Healthcare industry analysts at PricewaterhouseCoopers’ Health Research Institute have a few lessons for companies navigating what promises to be a turbulent year ahead, offering advice ranging from failing frugally to adapting to heightened transparency expectations.
Here are 3 of the most relevant foresights for the medical device industry, selected from HRI’s top 10:
Corporate funders take a front seat
Venture firms are shying away from life sciences, but corporate capital is poised to make up for the loss, HRI analysts said. More "unusual marriages" are forming in the industry, with giant corporations doling out millions to startups to spur innovation in medtech, pharmaceuticals and other fields.
"Instead of guiding molecules from bench to bedside solely in-house, corporations increasingly are happy to make bets on healthcare start-ups," according to the report. "For start-ups, corporate arms offer cash and other benefits – regulatory expertise, industry connections, reimbursement know-how and marketing muscle."
Young companies should look to corporations as potential partners, not only for the traditionally larger investment they offer but for valuable guidance, as long as both parties spell out their involvement expectations. Corporations would also do well to nurture the emerging companies that comprise a potential pipeline of innovation.
Transparency and pressure in pricing
Patients, employers and providers are increasingly demanding more transparency in healthcare costs, and in 2014 the pieces are in place to make it a reality.
The federal government opened up data on hospital pricing, revealing wide discrepancies in costs for identical procedures performed at different institutions, resulting in changes in at least 1 Boston hospital that promised to lower fees on routine procedures after patients threatened to switch to less expensive clinics. Companies that translate pricing and outcome data have raked in more than $400 million in investments in recent years and businesses are poised to demand transparency in negotiating insurance plans for their employees.
That may be good news for U.S. healthcare budgets, but it also means that medtech companies and other healthcare industries will be under the gun to lower prices to remain competitive and to meet the market’s demands, HRI analysts said.
How to win at failing
Innovation in 2014 is less about dollars and more about process management, HRI analyst said. The key is to "fail fast, frequently and frugally," embracing missteps as important test cases and developing innovation sandboxes that allow the company to innovate without fear.
"By fostering an innovative culture that brings more rigor to the process and views failure as a means to an end, companies can achieve high impact innovations in less time and at lower cost, which is what healthcare purchasers and consumers increasingly demand," the analysts wrote.
Medtech titan Medtronic (NYSE:MDT), for example, launched its Hospital Solutions business, giving it an incubator of sorts to test out new business models and point-of-care engagement, along the way saving its hospital partners some 20-25% in coronary care costs.
See the rest of HRI’s top 10 for thoughts on mHealth, clinical trials, counterfeit drugs and more.
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