With the proliferation of large language AI models (LLM) and to borrow from a recent essay by Marc Andreeseen - an American software engineer, co-author of Mosaic, [one of the first widely used web browsers] and founder of multiple $bn companies - everyone involved with medical technology, including R&D, finance, marketing, manufacturing, regulation, law, international etc., “will have an AI assistant/collaborator/partner that will greatly expand their scope and achievement. Anything that people do with their natural intelligence today can be done much better with AI, and we will be able to take on new challenges that have been impossible to tackle without AI, including curing all diseases.”
Two scenarios
We suggest there are only two scenarios for MedTechs: a company that fully embraces transformational technologies and one that does not. The former, will benefit from strengthened operational efficiencies, improved patient outcomes, and enhanced innovations, which will lead to increased market share and investor confidence. By leveraging digital technologies, such as remote monitoring devices, telemedicine platforms, LLMs, and machine learning, a company will be able to offer more personalized, effective and affordable healthcare services and solutions. An enterprise that integrates these technologies into their strategies and business models will, over time, experience improved growth prospects, increased revenues, and potentially higher profitability. These factors will contribute to a positive perception in the market, leading to an increase in company value. MedTechs that fail to fully embrace digitalization, big data, and AI will face challenges in adapting to the rapidly evolving healthcare landscape. They will struggle to remain competitive and relevant in a market that increasingly values transformational technologies and data-driven approaches. As a result, such companies will experience slower growth, lower market share, and limited investor interest, which will lead to a stagnation or decline in their value.
The analogue era's influence on MedTechs
If the choice is so stark, why are many MedTechs not grabbing the opportunities that transformational technologies offer? To answer this question let us briefly remind ourselves that the industry took shape in an analogue era, which had a significant effect on how MedTech companies evolved and established themselves. During the high growth decades of the 1980s, 1990s, and early 2000s, the medical technology industry operated with limited access to the technologies that have since radically changed healthcare. The 1980s marked a period of advancements, which included the widespread adoption of medical imaging such as computed tomography (CT) scans and magnetic resonance imaging (MRI). These modalities provided detailed visualizations of the human body, supporting more accurate diagnoses. Medical devices like pacemakers, defibrillators, and implantable cardioverter-defibrillators (ICDs) were developed and improved the treatment of heart conditions. The 1990s witnessed further advancements, with a focus on minimally invasive procedures. Laparoscopic surgeries gained popularity, allowing surgeons to perform operations through small incisions, resulting in reduced patient trauma and faster recovery times. The development of laser technologies enabled more precise surgical interventions. The decade also saw the rise of biotechnology, with the successful completion of the Human Genome Project and increased emphasis on genetic research. The early 2000s saw the emergence of digital transformation in some quarters of the medical technology industry. Electronic medical records (EMRs) began to replace paper-based systems, increase data accessibility and upgrade patient management. Telemedicine, although still in its nascent stages, started connecting healthcare providers and patients remotely, overcoming geographical barriers. Robotics and robotic-assisted surgeries gained traction, enabling more precise and less invasive procedures. During these formative decades, the medical technology industry focused on enhancing diagnostic capabilities, improving treatment methods, and streamlining healthcare processes. The industry had yet to witness the transformational impact of digitalization, big data and AI that would emerge in subsequent years, enabling more advanced analytics, personalized medicine, and interconnected healthcare systems.
From analogue to digital
During these formative analogue years, MedTechs experienced significant growth and expansion, where innovative medical technologies changed healthcare practices and improved patient outcomes. Companies thrived by leveraging their expertise in engineering, biology, and clinical research and developed medical devices, diagnostic tools, and life-saving treatments. For MedTechs to experience similar growth and expansion in a digital era, they must fully harness the potential of transformational technologies, and to achieve this, there must be a receptive mindset at the top of the organization.
According to a recent study by Korn Ferry, a global consulting and search firm, the average age of CEOs in the technology sector is 57, and the average age for a C-suite member is 56. Thus, as our brief history suggests, many MedTech executives advanced their careers in a predominantly analogue age, prior to the proliferation of technologies that are transforming the industry today. Thus, it seems reasonable to suggest that this disparity in experience and exposure colours the mindsets of many MedTech executives, which can lead to them underestimating and under preparing for the significant technological changes that are set to reshape the healthcare industry over the next decade. Senior leadership teams play a pivotal role in developing the strategic direction of companies and driving their success. Without a proactive mindset shift, these executives may struggle to fully comprehend the extent of the potential disruptions and opportunities that digitalization, big data, and AI bring.
