguing is that its value is predicated upon a story, a narrative that commands the largest following worldwide, surpassing the collective adherents of all religions combined. Money, in essence, is a story with believers numbering billions.
 
This narrative begins with the idea that a particular piece of paper or digital entry holds value. It is a shared belief system, one upheld by individuals, corporations, and governments across the globe. This shared belief is what allows us to exchange money for goods, services, and even intangible assets like trust or promise. Consider the notion of a banknote. Its value exists because we believe in the authority and stability of the issuing government or institution. It is a mutual understanding that a piece of paper, despite its lack of intrinsic value, can be exchanged for something tangible or intangible in the real world.
 
This shared belief in money's value creates a complex web of economic interactions and relationships. It fuels trade, investment, and economic growth. It enables people to plan, save for retirement, and invest in education and healthcare. Money, as a story, is a unifying force in the modern world, transcending borders, cultures, and languages. Yet, like all narratives, money is not without its challenges and contradictions. Economic disparities, financial crises, and questions about the fairness of wealth distribution persist. But the fact remains that money, as a story, is a force of unparalleled influence, guiding the decisions and actions of individuals and nations alike. In a world where the value of money is woven into the fabric of society, it becomes clear that its true worth lies not in the physical notes or digital records but in the collective trust and beliefs that sustain this narrative. Money, in the end, is a story that shapes our lives, economies, and the world at large.
 
Women’s movement

The women's movement is a testament to the power and influence of a story about equality. Over decades, this movement has enhanced the status of women worldwide. What makes this narrative particularly interesting is that, unlike the stories underpinning religion, politics, and money, the pursuit of women's rights has largely been achieved through peaceful means, which is a testament to the millions of people around the world who embraced the story that activists told.
 
The narrative of the women's movement is simple: equality. It tells a story of a world where women and men stand on equal footings, where gender should not be a barrier to opportunities, rights, or dignity. This story resonated with countless individuals who recognized the inherent justice in this vision. The power of this story lies in its ability to inspire action. It mobilized women and men from all walks of life to come together and advocate for change. Grassroots activists, iconic leaders, and ordinary citizens joined forces, fuelled by the belief in the story's inherent truth. They organised rallies, signed petitions, and engaged in peaceful demonstrations, all with the goal of dismantling systemic inequalities and securing equal rights for women.
 
What sets the women's movement apart from many other stories that shape our world is its peaceful nature. While religious, political, and economic narratives have often been associated with conflict and violence, the women's movement has predominantly relied on peaceful activism and advocacy. This nonviolent approach has garnered widespread support and sympathy from people of diverse backgrounds, fostering a sense of unity and shared purpose.
 
The influence of this narrative has been significant. It has led to legal and societal changes, from suffrage and reproductive rights to workplace equality and gender representation in leadership roles. Women's rights have advanced on a global scale, improving the lives of millions. The women's movement is a powerful example of how a story can shape the world when embraced by a collective of individuals who believe in its message. It demonstrates that narratives grounded in principles of justice and equality can bring about transformative change, even without resorting to violence. The women's movement serves as a reminder that stories have the power to move societies and bend the arc of history toward progress and justice.
 
Takeaways

The MedTech industry's journey through decades of M&A activity has been a transformative one, marked by the pursuit of economies of scale, technological access, and regulatory mastery. The resulting financial and organisational benefits, however, have inadvertently overlooked a critical aspect: organisational culture. The magnitude of M&A activity, exemplified by 2,680 acquisitions totaling US$607.8bn between 2006 to 2016, showcases both consistency and variability in deal considerations. As we fast forward to 2023, global uncertainties prompted a recalibration of strategic initiatives, especially as MedTech companies aimed for operational scaling and global expansion. The challenges of uniting diverse constituencies in an internationalized context - spanning geographical, linguistic, cultural, and religious boundaries – emphasized the importance of establishing common ground and fostering a sense of belonging. The consequences of prioritizing efficiency and not cultivating a cohesive organisational culture during the integration of acquired enterprises has become increasingly apparent. Some companies find themselves with fragmented cultures, marked by low solidarity and disagreements about organisational objectives. This cultural deficit makes organisations challenging to manage, and leaders often feel powerless to effect change. In the MedTech sector, where collaboration and creativity are important for healthcare breakthroughs, cultural dissonance poses a significant risk. A robust and distinctive culture, however, is instrumental in attracting and retaining top talent, which is essential for success in an innovation-driven industry. A MedTech with a clear and supportive culture is better equipped to navigate industry intricacies, respond to emerging healthcare needs, and drive sustainable value creation.
 
This Commentary suggests that culture is community: a network of shared interests and obligations that thrive on cooperation and friendships. Acknowledging the heterogeneity within organisations is crucial, recognizing differences across departments and hierarchical levels. While financial and organisational considerations are critical, an approach encouraging a distinctive organisational culture is equally important. Neglecting cultural integration poses a silent yet substantial obstacle to growth and value creation - a challenge manifested through disengaged employees, talent attrition, and a lack of agility in meeting industry demands. Recognizing and redressing this cultural deficit transcends employee satisfaction; it emerges as a strategic imperative for long-term success in the dynamic landscape of MedTechs. As MedTech companies expand globally, the challenges to unite and motivate constituencies intensify. We have suggested that within this interconnected ecosystem, a unifying and motivating narrative emerges as a potential solution. A well-crafted story has the power to bridge gaps, align interests, and cultivate a shared sense of purpose among employees and stakeholders alike, contributing to a company’s success. The influence of a unifying narrative extends beyond an organisation's boundaries, serving as an inspiration for collective action. This shared story fuels innovation, enhances problem-solving, and transforms an organisation into a responsive and adaptable entity. In a world where trust, differentiation, innovation, talent attraction, stakeholder engagement, and customer loyalty are important, a captivating narrative becomes a positive contribution to the success of a diversified MedTech company. In the grand scheme of human endeavours, the power of stories seems undeniable. Whether in religion, politics, finance, or the women's movement, it is through stories that movements are built and legacies are shaped. Thus, for MedTechs to overcome the silent obstacle to growth and value creation, they might consider harnessing the power of narratives to fortify their brand identities, nurture relationships, and fuel long-term commercial success.
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  • GE HealthCare, Siemens Healthineers, and Philips Healthcare entered the Chinese market in the 1980s and prospered
  • The once-booming era for Western MedTechs in China has slowed and become challenging
  • Latecomers to the Chinese MedTech market face geopolitical uncertainty, changing market dynamics, domestic competition, stringent regulations, IP risks, and healthcare reforms
  • Due to these obstacles and the Chinese’s economy slowing MedTechs are seeking international growth opportunities beyond China and Asia
  • Africa is emerging as the new frontier driven by its burgeoning population, growing middleclass, economic growth, abundant natural resources, and Beijing’s investement
  • MedTech pioneers in China, such as GE HealthCare, Siemens Healthineers, and Philips Healthcare, are early entrants in the African market
  • Prudential plc, an insurance giant, has made a vast strategic bet on Africa’s growth potential
  • Given insurers are healthcare payers, should MedTechs view Africa as the new Asia?
 
Is Africa the New Asia for Western MedTechs?


Preface

In the realm of international expansion for Western MedTech companies, Asia, particularly China, has historically been a key focus due to its vast size and rapid economic growth. However, the shifting global economic and geopolitical landscape suggests a re-evaluation. Is Africa positioned to emerge as the next hub of opportunity and growth for MedTech enterprises? China's remarkable economic ascent, initiated by reforms in 1978, accelerated it to the status of the world's second-largest economy, following the US. Western MedTechs that ventured into China's market in the 1980s prospered. Yet, those who hesitated due to concerns, including intellectual property (IP) theft, now face mounting challenges, which include geopolitical uncertainties, evolving Chinese attitudes towards Western corporations, a limited understanding of the Chinese market, and China's ambition to lead global technology by 2030. The recent deceleration in China's economic growth adds to the apprehensions of Western businesses. Moreover, China's rapid economic expansion has led to an aging population, characterized by declining birth rates, and increased life expectancy. By 2040, those aged ≥60 are projected to reach ~402m, constituting ~28% of the nation’s population. This demographic shift, with a shrinking workforce and a rising number of elderly consumers, is expected to exert downward pressure on China’s GDP growth, while straining public budgets with escalating healthcare and retirement costs. Given this evolving landscape, it becomes prudent to explore whether the once-promising prospects for Western companies in China and Asia are diminishing, prompting an examination of alternative international markets. While established MedTech players in China continue to provide essential healthcare products and services, they may benefit from contemplating strategic adjustments and, in many cases, restructuring their commercial operations to adapt to the changing dynamics of the Chinese market. Notably, some companies view Africa as a promising new frontier. Early entrants into the Asian medical device market, such as GE HealthCare, Siemens Healthineers, and Philips Healthcare, have already established footholds in Africa. Could Africa be on the verge of becoming the new frontier, reminiscent of what Asia once represented?
 
In this Commentary

This Commentary is divided into two sections. In Section 1, we briefly mention the early successes of prominent MedTech companies in the Chinese market during the 1980s. The section also notes that because geopolitical tensions between Beijing and Washington have increased, and recently China's economic growth has slowed, some Western MedTechs are seeking alternative growth regions to expand their international presence and reinvigorate their stagnant market values. Section 2 challenges popular perceptions by proposing that Africa could emerge as the new frontier for the MedTech industry. Despite Africa's enduring challenges, including political instability, corruption, poverty, and limited literacy, it seems to have potential. Albeit from a low start, Africa is projected to be the world's fastest-growing region in 2023, characterized by a youthful population, abundant natural resources crucial for renewable technologies, and an emerging middleclass. Decades ago, Beijing recognized Africa's potential, and more recently, a group of MedTechs, including early entrants to China, have established a presence in the African market. The section concludes by noting the strategic entry of a giant insurance company into the continent. Given the role insurers play in healthcare expansion and the demand for medical technology this maybe a positive omen for the MedTech industry, with Africa as its new frontier.

Part 1
MedTech pioneers in China

In the 1980s, as China underwent transformative economic reforms under President Deng Xiaoping, several Western MedTechs, including GE HealthCare, Siemens Healthineers, and Philips Healthcare, entered China, and capitalized on the nation's economic growth and modernization over the ensuing decades. GE HealthCare, equipped with medical imaging devices and healthcare solutions, forged relationships with Chinese hospitals and research institutions. Siemens Healthineers, a leader in imaging and laboratory diagnostics, followed suit in the late 1980s, emphasizing local R&D and strategic partnerships with Chinese healthcare providers. Philips Healthcare, with its diverse range of patient monitoring systems and diagnostic imaging equipment, also made its mark.

