MedTech Trends in 2022: Headwinds and Tailwinds
The new year begins amid a dramatically different medtech environment than 2021. Although the industry’s future remains bright, a unique set of challenges—or headwinds—awaits the sector in 2022. Fortunately, those headwinds can be conquered by equally unique opportunities, or tailwinds.
The headwinds include the latest COVID-19 variant (currently the highly contagious Omicron); labor shortages; price increases; supply chain challenges; rising borrowing costs; and cross-border restrictions.
COVID-19: Obviously, the most forceful and potentially damaging headwind right now is the latest coronavirus variant (labelled a “scariant” by some). Whether it is called Alpha, Beta, Gamma, Epsilon, Delta, or Omicron, the virus clearly isn’t going anywhere. Thus, the question becomes: How can SARS-CoV-2 and humankind best co-exist with minimal disruption? Should nations isolate intermittently, undermining the global economy or must society accept the fact that COVID-19 is here to stay and will always pose some sort of threat to homo sapiens, regardless of vaccination status? Most importantly, how will the virus impact business operations?
Labor shortages: There is no lack of jobs, but finding the right workers at an affordable price is essential in order to bridge the current labor shortage gap. The pandemic has prompted countless employees to look for better jobs (or bosses). In some cases, laborers are simply searching for a better work-life balance through remote or hybrid positions. But talent has become hard to find, costs are increasing, and manufacturing/production delays are creating a ripple effect throughout the supply chain.
Price increases: One of the fundamentals in the global economy is supply and demand. It’s also simple math: Items that are costly to produce are more expensive. Medtech organizations from component suppliers to large OEMs are absorbing higher pricing levels and passing those increases down (or up) the supply chain. Although basic economic theory dictates that rising prices eventually fall, a descent seems unlikely anytime soon.
Supply chain challenges: Countless articles and books have been written about the world’s badly broken supply chain. The collapse can be attributed to various factors, including a labor shortage that has limited production of goods, raw material availability, higher demand, and higher costs. Hopes for a return this year to a functional supply chain (pre-trade war with China) is unlikely with an entrenched and less flexible Chinese business environment and an unrelenting pandemic. Many companies consequently are revisiting regionalization and localization for manufacturing (vs. globalization).
Increasing cost of borrowing: Since the Great Recession in 2009, money has been relatively plentiful. COVID-19 has further upped the ante but this trend is about to change, as the cost of money will rise in 2022 and beyond. Those currently running a company and considering acquiring, refinancing, or taking out a loan already are aware of the rising cost of borrowing money. Thus, it would be prudent for business owners needing loans to obtain funds earlier in 2022 rather than later. And, borrowers should maintain strong banking relationships because competition for loans will likely be fierce.
Cross-border restrictions: Where to start? It seems new travel restrictions are continuously being released and updated, upending business travel plans. Global medtech executives must be able to see customers and suppliers all over the world. International tradeshows (even ones based in the United States) could still provide new business opportunities for companies impacted by foreign travel restrictions. While virtual activities are a short-term option, companies will eventually figure out a way to safely conduct face-to-face meetings again. There is no better way to move business forward than looking someone in the eye and building trust for a future business relationship.
Tailwinds include new markets being created by COVID-19, efficient digital healthcare solutions, medtech’s growing consumerism, and the planet’s aging population.
COVID-19: Every crisis brings new opportunities, and the pandemic is no different. Ventilators were in high demand in 2020 but less so last year and thus far this year. Ventilator parts and service, however, are now in high demand. Telehealth was struggling for acceptance before SARS-CoV-2, and now it is the preferred way to provide care. Elective surgeries are still experiencing ups and downs but the creation of new care centers are now offering new opportunities (i.e., remote patient monitoring solutions).
Efficiencies through digital solutions in healthcare: Digital solutions were already a trend before COVID-19, but the virus has triggered an explosion in enabling technologies. From robotic surgery to remote/at-home patient monitoring, electronic access to patient records, and telehealth, the industry has only just begun tapping digitized healthcare’s potential. In 2022, digital solutions are going to continue to become more popular as the demand for unique offerings will create unexpected opportunities and exciting results.
Growing consumerism of medtech: Consumers are now being asked to monitor themselves through activities (e.g., COVID-19 testing, wearables, etc.). As today’s patients embrace (or reluctantly participate) in the latest diagnostic and monitoring solutions, they are becoming more accustomed to welcoming medtech into their daily lives. In 2022, most people now understand the difference between PCR assays and home tests (and also where to buy them, where to get tested, and how to get vaccinated). This trend will only continue as colds, flu, and coronaviruses keep demand high for these products.
Aging demographics: This is not a new concept. The world’s overall population is aging and living longer than ever, even with a highly contagious virus running rampant around the globe. Respiratory diseases have always been an issue for the elderly. Though the growing geriatric population has more medical needs, it also has more spending power. Older consumers are also more likely to know what they are willing to accept and generally are not shy in voicing their expectations for care. These expectations will push healthcare providers to demand even better products from the medtech industry, and rightly so. More demands create more prospects for future successes.
Medtech executives now have the opportunity to become more educated healthcare consumers, a trend that is driving demand for products in unprecedented ways. It will be exciting to watch how this next year unfolds as the industry grapples with lingering supply chain challenges, skyrocketing prices, inflation, and a pandemic that often seems like it will never end. This much is clear: The ride in 2022 will be anything but smooth.
Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com or at www.medworldadvisors.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.
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