Historically, medtech and pharma firms experienced high margins, but many are now struggling with efficiency, effectiveness and focus. The analysis revealed many medtech firms report 50 percent of their research and development spend is on sustaining engineering instead of innovating for new products. Those companies with low product line complexity witness two times the predicted revenue growth compared to those with high product line complexity.
Here are five principles medtech companies can employ to boost profit growth:
1. Create cross-functional teams and governance structures.
2. Establish a cost-of-complexity model to capture all embedded costs.
3. Craft a business case for eliminating complexity based on what customers value.
4. Enhance organizational alignment.
5. Coordinate to limit complexity.
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