These companies showed their ability to adapt and succeed by adjusting their products to fit the needs of local customers and by encouraging new ideas through partnerships. Initially, they embraced expansion-type business models with multiply marketing and sales tiers, which emphasized rapid growth over stringent financial discipline. The plan worked well because China's medical technology sector was thriving, and experienced annual growth rates of ~10 to ~15% during the first two decades of the 21st century. However, since then, things have changed. Now, the focus is on making operations smoother and more efficient, which has meant reducing the number of marketing and sales layers between enterprises and their principal customers.
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Recent Western MedTech entrants, attracted by the vast Chinese market, faced heightened scrutiny and regulatory obstacles. Their limited knowledge of local markets and different administrations hindered their growth, which was compounded by concerns about safeguarding their IP. Meanwhile, Chinese MedTech firms rapidly advanced, increasing competition for Western latecomers. As of December 2022, the number of Chinese medical device companies amounted to 32,632. The once-lucrative "gold rush" in China for Western MedTechs has faded due to shifting sentiments, regulatory hurdles, and local competition. As China pursues global technological leadership by 2030, Western firms are likely to encounter mounting challenges. To sustain international expansion, they should consider exploring alternative global markets where they can leverage their expertise and resources more effectively. This suggests a turning point, highlighting the need for strategic diversification and adaptation to evolving global dynamics in the MedTech industry.
Headwinds for MedTechs expanding in China

Here we describe some of the headwinds facing Western MedTechs attempting to increase their footprints in the Chinese market.
 

Geopolitical Uncertainty
Ongoing geopolitical tensions, such the political status of Taiwan, which Beijing claims is a province of the People's Republic of China, whereas Taiwan’s current Tsai Ing-wen administration maintains it is an independent country, and South China Sea disputes, which involve conflicting island and maritime claims by China, Taiwan, Brunei, Malaysia, the Philippines, and Vietnam. These and other geopolitical uncertainties pose risks, particularly for late entrants to the Chinese market. However, despite these tensions, US-China trade remains strong, but doing business in China has become increasingly challenging.
 

Changed Market Dynamics
China's healthcare landscape has evolved driven by the largest middleclass cohort in the world. Beijing has increased healthcare spending, which has intensified competition in the MedTech sector. Trade conflicts between the US and China add complexity to market dynamics. Relationships between the two countries deteriorated in January 2018, when American President Donald Trump began setting tariffs and other trade barriers on China. The objective was to force Beijing to make changes to what the US says are longstanding unfair trade practices and IP theft. A recent example of such tensions occurred in September 2023, during a visit to China by US Secretary of Commerce Gina Raimondo, who oversees regulating technology. The Chinese tech giant Huawei chose this time to release its new smartphone, powered by an advanced chip. This shocked American industry experts who could not understand how Huawei could have obtained such an advanced chip following efforts by the US to restrict China’s access to foreign chip technology.

Domestic Competition
Chinese MedTech companies (>32,000) have rapidly gained market share, technical sophistication, and innovation capacity. They understand local customer needs and regulations better, posing increasing competition for Western counterparts. In 2021, China’s 134 listed MedTech companies generated US$44bn in revenues, a compound annual growth rate (CAGR) of 36% since 2019, ~3X the market’s overall rate of growth. More than five Chinese MedTechs have obtained the US Food and Drug Administration’s (FDA) breakthrough designation, with innovations like the VenusP-Valve, which has already been approved in >30 countries, and in April 2022, secured EU’s CE marking under its Medical Devices Regulation (MDR). This suggests that Western corporations will not only encounter heightened domestic competition but are likely to face increasing competition from Chinese MedTechs in the global arena.
 

Regulatory challenges
Regulatory hurdles in China pose challenges for Western MedTechs. Adherence to regulations, standards, and compliance measures, often different from Western counterparts, necessitates an in-depth understanding and adaptation. Central to China's regulatory framework is the National Medical Products Administration (NMPA), which is akin to the FDA. It prioritizes safety, efficacy, and quality in evaluating medical device registrations for market entry. While global acceptance of real-world evidence (RWE) in healthcare is rising, China is in the early stages of embracing the concept. Notably, a 2020 NMPA draft guideline hinted at the potential utilization of RWE from Boao Lecheng. Situated in Hainan, an island province in the nation’s southernmost point, Boao Lecheng has become a medical innovation hub, focusing on technology, high-quality healthcare, and medical tourism. It actively promotes advanced clinical research, housing globally recognized medical institutions like the Raffles Medical Group and Brigham and Women’s Hospital (BWH). The collaboration between Western MedTechs and initiatives like Boao Lecheng holds promise in tackling China's regulatory complexities.
 

Intellectual property (IP) risks
Protecting IP is a concern for Western MedTechs in China. Enforcing IP rights can be challenging due to factors like judicial protectionism, evidence gathering obstacles, modest damage awards, and perceived foreign bias. China follows a "first-to-file" principle for IP registration, granting ownership to the first registrant. Foreign companies also face pressure from government and state-owned enterprises to transfer technology for market access, investment opportunities, or approvals. Some are compelled to license technology at below-market rates. Despite China's efforts to enhance IP protection, concerns persist. Corporations need to balance IP protection with local engagement and government cooperation to navigate China's complex IP landscape effectively.
 

Healthcare reforms
China's healthcare system has undergone a significant transformation driven by various factors, including increasing incomes, heightened health awareness among its citizens, and a rapidly aging demographic. The government has placed substantial emphasis on healthcare, as evidenced by its ambitious goals outlined in the Healthy China 2030 plan. This plan envisions the nation's healthcare market reaching a value of ~RMB16trn (~US$2.4trn) by 2030. China's dedication to enhancing healthcare is underscored by the establishment of a comprehensive health insurance system that now provides coverage to ~96% of the population, benefiting >1.36bn individuals. According to a 2023 McKinsey Report, China's MedTech sector, which was valued at ~US$70bn in 2021, is poised to potentially double in size by 2030. Such growth would elevate China's MedTech market share to ~20% of the global market. To thrive in this burgeoning market, enterprises must be agile in adapting to changes, forge strategic partnerships, and effectively navigate the evolving healthcare landscape.

Navigating China’s Diversity
Succeeding in the Chinese market hinges on effective communication and a deep understanding of Chinese culture. China's administrative divisions include 23 provinces, five autonomous regions (Inner Mongolia, Guangxi, Tibet, Ningxia, and Xinjiang), four municipalities (Beijing, Tianjin, Shanghai, and Chongqing), and two Special Administrative Regions (Hong Kong and Macao). Furthermore, China boasts 129 dialects, with Mandarin as the standard and Chaoshan as predominant in the Guangdong region. Given this diversity, Western MedTech companies often grapple with cultural and linguistic barriers. Establishing vital connections within China's intricate administrative and business landscape can prove challenging. Therefore, crafting effective market entry and expansion strategies is imperative. Chinese consumers have preferences and expectations when it comes to medical technology. Western companies must be ready to adapt their offerings to align with these preferences, a critical factor in gaining market acceptance. Failing to do so can hinder market penetration and long-term success.
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China’s rising MedTech industry and the dilemma facing Western companies
Data Privacy and Security Concerns
Data privacy and security are concerns in China. Entrants must navigate stringent data protection regulations, which may differ significantly from Western standards. Building trust with healthcare providers and patients is essential to address these concerns. Failure to do so can lead to regulatory issues, damage brand reputation, and erode customer trust.
 
Reassessing global strategies amid China's economic slowdown

China, as the world's second-largest economy, has been a pivotal market for major Western MedTech companies. However, the current economic climate calls for a strategic re-evaluation. China's economy has recently experienced a slowdown, with repercussions felt not only in neighbouring nations but also globally. South Korea, a historical driver of global growth, faces its longest factory activity decline in nearly two decades. Other major Asian exporters are also dealing with sluggish demand, and Japan's manufacturing activity has declined, with Taiwan reporting contracting output and weakened foreign demand. In September 2023, concerns grew as China experienced deflation, raising questions about currency stability, challenges in the property sector, and high local government debt. China's decision to not stimulate its economy further exacerbated the situation, impacting key financial hubs like Hong Kong and Singapore, as well as satellite economies. This economic slowdown in China is expected to persist and likely have far-reaching global consequences. Businesses worldwide, including those in the US and Europe, heavily reliant on China for growth, should explore alternative regions for sustainable value and expansion. Western MedTech companies need to carefully assess the challenges and costs associated with further expansion in China.

An alternative strategy emerges; companies should consider complementing their Asian focus and explore the growing economies of Africa. Just as early MedTech pioneers capitalized on Asia's rapid expansion, companies today should contemplate laying the groundwork for a fresh international strategy in Africa. The continent has potential, and a proactive approach could yield sustainable growth opportunities, helping to mitigate the impact of China's economic challenges and slowdown on global ambitions.


Part 2
Africa's Ascendance

 
With a few notable exceptions, Western MedTech executives tend to overlook Africa due to its challenging socio-economic conditions, which include political instability, corruption, extreme poverty affecting ~50% of the population, limited access to necessities, and a high illiteracy rate of ~40%. Notwithstanding, China has long recognized Africa's potential, which mainly revolves around Africa's abundant natural resources, which constitute ~30% of the world's mineral reserves, including critical resources for renewable and low-carbon technologies. For instance, Zambia leads in unrefined copper exports, Guinea boasts the world's largest bauxite reserves, and South Africa contributes ~90% of the world’s platinum group metal reserves. Furthermore, Africa has the world's youngest population, with substantial projected growth.
 
Asia plays a pivotal role in Africa's trade dynamics, accounting for >42% of its exports and >45% of its imports, surpassing Europe in both cases. According to a 2023, Business Insider Report, Africa is poised to become the world's fastest-growing region, with six of the ten fastest-growing economies located on the continent, albeit starting from a relatively low economic base. In addition to its mineral wealth, the continent's path to economic success is partly based on developing an export-led manufacturing economy, akin to China's transformation in the 1980s. This, already in progress, has the potential to lift >0.5bn people out of poverty, create >100m jobs, and establish a substantial and rapidly growing middleclass that will demand improved services, including healthcare.
 
Currently, Africa's manufacturing sector contributes only ~9% to the continent's gross domestic product (GDP) and ~2% to global manufacturing output. However, the African Union has placed manufacturing at the forefront of its Agenda 2063, a strategic framework supported by all 55 African countries, aimed at achieving socio-economic transformation over the next 50 years. This commitment gains significance amid escalating trade tensions between the US and China, which have global economic implications. Africa has weathered recent shocks, including weakened external demand, global inflation, higher borrowing costs, and adverse weather events, which have hindered its post-pandemic recovery. Nonetheless, in the coming decades, the "Made in Africa" label may come to symbolize quality products, solidifying the continent's position as a prominent player in global manufacturing, akin to how "Made in China" became synonymous with quality two decades ago.
 
