2–3 March 2011, Novotel London St Pancras
The medical technologies sector is entering difficult times. Its overall market continues to grow, but the dynamics of that market are changing fast. Shrinking healthcare budgets and commoditisation threaten the market share of European companies and the market-leading role of innovation. Creative marketing and sales strategies will be essential if the industry is to avoid being derailed by the economic bad weather.
At the second annual European sales and marketing conference hosted by the Medical Device and Diagnostics Executive, speakers from a range of leading medtech companies and industry-focused consultancies faced up squarely to these challenges and explored some of the ways forward. Customer insight, social marketing and revenue optimisation were among the themes addressed in two days of intense and lively discussion.
Medtech companies represented by speakers included Stryker, Biotronik, Johnson & Johnson, BD, ConvaTec and Medtronic. Nearly 100 delegates participated in a highly interactive conference, with regular Q&A sessions sharpening the debate over the medtech industry’s future.
The opening presentation by Rob Jenkins, VP Business Development and Public affairs, Stryker Europe, assessed the future of medtech sales and marketing. While the industry fundamentals are strong, he argued, its sales and marketing model needs to evolve rapidly: what worked five years ago doesn’t work now. The value of medtech to healthcare is poorly understood by policy-makers, and pressure on healthcare budgets is likely to reduce market access for even those innovations likely to reduce healthcare costs in the long term.
The industry needs to reshape its business models, Jenkins argued, to reach a wider customer audience including economic purchasers, patient groups and health authorities. It needs to focus more on tenders, contracts and key accounts, as well as regulatory and reimbursement issues. This requires sales and marketing professionals to have a broader range of skills and expertise.
Arne Heissel, Global Director Reimbursement and Health Economics, Biotronik, discussed the importance of reimbursement strategy. As decision-making powers in healthcare shift from clinical to financial managers, he said, companies need to view reimbursement as a key issue. Within that context, the clinical effectiveness of a medical technology can be defined as its ability to “reliably improve outcomes in relevant populations”. As an example of how well that approach can pay off, Heissel pointed to the 30% rise in the value of Deltex Medical shares following NICE approval of its key product in October 2010.
In a panel debate, speakers from Biotronik, Gambro and The Marketers’ Forum discussed the impact of downward pricing pressure on sales strategy. Is the medtech industry a victim of its own success, unready to deal with a more difficult future? Has it failed to work with health systems at a high enough level, and so found its value poorly understood? If so, is there a better way?
The next three presentations dealt with a key aspect of sales and marketing: customer insight. Suzi Denton and Ceri James of ConsultComplete discussed the need to “go deep” into customer motivations and behaviours. They used examples from consumer advertising to illustrate the principles of ‘emotional marketing’. These can be closely aligned with ‘rational’ priorities for both clinical and financial decision makers, as well as for patients. For example, researching patient compliance issues can help to make a product more effective across the patient population.
Nava Barit Ben David, Business Development and Marketing Manager, Johnson & Johnson Israel, presented a compelling case study of how social marketing can boost the uptake of a medical solution. Faced with widespread patient resistance to bariatric surgery, J&J mounted a campaign to raise awareness of its potential for helping people to overcome disability. Medical forums, dedicated websites, magazines and DVDs were used to disseminate patient testimonies and educational materials, targeting primary care doctors and their patients. The campaign, which had a modest budget, effectively tripled the market for bariatric surgery in Israel.
Rohan Fernando of ZS Associates discussed how customer insight can be used to improve sales and marketing strategy. He argued that customer insight is the underlying principle that aligns marketing and sales, and also provides a common denominator across different health systems. The sales model needs to employ an understanding of the buying process. Key account management is not a magic formula: companies need a range of commercial engagement strategies, with all sales staff being fully aware of healthcare economics. The underlying challenge, Fernando said, remains that “We don’t understand how commercial stakeholders buy.”
