Four Ways Medical Device Companies Can Become More Profitable
If you are in the medical device industry, what are your top goals for 2017 and beyond? Like most other industries, improving profitability is likely at the top of the list. However, many of the steps medical device companies must take to improve profitability are unique. Medical device companies should consider the following four areas to improve their margins.
1. Reduce the cost of compliance
Medical device companies are in the rewarding business of making peoples lives better. However, given the critical requirements to ensure patient safety, the industry faces heavy regulation. Consequently, compliance to FDA, EU and other worldwide standards and regulations is a requirement for profitability.
At the same time, so much time and money goes into compliance, there are fewer resources for other factors that impact profitability. With this in mind, medical device companies should look at options to reduce the cost of compliance. Many companies are turning to technology to support and automate many of the manual tasks associated with compliance. With features such as traceability, rather than manually searching for documents, reports can be generated with a push of a button. By automating tedious tasks, more resources can be focused on innovation and quality to drive more revenue opportunities.
2. Consider the impact of the Case for Quality
While the business benefits of adopting quality focused processes are significant, medical device companies should also anticipate more regulatory emphasis on quality management. Through research, including The Business Case for Medical Device Quality study conducted by McKinsey, the FDA has concluded that traditional regulatory approaches of inspections and enforcement actions are not as effective as they should be. Dr. Jeffrey Shuren, Director of the FDA’s Center for Devices and Radiological Health says, “A purely regulatory approach that focuses on compliance with quality system regulations is not enough and may even create disincentive for device makers to innovate device quality.” He adds, “A recognition of these realities led to the launch for the Case for Quality initiative.” Dr. Shuren goes on to explain what this means to medical device companies. “Shifting the focus from the minimum operational compliance requirements, laid out in our regulations, to a higher sustained level of quality can provide end users with a better product and greater return on investment and quality for device companies through fewer recalls and adverse events and greater consumer confidence in their products.” This indicates that medical device companies who focus on quality management will not only enjoy financial benefits, but they will also be well positioned for any future changes coming out of the Case for Quality initiative.
Bringing together quality information and product information can help to manage quality. Features such as traceability across the product lifecycle, dashboards and reporting tools, and issue tracking can help improve quality. With the right technology to manage quality, companies can be innovative while minimizing risk.
3. Improve development efficiency to compensate for the time required for regulatory approval
Long regulatory approval cycles mean medical device companies face delays before new devices can be released to the market. This means it takes longer to recoup development investments. Because of this, development time should be as efficient and fast as possible, while keeping development costs down without sacrificing quality. In addition, it is important to complete development before competitors. If a competitor is awarded the patent first, your development efforts are wasted and the investment is lost. Look for ways to minimize bottlenecks, improve efficiency, and reduce manual tasks as much as possible.
4. Take advantage of innovation and technology such as IoT, to support positive patient outcomes and create revenue opportunities
Medical device companies should also consider ways for devices to provide evidence of improved patient well-being. Recent changes in the US mean that sometimes medical professionals must show positive patient outcomes to be compensated. One way to accomplish this is to take advantage of innovation enabled by the Internet of Things (IoT). This along with requirements for Unique Device Identifiers (UDI’s) can provide new levels of traceability and communication that can demonstrate device effectiveness. Medical device companies that can offer this easily may be able to use it as a competitive advantage, but the right technology must be in place.
By focusing on these four key areas, medical device companies can improve their competitiveness and boost profitability.