China’s impact on African manufacturing

China has been instrumental in the economic transformation of African nations, which partly stems from the Chinese strategy to relocate its low-level manufacturing operations to Africa. As China's domestic manufacturers have advanced technically, they have systematically shifted their basic manufacturing capabilities to African countries. This provides Africa with an opportunity to mirror China's journey from standard manufacturing to advanced production processes over several decades.
 
Chinese companies have made substantial investments in labour-intensive manufacturing facilities notably in Ethiopia. This has created jobs and fueled the growth of local manufacturing sectors. For instance, the Huajian Group, a leading Chinese footwear manufacturer, established plants in Ethiopia in 2012, employing >7,000 people and producing ~5m shoes annually. The Group’s partner in this project is the China-Africa Development Fund (CADFund), a private equity facility promoting Chinese investment in the continent. Huajian also invested in Ethiopia's Jimma industrial park, contributing US$100m to build shoe and coffee processing plants and a technical education centre.
 
As Chinese enterprises expanded in Africa, they provided training to local workforces, and transferred their manufacturing expertise. This collaborative effort is helping to develop a skilled labour pool important for sustaining manufacturing growth. Notably, Ethiopia's Eastern Industrial Zone, supported by Chinese investment, evolved into a thriving manufacturing hub, attracting both domestic and foreign investors. Additionally, Beijing's Belt and Road Initiative has led to significant infrastructure developments across Africa, including roads and ports, which further stimulate the continent's manufacturing sector. China’s investment in Africa stands out due to its tangible presence, in contrast to other nations whose involvement in the continent is characterized by distant and arms-length financial engagements. With the influx of such investments, technology transfers, and ongoing skill development, some African nations are positioned to follow China's path towards a manufacturing transformation. 
 
MedTech’s early entrants to the African market

For years, support for Africa’s healthcare tended to concentrate on education and malaria nets. In recent years however, as developed-world disorders, like cancer and heart disease, grew in Africa so medical technology companies increasingly found a market in supplying devices to private healthcare operators and investing in healthcare initiatives through partnerships with governments. US President George W. Bush recognised Africa’s strategic importance, emphasising investments for development and health initiatives, including the President’s Emergency Plan for AIDS Relief (PEPFAR), which, announced in 2003, reflected a commitment to fostering stability and wellbeing on the continent. Since then, American governments have not shown much interest in Africa. However, the MedTechs that entered the Chinese market ~4 decades ago and prospered, have established footprints in the African market by adapting their products and services to local needs, building partnerships with local healthcare providers, and addressing challenges such as infrastructure limitations and affordability. Their presence caters to Africa’s large and growing middleclass and has contributed to the improvement of healthcare standards in the region.
 
Philips Healthcare has made inroads into the African market and operates in several African countries, including South Africa, Kenya, and Nigeria. One of the advantages they offer is a wide range of medical devices and equipment tailored to different healthcare settings, from high-end hospitals to remote clinics. Their focus on technology that can operate efficiently even in areas with unreliable power grids has been instrumental in their success. GE HealthCare has a presence in countries like South Africa, Nigeria, and Egypt. Their commercial advantage is in their commitment to providing innovative medical technologies across various healthcare domains, from diagnostic imaging to healthcare IT solutions. The company collaborates with local healthcare providers and governments to build sustainable healthcare infrastructures. Siemens Healthineers is active in South Africa, Kenya, and Ghana. The company’s advantage stems from their portfolio of medical equipment, laboratory diagnostics, and digital health solutions. They often tailor their offerings to meet the specific needs and budgets of healthcare providers in Africa, contributing to improved patient care and diagnostic accuracy.
 
Unveiling MedTech opportunities: the impact of insurers

Large insurance firms wield significant influence in shaping the trajectory of the medical technology industry. They play a pivotal role in extending health insurance coverage to middle-class populations worldwide, not only bolstering healthcare systems but also driving the demand for medical technology. In essence, these insurance giants act as catalysts for the MedTech industry's growth.
 
A case in point is Prudential plc., a global insurance powerhouse with >23,000 employees and 2021 annual revenues of >US$70bn. The company holds dual listings on the London and Hong Kong Stock Exchanges and is a constituent of the FTSE 100 Index. It also maintains secondary listings on the New York Stock Exchange and the Singapore Exchange. In February 2023, shortly after Anil Wadhwani assumed the role of Prudential's new CEO, he publicly declared his intent to chart a new course and focus on Africa for growth. Wadhwani highlighted that the growth drivers in Africa today closely resemble the trends previously witnessed by the company in Asia: rapidly expanding middle-class populations with a growing appetite for insurance and enhanced services, including healthcare. He emphasized that Africa would complement Prudential's expanding Asian presence. IMF's 2023 reports indicate that countries such as South Africa, Ghana, Kenya, Ethiopia, Côte d'Ivoire, and Rwanda are prime candidates for substantial future growth. It is increasingly plausible that Africa could emerge as the next frontier for MedTech companies, thanks to the leadership of individuals like Anil Wadhwani, who steer insurance giants toward new horizons.
 
Takeaways

In recent years, Western MedTechs have witnessed a significant transformation in China's healthcare landscape, driven by changing demographics and an increased emphasis on technological self-reliance. Notably, industry giants such as GE HealthCare, Siemens Healthineers, and Philips Healthcare, which established a presence in China during the 1980s, are now extending their reach into Africa with hopes of replicating their prior successes. While some may view this expansion as unconventional due to factors like political instability, corruption, and poverty, the continent has potential. Africa's attraction for MedTechs includes some of its countries with significant economic growth potential, a burgeoning youthful population, a growing middleclass, and abundant natural resources that align with the evolving demands of a rapidly expanding global green economy. Much like the historical pattern of MedTech companies venturing into Asia, a similar trend is emerging in Africa among a select group of firms. Another critical point to consider is the emerging role of insurance companies as potential guides in this new journey. These insurers are participating in the continent’s healthcare expansion and innovation, and where they lead, MedTech companies should consider following. The growing middleclass, equipped with medical insurance, will eventually exert pressure on healthcare systems in the region to enhance access to quality care. This, in turn, will expand the market for medical devices. Despite the complexities and contradictions that Africa presents, it represents an opportunity that warrants consideration. The question of whether Africa will become the new Asia suggests the need for MedTechs to embrace a new era where innovation and progress thrive on the courage to venture beyond the familiar. By doing so, corporations can discover a promising landscape for growth and innovation, tapping into Africa’s underserved opportunities and playing a role in enhancing global healthcare.
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  • The MedTech industry faces a pivotal moment as it confronts the challenge of adopting transformative technologies amidst a rapidly changing healthcare ecosystem
  • Despite progress in other sectors, MedTech has shown reluctance to fully integrate digitalization, potentially hindering its growth and competitiveness
  • There have been some notable exceptions such as Medtronic, Siemens Healthineers and Philips
  • Many large diversified MedTechs could unlock growth and value by capitalizing on the potential synergies between traditional medical devices and innovative digital solutions and services
  • The convergence of digital offerings with legacy medical devices provides opportunities for improved patient care, operational efficiency and R&D innovation
  • There is a pressing need for MedTechs to comprehensively embrace digitalization to avoid reduced competitiveness, limited growth, and diminished value enhancement
 
Forging a path for digital excellence in the MedTech Industry

In an era of rapid technological advancement, the medical technology (MedTech) industry is at a crossroads. While numerous other sectors have enthusiastically embraced digitalization and moved forward, the MedTech sector, barring a few notable exceptions, has been hesitant to embrace these transformative technologies. However, the time has come for large diversified MedTechs to recognize the opportunities that digitalization offers for growth and value creation. The convergence of traditional medical devices with digital solutions and services presents an opportunity for the industry to improve patient care, streamline operations, and drive innovation. Failing to fully integrate digitalization into their operations in a timely way may lead to unexpected consequences, including a shorter window of competitiveness and a struggle to enhance growth rates and augment value. The reluctance of many MedTechs to adapt now could translate into a significant handicap in the rapidly evolving landscape of healthcare technology.
 
In this Commentary

In this Commentary, we tackle four questions: (i) What is digitalization? (ii) Why is digitalization important for MedTechs? (iii) Which MedTechs have implemented successful digitalization strategies? and (iv) What defines an effective digitalization strategy? In addressing the fourth question, we present a strategy that encompasses 20 'essentials', which are not meant to follow a linear, sequential path. Instead, they are orchestrated by agile cross-functional teams, collaborating and pooling resources. Together, these teams oversee the execution of various elements of the strategy, while assuming responsibility for its overall effectiveness. This approach signals a departure from hierarchical departments and advocates a matrix-style organizational structure characterized by a web of interconnected reporting relationships. This structure goes beyond the confines of the conventional linear framework and incorporates specialized clusters, akin to "nests," each housing unique competencies, spanning multiple dimensions, and encompassing responsibility, authority, collaboration, and accountability.
 
1. What is digitalization?
 
Digitalization, also referred to as digital transformation, involves harnessing digital technologies to improve and refine business operations, processes, and services. By integrating digital tools across all facets of an organization, digitalization streamlines workflows, amplifies customer experiences, and achieves strategic goals. This includes automating tasks, utilizing data analytics for informed decision-making, and leveraging cloud computing for scalable and flexible operations. The Internet of Things (IoT) facilitates data exchange through connected devices, while artificial intelligence (AI), machine learning (ML) and large language models (LLM) empower computers to perform tasks requiring human-like intelligence. Virtual and augmented reality (VR/AR) enrich experiences, while cybersecurity measures are important to safeguard digital assets.
 
2. Why is digitalization important for MedTechs?
 
Digitalization is important for the MedTech industry since it acts as a driver for significant and positive change. By fully embracing this transformation, the industry develops the ability to use data and analytics to create innovative medical solutions and services. These are built on insights and predictions obtained from large amounts of information. Apart from these benefits, digitalization also affects the core of how clinical operations work. It makes workflows more efficient and frees-up healthcare professionals to focus more on taking care of patients. One significant development is the rise of collaborative telehealth platforms, which play a role in improving the quality and efficiency of healthcare delivery. Additionally, the power of technologies like AI, and ML becomes more evident. These advanced tools, driven by their ability to rapidly analyse vast data sets and make predictions, contribute to breakthroughs in care with the potential to improve patient outcomes while reducing costs.
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Is the digital transformation of MedTech companies a choice or a necessity?

