In order to evaluate the current innovation status of medical technology companies at the company level, HRI interviewed executives from medical technology companies to comprehensively evaluate the company's leading practices and abilities in organization, management and encouragement of innovation, and released the "Medical Technology Companies Commit to Innovation and Reform" report.
"I always hear such complaints, why can't my blood sugar meter look the same as my phone? A big reason why people are reluctant to monitor blood sugar is that they don't want to bring an extra thing that can tell you that it's an medical device and can only measure blood sugar, so that they can always remind them to be sick." This is a passage from Andrew Atwell, senior manager of Samsung Innovation Center, in an interview with PwC.
For the past few decades, medical technology companies have been at the forefront of technological innovation, but at present, the return on innovation investment is constantly declining. In order to remain competitive in the new market environment, medical technology companies need to create and realize value through continuous innovation.
In order to evaluate the current innovation status of medical technology companies at the company level, PwC interviewed executives from medical technology companies to comprehensively evaluate the company's leading practices and abilities in organization, management and encouragement of innovation, and released the report "Medical Technology Companies Commit to Innovation and Reform".
Innovation means value creation
"Unless new technologies have commercial potential, we will not invest."
The growing market for medical technology has put traditional medical technology companies at a serious threat. The growth rate achieved by relying solely on product innovation is no longer enough to support the rise in product prices. As new entrants continue to seize the global medical technology market of US$349 billion, hospitals , medical service institutions, and even consumers have put forward higher requirements for medical technology companies in terms of product price, ease of use and product functions.
"We won't invest unless new technologies have commercial potential." Steve Van Nurden, former president of Mayo Medical Innovation Fund and now CEO of the Life Science Incubator and Project of Fitzsimmons Redevelopment Administration in Aurora, Colorado, said. "We are surprised by a lot of innovative technologies, but the profit model of these new technologies is unclear, so we won't invest in these technologies." The PwC survey found that 64% of executives believe that innovation is a necessary condition for corporate competitiveness, and 81% of respondents believe that this view will not change in the next five years. In a horizontal comparison, compared with 21% of telecommunications and 24% of pharmaceutical executives, only 17% of medical technology executives believe their company is a true pioneer of innovation. At present, the medical technology industry has not reached a consensus on the definition of innovation. Only a few companies understand innovation as value creation.
"Innovation is when you only cost one tenth of the cost to develop some kind of technology that can increase the value or efficiency by tenfold." said Clint McClellan, executive of Qualcomm Life Business, "Better, faster, and cheaper. For me, this is innovation."
PricewaterhouseCoopers divides business model innovation into three stages, believing that most medical technology companies are in the stage of incremental innovation (as shown below).
New services and problem-solving capabilities create more business opportunities for medical technology companies. Leaders in the medical technology industry focus on innovation in business models and share business risks by working with medical industry customers. Take Philips as an example, Philips Healthcare recently signed a 15-year $3 billion contract with Georgia Regents to jointly design a new surgical solution. Philips Medical will provide all the essentials for this new surgical solution, from providing medical equipment and training to product repairs and bulb replacements. 12 Philips Medical employees will work with Georgia Regents employees to develop this program and provide professional advice.
Faced with the innovative market with changing demand, many companies in the non-medical industry are also constantly exploring entry points to enter the medical entrepreneurship industry. According to HRI's survey, at least 18 companies from communications and home electronics (5 of which are the Fortune 100 in the United States and four are the Fortune 100 in the world) have entered the medical technology field.
Incubator effect
"How to cooperate in this new era is the key to truly determining the market winners."
General Electric Medical will invest $6 billion in product innovation, including product quality, market access and product payment capabilities. The innovation incubator was officially put into operation in 2010. The main task of the incubator is to explore innovative concepts and commercialize them. General Electric Healthcare invests, incubates and regulates these innovative ideas.
"We are not simply inventing new products based on these innovative ideas, but instead we integrate these ideas into our innovation management process. We test, invest and market these ideas," said Sue Siegel, CEO of GE Healthcare.
Incubator works with General Electric's global R&D center, incubator-invested start-up enterprises, universities and entrepreneurs to apply good innovative ideas to medical products and services. "The value of a company used to depend on their R&D capabilities," Siegel said. "I think the world has changed. How to cooperate in this new era is the key to really determining the winners of the market."
is unique. Medtronic has established BMI (Business Model Innovation), an incubation department for new internal businesses, to develop new products and business models for the surrounding markets of core businesses. The private hospital teams develop related products and services based on the characteristics and needs of various private hospitals in China. The Emerging Region team mainly focuses on providing appropriate solutions for third- and fourth-tier cities and township hospitals, and meets the medical needs of underdeveloped areas by developing low-cost equipment and applying mobile medical technology. For example, the innovative hemodialysis products that Medtronic is developing have lowered the current hemodialysis costs and will be mainly sold for small and medium-sized hospitals and primary medical and health institutions, and can also be used by families. The hospital equipment management system team in BMI is mainly responsible for developing products and services that assist hospitals in equipment management, such as the management of hospital catheters. The model of
incubator also allows traditional medical technology companies to constantly think about the flexibility of their own innovative businesses and new ways to measure the value of innovation. In 2011, Ante Insurance acquired iTriage and allowed the mobile healthcare company to maintain its previous innovative approach. "As one of my colleagues said, our goal is not to let the bear roll with a cub on his back," said Martha Wofford, vice president of Antel Insurance. "You need to properly separate the innovation business from the core business and some of the processes. You need to ask: 'How do you organize innovation activities? How do you protect long-term investments that require one or two quarters to see results are real innovations?' The real challenge is how to balance long-term and short-term interests."
PwC also summarizes the challenges facing Chinese medical technology companies at the innovation level. They believe that improving market insight and product management capabilities is the basis for Chinese medical technology companies to achieve product innovation. Breaking the barriers between functions is an important guarantee for achieving innovation. Learning from global innovation management practices and using external resources to train personnel in key positions can help Chinese companies make rapid breakthroughs in the field of innovation.
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