Report: Medical tech companies look to form customized growth strategies

According to a recently published study co-sponsored by PricewaterhouseCoopers US and released by Axendia, medical technology companies are looking at new methods to increase their visibility globally, finding an approach that does not cater to all markets but specializes to serve niches.

The customized growth strategies being explored by companies are aiming to penetrate emerging markets, tailoring business to unique local market needs. Challenges facing companies have been found to limit the businesses' promotions and visibility in globalized manufacturing and distribution chains.

The report is called "Walking the Global Tightrope: Balancing the Risks and Rewards of Med-Tech Globalization," and reveals the results of a survey of 125 executives from medical technology companies, including makers and distributors of pharmaceutical, biotechnology and medical products and devices, in 16 countries.

"Globalization is the byword for medical technology companies these days - and for most companies going 'global' means going to emerging markets," said Wynn Bailey, pharmaceutical and life sciences advisory services partner, PwC. "However, succeeding in emerging markets is not simply a matter of expanding operations into these countries. Leading companies are developing tailored supply chain strategies that are designed to respond to the unique needs and expectations of each particular market, thereby giving them the best chance to succeed in realizing their growth ambition."

The survey provided an in-depth look into the sourcing, manufacturing and distribution of medical technology products, showing the ups and downs of supply chain management.

According to the report, nine out of 10 executives who were surveyed expect their business to grow globally in the next three years. Eighty-eight percent also reported they expect increased sales in the BRIC nations (Brazil, India and China) and other emerging markets compared with 69 percent who expect increased sales in the United States and other developed markets.

A majority of the executives surveyed lack confidence as a result of low visibility and control over their global and outsourced operations. The report showed that 59 percent of those surveyed are worried about their company's ability to maintain consistent quality standards across internal and external sites.

Companies are beginning to look at technology as the best option for increasing visibility into their supply chains, but have not yet reached their full potential in leveraging tech for this purpose.

"The reliance on IT systems to help medical technology companies integrate across their organizations and achieve global visibility will succeed only if these systems are shared across the extended value chain of customers, the company, the company's suppliers, and their suppliers' suppliers," said Bailey. "These systems need to meet the bar of producing high-quality, actionable data. Companies need to implement risk management and supplier relationship management systems that can bridge organizational boundaries and improve quality and reduce risk."

The study also includes a plethora of strategies for medical technology companies to think about implementing in order to manage the challenges of conducting business in the global and networked environment.

"We believe the automobile industry, which has developed marketing and product distribution strategies tailored to different local markets and implemented effective cross-border supplier control systems, may offer examples of leading practices for other technology-based industries," said Daniel Matlis, president of Axendia. "Medical technology companies should seek to benchmark themselves, not only against their peers but against other industries."

When it comes to taking advantage of technology to improve supply chain positioning, companies should also keep sustainability issues in mind, according to a recent article on the website TriplePundit. To really track their sustainability profile, companies increasingly will need to bring their suppliers into their green initiatives, so to remain globally competitive, suppliers will need greater transparency on these issues, and appropriate software systems can help in this effort.