 
The collaboration between smart devices and blockchain technology becomes important in a digital transformation, enhancing patient safety, and ensuring regulatory compliance. As the MedTech sector embraces digitalization, it enables companies to succeed in value-based healthcare environments, which results in quality care becoming more accessible and affordable. This is partly made possible through remote monitoring and proactive interventions that overcome distance. A distinctive aspect of digitalization is the ability to provide personalized care. Focusing on creating solutions and services tailored to individual needs helps to create an innovative environment within MedTechs, which can be leveraged to drive continuous growth and value creation. As digitalization becomes more influential, the MedTech industry should move closer to personalized health, which means care is centered around patients, innovation is continuous, and growth is more certain.
3. Which MedTechs have implemented successful digitalization strategies?
 
There are several large MedTechs that have successfully leveraged digitalization strategies to gain access to new revenue streams. Here we briefly describe just three. Philips is known for its diverse healthcare products and services, including imaging systems, patient monitoring, and home healthcare solutions and services. They have successfully utilized digitalization by creating a connected ecosystem of devices that capture and transmit patient data, enabling real-time monitoring and personalized care. Their strategy also includes software solutions for data analysis, predictive analytics, and telehealth, contributing to the creation of new revenue streams beyond traditional medical devices. Siemens Healthineers focuses on medical imaging, laboratory diagnostics, and advanced healthcare IT. Their digitalization strategy involves offering integrated solutions that connect medical devices, data analytics, and telemedicine platforms. For instance, their cloud-based platforms enable healthcare providers to store, share, and analyze medical images and patient data, resulting in streamlined workflows and new revenue opportunities through data-driven insights. Medtronic, a global leader in medical technology, offering a wide range of products and services in various medical specialties, has successfully embraced digitalization by incorporating smart technologies into their devices, such as pacemakers and insulin pumps, allowing remote monitoring and data collection. This has improved patient care and given the company access to new revenue streams through subscription-based services for data analytics and remote monitoring.
 
4. What defines an effective digitalization strategy?
 
In today’s business climate, developing an effective digital strategy has shifted from being a ‘nice to have’ to a necessity. As MedTechs navigate the dynamic technology landscape, digitalization has become a priority. In this section, we present a 20 'essentials' for crafting and implementing a digitalization strategy. These are not linear, but collectively constitute a path towards a digital transformation for a large diversified MedTech company.   

1. Crafting a Cohesive Vision
Digitalization starts with an evaluation of a company's existing products, services, processes, and technologies. This forms the basis upon which a vision and strategic goals are constructed. The main objective here is to align a company's aspirations with the dynamic MedTech landscape, creating a basis for innovation. Digitalization entails more than the integration of peripheral technologies. It is a paradigm shift. The initiation of a digitalization vision depends upon sound long-term strategic objectives. This involves not only envisioning the transformative potential of digitalization within an organization but also projecting its impact, whether that be improved patient experiences, data-driven operational enhancements, or the exploration of new revenue streams. As this vision takes shape, often in the form of a story that everyone in an organization can buy-into, it should steer decisions and guide investments throughout the entire digital transformation process. Further, it provides tangible benchmarks against which progress can be gauged and strategies can be refined. It is important that digitalization goals are aligned to the evolving needs of healthcare. MedTechs should harness the power of digitalization to meet the expectations of patients and adapt to dynamic clinical practices. This requires reconciling digital innovations with a company’s core values. A comprehensive and forward-looking vision (story) functions to safeguard a company's strengths against potential challenges. This first step toward a digitalization strategy serves to position a company for sustainable growth and enduring value creation.
2. Leadership commitment
The significance of securing buy-in from senior leadership teams lies in its assurance of resources, funding, and support, which are vital for the success of such an initiative. The endorsement from executives, beyond being a signal of change, serves as a catalyst for the allocation of both financial and human resources and has a substantial impact on the direction and depth of a digitalization strategy. By wholeheartedly supporting such an initiative, leaders disseminate not only a positive message about the importance attached to digitalization, but they also foster employee engagement, subsequently paving the way for the potential integration of digitalization across an entire company.

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3. Cross-functional synergy
Creating cross-functional teams is central for driving change, and should span departments like IT, R&D, operations, marketing, and regulatory affairs. The nature of a MedTech's digitalization strategy requires diverse expertise to successfully release technology's full potential. IT professionals contribute technical knowhow, which ensures the implementation and integration into existing infrastructure. R&D members provide visionary insights, encouraging innovative solutions and services. Operations specialists optimize processes for digital efficiency. Marketers strategize effective communications of digital progress. Regulatory experts ensure compliance and ethical considerations. Each contribution plays a distinct yet interconnected role, fostering collaborative brainstorming, shared goals, and pooled talents within a developing culture of agility and innovative. This approach breaks down silos, and aims to create a unified, technology-optimized future. Cross-functional teams act as the driving force to transform digital potential into a tangible reality.

4. Informed market insight
Market and consumer research is an important element of the strategy, as it uncovers customer needs, preferences, and pain points in digital healthcare. Such insights form the basis for tailored technologies that cater to specific needs, increasing patient engagement and satisfaction. Additionally, a successful digitalization strategy needs to identify and adapt to evolving trends in the digital MedTech sector. This entails monitoring emerging technologies, shifts in consumer behaviour, and advances in medical practices. Equally important is analyzing the competitive landscape to benchmark offerings and drive innovation. When companies are aligned to market dynamics, they are more likely to become digital leaders, fostering continuous improvement and innovation.

5. Technology assessment
Assessing a company's existing technology infrastructure helps to gauge whether a strategy can effectively leverage current investments and assets. Simultaneously, the assessment should uncover gaps and shortcomings. Identifying these informs targeted resource allocation for new technologies that support digital goals. Thus, a technology assessment allows organizations to strike a balance between leveraging existing capabilities and making targeted investments, in pursuit of their digital transformations.
6. Effective digital solutions
An essential aspect of a digitalization strategy involves identifying effective solutions and services. This process entails exploring various facets of an organization to integrate innovations; from improving customer engagement to optimizing workflows. Equally crucial is deploying technologies that improve patient outcomes, diagnoses, treatments, and monitoring. This stage also identifies potential revenue streams derived from new digital solutions and services, like remote patient monitoring, telemedicine, data analytics, and AI diagnostics, which strengthen existing offerings.
7. Partnerships
Engaging in collaborations with technology companies, start-ups, and various stakeholders creates opportunities for synergistic growth. Such partnerships enable enterprises to tap into diverse expertise, gain fresh perspectives, and access specialized resources, all of which support the development and implementation of digital solutions and services. Collaboration facilitates knowledge and resource pooling, enhancing innovation cycles and ensuring a comprehensive transformation of healthcare services. Simultaneously, acquisitions can enhance in-house capabilities. Exploring the acquisition of companies possessing relevant digital competencies or disruptive technologies offers a potential competitive edge. Such moves can help with assimilating novel technologies and developing a culture of innovation. Acquisitions can assist companies to position themselves as key players, advancing their digital health agenda and solidifying their position in an evolving industry.

8. Data management and security
Enhancing data management entails developing and implementing robust protocols. This involves refining data collection procedures, enforcing privacy and security measures, and adhering to healthcare regulations like the US Health Insurance Portability and Accountability Act (HIPAA) and the EU General Data Protection Regulation (GDPR), which safeguard patient data from breaches or misuse. Such measures establish a foundation for data management and security and help to foster stakeholder trust. Compliance with regulations like HIPAA and GDPR should not simply be viewed a legal obligation, but also as a moral commitment when handling sensitive patient data. Such a proactive stance strengthens a company's reputation for data integrity and helps to avoid legal repercussions.

9. Technology roadmap
A technology roadmap is a blueprint charting a course toward enhanced efficiency, patient-centric care, and heightened competitiveness. Beyond action planning, it provides clarity and purpose in navigating technological advancements. It consolidates an enterprise's digitalization efforts by integrating initiatives with timelines and resources, thereby establishing a framework for goal setting and assessment. Such planning assists timely project execution and supports the rationale for digitalization with measurable benefits. With a well-structured roadmap, stakeholders can appreciate how digital initiatives improve operations, trigger innovation, and enhance patient outcomes.

10. Pilot programmes
Pilot programmes serve as incubators and evidence-based validators for innovations, offering a means to test and enhance digital solutions before they are fully implemented. Such initiatives provide tangible evidence to support an enterprise's commitment to a digitalization strategy. Pilots offer concrete proof of an enterprise’s commitment to its digitalization strategy. Each programme should concentrate on specific solutions and establish a controlled setting for gathering user feedback, which constitutes an on-going effort to refine functionality. Additionally, pilots demonstrate a commitment to user-centric offerings by proactively tackling challenges, thereby improving the chances of successful, large-scale digital deployments.

11. Scalability and integration
Establishing scalability and integration capabilities is important for MedTechs to realize their digital transformation. As healthcare technology landscapes evolve and organizational needs change, the ability of digital solutions to scale and integrate with existing structures increases in importance. Ensuring these attributes contributes to a digital transformation. Scalability emphasizes a company’s adaptability to evolving demands. A scalable digital solution that expands in scope without sacrificing functionality invokes confidence. Further, integrating novel solutions and services with existing systems signals operational intelligence, which adds credibility to the digital transition. When digital solutions merge with legacy structures, they reflect an alignment of traditional expertise and cutting-edge technology. Emphasising scalability and integration involves anticipating future requirements and aligning digital strategies with longer-term organizational objectives.

12. Change management
By supporting a mindset that views digital technologies as enablers rather than disruptors, companies demonstrate their commitment to progress and cultural change. Implementing change management acknowledges the importance of cultural shifts and affirms an intent to embrace digital technologies holistically and sustainably. It acts as the vehicle, which guides an enterprise through transformation, and ensures stakeholder support for technological evolution. Through communication, training, and engagement policies, enterprises lay the groundwork for digital adoption, and smooth technology integration. This strengthens the case for change and demonstrates an organization's commitment to fostering an innovation-receptive environment.

13. Training and skill development
Central to a successful digitalization strategy is an investment in training and skill development. This underlines an organization's commitment to harnessing and effectively utilizing the transformative potential of technology. By training, corporations equip their employees with capabilities required to support digital solutions and services. Training bridges the gap between skill shortages and technological advancements. Empowering employees with the capacity to navigate digital technologies positions an enterprise for a successful transition, by a process that reconciles change with employee growth. Training reinforces the notion that digitalization is not just an operational enhancement but also a means to cultivate a workforce with capabilities, which contribute to operational excellence and sustainable expansion.

14. Regulatory adherence
Regulatory compliance is an important feature of a digital shift, as it demonstrates a company's commitment to upholding the highest standards of patient care and industry excellence. It shows that transformation is about embracing the future with integrity by ensuring that an enterprise’s  innovations are synchronized with the values underpinning medical practice. Adherence to regulatory standards is a declaration of an organization's commitment to patient safety and industry integrity. By ensuring all digital solutions and services adhere to rigorous medical regulations, corporations strengthen their case for digitalization within ethical and legal boundaries. Demonstrating adherence to medical regulations and industry benchmarks reinforces a new digital strategy as a responsible and trustworthy pursuit and showcases an organization's commitment to delivering technologies that both innovate and enhance patients' therapeutic journeys while respecting established medical protocols.

