Innovation continues to excite people, even though the global pandemic has ground business as usual to a halt. As COVID-19 continues to reshape the healthcare market, many medtech companies are debating whether to launch and how to drive launch excellence in this new market reality full of changes and uncertainties. 


ZS’s Duo Wang sat down with a panel of leaders in ZS’s medtech practice; the group has a mix of deep expertise in medtech and launch strategy: Sundeep Karnik, Brian Chapman, Tim Joyce, Matt Singer and Sudhanshu Bhatnagar. They discussed how COVID-19 is impacting launch strategy for medtech. Their conversation has been edited for length and clarity.


Duo Wang: Many medtech companies highlighted their pipeline in their recent earnings calls. However, all were cautious about providing specific guidance on launches. Some cited delays due to interrupted clinical studies and regulatory processes. Should medtech companies continue to launch products over the next year or two given the disruption by COVID?


Sundeep Karnik: Let’s first clarify the definition of a new product. As described in a previous blog post, “New Product Launches: Some Matter More Than Others,” there is a wide range of launches based on the level of innovation. Will this launch introduce a truly innovative, new-to-the-world procedure? Or is it a new product in an existing category? Or is it more of a line extension with nominal improvement of features?

Brian Chapman: A ZS survey last year showed that only 20% of hospital executives saw significant advancements in newly launched medical technologies. If a new feature isn't as consequential in the post-COVID world as before, this could be a good reason to consider pausing. For some new procedures, it may be impossible to get sufficient market attention or gather supportive evidence for a while. On the other side, if the new product focuses on delivering clear-to-see financial benefits, now can be a great time to launch. It all comes down to value proposition.


Tim Joyce: Agree. Companies should continue to launch “disruptive innovations” that bring the costs down for customers, and even more so now given the financial challenges. The “should you launch” decision also depends on the portfolio, specifically the role of the new product in the portfolio. Some products will be sources of profit. Others will be sources of revenue. It will be difficult in this environment to launch a product whose primary goal is to drive profit growth through price increase. Companies need to assign clear portfolio roles for their new products and stick to them during execution.


SK: A product launch is an investment decision and medtech is in a cash crunch right now. The less compelling the value proposition, the less attractive the ROI of the launch will be. Companies need the financial discipline to make the hard decision about what to launch versus not.

Matt Singer: We have always recommended that medtech companies ask two fundamental questions when they determine how to prioritize and customize their launch strategies: 1.) How compelling is the new product’s value proposition from the customer's perspective? 2.) How large is the realistic, addressable market opportunity for this product?


For every company that has new products set for commercial release over the next six to 12 months, I would strongly recommend that they revisit these two questions. Look for the reasons why the answers could be different, not why they should be same.


Clearly the healthcare provider’s world has been turned upside down lately and will continue to evolve in the foreseeable future. The strength of your value proposition may have changed as customer priorities shift. In this case, can you find a narrower segment of the market where your value proposition remains strong and clear? Your addressable market could be different as the patient flow you rely on slows down or gets diverted elsewhere. For example, as more patients are expected to move to ambulatory settings at a faster rate post-COVID, can you delineate your portfolio between hospital and ambulatory?


If you can find ways to recast your value proposition and reshape your addressable market, then you should definitely move forward with the launch. If not, your organizational energy may be better spent somewhere else.


TJ: Companies definitely should revisit their decisions, but in reality many won’t or don’t know how. Few organizations are set up to pivot so quickly under so much pressure and so many uncertainties, as in the COVID situation. One of the big learnings from this crisis is that we need the capability going forward to react more quickly. We can’t afford to be caught off guard again. Portfolio governance structure and strategic planning process exist in most medtech companies. We can redesign the process to be more agile and capture both strategic and tactic changes. We can also develop analytical tools that enable the governance body to make better decisions. Launch is as much an organizational decision as a product one.

