The Medtech industry is on the brink of a revolution the scale of which will mirror the resurgence of the industrial sector 100 years ago, market experts have predicted.
Despite the current economic climate, the NHS’s intended shift in focus from hospital services to community and home-based care means innovative technologies will be more in demand than ever, with IT solution providers, in particular, able to take advantage of new opportunities for growth.
The forecast was made by technology and innovation experts Ian Rhodes and Kevin Deane of PA Consulting Group during a speech at MedTec Europe, one of the world’s largest exhibitions for the healthcare equipment and supply sector.
In an exclusive interview with HES in advance of the event in Stuttgart, Germany, Rhodes said: “A vastly-increasing level of knowledge and awareness among patients is driving a big increase in expectations for healthcare services in the UK and further afield. This is leading to an increasing number of new entrants into the healthcare sector and potentially new commercial models.
“Several decades ago we used to see a pattern of healthcare where the doctor always visited the patient. Then this changed and we constructed purpose-built hospitals and surgeries where patients could go. Now, we are beginning to see the next step of decentralising services once again and we will be going back to a situation where the doctor, sometimes in virtual form, goes to the patient, helped by technologies which are not new, but are now reliable enough and cost effective.
“In time this will be seen in the same way as the industrial revolution was 100 years ago, but this time the change is being driven by the acceptance and embracement of innovation, particularly within IT, throughout the healthcare sector. Now it will not so much be an issue of whether there are technologies available, but whether they are cost effective.”
To enable companies to take advantage of these opportunities, Rhodes said they need to ensure they know the market and can anticipate the right timing for the convergence of key technologies and the evolution of the regulatory and payment systems.
“Healthcare is one of the industries where you can provide a product or service and even if it fails to do what it claims it will, there is little or no comeback and we are not entitled to our money back,” he said. “It looks increasingly likely that the marketplace will change and the supplier will be expected to deliver a certain result or outcome to get paid.
"Healthcare commissioners want to see a cure or an improvement in the state of someone’s health, so pharma companies, for example, will have to step away from providing just a white powder and come up with patient-centred solutions. If they do not do this they risk being pushed back down the value chain. It is not just about best in class any more and pharma companies may find they will be better off combining with a Medtech firm so they can deliver a more-rounded solution. An example of this was a recent trial where an asthma drug manufacturer and a Medtech company joined forces to create an inhaler which monitored lung inflammation and titrated an asthma drug which more effectively controlled the asthma and with a lower average dose of generic steroid. This has clear benefits for patients, commissioners and clinicians.”
This potential for partnership is already attracting companies which would never usually target the healthcare market, including Google, BT and McLaren, to name a few.
“There is an enormous opportunity,” said Rhodes, “but success will depend on capturing and using information in an intelligent way and welcoming new people and new innovations. Some device companies are going to have to work together and with other industry groups and the NHS. The current systems are financially unsustainable in the medium-term and, if we are to move towards payment by results, then we need to do this together. The key is to pick your collaborations very carefully.”
Offering further advice to companies on how to embrace the changes, Deane admitted that while the current systems of procurement and payment were a challenge, there were still widespread opportunities for product developers, manufacturers and distributors.
“To penetrate the NHS in particular you have really got to focus on the market and understand in more detail what it needs, instead of individual companies being fortresses and internally focused.
“New technologies do not always offer value for money as they tend to be applied universally and overtake what has gone before. What is often needed is a more-targeted solution applied not to everyone, but to those who will benefit the most in terms of value for money. Too often, new technologies supercede existing, cost-effective treatments which may still be the best-value solution in the majority of cases. What is good for some people in some circumstances is not always good for everyone in every circumstance.
“We use the word innovation too much without actually thinking about what it means. We know it when we see it, but in a business context it is not always fully understood.”
It is this insight into what is a complicated marketplace that will distinguish the forerunners in the years to come, he added.
“There are three things that I think drive a breakthrough product. Firstly, great companies and great products find a way to anticipate the market. They see market change before it actually happens and can develop and deliver a solution that fits the market at the right time. These companies are able to move very quickly.
“Secondly, great products come from companies that are able to move quickly. As companies become bigger and bigger R&D becomes quite hard to control. Sometimes a company can see a market changing, but it has become so big that its R&D function has lost the capacity to move with the speed it needs.
