Why You Need to Embrace Medtech Outsourcing

Outsourcing greatly improves return on investment in medical device commercial operations--but is being underutilized in the industry, according to a new survey.

Varun Saxena

There is apparently a surprising difference between medical device companies that achieve a strong return on their investments in commercial operations, and the 81% of them that do not, according to a new survey of 60 medtech executives leading companies with with revenues ranging from $50 million to $2 billion.

It comes down to one word: "outsourcing." It's an area in which medtech companies lag behind their pharmaceutical industry counterparts.

"Approximately 85% of respondents say they rely on 'personal experience' to stay on top of commercial operations best practices, yet key commercial operations functions such as advanced analytics, incentive compensation, and information management are highly sophisticated and require deep technical knowledge (as are the technologies associated with them)," Evanston, Ill.-based sales and marketing consultancy ZS Associates said in a report.

The firm found that companies that reported a strong return on their investments leverage partners a precise 2.6 times more than those that reported weak or no return on their investment.

ZS also said that companies who reported strong returns on their investment made investments in analytics of all sorts in order to give their salespeople better leads, including pricing analytics and social analytics. Among companies that reported a return on investment of more than 10%, 84% invested in big data analytics, compared to 5% of those who achieved no return.

An integrated approach to the investments is preferable. "Companies that have seen bottom-line results from commercial operations investments have not only invested in technology, but also in building the right processes and teams to support their commercial teams," the report says. Examples of wise business process investments include territory design tools and territory management systems, according to the report.

The respondents included a majority of the top 25 companies in the industry across a range of categories. Commercial operations capabilities studied by ZS include business intelligence, advanced analytics, and contract price management.

"Our study shows that while major hurdles do exist to achieving meaningful return on commercial operations investments, some forward-looking companies are already doing it well and offer valuable lessons," ZS manager Bhargav Mantha said in a statement. "The commercial operations organization at these companies is closely aligned with the business and has become an important profit driver by providing actionable business insights and enabling better productivity among the commercial teams."

Varun Saxena is a contributor to Qmed.

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