Sudhanshu Bhatnagar: I’d caution against launching any products with a price uplift but only marginal improvement. With the financial pressure, customers are more likely than they may have previously been to challenge and reject premium-priced product upgrades unless they can bring significant, measurable improvement in clinical outcomes or procedural barriers. Customers, including clinicians, are paying more attention to the economics associated with new products. Launching a marginal improvement with a price uplift also poses the risk of alienating customers; customers could view such actions as self-centered and tone-deaf to their needs.


MS: In this environment, products with compelling value propositions will be the winners and those without will be the losers. I would recommend that companies reconsider a launch if its value proposition centers around either physician preference or some long-range, yet-to-be-proven clinical outcome with no clear financial metrics.

MS: Companies need to take a long-term view around launching a new procedure in today's world. Uptake curves from most medtech product launches follow an “S” shape. Revenue is typically disproportionately small relative to the resource and energy spent on the new product, even before COVID. It takes time to collect data, build cases and establish market access. Companies must be laser-focused on maximizing the long-term value proposition and long-term addressable market, which may mean not maximizing sales or margin for that product this year. Companies can compartmentalize people and budget devoted to the launch while the rest of the organization can concentrate on the near term.


TJ: Companies can leverage their portfolio and contracting if there’s a reasonable market but not enough appetite for the new product right away. A multi-year, multi-product contract that gradually shifts the mix from older and cheaper to newer, more premium products may help customers bridge immediate budget constraints and allow the company to secure share and drive new product adoption in the long term.


SB: This is the time to think locally. Healthcare market dynamic has always been local. COVID exacerbated such variance and the path to recovery will be very local too. Certain places, segments or channels might be more willing and conducive to product launch. If a company has a product whose value proposition is particularly strong in selective markets and such markets also represent a decent size opportunity, a segment-focused launch may work better than a “one-size-fits-all” national or global one.


BC: Medtech needs to go beyond traditional means to overcome the challenges in the current environment. The bar will be much higher now to prove and communicate your value proposition. Let’s assume you have a new product that has meaningful economic benefit but requires some explanation, such as lower lifetime disease burden, better efficiency across departments, etc. You may need a key account manager with business acumen and account expertise to pitch the message and help your rep who is used to selling features rather than value.  


Similarly, assuming you want to launch a product that delivers great clinical outcome but requires a lot of in-person training or support from the rep, such access is no longer possible with COVID. That doesn’t mean that you have to cancel the launch. You just need to find another way to deliver training and procedural support at scale before you release the product. Maybe you need to create a virtual-reality-based procedure simulator or deploy an online platform for reps to “remote” into and assist clinicians in real time.

MT: It’s a challenging time for new procedures. You will need to think about market development both comprehensively and creatively. Market development means removing adoption barriers across stakeholders: providers, patients, payers, etc. With the disruption from COVID, you may encounter additional challenges. For example, as patient flow slows to a trickle, can you find ways to engage patients, raising awareness and motivating them to act? As the scrutiny around procedures increases, can you demonstrate real-world evidence to a payer that your procedure is a better alternative to cheap medical management? Maybe you should wait until you figure out how to remove these barriers. Or you could do a limited launch instead of a big splash, with a focus on gathering data evidence.


BC: Budget constraints are real. Hospital operating margin in the U.S. dropped 150% in Q1 compared to last year. HCA already announced they would postpone certain capital expenditures. Medtech companies in the capital business may need to explore different revenue models to remove the high upfront costs: rental, leasing, subscription. Also, move the focus from features to financial values; communicate and prove how your devices can help customers increase revenue, and improve efficiency or reduce cost of ownership.

SB: I’d recommend breaking down the decisions into “Should I launch?” and “How should I launch?” For the former, ask if the value proposition will still resonate in the new market environment. If not, can it be pivoted? What are the business objectives for the product? The second question is a downstream decision. How do I communicate the value and target a segment? What alternate channels can I use? And importantly, do I have the discipline, the information, the resources and the mindshare to launch the product right?


BC: Both the financial stakes and risks are higher now. Therefore, the decision whether to launch or not is critical. I would recommend that the individual reconsider previous assumptions. After that, if the decision is yes, go all in. It's about launching fewer but better things in the near term, and making sure the launches make sense and are fully supported in the new environment.