Value creation priorities shaping medtech

Investment Rating - The report indicates a positive outlook for the medtech industry, highlighting the performance gap between top value creators and their peers, suggesting a favorable investment environment for leading companies [3][6]. Core Insights - The medtech industry has seen a significant divide between high performers and others, with top companies achieving above-average growth and profitability, while the rest struggle [3][6]. - Key strategies for value creation among leading medtech companies include prioritizing innovation, adopting digital tools, and focusing on clinical excellence [7][10][11]. Summary by Sections Value Creation Priorities - Top medtech companies have outpaced the S&P 500 since 2019, with a focus on quality, innovation, and rising profit margins [3][6]. - The report identifies six strategic moves that leading companies are making to create value, including innovation productivity, digital tool adoption, and data-driven management [7][8][9]. Innovation and R&D - R&D costs have increased significantly, with spending as a percentage of sales rising by 300 basis points since 2008, necessitating a focus on meaningful innovation backed by clinical evidence [4][6]. - Successful companies are leveraging digital tools to reduce development time by 20% and improve efficiency [8]. Clinical Excellence - There is a growing need for clinical data across all devices, with top performers looking to the pharmaceutical industry for improved trial execution and monitoring [10]. Portfolio Management - 2024 has seen a surge in acquisitions, with top performers making 3.5 times more acquisitions than their peers since 2019 [11]. - Companies are also actively divesting underperforming assets, with divestitures in 2023 and 2024 doubling previous years [11]. Cost Management - Industry margins have declined by approximately 100 basis points since 2019, prompting leading companies to undertake significant cost transformation programs [16]. - Successful cost management strategies include portfolio simplification, go-to-market optimization, and supplier renegotiation [16][19]. Geopolitical Adaptation - Medtech companies are facing challenges from geopolitical uncertainties, with top performers focusing on key markets and local partnerships to drive growth [32][33][35]. - Localization efforts are critical, particularly in emerging markets like China and Indonesia, to enhance growth potential [34]. Generative AI Utilization - Leading medtech companies are beginning to harness generative AI to enhance commercial capabilities, with significant potential for productivity gains and improved customer engagement [31][28]. - Use cases include sales rep support, account-level prioritization, and content generation, leading to increased efficiency and effectiveness [28][27].