Innovation is the driving force behind the medical devices industry. In the past, enterprises have improved upon their products through invention and development in fields such as the materials science, electronics technology and machinery manufacturing. Nowadays, China’s new medical reform policies, new technologies represented by artificial intelligence (AI) and the internet of things, as well as new entrants such as commercial insurance companies and the internet giants are promoting the transformation of medical device enterprises from producers of products to providers of value.
In response to changing industry trends, numerous outstanding companies are now offering more value-added services to healthcare professionals, patients and payers by introducing new ideas, new models and new assets. In order to develop new products to better meet the needs of hospitals, patients and clinicians, medical device manufacturers have embraced the concept of “customer-centric product design”, highlighting the advantages of differentiation. In an interview with PwC’s Health Research Institute, 20 medical device technology executives unanimously emphasized the importance of incorporating user perspectives into product design.
In China, enterprises not only need to be familiar with the operating habits of medical staff, they also need to understand the policies around their product categories and the requirements of hospital management. For example, primary healthcare institutions may be unable to install large medical examination equipment due to budget and site restrictions. Senior doctors may be called upon to assist in the interpretation of biochemical and imaging diagnostic data due to lack of experience. Patients don’t wish to be repeatedly examined or to spend a lot of time transferring medical records due to internal referrals. In line with trends in hierarchical medical diagnosis and treatment, leading companies have developed small imaging devices that are easier to use and maintain. Digital means such as remote diagnostic cloud services and AI-assisted diagnosis have strengthened the basic level of diagnosis and treatment and have supported remote telemedicine consultation and patient referrals.
New model: Delivering solutions for key scenarios
Medical device companies have traditionally offered solutions through horizontal expansion of their product portfolio or vertical integration of the supply chain. The objective, in essence, is to reduce the operating costs of medical institutions and research institutes by means of bulk procurement, equipment hosting, unified after-sales services and financial leasing. The economies of scale is a key success factor for large companies. At the same time, many medical device companies have strengthened their research on the patient journey, mapping out their path from disease screening, diagnosis and clinical treatment to out-of-hospital rehabilitation and chronic disease management, while building solutions around these scenarios. The superiority of their products allows device companies to jointly define new business models that can unify multiple stakeholders. Business model innovation needs not only to fully consider the economic interests of all parties, it should also highlight clinical values as well as the value of hospital management.
New assets: Digitization promotes industrial change
In June 2016, the General Office of the State Council issued its “Guiding Opinions of the General Office of the State Council on Promoting and Regulating the Application and Development of Big Data in Health and Medical Care”, which, for the first time, identified healthcare and medical big data as a fundamental strategic resource. In recent years, relevant policies have been introduced in quick succession to promote the digital transformation of the healthcare industry, from strategic planning, legal research, data application and management, as well as industrial group construction and basic scientific research. At this stage, medical device companies are paying more attention to personal health, hospital diagnosis and treatment data as well as medical device data (see Types of Data). Manufacturers of equipment such as wearable devices, home medical devices and smart medicine boxes are concerned with chronic disease management and old-age care. They hope to cooperate with pharmaceutical companies and commercial insurance companies to collect data on patient behavior, disease management and medications, improve the compliance of patient medications, while promoting chronic disease health insurance. The wide application of hospital management systems and electronic medical records and interconnectivity of diagnostic, as well as the treatment and monitoring equipment data effectively improves the operational efficiency of hospitals, providing data support for hospital management and medical management organizations, thus adjusting and optimizing their medical resources. The functions of selfexamining its state and running time of largescale medical equipment not only provides hospitals with operational guarantees, but also helps manufacturers optimize on product design in accordance with China’s market demands. With the rapid expansion in the scale of data, digital technology becomes not only a tool, but also an asset. Big data has the potential to be available as an independent product or service to data consumers, providing increased value to ecosystem participants. PwC has found that leading medical device companies are leveraging their data collection and analysis capabilities to expand their data-based, independent business segments and explore new data management platforms with medical service providers, healthcare authorities and insurance payment organizations. Faced with these new industry trends, companies are now adjusting their strategies to achieve a better, brighter future. Yet many remaining challenges stand in the way of this vision and its strategic realization. Therefore, the following four approaches can be identified:
I. Focus: Integrate the needs of key stakeholders; clarify product positioning; design more competitive products; reduce the long tail of product portfolios
The procedures involved in the procurement, use and maintenance of medical devices can be complex and involve multiple stakeholders. Manufacturers need a deep understanding of customer needs and preferences through the honest collection of competitive product evaluations.
II. Acceleration: Enable the promotion of cross-functional collaboration, shorten product design, timeto- market and delivery times, and improve product launch performance and supply chain effi ciencies through organizational restructuring and empowerment
First, senior management needs to adopt a more forward-looking outlook and take the initiative when communicating with the regulatory and policy analysis departments, fully leveraging the reform dividends from the current evaluation and approval system, and shape the policy environment to accelerate the listing of new products. Second, new product development – from demand analysis, concept selection and listing – involves a large volume of crossfunctional communication and collaboration. Relying solely on the leadership of R&D departments may lead to ineffi cient or even failed project management.
III. Openness: Creating a business model with business partners premised on mutual gain, openness and innovation
To create additional value beyond the product, companies must bol ster their own strengths; foster a partnership ecosystem based on mutual cooperation; constantly seek industry consensus in the spirit of openness and innovation; experiment with ideas put forward by partners; and promote the shared advancement of ecosystem partners in the quality of their thinking and ability of their execution. In the process of digital transformation, medical device manufacturers need to build a “data closed loop” to feed back the results of data analyses and insights to patients, doctors, hospitals and other partners who provide data to observe how this feedback affects partner behavior and decision making.
IV. Compliance: Actively follow and infl uence laws, regulations and technical standards that relate to the digital economy, while staying compliant in how data is obtained, analyzed and used
In order to become a fundamental resource of the information age, big data requires a “clean data economy” that is tradable, rights and interests as sured, and maintains integrity in circulation. Governments, businesses, academics and legal professionals should jointly explore and design laws, regulations and technical norms that re late to the digital economy.
Personal health data
- Blood pressure, heart rate, body temperature and other health data
- Purpose: To enable patients to monitor their vital signs and improve compliance from time to time; assist medical insurance companies to design insurance products for chronic disease
Hospital diagnosis & treatment data
- Diagnostic and therapeutic data such as a patient’s image report, examination sheet, medical records etc.
- Purpose: To assist doctors in diagnosing diseases; improve effi ciency of patient referrals, realize hierarchic - al medical diagnosis and treatment; provide reference data for medical administrative institutions to further optimize medical resources and hospital management
Medical device data
- Medical equipment operating data
- Purpose: To remind equipment suppliers to maintain and repair in time; help equipment manufacturers optimize product designs