The global medical devices industry, while large, is very competitive. Worldwide sales for 2011 are estimated to be more $300 billion in 2011 with the U.S. being the largest market.
The U.S. medical devices industry is growing due to aging Baby Boomers, unmet medical needs, and increasing incidences of lifestyle diseases – like cardiovascular, hypertension, obesity, and diabetes. However, all isn’t rosy; the medical device industry faces several issues – pricing concerns, health care reform, reimbursement pressures, and increasingly regularly involvement. Given this picture, what are the implications for medical device sales people?
1. Changing decision-makers – Although once often the sole decision-maker, the power of physicians is eroding. Today sales people must manage not only physicians – who are becoming increasingly cost conscious, but also procurement, the C-suite, and other healthcare practitioners (e.g., nurses, techs). Many of these people will have pre-conceived notions about you and your competition. Some are your supporters, some are neutral, and some are adversaries.
With more buyers involved in the process, with different priorities and differing views about your device, the complexity of the sales process has increased. And this increased complexity translates into the need for more time to be spent in each account and the need to prioritize that time.
An additional factor is the rise of committees – new product committee, VAC (value analysis committee) or by some other name. Committees mean the buying process will take longer than when physicians spearheaded the decisions. It also means a lot of the decision making is going on when the sales rep isn’t there. Therefore, working with your internal champions to effectively present your solution is critical.
2. Rise of new influencers. In additional to the multiple buyers inside the hospital, there are powerful outside groups in the market – GPOs (Group Purchasing Organizations who contract with suppliers to pool the purchasing power of a consortium of member hospitals) and independent consultants (who promise to identify cost savings.) Sales people must factor in their roles when crafting their strategy for the account.
Ignoring them is the big pitfall here. Regardless of your point of view, these influencers are here and have to be worked with. Just aiming to get them on your side isn’t always the answer. They are measured against criteria that may or may not work in your favor. Understand what drives them and their position at the hospital. Once you know where you stand and where they stand, you can craft a strategy which takes their influence into account. Whether you can build on the influence or try to neutralize or diffuse it will be different in each account.
3. Pricing pressures. Health care reforms in the U.S. will place increasing pricing pressures on physicians and hospitals. These pricing pressures will also be felt in Europe which, too, is experiencing an aging population and an increase in chronic disease. Furthermore, over time, European cross-border comparisons will intensify resulting in prices becoming more aligned.
Sales people must be cognizant of these pricing pressures and craft strategies to help physicians and hospitals find ways to minimize other costs or grow patient census. So now sales people need to be more savvy about hospital economics. They must look at the bigger business picture. For example, How profitable is implanting your device to the hospital? Does the implant bring pull-through revenue for other hospital services? Or, perhaps, does offering these products will bring prestige to the hospital or to the doctor – building a revenue stream?
This is just a starter list. What would you add to how the medical sale has changes?
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