15. Market communication
Crafting a communication strategy is important as it underlines an organization’s commitment to transformation. Employing a variety of smart communication methods to describe the benefits of new digital offerings enables MedTechs to garner support from stakeholders and thereby strengthen their market position. By aiming at healthcare professionals, investors, payers, patients, providers and other stakeholders, these messages inform and persuade by highlighting the tangible benefits they bring to patient care, operational efficiency, and industry progress.

16. Feedback loop and iteration
Stakeholder feedback can be used to enhance digital solutions and services. By engaging users and patients, healthcare technologies can be tailored to cater to specific needs and preferences, fostering a user-centric design ethos. This collaborative approach identifies bottlenecks, deficiencies, and possible enhancements, which contribute to efficacious digital solutions and services. Moreover, stakeholder involvement helps to ensure a company's technological endeavours support broader healthcare goals, enhancing the overall quality of care. Iteration should be synonymous with evolution. Regularly integrating feedback to enhance the functionality of digital offerings enables an enterprise to adapt to market challenges and healthcare advancements.
17. Performance measurement
Effective evaluation of a company's digitalization strategy demands the use of key performance indicators (KPIs). These serve as a compass to assess the impact of digital solutions across patient outcomes, operational efficiency, and business expansion. By selecting relevant KPIs, MedTechs can show stakeholders the tangible effects of their digitalization strategy. These quantifiable metrics offer a lens to observe enhanced patient care, rectify operational inefficiencies, and decipher trends in business growth.
18. Fostering a culture of continuous innovation
An effective digitalization strategy relies on fostering a culture of perpetual innovation, which is essential to maintain a market-leading position. Such an approach encourages the creation, implementation and refinement of smart technological solutions and services. It equips MedTechs with the agility to quickly embrace emerging trends, capitalize on novel prospects, and tackle unforeseen challenges. Further, a culture of continuous innovation encourages an executive mindset that perceives setbacks as opportunities and views technology as evolving tools to improve patient care and operational efficacy.
 
19. Adaptation to market changes
MedTechs must rapidly adjust their digital strategies to match prevailing technological trends, regulations, and market dynamics. These ever-changing elements emphasize the need for a proactive, flexible digitalization approach that can swiftly adapt. By staying ahead of shifting trends, businesses are better positioned to leverage emerging technologies and provide solutions for evolving market needs. Navigating regulatory changes is equally important. Balancing compliance with innovative solutions ensures the integration of digital offerings in a dynamic healthcare setting. Flexibility should extend to market fluctuations, aligning digitalization strategies with customer demands and competition. This not only helps a company to navigate volatile markets but also positions it as an agile player, primed for change and enduring growth.

20. Embracing longer-term sustainability
For MedTechs, it is important that their digital strategies align with their principal longer-term objectives. Instead of solely pursuing immediate gains, this strategy should support a company's core purpose and future aspirations, which are embedded within its day-to-day operations. Such an approach establishes an innovative, adaptable, and resilient framework and strengthens the potential for growth. When a digitalization strategy is aligned with a company’s longer-term goals, it assumes the role of a catalyst for growth by optimizing the utilization of resources, improving brand resilience, and securing a distinct competitive advantage. During constantly evolving technologies and markets, such an alignment provides the capacity for a company to effectively confront challenges and capitalize on emerging opportunities, thereby either moving into, or securing, a leadership position within the rapidly changing market landscape.
 
Takeaways 
 
In the face of rapid technological evolution, the MedTech industry finds itself at a crucial juncture. While other sectors have embraced digitalization, many large diversified MedTechs have been hesitant in adopting these transformative tools. Yet, the imperative is clear: for sizable companies, the present demands recognition of digitalization's potential to drive growth and cultivate value. The fusion of conventional medical devices with digital innovations not only augments patient care but also streamlines operations and encourages innovation. The consequences of delaying this integration are significant. Without prompt action, corporations risk narrowing their competitive horizons and struggling to accelerate growth and enhance value. Failure to adapt may result in a substantial disadvantage in the rapidly changing arena of healthcare technology. It is important for MedTechs that have not already done so, to pivot towards digitalization and transform their challenges into opportunities, ensuring a dynamic and thriving future in an increasingly interconnected world.
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  • Many large diversified MedTechs are experiencing stagnate growth and aging products in slow growing markets
  • Initially, MedTech expansion leveraged disruptive technologies and underserved markets
  • As MedTechs’ evolved they shifted from innovation-led to financed-focused management taking advantage of low interest rates and cheap money
  • M&A substituted for innovation as a growth strategy
  • Today, MedTechs grapple with volatile politico-economic environments, stringent regulations, ethics, and increasing patient demands
  • The solution lies in visionary leaders driving R&D-focused growth, and more strategic M&A
  • This requires leaders able to blend finance, innovation and patient-centricity
  
Redefining Leadership in the Evolving Landscape of MedTech
Balancing Innovation, Profitability, and Patient Care
 
Preface
 
Over the past four decades the medical technology (MedTech) sector has experienced substantial transformation. Its initial rapid growth was driven by sophisticated devices, unmet clinical needs, entry barriers, and available funding. Later, expansion was primarily fueled by mergers and acquisitions (M&A), the integration of technology, market consolidation and financial undertakings. Decades of low interest rates, cheap money, and, the pursuit of top-line revenue growth, rather than profitability, led to an overemphasis on M&A, which enlarged the industry without equivalent enhancements in R&D. Over time, many large diversified MedTechs faced challenges associated with legacy products in slow-growth markets, and an overreliance on M&A. While the industry maintains ~6% compound annual growth rate (CAGR), much of this progress comes from smaller players. The industry’s maturity brings new challenges distinct from those of its early days. M&A, once effective for diversification, now struggles to sustain growth for larger companies. The industry’s financialization has shifted leaders’ focus from vision to short-term gains, creating a void in leadership. Amid current headwinds - political uncertainties, commercial pressures, stringent regulations, ethics, and patient empowerment - successful navigation requires visionary leaders committed to patient care over short-term gains. Emerging leaders must combine financial expertise with innovation. The next decade calls for a break from an overreliance on M&A-centred growth, embracing research-based, value-driven solutions and services, which enhance patient outcomes and reduce healthcare costs. This transformation demands leaders skilled in business strategy, R&D, and patient-centered approaches.
  
In this Commentary

This Commentary is comprised of four sections. Part 1 draws a distinction between leaders and managers and suggests that while both roles are necessary for a successful commercial enterprise, it is important for executives to balance the two roles. Part 2 describes the merits of M&A, the financialization of the MedTech industry, and its repercussions on leadership and innovation. Notably, financialization and M&A activities shifted executive focus away from innovation towards transactions. Part 3 explores the interplay between transactional proficiency and innovation and discusses the implications of M&A-focussed expansion on R&D and patient outcomes. Part 4 suggests a strategy for enterprises to reignite their stagnating values and slow growth rates, which entails less M&A-driven expansion and more innovation-centred growth. Achieving this involves developing leaders with a blend of financial and R&D acumen.
 
Part 1
 
Leaders and Managers

Leaders and managers play important roles in the success of commercial enterprises, each having distinctive yet interconnected functions. However, leadership and management differ, and this differentiation is important to understand their respective contributions to the medical technology industry.
 
Leadership, which has evolved over time, involves guiding, influencing, and motivating individuals and groups towards shared objectives. It includes envisioning a direction, making strategic choices, and inspiring growth within organizations. Leaders prioritize people, nurture relationships, and understand individual strengths, and motivations. This enables them to empower others to embrace change and achieve their potential. They adopt a forward-looking, longer-term strategic perspective, fostering innovation while being prepared to take calculated risks for growth. Effective leadership influences a company’s trajectory, culture, and efficacy. It fosters productivity, innovation, and a positive attitude to work. In an environment characterized by technological advancements, constant organizational change, and market shifts, leadership is crucial. Under such conditions, embracing change rather than resisting it not only brings stability but also reduces stress and prevents chaos. Leadership is essential for guiding enterprises and employees through uncertainty, fostering innovation, creative thinking, and stability. Leaders often possess a combination of leadership and managerial skills; and they know how to balance these and have the capacity to navigate dynamic environments which require adaptability, agility, and inspiring visions.
 
Conversely, management, revolves around organizing, planning, and efficiently controlling resources to attain specific goals. Managers address operational challenges, and focus on processes, structures, and day-to-day operations, ensuring tasks adhere to plans. Their strength lies in executing business plans, maintaining stability, control, and consistency in operations to ensure that organizations function smoothly. Managerial skills excel when supervising daily operations, allocating resources, and completing tasks efficaciously. Managers perform well in project-oriented environments, overseeing planning, execution, and monitoring to achieve objectives. They allocate budgets, personnel, and equipment optimally, managing risks and performance to ensure stability.
 
Part 2
 
The Rise of Financialization in MedTech

The financialization of the MedTech industry took root over several decades when interest rates were low and access to affordable capital was relatively easy. This encouraged corporate executives to lean away from developing innovative scientific devices for expansion and lean in on M&A to provide growth. One recent period during which central banks maintained low interest rates, and adopted accommodative monetary policies, is the aftermath of the global financial crisis of 2008. In response to the crisis, central banks, including the US Federal Reserve, (Fed) implemented measures to stimulate economic growth and stabilize financial markets. One of the primary tools used was reducing interest rates to near-zero. For instance, the Fed held its federal funds rate [the benchmark interest rate] at near-zero levels from December 2008 to December 2015. The purpose of this was to encourage borrowing and investment, which in turn was expected to stimulate economic activity, job creation, and consumer spending.
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The Financialization Dilemma of MedTechs



Have diversified medical technology companies blown their competitive advantage?

