MedTech

The requirements for manufacturers and distributors in the medtech sector have once again become significantly more complex due to the introduction of the “Medical Device Regulation”. At the same time, there is concern that important existing and niche products will disappear from the market due to the increased effort.

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Procurement consultancy in medical technology

As a manufacturer or distributor of medical technology, the Corona virus pandemic has had a massive impact on your business. With rising vaccination rates, the situation is beginning to normalise, but it will be a long time before the old predictability returns. In addition, the EU’s Medical Devices Regulation (MDR), which has been in force since May, imposes new requirements that involve more time and higher costs for the certification of medtech products. To ensure that you can continue to operate profitably in the face of these challenges, new approaches to cost optimization and supply chain management are necessary.

We will develop an individual programme for you, which we will implement together with your employees if desired.

 

Procurement Contribution to Profitability in MedTech

Research and development is surely one of the distinct KPIs to drive revenues through competitiveness and eventually to generate profit, which ensures long-term success of the company. In order to free up funds for research and development there are essentially two options, either increasing revenues or reducing cost.

Boosting profitability by focusing on cost savings is a very effective strategy. By implementing cost-saving measures, MedTech companies can optimize their operations, streamline processes, and enhance their overall financial performance. Furthermore, improving cost has specific benefits such as:

  • Achieves in general fast results and requires less investment compared to e.g., improving revenues
  • Is sustainable and can last over a long period when done correctly e.g., by fixing terms with suppliers over a longer time period

Making procurement and SCM fit for the new normality

Due to the global shift in demand, cost structures for raw materials and intermediate products have changed substantially, especially in the medtech sector. It is not yet foreseeable whether the shifts will be permanent. It is indispensable to analyse the previous requirements with regard to savings potentials, to bundle them anew, to specify them and to put them out to tender.

Although the great wave of insolvencies has so far failed to materialise thanks to broad-based government support programmes, the consolidation of the entire medical technology industry, which had already begun before the pandemic, continues to progress. It is likely to accelerate in view of the MDR. Companies should therefore analyse their supply chain and check whether current suppliers and their product portfolio are still the right fit.

Furthermore, due to the ongoing disruptions in global markets, it makes sense to diversify one’s supply chain and selectively qualify new suppliers, if necessary in regional proximity to one’s own production. The establishment of a structured risk management system safeguards your company against the occurrence of future risks.

Professional working capital management optimally controls liquidity and is thus the best basis for defying disruptions of all kinds. Working capital should therefore always be considered in the course of optimising procurement and supply chain management.

Digital tools provide the necessary transparency in the supply chain and can automate routine activities in procurement. Both are important prerequisites for complying with the Medical Devices Regulation.

With customised training courses in procurement, we can support you in sustainably anchoring the newly acquired knowledge in your company.

 

A holistic risk management process must be approached across departments and repeated on a regular basis. In this way, risks can be identified at an early stage and corrected more quickly in the event of an emergency.

Philipp Mall, Managing Director, KGM Strategy – a BCG Company

Further publications

 

Medical Devices Regulation: Analysing the portfolio

Although the new MDR offers a transitional period of up to four years, it is clear that all products will have to be re-certified – many of them at greater expense than was previously the case.

Under these conditions, it is necessary to subject your own portfolio to a detailed analysis. Before you sort out products, however, you should seek dialogue with your customers: If you are no longer able to produce a medtech article at a cost-covering level under the new requirements, clarify whether and under what circumstances your customers will accept higher costs. A serious, transparent calculation can serve as an argumentation aid.

At the same time, you should look for solutions together with your suppliers. Respecifications or standardizations may help you to control costs. Our experts will be happy to support you in analysing and developing your portfolio.

Flyer “Profitability in MedTech: how procurement can make the difference” Preview

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Our medtech experts

Nicolas Willmann

Managing Director

office@kgmstrategy.com Contact

Gökhan Yüzgülec

Managing Director

office@kgmstrategy.com Contact

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