The 2016 edition of Pulse of the industry, EY’s ninth annual report on the medical technology industry.
Consumer empowerment, digital enablement and new competitors are reshaping the medtech landscape as never before; tech giants and start-ups are developing service-driven solutions and “smart” devices aimed at wellness and medtech white spaces, while engaged patients are increasingly vocal about product value.
In the face of such forces, the very definition of “medtech” continues to evolve. While there is clear demand for therapeutic focus and real-world data collection, companies’ strategic responses vary tremendously. Some continue to pursue innovative business models, bolstering therapeutic depth with new digital or service capabilities, often gained by innovative partnerships. Others, meantime, must determine if they have the requisite scale to compete in today’s altered health care ecosystem. These companies are asking another basic, but critically important, question: am I a buyer, or seller, of medtech assets?
The fact that medtechs are even asking this question suggests that macro trends will continue to drive a strong environment for mergers and acquisitions, a finding highlighted in the report. But equally important, the question reinforces the notion
that this is an industry in transition.
That assessment is further underscored by the report’s 2015–16 key financial indicators, which paint a mixed picture for medtechs’ performance, and are both caused by — and causes of — the industry’s ongoing transformation.
As investors demand higher growth and the financing climate becomes less certain, the medtech industry has an opportunity to reignite performance via embracing some of those same trends — particularly consumer empowerment and digital — that threaten to disrupt it. Many have already done so, prioritizing products and solutions that improve real-world health outcomes.