Former projects and observations of the medical devices market show that it is becoming increasingly challenging for medical device providers asserting their market position. Competing medical device organizations successfully extent market shares in well-developed markets, often initiated by M&A activities like Boston Scientific acquiring BTG or Siemens Healthineers’ acquiring Corindus Vascular Robotics. However, medical device companies identified enhanced customer service levels as a valuable method of extending market presence as well. Reaching an enhanced customer experience can be realized by superior logistics solutions, e.g. improved tracing and delivery performance standards. Moreover, developing internal IT-related logistics processes leads to a more advantageous market position as well.

A justification for further expansions can be found in the highly attractive market outlook for medical devices as forecasts show a CAGR of 5,3% from 2018 until 2025. This would represent a growth of the global market to more than $600 billion US-dollars by this time from about $420 billion, where it stood in 2018.

Acting instead of reacting

If forced to react against losing market shares to the competition, it is important to distinguish the market segment affected. The medical device market contains a multitude of rather inhomogeneous products making it compulsory to segregate and differentiate accordingly as different product-customer segments require different solutions. In this context, the classification provided by the EU directives into four groups of medical devices is a good first orientation. Each group represents a more intensive level of invasiveness, meaning an increasing level of potential harm to the human body e.g. if a device is bacterially contaminated. Accordingly, each class requires a different and more intensive level of care during the warehousing and transportation processes. Here either cost or superior logistics and service levels can play an important role on how efficiently you comply with statutory regulations and fulfill customer demands. Therefore, your current setup needs to undergo an assessment by segment with key elements being:

  1. Your current service partner setup, like logistics service provider portfolio
  2. Your ERP-environment managing material and data, your ability to trace the origin of your products as well as the integration level of your transport management (TM) & warehouse management (WM)

Service partner assessment 

Assessing your logistics service providers (LSP), the outcome is not necessarily the need for cost cutting along your supply chain, wherever possible to undercut your competitor and therefore offering lower prices. More sustainable for your profits might be instead an assessment and benchmarking of your current LSP setup (also see our whitepaper). Reviewing its ability as well to offer value-adding services (VAS) to you. Beside the concept of postponement, related to packaging / artwork or promotional packaging / kitting, VAS can encompass a direct-to-fridge delivery or enhanced track & trace solutions as well. However, it is not only the capability but also the performance of the LSP that must be considered and compared against others. If your requirements do not match the service level of your LSP, a meaningful tender process should be initiated.

Weak spot ERP?

Historically grown ERPs can quickly became bottlenecks hindering future growth or process improvements. Reviewing your current IT setup can quickly reveal potential risks and opportunities for optimization. To help streamline such process and quickly achieve transparency, we have developed at Camelot a set of maturity models to identify and compare your current set up. Market-intruding competitors often can rely on more advanced, integrated and mature TM (transport management) and WM (warehouse management) software that help achieve speed, efficiency and transparency. Here it is less relevant which software provider to choose but the improvements you can achieve with state-of-the-art integrated solutions enhanced by digital innovations.

Competition countermeasure: technology

Smart devices, the new generation of medical devices that actively transmit vital patient information to e.g. doctors or medical institutes for research or monitoring purposes, demand secure end-to-end data transmission. Being able to ensure this data security and comply with multiple national laws towards data security can become one of the top competitive advantages in the Life Science industry. Furthermore, we see evidence that without a proven and secure end-to-end data transmission, the trend of smart devices will not develop its full potential. This in fact is true for all new direct-to-patient services.

Specifically related to medical devices, we observe that companies are becoming more aware of the risk of theft, losses and quality issues due to the growing competition both regarding service levels as well as quality standards. Following a product and distribution channel specific assessment of the logistical requirements and respective segmentation, the protection of the product against damages during both transport and storage establishing can be improved. For example, by establishing handling procedures and different packaging as well as tailored track & trace solutions. Such track & trace solution is nowadays not limited anymore to “Where is my parcel?”. It is more related to the ability to provide transparency regarding the adherence to e.g. temperature or humidity constrains as well as the provision of evidence related to the origins of the specific device, if even supported with blockchain technology.

Nevertheless, technology does not fulfil a purpose by itself. It obviously needs to increase service, margins, compliance or generate new / more business to provide payback. Nevertheless, technology can also help protect your market share when it comes to counterfeits. Here, the pharma industry is leading the way with the serialization regulative of the EU and the upcoming aggregation requirement of the FDA. With serialization describing the procedure to register each packaging (blister) in a globally accessible data warehouse, the doctor, pharmacist or even respectively the patient can scan each unit and verify the authenticity. This of course can be adopted to medical devices as well, if the consensus and market standards are given. In the meantime, alternative / isolated solutions would provide a leading edge and sells argument. The Blockchain technology represents one option ensuring secure end-to-end transmissions and traceability.

What options do you have?

Securing and defending your market segment is key to assure the future of your organization. Beside the right product and innovative solutions for your customers, logistics is key to it. A collaborative approach with the right Logistics Service Provider allowing cost efficient and flexible ways to provide value adding services, advanced technology and streamlined processes paired with state-of-the-art systems will put you back in a stronger position and help expand into other markets yourself.

If you want to learn more, feel free to contact us!

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