“R&D productivity as a whole is declining, particularly in large markets such as healthcare and particularly within the Medtech and pharma sectors. It is hard for companies to know everything that is going on in the marketplace and many do not have the cash to invest or the ability to borrow funds. The current economy has made this situation worse. In this sort of environment, breakthrough products and services will become the key differentiator. When the economy does pick up, it will be the companies which have controlled their R&D that will be able to reap the rewards with products which are ready to go. Some companies have so many different programmes going on that they lack the focus needed to see any of them through.”
As well as knowing what is going on in the sector and having the ability to develop products quickly, companies can also benefit by shaping the marketplace themselves. Deane said: “With real innovation, part of the problem is that the market does not understand it. Ten years ago most people did not have a mobile phone and somehow individuals and businesses existed without them. Now because of a few forward-thinking companies that market has changed to the point that if they were taken away, we would struggle to live and work in the way that we do now. Healthcare has the same potential for widespread innovation.”
With regards to these devices making their way into the supply chain, with a change in focus to payment by results, Deane advises ensuring support from clinicians working on the front line. He told HES: “A lot of times new companies go straight to NHS Supply Chain or the hubs when in fact where new innovation is concerned they are not the best port of call. It is opinion leaders like clinicians that the market is influenced by and they can anticipate future trends better than anyone else. They tend to have a definite view of what the next generation of products should look like, but they cannot always articulate this vision. ompanies need to harness this insight and try to link up with these opinion formers at the very earliest stage of product or service development.”
To help further, PA Consulting Group has developed a planning process called FutureWorlds: Using Uncertainty to Drive Innovation. FutureWorlds is a scenario planning process with a twist. Instead of assuming the future can be predicted by extrapolating past trends, PA’s experience suggests that future markets and technologies are driven by disruptive events which, by their very nature, are impossible to predict with certainty. FutureWorlds builds on the extremes of these uncertainties, defining four very different, but equally valid, scenarios. Through exploring these scenarios, organisations are able to understand what technologies and business models will be the most effective in each potential ‘world’, and what their customers are likely to value most.
There are also a number of case studies of FutureWorlds, including a programme with Alan Ashby, vice president of global concept development at orthopaedics firm, DePuy. The company has embraced innovation over recent years by creating a virtual business unit, changing attitudes to risk and accessing the right technology partners.
Ashby said: “We do not look at innovation purely in terms of new products and technologies. It is much more about a culture and attitude and the continual striving of the business to re-invent itself and its processes and in fact to obsolete itself so that it can continue to be a dynamic organisation reaching new levels.
“The orthopaedic marketplace, for example, is very conservative and products have to last a very long time, so innovation has always been a big challenge. We can change product materials and surgical techniques, but it takes a long time to find out whether you have done something valuable or catastrophic when changing something that has a very successful track record. A continuous challenge is for us to deliver products at a significantly-reduced cost for a particular disease treatment. Unless this happens, we might have the best technology in the world, but we would not be able to do anything with it.”
To try and address this in 1997 the company’s parent group, J&J, instigated an initiative known as What’s New.
Ashby said: “We looked at case studies of other businesses and tried to make ourselves very uncomfortable about the fact we were not innovating enough. This kick-started the introduction of new toolkits and the realisation that the organisation had to come to terms with the risk associated with innovation, both financially and in the way that it manages its people. A central tenet of our culture now is that giving autonomy to the individual businesses is the best way for them to be creative, effective and accountable for what they do.
“There are always people you know will respond positively to change and are prepared to move out of the mainstream of the business into an area that may or may not be successful, and those who prefer a safer, more-predictable working environment. For this reason you need the leaders of new businesses to bring the whole organisation along with them. You can have the greatest analytical minds and the leadership saying it has to happen, but you need others who will manage the change all the way through the organisation.”
And he agreed that collaborations were a key priority.
“Traditionally we have not used a lot of external partners,” he said, “However, the trend over the last five years has been for us to use increasing amounts of external resource and partners and as we face more and more challenges to bring disparate technologies together to make new products, I can see this continuing in the future.”
PA Consulting Group
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