In February, Model N released its fifth annual State of Revenue Report, providing information intended to guide medical technology, pharmaceutical, and high-tech industry executives in implementing new strategies and tools to grow company revenue and market share. The report benchmarked companies’ perceptions and reactions to economic conditions, supply chain disruptions, recent legislation, and more.
Rehmann Rayani, Model N’s chief strategy and marketing officer, recently detailed the report’s findings with 24×7 Magazine and provided thoughts on what’s ahead for the medtech industry.
24×7 Magazine: What did you set out to achieve with this year’s State of Revenue Report?
Rehmann Rayani: It can be challenging for the life sciences industry, including medical technology companies, to balance a shortage of staff and expertise with urgent operational demands while providing exceptional customer experiences. As the leader in revenue optimization and compliance for these industries, we set out to answer three key questions:
- What trends are influencing revenue management?
- What is the current state of data analytics in revenue management?
- How can modern technologies be leveraged to support revenue management?
Based on responses from over 300 industry leaders, we identified three themes:
- Innovation is being affected by today’s market realities.
- Inflation and supply chain disruption impact revenue management.
- There’s a growing role (and need) for technology in revenue management.
As medtech companies adapt to the current economic climate, the quality and reliability of technology solutions become increasingly critical to success. By leveraging these insights, we aim to empower our customers to develop and launch life-changing products, while helping them thrive in an increasingly complex marketplace.
Further reading: 7 Steps for Medtech Manufacturing Revenue Optimization Amid the Chip Shortage
24×7: You studied several industries in this report. Specific to medtech manufacturers, what stood out to you?
Rayani: According to our research, many medtech companies face challenges that hinder their ability to maximize revenue potential. Most executives voiced concerns about potential revenue losses due to pricing and quoting inaccuracies. Fortunately, challenges related to managing financing and subscription models for capital equipment have somewhat improved, but still have a ways to go with 72% of medtech leaders reporting difficulties.
Three-quarters of executives acknowledged potential losses in the billions due to pricing issues, quote and rebate errors, and other revenue management issues. Technology helps manufacturers address these issues.
24×7: The report highlights that challenges with the selling process are common. What are some key takeaways for manufacturers?
Rayani: Ideally, executives would say “never” when asked if their customers experienced pricing or responsiveness issues when asked about customer experiences. Unfortunately, this is not the case.
More than three-quarters of surveyed executives report experiencing response delays, price discrepancies, or incorrect pricing some of the time. When it comes to revenue optimization, any occurrence is too many. These findings demonstrate the need for companies to improve their revenue management practices to provide customers with exceptional experiences.
24×7: What did medtech execs say about the economic challenges their companies are facing?
Rayani: Most executives named inflation a significant headwind, with more than 8 in 10 calling it the most significant impact on innovation. The rising costs of raw materials, manufacturing, and administration are putting a strain on medtech companies’ finances. At the same time, healthcare providers exert downward pricing pressure due to higher staffing costs and other expenses.
Supply chain and logistics issues are creating further obstacles for the industry. The report reveals 40% of medtech executives identify regulatory changes as a top issue impacting innovation. Companies are also facing staffing and expertise issues across almost all areas. Specifically, they’ve experienced reduced availability of consultants and contractors, as well as increased workloads and difficulty hiring highly skilled staff.
Despite these challenges, there is positive news. While the same percentage of executives in both 2022 and 2023 expect staffing and expertise issues to affect revenue management, the percentage who describe the impact as “significant” decreased significantly.
24×7: Our publication recently reported that representatives from the medical device industry, government, and industry associations formed a working group to help improve medical device quality and enhance supply chain resiliency. Why is this important?
Rayani: For the second consecutive year, our research showed that supply chain disruption was the No. 1 factor impacting medtech companies’ revenue management.
Medtech manufacturers are grappling with supply chain disruptions as well as increased manufacturing and shipping costs. The recent surge in demand for semiconductors has further strained an already fragile supply chain, compounded by years of underinvestment in production. The CHIPS and Science Act of 2022 seeks to bolster domestic chip manufacturing, but it will take time for the legislation to have an impact.
Manufacturers also need to address a shortage of skilled workers to maintain production levels and remain competitive. To attract and retain talented employees, medtech companies are exploring ways to promote training, certifications, and apprenticeship programs. For instance, organizations like AAMI are advocating for these programs to help bridge the skills gap and bring new talent into the industry.
To the extent that the working group can provide better guidance to medtech manufacturers grappling with these supply chain challenges, it’s an opportunity to put the industry on firmer ground and boost innovation to create more life-changing products.
Rehmann Rayani, chief strategy and marketing officer, joined Model N in 2018. Rehmann is responsible for leading Model N’s corporate strategy function and all aspects of the Marketing function across corporate and growth marketing, product marketing, and communications.