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How to Beat Expected Medtech Price Competition | MDDI Medical Device and Diagnostic Industry

A trend of price undercutting isn’t surprising, of course. As MD+DI and others have reported, hospitals and other customer accounts are heavily focused on reducing the price of products they buy. But cost isn’t the “be all and end all” in the device-customer relationship. As Arundhati Parmar reported recently, hospitals most want to boost their performance and efficiency, even more than cut costs.

What’s the solution to avoid price battles, which can be costly for the entire industry?

Study co-author Joerg Kruetten, executive vice president and head of Simon-Kucher’s Global Life Sciences practice, said in the release, “Medtech companies definitely need to handle their direct and indirect channel management more effectively if they want to avoid price erosion and ensure they can get the right products to the right customer and patient groups.”

Improving channel management is one way the study authors suggest considering, including newer routes like e-commerce and telesales, and “optimizing the overall footprint across the channels so that sales teams are not spread too thin and important segments are fully exploited.” With indirect sales, cross-channel marketing and a logically justified pricing strategy is also important, according to the authors. Meca called for a “new, active, and holistic approach to multi-channel management.”

The surveyed executives acknowledged the importance of these efforts, naming “managing prices” and “enhancing sales effectiveness” as their two top business challenges. One leader noted in the survey, “The ‘old way’ of selling is still quite vivid.” But, the respondents envision a higher share of revenue coming from telesales and e-commerce in three years—34% of share, up from 16% today.

Results of this study underscore a growing trend among medtech companies finding new ways to work with their customers. From Stryker’s recent announcement of a money-back guarantee to risk-sharing business models and “integrated care” divisions at other large medtech firms, new methods of generating sales seem to be taking hold.

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