The medical devices industry is changing rapidly, meaning sales and marketing are working overtime to keep up with a new class of buyer who operates within an uncharted set of market conditions.
- The baby boom has become a healthcare boom. By 2017, the number of Americans ages 65 or older had increased at an annualized rate of 3.1% to 47.3 million. This older population is more likely to engage with the healthcare system, leading to an increase in total hospital visits—and, therefore, an increased use of medical devices.
- The Affordable Care Act (ACA) has unleashed greater healthcare spending. The ACA levied a 2.3% tax on all medical-device manufacturers at a total cost to the industry of $20B over the next 10 years. On the flip side, the increase of insured patients is leading to more visits and greater use of medical devices. Industry analysts expect sales of cardiovascular and neurological devices, as well as equipment used to treat age and obesity-related health problems, will likely rise accordingly.
- The rise of General Purchasing Organizations (GPOs) has shifted the power balance onto buying groups. In 2012, nearly 70% of all physicians ran their own practices. By 2016, however, that number had decreased to just 25%. With more physicians signing on to work for larger hospitals and organizations, buying decisions are increasingly made at high levels. With fewer deals to be won, the stakes have heightened for medical-device manufacturers.
- 510(k) reform is on the horizon, increasing product-development costs. The medical devices’ 510(k) process requires manufacturers to demonstrate that new products are materially equivalent to any product available prior to 1976 or face a lengthier Premarket Approval (PMA) process. Forthcoming changes to the 510(k) process are expected to drive more products into the PMA process, meaning development costs will increase and go-to-market plans will lengthen.
- Mergers and acquisitions have driven smaller players into niche markets. In the world of GPO dominance, medical-device manufacturers who produce a broad range of equipment tend to end up on top. It’s quicker for buyers to make large purchases of a variety of product lines from a single supplier, and this buying convenience has driven mergers and acquisitions across the industry as businesses with diverse specialties pool their collective expertise to serve the whole market. This dominance leaves smaller players on the outside, manufacturing and selling niche medical devices that are either too complex or too obscure to be worthy of the larger medical-device manufacturers time.
- All these disruptions mean sales & marketing need to change, too. As engagement with healthcare providers rises steadily, medical device manufacturers know that strong demand for their products remains. But market pressures have led to bigger deals with fewer buyers, meaning every sale today is more urgent than a sale 15 years ago. These stakes make it crucial for medical device manufacturers to target buyers at key GPOs with personal, relevant marketing messages that will guide them through the buying journey—from the early stages of anonymous online research through each order-renewal cycle.