Q: Considering the financial pressures faced by OEMs, what will be the impact to R&D and innovation in the medical device industry?
The financial pressures medical device OEMs are facing are very real. They’re experiencing reduced reimbursements from the government and insurance companies, increased taxes, and global competition. As a result, new business models are evolving to ensure new product innovation is not stifled and, most importantly, patient safety is not compromised.
Established OEMs are heading toward the same model startups have been engaging in because they have constrained resources. Startups have utilized partnerships and outside R&D resources to bring products to market at lower costs. Now medium and large OEMs are looking to stretch their R&D expenditures by working with partner organizations that can apply efficiencies of scale or contribute in terms of specific areas of expertise so they don’t have to incur the cost of maintaining specialists that would not be fully utilized. This way, they can focus on their core areas of expertise and maintain subject matter experts for the segment they are in.
New medical device OEMs are starting off from the beginning with this model, where they have a core team of technical, marketing, and engineering experts, and from the outset, are partnering with organizations with R&D resources to bring their products to market.