Medical Device Companies Turning To New Breed Of Supply Chain Partner

Medical Device companies are well aware of the strategic and operational impact of tougher reimbursement policies and the soon to be implemented medical device tax. In an analysis of 2011 medical device company 10Ks, 94% identified health care reform – both reimbursement and taxes – as key risks to their businesses. Only international economic conditions were more widely viewed as a risk. These two factors, along with numerous others, pose significant challenges to current business and financial models. Competition is intensifying due to acquisitions, product portfolios are being managed more aggressively to protect margins, FDA market approvals require more extensive clinical results, sole source GPO agreements are creating overnight shifts in market share, and Providers are starting to standardize on physician preferred items. Every one of these pressures has the potential to negatively impact revenue and margins. They test the foundation of market strategies, pricing structures, product costs, value propositions, and capital strategies. They even open the door for a re-evaluation of a company’s core competencies and the value of outsourcing, including supply chain outsourcing.