For some time now the importance of innovation in medical device manufacturing surpassed quality as a primary factor in company and market success, but things may be starting to change.
Why?
Unlike consumer products there is no consumer data source like Underwriter’s Laboratory or Consumer Reports to provide data and analysis on medical device products. The American Recovery and Reinvestment ACT of 2009 directs that $1.1B be spent to expand the collection and dissemination of comparative effectiveness information for consumer use. This will enable comparisons of therapy options that highlight the quality and safety of a specific medical device. Market opportunities will expand for those companies and devices that perform well in these analysis.
The increase in medical device complexity combined with the expansion of user environments is increasing the chances for significant quality issues. Increasingly when quality problems do occur, legal, regulatory, media and social media attention increases, magnifying and focusing attention on the issue.
The Financial Returns are Huge
Data and studies also tell us that the medical device manufacturers who are average in their quality performance who move to the top-quartile of performance would increase profits by 3 to 4 percent of revenues. This would translate to roughly 14 percent growth in EBITA for an average company.
Estimates are that the industry spends 10 to 14 percent of revenues on maintaining day-to-day quality, industry wide that is $14 to $21 billion. Major warning letters and consent decrees along with lawsuits cost the industry between $2.5 to $5 billion per year. Some believe that adopting best practices could cut these costs in half.
Whether your company is large or small, improvements in quality performance require senior management to take the lead and guide attention and improvements in quality systems and processes.
Learn More
See this Study by McKinsey & Company for more detail on The Business Case for Medical Device Quality.