15/10/2020 Medtech: The Post–Covid-19 Growth Strategy | Bain & Company

Brief

Medtech: The Post–Covid-19

Growth Strategy
As interactions with physicians go virtual, leaders are rethinking their
commercial models and product portfolios.

By Todd Johnson and Tim van Biesen

September 08, 2020 • 5 min read

At a Glance

 Grappling with higher costs from Covid-19, healthcare providers are

seeking procurement savings and consolidating vendors.

 As hospitals limit sales representatives’ access to surgeons, medtech

companies are developing virtual selling strategies for differentiated go-to-
market models.

 The shift to alternative sites of care and increased use of digital health and
connected devices will require medtech companies to respond with new
and innovative products.

 Medtech leaders are cutting unnecessary costs through process

optimization, complexity reduction and organization redesign.

This article is part of Bain's report US Healthcare Trends 2020: Insights from
the Front Line. Explore more insights from the report here.

To thrive in a post-Covid environment, forward-looking medtech companies

are taking a more nuanced approach to achieving long-term growth. Already,

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the landscape is changing rapidly. Healthcare providers are reassessing how

they deliver care, where physicians interact with patients and how best to
procure supplies.

Commercial strategy. As the medtech market becomes more competitive,

leadership teams are rethinking their commercial models to address
customers’ changing needs. An important part of that process is
differentiating the sales strategy and portfolio value proposition to improve
the odds of winning as providers reduce the number of vendors they use. One
way to do that is by embracing a category leadership strategy—seeking to lead
in one or two segments instead of broadly.

Forward-looking medtech companies are also building commercial

capabilities to compete effectively for the business of ambulatory surgery
centers (ASCs) and office-based labs. These outpatient centers are growing as
the volume of procedures continues to migrate away from hospitals. In
addition to virtual selling strategies, medtech companies are developing
flexible contracts and more just-in-time distribution, since alternative sites of
care have less space for inventory.

However, ASCs and office-based labs may increase pressure on medtech

companies’ costs if sales to these outpatient settings are lower margin than
those to hospitals. To keep costs down, leaders are streamlining their
commercial model design and defining and communicating clear roles for
sales reps, inside sales, account executives and tech support so physicians can
access the right support when needed. This is particularly important in
multidivisional companies where navigating across roles and divisions can be
a challenge.

Sales coverage and virtual selling. While the pandemic required an

immediate shift from in-person sales interactions to virtual ones, leadership
teams are now focused on the broader, long-term shift in commercial strategy.
Companies have the opportunity to apply virtual selling tools to differentiated

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go-to-market models. Leaders are using digital tools and technology to target
the right channels at the right points in the customer journey. Three key
questions can help guide virtual selling decisions: 1) What could be done
virtually, 2) What customer episodes should be prioritized for virtual selling,
and 3) How do companies successfully reach their ambitions?

Once the leadership team defines its goals for virtual sales coverage, it can
focus on creating the conditions for success. A first step involves adjusting the
operating model and redesigning the organizational structure to ensure
maximum efficiency and optimal client coverage. Optimizing the sales
technology engine is critical to supporting virtual sales. That includes
assessing the existing technology infrastructure and investing where needed
to deliver services and engage customers in a virtual environment such as
digital platforms for customer engagement (e.g., telesales, virtual rep in the
operating room), internal training and team collaboration. Telehealth and
connected devices, including mobile diagnostics, data monitoring and device
support, underpin real-time virtual physician consultations. Finally, a results
delivery operation can help ensure the company meets its virtual selling goals.
Leaders develop a pilot-based approach to scaling virtual selling, mitigating
risks and investing in change management in order to deliver results.

Product portfolios. The shift to alternative sites of care such as ambulatory

surgery centers and increased use of digital health and connected devices are
pushing medtech companies to respond with new and innovative products,
user interfaces, commercial models and supply chains. Leaders are developing
new product features to address the needs of alternative sites of care. They
also are investing in data-enabled, connected devices to support real-time
tracking of location and status.

Well-capitalized, larger companies will be able to invest through the downturn

to gain market share and increase category leadership through organic growth
and acquisitions. For example, category leaders are guaranteeting supply to

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their best customers and providing innovative financing options to help

customers manage their own cash constraints.

To expand their product portfolios, forward-looking medtech leadership

teams regularly review acquisition opportunities. They realize that small,
high-quality assets may be available at attractive valuations during the
downturn. It’s also important to regularly reassess prior targets while scanning
for new ones, given that valuations and liquidity situations evolve, along with
the company’s strategic and financial rationale for an acquisition.

Complexity reduction. As healthcare organizations struggle financially,

performance improvement will be increasingly important for all stakeholders.
Successful medtech companies have started building more efficient cost
structures. In particular, they are reducing complexity and simplifying
organization design to achieve a sustained cost transformation.

In considering opportunities for complexity reduction, leadership teams focus

on the company’s long-term cost ambitions. They ensure the team is aligned
on the concept and benefits of reducing complexity, design a plan for real (not
perceived) customer needs, and ensure operations and commercial buy-in.
Those steps pave the way for launching a successful complexity reduction
plan.

Covid-19 has triggered lasting changes to the healthcare ecosystem.

Tomorrow’s leaders are ensuring future growth by rethinking their strategic
portfolio strategy today.

TAGS

Coronavirus Healthcare Medical Technology US Healthcare Trends 2020

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