Such extended periods of low interest rates encouraged MedTech executives to explore growth opportunities beyond conventional R&D investments. With significantly reduced financing expenses, and a large, underserved, fast growing sector, managers turned to M&A to bolster their resources and expansion efforts. This trend was further buoyed by investors seeking higher returns amid limited profitability in low-interest rate environments. Consequently, MedTechs gravitated toward M&A and financial activities, which promised near-term gains and broader market reach. This shift diverted executive focus away from innovation-centered expansion to transactional approaches for growth, ultimately reshaping the industry's trajectory toward financialization. M&A opportunities initially helped companies to strengthen their presence in underserved, rapidly expanding market segments. By merging with, or acquiring, near adjacent enterprises, MedTechs accessed new customer bases, technologies, and product portfolios, which allowed their executives to consolidate company resources, increase market share, and achieve economies of scale, which drove growth.
Perceived benefits of M&A

This shift towards M&A and financial optimization did not diminish the significance of scientific progress and innovation; but it did incentivize many MedTech executives to recalibrate their reliance on R&D. As the industry evolved, several factors encouraged executives to prioritize M&A and financial engineering as their principal drivers of growth. These included the increasingly stringent regulatory landscape for medical devices, which extended the time and costs associated with new product launches. Executives recognized the value of acquiring readily available innovations with existing regulatory approvals. Additionally, M&A offered the opportunity for MedTechs to streamline their operations, eliminate redundancies, cut costs, and enhance financial performance.
 
Over time, intensifying financial activities increased the industry’s global competition, and many MedTechs employed M&A to expand internationally and gain access to new markets. Simultaneously, acquisitions facilitated the diversification of product offerings, which lowered risks associated with relatively narrow product portfolios. Publicly traded corporations faced pressure from investors to deliver near-term financial results and shareholder value, which further steered executives to lean in on M&A for quick returns and access to a wider talent pool and complementary technologies.
 
Impact on leadership dynamics

The rise of M&A activities and the financialization of the MedTech industry reshaped leadership dynamics. While the sector was initially driven by innovation-focused leaders, the shift we describe has led to a gradual transition towards transaction-oriented managers taking control. Visionary figures like Willem Einthoven, a Dutch physiologist and Noble Laureate for Medicine, Thomas Fogarty, an American inventor, innovator, and cardiothoracic surgeon, Patricia Bath, an American ophthalmologist, and inventor and Robert Langer, an American engineer, scientist, and entrepreneur, are just four  among many others  who laid foundations for the industry's growth with their pioneering medical technologies. For instance, Einthoven's invention of the electrocardiogram (ECG) changed cardiology, Fogarty's embolectomy catheter, (balloon catheter), transformed vascular treatments, Bath’s Laserphaco Probe, disrupted cataract surgery, and Langer's work on biomaterials led to several breakthrough medical devices.
 
Notwithstanding, over time, M&A pursuits by companies altered resource allocation, diverting attention away from R&D towards activities like due diligence and integrations. This shift redirected budgets and talent away from innovation, affecting the creative and scientific progress of enterprises. Metrics tied to M&A outcomes gained precedence over those that encouraged internal innovative momentum. Further, the growing financial acumen of MedTech executives overshadowed R&D capabilities, emphasizing short-term gains over longer-term strategic innovative initiatives. After decades of successful M&A, changes in economic, financial, and technological landscapes prompted concerns about the industry’s sustained growth and innovation-centric leadership.
 
Consequences of M&A for innovation and R&D

Prioritizing financial transactions over R&D in a fast-paced industry can undermine innovation, sustainable growth, and competitive advantage. Companies favouring financial activities at the expense of R&D have tended to show diminished ability to create novel medical technologies, which results in fewer disruptive solutions and a weakened ability to address evolving healthcare challenges. The significance of R&D for longer-term sector growth cannot be overstated. A disproportionate focus on financial transactions leads to short-term mindsets, which tend to neglect opportunities for organic growth through innovation, and thereby disadvantaging companies by hindering their adaptation to economic trends and market dynamics.
 
Companies with robust R&D cultures attract scientific talent. Conversely, leaning away from innovation makes it difficult to attract and retain top researchers, engineers, and experts. An enterprise's reputation is tied to its innovation and scientific capabilities, while an overemphasis on financial transactions projects profit-centric motives, which can erode stakeholder trust and credibility. In the rapidly advancing technology landscape, neglecting R&D invites obsolescence. Companies not allocating sufficient resources to innovation run the risk of falling behind competitors as new breakthroughs emerge, jeopardizing their market share. Over emphasising M&A introduces dependence on external factors such as regulations, negotiations, and integration challenges, which can disrupt an enterprise’s growth predictability. While financial transactions may promise more immediate gains, they tend to divert resources away from longer-term strategies and R&D, which can compromise sustained growth and value added. This shift risks a company losing a core identity, which can undermine employee motivation and reduce stakeholder alignment. Further, prioritizing financial transactions can create discord within an organization between transaction-focused executives and innovation-aligned employees, which could impede strategy execution. Thus, leaning away from R&D for financial gains can jeopardize innovation, growth, and competitive edge, ultimately hampering a company's longer-term success.
 
Part 3
 
The Implications of M&A-Centric Growth

The implications of M&A-centric growth are multifaceted and extend beyond the immediate area of financial transactions. A trend that emerges within MedTechs as they prioritize M&A activities over R&D, is an innovation gap, which can introduce strains within leadership dynamics as resources are disproportionately allocated to financial pursuits rather than fostering technological advancements. Reallocating resources in this way can stifle the development of innovative technologies. Moreover, often the shift is accompanied by a transformation in executive skill sets, where financial acumen takes precedence over the ability to drive R&D. Consequently, there is a shift in the overall performance metrics of companies. Short-term gains resulting from transactional activities, often overshadow longer-term, research-driven achievements that are essential for innovation, growth, and competitive advantage.
The change in company culture is another potential consequence of this growing inclination toward financial activities. The once-pervasive values of creativity calculated risk-taking, and scientific exploration, which have historically fueled innovation, start to wane. This is further exemplified by a shift in talent attraction strategies. The attraction of financial expertise can eclipse the allure of nurturing disruptive innovation, thereby resulting in a dearth of fresh perspectives that could potentially drive growth and value.
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As decision-making processes prioritize short-term financial outcomes, there is a gradual sidelining of research-driven innovations that are needed for the sustained growth and relevance of MedTech companies. The ramifications of this choice are significant. Entities that opt for transactional expansion rather than innovative evolution may find themselves trailing behind competitors who continue to invest in R&D endeavours. This divergence in strategy could lead to a subsequent loss of market share and a gradual erosion of overall relevance. Innovation remains important to address the adaptive challenges that arise from evolving healthcare demands, increased patient voices, rapidly advancing technology, and increasingly stringent regulatory requirements. The transformation of MedTech companies into entities that prioritize financial outcomes run the risk of leaving them ill-equipped to effectively navigate these headwinds. A reduced focus on innovation tends to render companies vulnerable, impairing their capacity to anticipate and effectively respond to future industry and societal trends.
 
The importance of striking a balance between short-term financial goals and longer-term innovation objectives cannot be overstated. Companies that are unable to reconcile these contrasting perspectives risk compromising their ability to anticipate and adapt to the evolving healthcare landscape. In essence, the ramifications of an M&A-centric growth approach are not solely confined to fiscal aspects; they extend to the core of a company's competence to foresee, adapt to, and thrive within a rapidly evolving MedTech sector.
 
Reduced R&D resources impact on patient care and outcomes

The impact of diminished R&D resources on patient care and outcomes can be significant. At its core, a vibrant and forward-thinking MedTech industry is essential for the development and successful deployment of medical technologies, diagnostics, and treatments that increase the efficacy of healthcare and improve patient outcomes. The combination of innovation and healthcare can translate into tangible benefits for patients. For instance, personalized medicine therapies, which are outcomes of R&D, offer a transformative approach that enhances patients’ therapeutic journeys, and minimizes adverse effects.
 
Smart devices often mean swift and precise diagnoses, which pave the way for timely and effective interventions. Beyond this, innovation extends to healthcare accessibility. Remote monitoring and telehealth technologies reduce geographical barriers, bringing healthcare within reach of those in remote and underserved regions. This can reduce disparities in healthcare access, leveling the playing field for all individuals, regardless of their location, ethnicity, or socioeconomic status. Further, the shift toward minimally invasive technologies not only fosters quicker recovery times but also shortens hospital stays. The combination of improved healthcare protocols that promote better adherence and more efficient, cost-effective medical procedures helps to make quality healthcare accessible to more people.
 
Concern arises when MedTech innovation takes a back seat, which tends to perpetuate outdated medical devices that can result in suboptimal outcomes and the continuation of existing healthcare disparities. The neglect of innovative R&D endeavours delays the development of disruptive technologies, thus prolonging inequitable healthcare access and outcomes. In this context, companies that lean away from innovation could find themselves deepening divisions between different patient outcomes. The role of healthcare providers is associated with the availability of advanced technologies. Optimal care requires the integration of innovative technologies into medical practices, and the neglect of this can limit access to care, and potentially compromise patient outcomes. It is important to stress that the direction of the MedTech industry has an impact on the quality of healthcare that a society can provide. By placing innovation at the forefront of strategic priorities, companies are more likely to enhance treatments, patient experiences, and the overall efficiency of the healthcare ecosystem. Neglecting innovation, on the other hand, can result in stagnation that perpetuates inequalities, delays healthcare access, and slows the development of patient-centered care. The symmetry between financial considerations and the pursuit of innovation is important. The consequences of overlooking either aspect have effects, which can extend beyond company balance sheets into the health and wellbeing of patients who depend on the MedTech industry to provide leadership for a healthier and more equitable future.

 
Part 4
 
A Strategic Approach for MedTech Transformation

The phase of MedTech's growth driven by M&A has now matured, necessitating a fresh perspective and refined strategy. The transition from visionary leaders to financial managers has, in many medical technology companies, created a void in leadership, especially given the current headwinds faced by the industry. To improve patient outcomes and foster sustainable growth, a recalibration is required, which places innovative leadership and patient-centric care initiatives at the forefront. A synergy between financial and R&D strategies is important for success. Only by reconciling financial operations with innovation endeavours, can the potential for competitive advantage and improvements in patient care take place.
Strategic allocation of resources, particularly towards dedicated innovation efforts, drives research. Notwithstanding, the realization of this relies on company executives leaning in on the transformative potential of R&D endeavours. To counterbalance any undue focus on short-term gains, it is essential to develop and implement a balanced set of performance metrics that connect financial milestones with innovation breakthroughs. This provides the basis for a strategy, which fuses financial decision-making with the promotion of innovation-driven initiatives. Further, to help executives develop diverse and adaptable mindsets, enterprises might consider increasing collaborations with research institutions and start-ups, with the aim to gain access to talent and knowhow that complements internal capabilities.


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The establishment of structured innovation frameworks, closely tethered to fiscal objectives, should help to provide a consistency of purpose. Safeguarding innovations requires robust intellectual property (IP) strategies, and regular evaluations, attuned to prevailing market trends, and assisting with the ongoing alignment of a company’s strategy with exogenous trends.  This nuanced approach hinges on executives being able to balance essential financial imperatives with innovations to create a balance, which, in turn, is expected to contribute to sustainable growth, heighten competitiveness, improved patient outcomes and reduced healthcare costs.
 
