Medtech Success in 2024: Insights and Strategies

Two recent McKinsey reports offer insights and predictions for medtech success, based on conversations with industry leaders and McKinsey’s research.

“What to expect from medtech in 2024” discusses the uneven performance of the medtech industry in 2023, highlighting factors such as revenue growth, product approvals, and investor sentiment. Seven key predictions are made for 2024, covering topics such as industry growth, profitability, innovation, global performance, AI adoption, M&A activity, and the impact of GLP-1 drugs.

“Medtech Pulse: Thriving in the next decade” provides a comprehensive analysis of the medtech industry’s challenges and opportunities for value creation. It explores strategies for sustainable growth in a changing economic landscape, focusing on areas such as R&D, software innovation, digital health ecosystems, commercial models, operations, ESG considerations, M&A, and competition in China.

Industry Landscape in 2024

Looking ahead to 2024, the medtech industry is expected to stabilize after experiencing both successes and challenges in 2023. Despite facing hurdles such as investor concerns about profitability and inconsistent performance across regions, the industry remains optimistic. Predictions for 2024 suggest a focus on stabilizing growth rates and enhancing profitability. Industry experts anticipate continued innovation in areas such as cardiovascular health, digital healthcare, and robotics. These sectors are expected to drive growth and provide opportunities for companies to thrive amidst evolving market dynamics.

Investor Focus on Profitable Growth

Investors in the medtech sector are increasingly prioritizing profitability alongside sales growth. This shift in focus comes in response to concerns about the industry’s ability to generate sustainable returns. Despite anticipated interest rate declines, companies are expected to prioritize efforts to expand profit margins. This emphasis on profitability reflects investors’ desire for medtech companies to demonstrate financial resilience and long-term viability in an uncertain economic environment.

Continued Innovation

Innovation remains a cornerstone of the medtech industry, with companies continuously striving to develop new medical technologies. In 2023, the FDA approved a record number of novel medical products, signaling a robust pipeline of innovation. Looking ahead to 2024, experts anticipate an acceleration in innovation, particularly in segments such as cardiovascular health, digital healthcare, and neuromodulation. These advancements promise to address unmet medical needs and drive growth in the industry.

Geographic Performance Variability

The performance of the medtech industry varies across different regions, with certain markets driving growth while others face challenges. Projections for 2024 indicate that China, Japan, and the United States will continue to be key drivers of industry growth. However, growth in Europe may slow down, while India presents promising opportunities due to favourable policy changes. Understanding these regional dynamics is crucial for medtech companies seeking to capitalize on growth opportunities and navigate market complexities.

Adoption of AI in Medtech Success

Artificial intelligence (AI) is increasingly being leveraged by medtech companies to enhance productivity and drive innovation. In particular, the adoption of generative AI (gen AI) is enabling companies to streamline processes and develop novel medical technologies. Early adopters of AI technologies are expected to gain a competitive advantage in the evolving medtech landscape, as AI continues to play a transformative role in research and development efforts.

M&A Activity Outlook

Merger and acquisition (M&A) activity in the medtech sector is expected to remain stable in 2024, with companies seeking strategic growth opportunities. Despite challenges such as a scarcity of high-growth targets, companies are actively pursuing M&A transactions to enhance their market position and drive value creation. Significant cash reserves accumulated by medtech companies offer opportunities for strategic investments and expansion through acquisitions.

Impact of GLP-1 Drugs

The emergence of GLP-1 therapies for conditions such as diabetes and weight loss has garnered attention within the medtech industry. While these therapies are gaining popularity, experts do not anticipate a significant impact on overall industry growth in 2024. Medtech companies must proactively address potential business impacts associated with the adoption of GLP-1 drugs, ensuring they remain resilient in the face of evolving market dynamics and changing healthcare landscapes.

Key Takeaways

The medtech industry faces both opportunities and challenges in 2024 and beyond. Key areas of focus for medtech success include stabilizing growth rates, enhancing profitability, fostering innovation, navigating geographic performance variations, adopting AI technologies, managing M&A activities, and addressing the impact of emerging therapies. Despite uncertainties, medtech companies can create value by embracing strategic approaches outlined in the “Medtech Pulse” report, such as reimagining R&D, cracking the code of software innovation, building digital health ecosystems, transforming commercial models, optimizing operations, committing to ESG principles, and adapting M&A strategies for the current environment.