Recent changes in the healthcare environment have significantly affected the medical disposables and supplies segment of the medtech market (which includes products such as catheters, gauze, blood tubes and bandages). These types of products are particularly impacted by the following trends:
- Increased pricing pressure from health systems, non-acute providers, group purchasing organization GPOs and other market participants has particularly impacted consumables players, whose products are often seen as relatively more commoditized compared with physician-preferred items.
- The expanding role of distributors and growth in private label present challenges to original equipment manufacturers (OEMs) as well as added complexity to the relationship between OEMs and their distribution partners, as these distributors are increasingly offering their own competing (and often highly price-competitive) products and services to end users.
- Supply standardization across care settings is forcing medical consumables and supply players to more actively engage with value analysis committees and C-suite stakeholders in health systems and customer organizations to help drive product standardization across the continuum of care.
- Increased demand for value-added services: As supplies and consumables face greater pricing pressure, some suppliers and distributors are developing value-added services, such as inventory management, workflow optimization and change management services, that help differentiate their offerings.
L.E.K. helps companies focused on medical consumables and supplies develop practical strategies to address these issues and win in a dynamic global healthcare market.
How we help
Small, midsize and large multinational medical disposables and supplies companies routinely engage us to help with:
- Product/market evaluation: We help our clients expand their products and services into new markets, settings of care, market segments and geographies. This includes addressing both acute and non-acute settings (e.g., hospital outpatient departments, skilled nursing facilities and long-term acute care hospitals) and both mature and emerging markets, as well as evaluating product opportunities within commoditized and physician-preferred consumables and supplies, surgical and nonsurgical products, and research and diagnostic markets, as well as nonmedical (e.g., tactical) markets. Our market access strategies for clients open the door for growth and long-term value creation.
- Service and solution expansion: We work closely with our clients to ideate, develop and execute innovative inventory and workflow management solutions and services that help transform our clients into solution providers and allow them to meet the increased needs of customers asking for these services from their consumables and supply partners. We also help shape and test the standardization support services and change management capabilities that consumables and supply companies will require in order to effectively help providers realize their standardization goals for their consumables and supplies across departments and care settings.
- Commercial model optimization: We also work closely with our medical consumables and supply clients to help reshape their commercial models to better match the needs of their customers, including reallocating resources and adding new functions to better align with key stakeholders.
Examples of our work
We have helped many companies in the medical consumables and supply space recalibrate their product strategy or business model to drive profitable growth and outsized returns.
- Business model innovation: A leading consumables medical device player was trying to understand how to evolve its entire U.S. strategy, including its go-to-market approach among key accounts, sales team allocation, customer solution ownership and development, and data/analytics tool prioritization and development, among other key considerations. Over a five-to-six-month period, L.E.K. worked closely with the management team to develop an optimal approach to each key issue, including concrete tactical steps to execute and build on each pillar, leading to further improved share performance and above-market growth for the organization.
- Diligence of a leading consumables manufacturer for the OR: A private equity client evaluating an innovative surgical consumables player asked L.E.K. to develop a plan for how its technology could be used to enter into new segments. Within the management and investor team, there was significant uncertainty about which market opportunities were most attractive and what the optimal business model was to pursue them. We helped segment potential customers and designed core use cases, uncovering new revenue opportunities worth upward of $500 million.
- Services and solutions development: A global supplier of medical devices and consumables asked L.E.K. to help with a hospital-specific departmental strategy, focusing on value-added services that included product usage analytics. We leveraged extensive external and internal perspectives to create a large set of potential solutions, which were then tested with key stakeholders to determine optimal pockets of opportunity that aligned with the company’s core competencies. Ultimately, our recommendations led to significant advancements in the company’s service offering.