Paul Cooper, director and MedTech sector specialist at management consultancy, Vendigital shares how with the medtech sector booming, established and growing businesses need help in optimising their processes and their innovative products to achieve growth and build on their competitive advantage.
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The UK medtech sector contributes approximately £13.5 billion in Gross Value Added (GVA) to the economy. Turnover currently stands at £43 billion and is projected to reach £48.2 billion by 2026. Dominated by SMEs, the sector also employs some 13,000 people. The rapid growth of the sector has brought with it both risks and rewards for many existing, mid-sized manufacturers.
Risks and rewards
The UK’s excellent R&D capabilities, particularly in areas such as genomics and digital health technologies, are world leading. In terms of the sector’s contribution (GVA) to the economy however, the UK medtech sector is ranked sixth globally, behind countries such as the US and Germany, but ahead of others including Italy and France, which means there is scope for improvement.
However, achieving rapid growth in a fast-developing market is not without its challenges. From a regulatory perspective, the adoption of new frameworks and the transition from CE marking to UKCA marking have introduced complexities, with many companies expressing concerns about delays and a lack of clarity regarding approval processes. Cost pressures linked to inflationary price increases have also been compounded by supply shortages and geopolitical instability. In some cases, combined cost and supply chain issues have led to production slowdowns.
Increasing competition
For established medtech businesses, an influx of innovation-led start-ups in areas such as digital healthcare has increased competition. At the same time, the rapid advancement of data-driven technologies such as AI modelling and digital twinning have required businesses to invest significant sums in optimising processes and accelerating product development pathways. A market shift in favour of personalised medicine and home test-kits has also required a rethink of some products and services as patients are empowered to take more control of their health and wellbeing.
To progress their growth journeys, established medtech businesses must focus on optimising products and processes while continuing to invest strategically to strengthen capabilities and accelerate new product development. Applying design-for-cost and design-for-manufacturability principles, while maintaining a focus on regulatory standards, can help to optimise existing portfolios by delivering significant efficiencies and mitigating the risk of supply-side disruption. Focusing on design-for-assembly techniques could also help to reduce the number of components used and simplify assembly processes, decreasing labour costs whilst maintaining the product’s overall function, reliability and efficacy.
Ongoing supply chain issues have led more decision makers to focus on improving operational resilience. Design-for-supply chain principles are increasingly prioritised to optimise logistics and standardise components with the aim of mitigating the risk of disruption. Close collaboration with suppliers can also help to ringfence mission-critical supplies, streamline inventory management and encourage innovation activity.
Building a data-based advantage
Improving decision-making is key to building a more profitable business. Accurate and reliable data about how materials and components for existing products are sourced, and what they should cost versus their actual cost can improve decisions and highlight value-driving opportunities. For example, data analysis could highlight opportunities to re-design products to drive efficiency without compromising quality or regulatory standards.
Increasingly, medtech businesses are investing to build a data-based advantage by training efficiency-driving AI models on a range of product, customer, supplier and sales data. These intelligent AI models provide real-time data visibility across the end-to-end value chain, facilitating better forecasting, scenario modelling and improving overall efficiency. For example, enhanced supply chain visibility enables smart inventory management by highlighting areas where stock levels could be reduced without impacting throughputs and enable decision makers to respond to supply-side risks in a more agile way.
Automation technologies are already widely used by medtech businesses, but when combined with sensors they can monitor equipment performance in real-time, predicting maintenance needs before failures occur. This proactive approach can help to minimise downtime and enhance operational efficiency.
For established and growing medtech businesses, there are many challenges to contend with, but by investing in data-based intelligence and advanced technologies in they can strengthen their position in an evolving market.