The innovations in digital technology and smart connections that have led to what is commonly known as Industry 4.0 — or the fourth industrial revolution — hold tremendous potential for the medical technology (medtech) industry. Digitization can help medtech companies improve their operational and financial performance through both internal and customer-facing applications. Yet most companies in the industry are still in the early stages of incorporating these digital technologies into their core business operations. In the third quarter of 2016, we analyzed a sample of 20 medtech companies to gauge their Industry 4.0 maturity and digital readiness across three dimensions: (1) digitization of products and services; (2) business model (digitization of market and customer access); and (3) operating model (digitization of value chains and processes).
The results give a snapshot of digitization in medtech thus far, and highlight priority areas that companies need to focus on.
Key findings for specific segments include the following:
- Companies that sell medical aids have reached a mature stage in their use of digitization for pricing as well as for customer and patient access. However, they can build on that progress by using data to gain a deeper knowledge of their customers’ needs.
- Diagnostics companies are showing a strong use of digital technologies in product and service portfolios. Yet they need to shift away from expensive sales channels and into data-driven digital models that will help them reduce commercial costs, generate better customer insights, and build stronger customer relationships with price-sensitive providers.
- Surgical products companies are reasonably mature in their use of digital products and sales channels. But they can apply new tools and solutions to manufacturing processes, enabling greater customization and smaller lot sizes.
- Medtech companies that are regional in scope and want to expand their geographic reach must use digital technologies to help improve their pricing strategies and manage complexity.
- Medtech companies that are trying to diversify their customer base will also need stronger digital capabilities. In particular, digitization will help them develop the market access, value chains, and processes they need to reach new markets.
Because digital technology advances very quickly, medtech companies need to begin investing in digital capabilities now. Those that do will be able to differentiate themselves and gain a first-mover edge over the competition.