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Two Thirds of MedTech Companies Are Fighting Price Wars


Sep 29, 2019 #Business

Price pressure in the industry is high, a new study reveals: Almost 70 percent of medtech companies have been exposed to significant price pressure in the last two years. Only 18 percent are planning to implement targeted price increases next year.


London, 4 September 2019 – With high, ongoing price pressure in the medtech sector, price wars are inevitable. In fact, 72 percent of medtech companies believe they are currently caught in a price war that they themselves started, either intentionally or unintentionally.

The proportion of companies involved in price wars is much higher in medtech than in other industries, with a cross-industry average of 57 percent. These are some of the key findings of the Global Pricing Study 2019 – MedTech* conducted by the global pricing strategy consultancy Simon-Kucher & Partners.

When asked about the most important drivers of profitable growth, half of all medtech companies name higher sales figures, while 27 percent of the medtech companies surveyed see price increases as the most important profit driver.

Nevertheless, the ambitions to raise prices are relatively modest in the medtech industry, as only 18 percent of companies plan to implement targeted price increases in the year ahead.

Joerg Kruetten, Senior Partner and Head of the Global Life Sciences practice at Simon-Kucher, notes: “In most cases, this low ambition amongst medtechs to raise prices is because previous attempts weren’t particularly successful.

“As ever, preparation is key: product value should be the central message whenever prices are increased.  Price must always be aligned with corporate goals, and sales needs to be given a clear briefing to enable them to work efficiently.”

Digitization generates revenue growth

To overcome the increasing pressure, companies in the medtech sector are continuing to digitalize their products. 75 percent of companies have invested in digitalization initiatives to overhaul their processes and services in the last three years. However, the primary stated goal of 44 percent of companies is cost reduction, not revenue and profit growth.

This is all the more surprising considering that for 56 percent of medtech companies digitalization has had a positive impact on their revenue performance – a clear improvement on the results of the 2017 study when the share was only 21 percent.

Digital distribution channels still need to be expanded

The study also shows that selling via online channels still hasn’t become well established in the industry. 23 percent of medtechs do not yet use digital sales platforms.

Dr. Marc Matar, Partner in Simon-Kucher’s Global Life Sciences practice in London, adds: “It is even more striking that only 1 in 10 companies have achieved significant numbers of sales through online channels.

“It should be clear to the rest of the industry that a purely conventional sales approach is no longer sufficient today. The many different customer segments can only be addressed effectively through holistic strategies involving different channels.”

Simon-Kucher & Partners, Strategy & Marketing Consultants:

Simon-Kucher & Partners is a global consulting firm with over 1,300 professionals in 38 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has more than 30 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.

By Kewalin