Cultivating leaders with balanced expertise

Successfully blending transactional expertise with R&D capabilities requires leaders with vision and purpose able to develop and implement strategies that harmonize with an enterprise’s goals and politico-economic trends, evolving stakeholders’ demands and changes in healthcare systems. Let us briefly suggest a roadmap to achieve this.
 
First, develop cross-functional leadership teams that unite financial and R&D experts, and are expected to help ensure that decisions become grounded in both fiscal considerations and innovative pursuits. Advocating for innovation within finance and R&D units, helps to foster alignment between financial choices and R&D priorities. Developing and implementing key performance indicators (KPIs) is crucial. These should measure both financial outcomes, and advancements in innovations. Consider incorporating into performance evaluations metrics such items as newly filed patents, and the delivery of product launches and impactful R&D projects on-time and within budget.
 
Establish a dedicated venture fund to drive and reward innovation. Facilitate collaborative workshops that bring together finance, R&D, marketing, and other functions to ideate transformative solutions and services. Such endeavours should aim to increase growth, enhance enterprise value, improve patient outcomes, and reduce the cost of care. Align financial objectives with innovation goals, linking bonuses to achievements in both financial performance and successful innovation. When contemplating M&A, give precedence to targets that enhance a company’s innovative capabilities by aligning with R&D expertise and novel product portfolios, thus amplifying innovation.
 
Create small cross-functional review groups to assess innovation projects for alignment with business goals and fiscal viability. Establish agile committees to oversee resource allocation and to ensure consistent R&D funding. Implement programmes to recognize and celebrate employees who contribute to innovative ventures to help cultivate a culture of inventiveness. Set up platforms to facilitate interdepartmental sharing of creative ideas. Actively involve financial specialists in innovation discussions. Cultivate external partnerships to infuse fresh perspectives into R&D initiatives. Foster communication channels between financial and R&D teams and encourage regular exchanges of insights and opportunities. Provide training to enhance financial experts' understanding of R&D processes and offer financial literacy training to R&D teams. By integrating transactional expertise and R&D acumen, MedTechs can more effectively balance financial growth and innovation, to help enhance competitiveness, adaptability, and industry-leading innovation.
 
Reviving visionary leadership

This Commentary started by describing differences between leaders and managers to highlight the prevalence of transactional management during a period of M&A-driven growth, which in turn diminished the demand for visionary leadership. As the industry has reached a mature phase, and facing significant headwinds, a juncture arises that calls for leaders capable of bridging the gap between financial success and technological advancement. This involves aligning financial strategies with a broader vision of innovation and patient-centric progress. In doing so, visionary leaders establish a framework that both augments a company's financial performance, and drives healthcare technology forward, ultimately enhancing patient outcomes. This strategic evolution depends on leaders embracing a forward-thinking mindset that extends beyond immediate gains and helps to steer enterprises towards sustained innovation and growth.
 
Central to this transformation is the synchronization of financial goals with a company's longer-term vision. This ensures that financial policies are conducive to fostering transformative technologies. Cultivating an innovative culture within an organization, leaders instill a spirit of expansive thinking, experimentation, and the pursuit of innovative technological solutions and services that address healthcare challenges. Acknowledging the need for strategic investments in R&D, these leaders allocate resources optimally to bolster novel solutions and services. Furthermore, they have an awareness of market trends, emerging technologies, and evolving patient needs. This equips them to anticipate shifts in both the market and technology landscapes, which enables them to strategically position their companies to take advantage of emerging opportunities. By balancing innovation and astute risk management, leaders blend calculated risk-taking with prudent financial decisions, thereby contributing to stability and improved competitiveness. With a focus on the longer-term impact of their actions, visionary leaders understand the interplay between present-day technological advances and a company's future standing.
 
In the dynamic ecosystems of contemporary medical technology, visionary leaders exhibit adaptability in navigating change, guiding companies forward by skilfully adopting new technologies and strategies. Their longer-term strategic outlook attracts top talent from both finance and technology. Inherently collaborative, these leaders forge alliances with other companies, start-ups, research institutions, and industry experts, which increase the potential for accelerating the pace of technological innovations from the bench to the bedside. Harnessing novel technologies to create distinctive solutions and services, they lead their organizations to prominence within a competitive market. Upholding ethical considerations, these leaders ensure that technological progress not only yields financial gains but also has benefits for patients and healthcare systems. Investors tend to gravitate towards enterprises with visionary leaders. The ability to articulate a compelling narrative that emphasises how innovation drives future growth and financial returns enhances their allure. Thus, visionary leaders orchestrate a successful synergy between financial acumen and technological ingenuity, encouraging an ecosystem where strategic foresight translates into substantial dividends.
 
Takeaways

The evolution of the medical technology sector over the past four decades has presented a dual-edged transformation that healthcare professionals must now grapple with. The shift from pioneering innovators to adept managers within the industry reflects the interplay between economic, technological, regulatory, and ethical factors. As these converge, healthcare companies face significant headwinds that demand leadership rather than management. The financialization of the industry, driven by prolonged periods of low interest rates and accessible capital, has had a significant influence on the industry’s ecosystem, accelerating growth while simultaneously steering priorities away from innovation towards financial pursuits. This shift opened a new era, characterized by an abundance of skilled managers but a deficit of visionary leaders. Today, the MedTech industry stands at a juncture, with the demand for strategic foresight and innovative thinking never more acute. The need to pivot towards sustained growth and enhanced enterprise value necessitates leaders who can balance the strategic imperatives of R&D and the financial acumen required for M&A. The future trajectory of the medical technology sector hinges on the ability of healthcare professionals to recalibrate leadership dynamics. By addressing the scarcity of visionary leaders, the industry can leverage its potential to overcome the headwinds it currently faces and pioneer transformative innovations that redefine the landscape. As healthcare professionals navigate the future, their collective efforts will determine whether the MedTech sector continues to evolve along its current trajectory or takes a bold new direction towards enhanced growth, innovation, and added value.
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  • Women's health needs are linked to their biological, physiological and psychosocial makeup, setting them apart from men and requiring specialized care
  • Women's health has been inadequately addressed
  • Gender inequalities continue and lead to uneven healthcare accessibility, resulting in postponed diagnosis and less than optimal treatment outcomes 
  • Women play a pivotal role in families, communities, workforces and society
  • Investing in comprehensive lifetime care for women, rather than disparate, periodic interventions, is a human right, a social responsibility and an astute economic strategy
 
Transforming Women's Health
Pioneering a Comprehensive Lifelong Healthcare Paradigm
 
Preface
 
In a significant shift, gender issues pertaining to women’s health, are experiencing change driven by women’s growing refusal to accept secondary status. This change is accompanied by the substantial contributions women make to economic growth, stemming from their expanding presence in the workforce and their influential roles within families, communities, and society. While pharmaceutical and medical technology sectors have developed specialized treatments for certain women’s disorders, there remains a need for a proactive, lifelong approach to women’s healthcare. Although efforts to address conditions like menopause and breast cancer are commendable, they risk commodifying women’s health. To meet their diverse health needs and acknowledge the pivotal roles they play in both developed and developing economies, a comprehensive and sustainable healthcare model is necessary. This is more than episodic interventions and calls for an understanding of, and sensitivity towards the unique physiological and psychological challenges women encounter throughout their lives. A proactive paradigm prioritizing prevention, early detection, and treatment is mooted. Realizing this calls for collaboration among healthcare providers, institutions, advocacy groups, governments, and payers. While commercial enterprises may think that participating in a comprehensive lifelong strategy for women’s health is beyond their scope, the changing business environment, shaped by concerns related to Environmental, Social, and Governance (ESG) matters, highlights the ethical, social, and commercial importance of supporting a holistic approach to women’s healthcare.
 
In this Commentary
 
This Commentary is in three parts. It starts by briefly describing what constitutes women's health and suggests why women’s healthcare is important, which is followed by a short historical perspective and mention of gender disparities that still exist despite improvements. Part 2 describes a comprehensive lifetime healthcare strategy for women, to replace current disparate, episodic interventions, and contends that such a holistic approach has the potential to yield substantial health, wellbeing, and socio-economic benefits. The size of the global women’s healthcare market and some of the leading companies participating in it are described in Part 3. Takeaways follow and stress the significance of a comprehensive, lifetime healthcare model for women. 
 

Part 1

Women’s health

Women's health is a critical and multifaceted area of healthcare that focuses on their specific biological, physiological, and psychosocial needs throughout their lifetime. It encompasses a wide range of conditions, from reproductive and gynecological health to hormonal changes, pregnancy, and menopause. Reproductive health includes family planning, contraception, and fertility management. Providing information about birth control and fertility treatments helps women to make informed decisions about their reproductive choices. Addressing issues related to sexual health, such as sexually transmitted infections (STIs) and sexual dysfunction, encourages women maintain a healthy intimate life. Gynecological health is another key component of women’s health, involving the prevention, diagnosis, and treatment of conditions affecting the female reproductive system. Routine screenings like Pap smears and mammograms help in early detection of cervical and breast cancers. Healthcare professionals should be adept at managing common gynecological conditions such as menstrual disorders, polycystic ovary syndrome (PCOS), endometriosis, and uterine fibroids. Throughout a woman's life, hormonal changes influence her physical and emotional wellbeing. Addressing concerns related to menstruation, hormonal imbalances, and menopause is important. Additionally, pregnancy and childbirth require prenatal care, delivery support, and postpartum care for both mother and baby. Sensitivity, empathy, and a patient-centered approach are essential. Only by recognizing and addressing the needs and challenges faced by women, can healthcare providers effectively contribute to female patients' overall wellbeing and quality of life.
 
The importance of women’s health 

Historically, women’s health has predominantly revolved around reproductive aspects due to their perceived primary role. Despite enduring years of inadequate representation and underfunding in medical practice and research, the importance of prioritizing women’s health is a crucial step towards reducing gender disparities, optimizing outcomes, and fostering societal equity. Overlooking the holistic consideration of women’s distinctive lifelong attributes can lead to undetected or untreated disorders. Central to this is women’s reproductive and maternal wellbeing, which not only molds their own health but resonates across generations, influencing the wellbeing of their offspring. Thus, ensuring ample prenatal care, maternal nutrition, and birthing support is pivotal in securing favourable results for mother and infants.

Prioritizing women’s health leads to the reduction of preventable diseases. Comprehensive female health programmes encompassing screenings, vaccinations, and early detection of conditions such as breast and cervical cancers play a crucial role in disease prevention and prompt treatment, thereby amplifying overall health and longevity. Women’s wellbeing is a foundation for personal wellness, gender parity, and societal advancement. Optimal female health empowers women to confidently engage in decision-making, pursue education, seize economic opportunities and more. By concentrating on women’s health, we not only champion proactive care and lifestyle adjustments benefitting individuals and future generations, but also alleviate the large and rapidly growing burdens on healthcare systems.
 
