As is the case in most industries, globalization has increased demand for medical technology around the world. Indeed, according to a new report by Axendia, a majority of executives expect their business to grow globally in the next three years. What’s more, they expect growth will be higher (88 percent) in emerging markets compared developing markets (69 percent).
As would be expected, the top two drivers of globalization are the need to support emerging markets with locally produced product (cited by 64 percent of the respondents) and improve the rate of innovation (cited by 63 percent).
But with this opportunity comes challenge. So as the business model shifts from selling products to providing integrated solutions, executives responding to the survey note that their companies must navigate three primary macro trends:
· Manage sustainable global growth
· Comply with tightening global regulatory environments
· Support changing healthcare delivery models globally
The report, “Walking the Global Tightrope: Balancing the Risks and Rewards of Med-Tech Globalization,” summarizes the findings of an Axendia survey of 125 individuals from 89 different companies from 16 countries. Seventy nine percent of the respondents were decision makers with a title of Manger, Director, or Senior Executive. Over one third of the respondents represent large organizations with annual revenues exceeding $1 billion, and another third of the respondents were from midsize med-tech companies. The remaining respondents represent organizations with revenues below $25 million.
I’m always interested to see which issues are reported as “keeping executives up at night” when reading survey results. In this case, 60 percent of the executives cited the quality of products, raw materials, or services provided. The next frequently cited concern is the ability to maintain consistent quality standards across internal and external sites (noted by 59 percent of the respondents). Finally, 49 percent cited protecting the company’s intellectual property as an issue that keeps them from sleeping.
But I was most interested in supply chain challenges. As the report notes, seven out of 10 executives rated their level of risk as moderate to high based on their current lack of visibility into critical suppliers. Furthermore, 90 percent of the respondents indicated they would like access to real-time and on-demand data from critical suppliers and contract manufacturers.
This poor visibility, however, is not always due to a lack of technology systems. In fact, it’s due here to having too many ineffective systems. For example, to achieve global visibility, 50 percent of large organizations still rely on paper reports and homegrown systems.
Based on the results, authors of the study suggest that to mitigate risk and attain sustained benefits, medical technology companies will need to need to implement new strategies, processes, and technologies to proactively manage risk across the life-cycle of their products in a global and outsourced environment. These steps, according to the authors, should include the implementation of holistic control over governance, risk management, and compliance practices; enhanced visibility across the med-tech ecosystem; and improved collaboration with all constituents in the ecosystem.
So in the end, there’s growth, and the usual growing pains. It will be interesting to watch as the med-tech industry adapts to meet evolving demands driven by globalization.