Further customer insights were delivered in a workshop by Simon Grime, Head of Healthcare at Doctors.net.uk, on the importance of online medical forums for customer targeting. Medtech companies can use such networks to position themselves as authoritative sources of educational materials, Grime argued. Engaging clinicians online has delivered excellent ROI for companies while enabling them to understand customer trends across territories. With 43,000 doctors visiting Doctors.net.uk, the forum offers medtech companies a key opportunity to access the new GP consortia.
Analogue to digital
Bahram Saidieh, Medical Technology Lead – EALA at technology firm Accenture, discussed how medtech companies can use digital technology to influence customer choice. User-generated networks have marginalised brand advertising and made online dialogue with the customer necessary. Online marketing needs to integrate its global audience while allowing differentiation at the individual customer level. But medtech companies are still wedded to the 1990s internet model of dedicated websites. Saidieh argued that a creative and versatile digital strategy using a wide variety of media can increase sales revenues while reducing marketing costs.
Andrea Zanelli, Country Business Director Italy and Greece, BD, examined the value of ‘hyper-segmentation’ (segmentation of the individual customer’s time) in targeting growth markets. This form of segmentation can be allied to forms of digital marketing that actively engage the customer, allowing the company to develop online dialogue and so refine its value proposition for each customer segment.
Moving on up
The second day of the conference reviewed some themes from the previous year in the harsher light of 2011. Dominique Legros, VP Sales and Marketing, Advanced Sterilisation Products, Johnson & Johnson, discussed how companies can grow into solutions providers for hospitals. By developing consultative sales of customised solutions, a company can build strong customer relationships and leverage its corporate brand. The difficulties include unreliable hospital financing and possible reciprocal customer insecurity, though the opportunity to outsource management functions will appeal to hospitals as their budgets shrink.
James Lewis, Director Surgical Sales Europe, Leica Microsystems, examined the same theme in terms of the shift “from clinical value to economic value”. To convince the customer that you are a solution provider, you need to make an economic case based on running costs while your sales force needs to be able to identify and respond to customer needs. This, Lewis argued, is the best strategy to defend your market share against low-cost competition.
Frank Gehres, VP and GM DACH, ConvaTec, discussed the challenges of “stakeholder relationship management” in relation to the wound care market, where the shift to home-based care has created a new network of stakeholders who influence purchasing decisions. As he said, “These days you have no time for a five-year plan.”
Pat Beyer, CEO of infection control specialist ICNet, addressed the issue of distributor partnerships. He underlined the value of distributors in providing local market knowledge and customer relationships, and emphasised the need for companies to give distributors their full support. He also drew attention to the global reach of new anti-bribery legislation, and the need for compliance to be closely monitored. “What your distributor has done, you have done.”
A panel led by Baba Awopetu, Director of The Marketers’ Forum, debated the challenges facing innovation through the commoditisation of the medical device market. Will cheap mass-produced products squeeze out unique brands? Will medtech become like the airline industry, with an expensive niche ‘top end’ and the rest dominated by price competition? Will innovation become detached from manufacturing, with SMEs only selling intellectual property? Scary questions – though the panel suggested that medtech companies can protect their role by linking innovation to the value chain.
The big picture
The final presentations took a broad view of the industry’s future. Dr Brian Smith, Managing Principal, Pragmedic, posed the challenge facing the medtech sector in stark terms: how can innovative companies maintain their role in the face of commoditisation, shrinking healthcare budgets and the growing impact of biotechnology? The industry’s future, he argued, depends on such ‘evolutionary tricks’ as market insight, value proposition design and the ability to link new technologies to new strategies for health management.
Francis White, Business Director of Medtronic in the UK, argued that ‘emotional marketing’ is the future of product differentiation. The only way to offset the dehumanising force of commoditisation, he argued, is for marketing to stress the human value of the products. The value of a successful therapy needs to be measured over a human lifetime, not a financial year. The war against device commoditisation demands that the industry use every strategy available: bundling products into services, reaching as many stakeholders as possible, using new media to get the message across. He concluded: “We need to bring the passion back into sales and marketing.”
This call to arms was a strong conclusion to a conference that rejected complacency, but gave its delegates a wealth of powerful ideas to strengthen the medtech industry’s role in the healthcare of the future.