Recap from the Q1 Productions’ Medical Device Corporate Strategy & Business Development Conference
Last week, Cipher sponsored and attended Q1 Productions’ Medical Device Corporate Strategy & Business Development Conference in Dallas, Texas. Over 40 companies and organizations from across the medical device field attended this conference to share their struggles, lessons learned, and opportunities in this ever-evolving industry. Sessions revolved around the future of Healthcare and the Regulatory Landscape, as well as corporate strategy approaches to balancing business development with R&D advancements and expansion efforts.
The medical device industry continues to encounter new hurdles every day from increasing regulatory obstacles, to healthcare reform, to growing pressures for innovation. The real struggle is striking a balance between the three, while continuing to remain fiscally healthy. In order to walk this tightrope, it is crucial to recognize the key trends across the industry. During the two days of discussion, three clear trends emerged:
Three key trends across the medical device industry in 2015:
1. The shift from innovation to iteration
Rising regulatory compliance concerns and device taxes, paired with a decreasing amount of funding for innovation, are causing companies to shift focus from innovation to iteration. (This trend is especially prevalent among smaller, private companies.) It is becoming more advantageous to stay ahead of an established market, making improvements to a current product, rather than jump through the regulatory hoops of an increasingly complicated legal system for a new, innovative solution. The challenge here lies in identifying the competitive advantages in current products to create strategic iterations aligned with their consumer’s changing needs. Companies are having to be more creative in incorporating innovation into their iterations.
2. An increased focus on globalization and end-to-end solutions is driving a spurt in acquisitive growth strategies
Driven by a desire to achieve vertical integration where possible, there has been a stronger emphasis on Mergers and Acquisitions (M&A) among larger-scale medical device producers, paving the way for more end-to-end solutions. Companies are also looking to M&A to help them exploit emerging markets including India, China, and Brazil. However, with these global expansions come rising concerns about complex regulatory compliance challenges and hidden reputational risks that could be associated with target companies - which leads to this final takeaway:
3. Due diligence is becoming a larger piece of corporate strategy for medical device corporate growth
As companies spin-off, carve-out, and merge technical/intellectual competencies at a faster rate, it is becoming increasingly important to have a solid due diligence process in place to ensure transactions do not create unforeseen risks stemming from either regulators or consumers. Companies are looking both internally and externally to ensure they are setting themselves up for financial and reputational success in the market.
As these three key trends demonstrate, it is important for corporate strategists to recognize and understand the effects that competitors, regulators, and customers have on one another in their market, as well as how companies and organizations are anticipating and preparing for these potential shifts. Increased market and competitive understanding decreases uncertainty and enhances decision making speed. With the ever accelerating pace of change in business, this efficiency is imperative in identifying and capitalizing on opportunities in the dynamic markets in which we operate.
Cipher’s expert analysts and consultants stand ready to help companies in the medical device industry who are considering M&A as a core piece of their growth strategies. We have deep experience across the transaction life-cycle from target selection and screening, to investigative due diligence and corporate risk mitigation services, to post-transaction integration support. We have worked with over 215 clients to complete more than 425 engagements in 23 countries in a host of industries including medical devices. We offer a full suite of due diligence services including channel checks, reputational due diligence, beneficial ownership analysis, compliance due diligence and overseas partner/target vetting.
Start a conversation with Cipher today to learn how we can help your company navigate this and other complex industries. Learn more by emailing us at email@example.com or visiting our website www.cipher-sys.com.