By embracing such a mindset shift, senior leadership teams could foster a culture of innovation and agility. But they must recognize the urgency of preparing for a future fueled by significantly different technologies from those they might be more comfortable with. Such urgency is demonstrated by a March 2023 Statista report, which found that in 2021, the global AI in healthcare market was worth ~US$11bn, but forecasted to reach ~US$188bn by 2030, increasing at a compound annual growth rate (CAGR) of ~37%. As these and other facts (see below) suggest, the integration of digitalization, big data, and AI has already begun to redefine healthcare delivery, patient engagement, and operational efficiency and is positioned to accelerate in the next decade. To remain competitive and relevant in this rapidly evolving high-tech world, MedTechs must foster a culture of openness to change and innovation. Leaders should encourage collaboration, both internally and externally, and create cross-functional teams that bring together expertise from various domains, including AI and data analytics. This multidisciplinary approach facilitates the integration of transformational technologies into all aspects of the business, ensuring that the organization remains at the forefront of the evolving industry.
Implementation and utilization
Limited resources, such as budgets and IT infrastructure, can hinder the adoption and utilization of digitalization, big data, and AI, especially for smaller companies. Compliance with healthcare regulations like HIPAA and GDPR adds complexity and can slow down technology implementation. Resistance to change from employees, healthcare providers, and patients also poses challenges. Fragmented and unstandardized healthcare data limit the effectiveness of AI-driven strategies. The expertise gap can be bridged through collaboration with academic institutions and technology companies. Demonstrating the tangible benefits of digitalization, big data and AI is essential to address concerns about return on investments (ROI). Strategic planning, resource investment, collaboration, and cultural change are necessary for the successful implementation and utilization of transformational technologies in MedTech companies.
Organizational and cultural changes
MedTechs must embrace agility and innovation to harness the potential benefits from transformational technologies. This requires fostering a culture that encourages risk-taking and challenges conventional practices. Creating cross-functional teams and promoting collaboration nurtures creativity and innovative solutions. Transitioning to data-driven decision-making involves establishing governance frameworks, ensuring data quality, and leveraging analytics and insights from big data. Talent development and upskilling are crucial, necessitating training programmes to improve digital literacy and add analytics skills. Collaboration and partnerships with external stakeholders facilitate access to cutting-edge technologies. Enhancing patient experiences through user-friendly interfaces and personalized solutions is essential. Investing in agile technology infrastructure, including cloud computing and robust cybersecurity measures is necessary. MedTechs must navigate complex regulatory environments while upholding ethical considerations, transparency, and patient consent to gain credibility and support successful technology adoption.
Investors
A further potential inhibitor to change is MedTech investors who may harbour conservative expectations that tend to discourage companies from taking risks, such as fully embracing and integrating digitalization, big data, and AI across their entire businesses. This mindset also can be traced back to the formative analogue decades on the 1980s, 1990s, and early 2000s when investors became accustomed to growing company valuations. During that time, most MedTechs catered to an underserved, rapidly expanding market largely focussed on acute and essential clinical services in affluent regions like the US and Europe, where well-resourced healthcare systems and medical insurance compensated activity rather than patient outcomes. However, the landscape has since undergone a radical change. Aging populations with rising rates of chronic diseases have significantly increased the demands on over-stretched healthcare systems, which have turned to digitalization, big data, and AI in attempts to reduce their mounting burdens. These shifting dynamics now demand a more forward-thinking approach, but investor expectations often remain fixed on a past traditional model, which impedes the adoption and full integration of transformational technologies into MedTech enterprises.
To overcome investor conservatism and reluctance to embrace transformational technologies requires a concerted effort by MedTechs to demonstrate the tangible benefits of these technologies on the industry. Companies can focus on providing evidence of improved patient outcomes, increased efficiency, cost savings, and competitive advantages gained through the integration of digitalization, big data, and AI. Engaging in open and transparent communications with investors, showcasing successful case studies, and highlighting the long-term potential and sustainability of a technology-driven approach can help shift investor expectations and encourage a more receptive attitude towards risk-taking and innovation.
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1 year, 9 months ago
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