Brief history

Over time, women's healthcare has experienced gradual advancements and improvements. In ancient times knowledge about women's health was passed down through oral traditions and informal practices. Women relied on natural remedies and herbal medicine for managing reproductive health, childbirth, and general wellbeing. During the medieval and Renaissance periods, women's healthcare was mainly in the hands of midwives and female healers. Their expertise in childbirth was valued, but formal medical education and knowledge were limited. As medical knowledge advanced during the 18th and 19th centuries, some progress was made in understanding women's anatomy and reproductive health. However, societal norms and prejudices often hindered women from either accessing formal medical education or seeking medical attention, which resulted in continued reliance on midwives and home remedies. The mid-19th century brought changes. In 1849 Elizabeth Blackwell, a British-American, became the first woman in US to earn a medical degree, and the first woman on the Medical Register of the General Medical Council for the UK. Florence Nightingale, best known for her pioneering work in nursing, played a significant role in the Crimean War (1853-1856), where she improved nursing care for wounded soldiers and established modern nursing practices, which have had a lasting impact on nursing and public health. Their achievements, and those of others, subsequently laid the foundations for the involvement of women in the field of medicine. However, societal attitudes still posed obstacles to women's healthcare advancements.
 
The 20th century saw progress in women's healthcare. With the suffrage movement and feminist activism, women's rights and health issues gained attention. In the early 1900s, the first birth control clinics were established, allowing greater control over reproductive choices. Further progress was made during the mid-20th century. In 1960, the US Food and Drug Administration (FDA) approved the first oral contraceptive pill, which changed family planning and reproductive rights. In the following decades, women’s movements advocated access to safe and legal abortion. Women's healthcare expanded further in the latter half of the 20th century, with increased research and understanding of women-specific health concerns. Breast cancer screenings, cervical cancer screenings (Pap smears), and other preventive measures became more widely available.
 
In the 21st century, women's healthcare continued to progress, with an emphasis on preventive care, and early diagnosis. Advances in medical technologies and research further improved women's health outcomes. Efforts were made to address disparities in healthcare access for different populations of women, including those based on ethnicity, socio-economic status, and geographical location. Initiatives to improve maternal health, reduce maternal mortality, and provide better support during childbirth gained momentum. Awareness campaigns focusing on issues, such as breast and cervical cancers, helped in early detection and treatment. Taboo and often misunderstood subjects like menopause are now widely discussed, primarily to educate people. Additionally, women's mental health received more attention, leading to increased resources and support. While challenges remain, the activities of healthcare professionals, researchers, advocates, policymakers, and commercial enterprises continue to help shape a healthier future for women.
 
Gender disparities in healthcare

Despite advances in women’s healthcare, gender disparities have been a persistent and concerning issue, with women often facing underrepresentation in medical research and practice. Such differences result in unequal access to healthcare services, delayed diagnosis, and suboptimal treatment outcomes. Women's health concerns have often been underrepresented in clinical trials, which results in a lack of evidence-based treatment options tailored to female physiology and health risks. This disparity can be pronounced in conditions such as heart disease, where symptoms and risk factors may differ between men and women. Women often face barriers in accessing comprehensive reproductive health services, including contraception, family planning, and safe abortion services. Some regions have limited availability of these services due to legal, cultural, or religious factors, which can impact women's control over their reproductive choices and health. In many parts of the world, maternal mortality rates are disproportionately high, particularly in low-income countries. Every two minutes, a woman dies from preventable causes related to pregnancy and childbirth. Lack of access to appropriate prenatal care, skilled birth professionals, and emergency obstetric care are contributory factors, reflecting a significant gender-based health inequity. Some chronic autoimmune diseases, such as lupus and psoriatic arthritis are more prevalent in women, yet diagnosis and treatment can be delayed or less effective due to gender biases in medical research and practice. Studies have shown that women's pain is often undertreated compared to men's, potentially due to biases in healthcare providers' perceptions of pain and discomfort. This can lead to inadequate pain relief and poorer health outcomes. While mental health problems affect both genders, women frequently encounter distinct challenges. These encompass conditions like postpartum depression and anxiety, which are primarily linked to hormonal imbalances, but also associated with factors such as insufficient sleep and inadequate support systems. Societal stigma around mental health, combined with gender norms, can discourage women from seeking help and support for their mental wellbeing.

In some societies, limited education and information about healthcare can lead to women having less knowledge about preventive measures, symptoms, and treatment options, which can result in delayed or inadequate care for certain conditions. Gender-based violence has health consequences, including physical injuries, mental health issues, and increased risk of sexually transmitted infections. Limited access to safe spaces, support services, and legal protection can hinder women's ability to escape such situations. Further, women tend to live longer than men, but they may also face difficulties accessing appropriate healthcare and support in their later years. Consequently, elderly women often experience greater social isolation, limited financial resources, and increased prevalence of certain health conditions.
 

Part 2

Comprehensive lifetime care

With increasing recognition of the contributions women make to economic growth and stability, their health has gained relevance. The emergence of women's economic influence and direct participation in the workforce has prompted a shift in our approach to women's health. The pharmaceutical and medical technology industries have made progress by developing medications and devices targeting specific health issues. Notwithstanding, it seems timely to move beyond such approaches and focus on a comprehensive care model that supports women throughout their lives.
 
Pharmaceutical and MedTech companies have tapped into the women’s healthcare market by focusing on high-volume areas, like mensuration, menopause, and breast cancer. While such efforts are improvements, women deserve better. In recognition of the significant contributions they make to society, and the changing perspectives of corporate social responsibility, it is time to pivot towards a new approach to women's health. Rather than focusing on reactive healthcare policies to address specific disorders, a comprehensive and proactive care model is required to address women's diverse healthcare needs. Women's health encompasses more than just the treatment of certain illnesses and diseases. It involves addressing the unique physiological and psychological aspects they experience throughout their entire lives. Thus, a shift towards providing lifetime care and support for women seems timely.
 
According to the World Health Organization (WHO), Health is a state of complete physical, mental, and social wellbeing and not merely the absence of disease or infirmity”. Achieving this for women requires a collaborative effort from healthcare providers, institutions, organizations, governments, and payers. This should aim to break down barriers, improve access to quality care, and foster health equity for all women, regardless of their socioeconomic status or geographical location. Certain businesses may view participating in a comprehensive women’s health approach as beyond their commercial interests. However, with ESG concerns reshaping the landscape, collaborating in a women’s holistic healthcare strategy becomes ethically, socially, and commercially logical.
 
Benefits of a lifetime health programme

A proactive lifetime healthcare approach would result in long-term cost savings by identifying health concerns early and reducing expensive treatments, benefiting individuals, and trimming large and rapidly growing healthcare burdens. This allows resources to be reallocated for other needs. Moreover, enhanced women's health has a positive economic impact. Countries like the US and UK have relatively high female workforce participation rates: ~57% and ~72% respectively. A healthier workforce contributes to higher productivity, benefiting both businesses and economies.
 
Investing in women's lifetime healthcare also helps narrow gender pay gaps by providing access to consistent healthcare, promoting career advancement, financial security, and workplace parity. Prioritizing prevention and addressing women's health needs drives demand for innovative solutions and services, potentially leading to advancements in pharmaceuticals, medical technologies, and healthcare practices. Nation’s investing in holistic women's health can gain a competitive edge with an educated, committed female workforce, which supports stability, and innovation. Additionally, effective women's healthcare reduces reliance on public aid, channeling fiscal savings toward societal wellbeing.
 
The women's health market holds significant growth potential. Unique concerns provide opportunities for innovative solutions and services such as advanced fertility treatments and personalized therapies. Telemedicine and digital healthcare platforms expand access, especially in underserved regions. Amid competition from established players, newcomers can thrive by emphasizing innovation, patient-centered care, and technology integration. Adhering to safety standards and addressing cultural norms are crucial for building trust. Overcoming stigmas through education and targeted campaigns encourages women to prioritize their health. By collaborating in a comprehensive lifetime approach and strategic R&D, companies can gain a competitive edge.
 

Part 3

Women’s healthcare market

According to Grand View Research, in 2022, the global women’s health market was valued at ~US$41bn, and is expected to grow at a compound annual growth rate (CAGR) of ~5.4% over the next decade. Market growth is attributed to aging populations of women, and the increasing prevalence of women-centric diseases such as osteoporosis, menopause, and breast cancer. The World Health Organization (WHO) reports that breast cancer is the biggest killer of women, but only ~50% of them realize this. In 2020, there were 2.3m new cases of the disease globally and ~685,000 deaths.

There are many companies marketing products for women’s health. Pfizer, one of the world's largest pharmaceutical companies has a presence in women's health. They have developed and market contraceptives, hormone replacement therapies, and treatments for menopause-related symptoms. Merck & Co. is a global healthcare company that offers a range of products for women's healthcare, including fertility treatments, contraceptives, and medications for conditions like human papillomavirus (HPV) and osteoporosis. Johnson & Johnson, a diversified healthcare company, offers medicines for menopause, products for menstrual health, and contraceptives. Bayer, a multinational pharmaceutical company known for its contributions to women's healthcare, produce intrauterine devices (IUDs), and medications for various women's health conditions and wellbeing. AbbVie has offerings that include treatments for endometriosis and hormone replacement therapies. Hologic, a MedTech specializing in women's health, produces imaging systems, diagnostic tools, and surgical equipment for gynecological and breast health, including mammography and biopsy solutions. Medtronic, a global healthcare technology leader, provides medical devices for gynecological surgeries and treatments for urinary incontinence. CooperSurgical, a dedicated women's health company, offers a wide range of medical devices and products for gynecological procedures, fertility treatments, and obstetrics.
 
Takeaways

In a world where gender-specific health disparities persist, companies engaged in women’s health have the capacity to make an impact on women’s overall wellbeing. The growing recognition of distinct healthcare requirements for women emphasizes the significance of committing resources to women’s health, suggesting a choice that is both commercially astute and socially just. In addition to reactive interventions, businesses might consider partnering with stakeholders to support a comprehensive healthcare strategy tailored to women’s individual life journeys. This requires leadership, investing in R&D, and harnessing the potential of emerging technologies like digital health platforms, telemedicine, and AI-driven data analytics. Such an endeavour has the potential to change healthcare accessibility, amplify diagnostic precision, and refine disease management exclusively for the female demographic. By participating in such an approach, companies not only position themselves as leaders in an important market segment but also contribute to fostering a healthier, more equitable world for women throughout their entire lifespan.
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