Ten MedTech Trends to Watch in 2023
Dynamics That The MedTech Industry Should Monitor In The Coming Year Catherine Ellis, VP, Practice Lead, US MedTech Consulting, IQVIA Feras Mahdi, Principal, Head of IQVIA MedTech, Asia Pacific 2023 presents new uncertainties as optimism generated by a gradual recovery from the upheaval of COVID-19 is being met with new challenges such as staffing shortages, energy market disruptions, and rising interest rates. More than ever, MedTech players need agility and foresight to adapt to an increasingly dynamic global industry. 1. Deglobalization and reshoring are gaining traction and affecting the MedTech industry across the whole value chain. The most used indicator for globalization — the global trade to GDP ratio (as measured by the World Bank) — has declined from 61% in 2008 to 52% in 2020. The trade restrictions between the U.S. and China, the COVID-19 pandemic, and Russia-Ukraine conflict have emphasized the importance both of having sufficient stock of critical components and raw materials, and of having a well-diversified supplier base. While manufacturers will likely invest in further supplier diversification and stockpiling efforts, these initiatives have certain limits. If the current global trade environment and trajectory persists, both governments and market players may resort to ‘near-shoring’ or ‘friend-shoring,’ which would benefit certain geographies as production and logistics hubs, depending on their proximity and/or friendliness to a certain geopolitical bloc. Another potential scenario is that fragmentation at the global level may promote further integration at the regional level, leading manufacturers to further regionalize their production and supply chains. 2. The MedTech investment downturn will manifest itself differently in various regions of the globe. The drop in M&A dealmaking, a severe dip in capital raised, and pressure on R&D investments will dominate the global MedTech scene, but different geographies may face unique manifestations of these challenges. Regardless, MedTech firms in each region must be quick to adapt to the economic slowdown and find enablers of innovation and investment, including for instance, new cross-sector partnerships and collaboration with academia. United States In the U.S., M&A deals and venture capital investments have dropped sharply from their peak in 2021, according to PitchBook data. However, many U.S. investors are optimistic that the markets are simply returning to pre-pandemic levels. United Kingdom In the UK, as healthcare staff shortages intensify, the NHS is pressed to divert investments that would have gone into technology and re-focus them elsewhere. This will make it more challenging for MedTech to enable new revenue channels and cost savings. Germany In Germany, Europe’s largest MedTech market, unease is permeating the previously flourishing Berlin health-tech startup scene. The German MedTech industry prides itself on a higher resilience to recession than the automotive industry; however, in a market where a substantial portion of MedTech sales is driven by products under three years old, any innovation slowdown may have long-lasting consequences. APAC Based on Pitchbook data, China accounted for almost 75% of the total APAC MedTech investment (~$15.3 Bn) in 2021. Investment activity is expected to slow down amid rising cost of capital and decreasing risk tolerance in VC and M&A. The investment focus will continue shifting away from “pandemic”-related topics (e.g., telehealth, PPE), to those that improve access, affordability, and quality of healthcare (e.g., point-of- care testing, low cost minimally invasive products, surgical robots, health data, and AI). 3. Direct-to-consumer (DtC) advertising for MedTech has proven its worth and will grow as a tool to drive adoption — especially for devices that patients interact with directly, or that compete with pharmaceuticals. DtC advertising of medical devices became more visible than ever in 2022, with Abbott Laboratories becoming the first healthcare company to give a public keynote at the Consumer Electronics Show, followed by Cue Health and Hologic airing national TV ads during Super Bowl LVI. This trend extends beyond the U.S., with Insulet running TV ad campaigns in the UK, Germany, and Canada to promote their latest insulin pumps. DtC advertising will continue to gain momentum as an adoption driver for devices that patients interact with directly. This includes insulin pumps, continuous glucose monitors, oxygen concentrators, at-home diagnostics, and dental devices — and the category will broaden with the introduction of more smart devices, which continuously collect data and leverage patient-facing apps. As more devices are introduced as alternative to pharmaceutical therapies, DtC advertising will also be an important tool to drive consumer awareness. For example, Boston Scientific ran a DtC campaign to introduce the WATCHMAN implant as an alternative to blood thinners to reduce stroke risk in patients with atrial fibrillation. […]
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