The tie that binds the development of medtech product innovation and medical device pricing strategy must be strong. To define medical device market potential, there are three critical questions you need to ask:
- What is the unmet need that can be solved with medtech products?
- Is the medical device market potential for this innovation robust and viable? For how long?
- What member of the healthcare ecosystem (e.g. hospital, payer, ASC, patient), will pay or reimburse for this medtech product, how much, and why?
Stating the unmet need is the beginning of the process. The second step is ensuring that the medical device value proposition meets that unmet need. The design must fit the clinical workflow in every medical device market segment you target, and should be able overcome every forseeable barrier to use.
Medical device market research differentiates the market positions of direct and indirect competitors, to assess the viability of the medtech product in the market. The most ambiguous and all-important question? Who will pay for medical device innovation, what do they think of the medical device value proposition, and why?
The cost of entering the global medical device market
Introducing a medical device to the US market is not for the faint-hearted. A Stanford study1 performed in 2010 identified the following:
- Average cost to bring a 510(k) medical device to product launch is $31 M.
- Approximately 77% of that cost; estimated at $24 M is spent on regulatory and FDA-related processes alone.
- A PMA is estimated at triple the cost of a 510(K), averaging $94 M, with $75 million spent on FDA related processes.
Medical device pricing strategy and conjoint analysis
Conjoint analysis is an advanced medical device pricing strategy tool that gives your product development team insights into how your customers will make price and feature decisions to inform your medical device go to market strategy.
Through conjoint analysis, we show how hospital administrators, clinicians and patients define their ideal product and identify the drivers for the choices they make. Beyond those real time choices, the second best output of a conjoint analysis output is the market simulator, giving you critical insights that are usable for years to come to address problems like:
- Do we add more features and how will this impact the price?
- Which features will take the most competitive share of market?
- Can we charge a price premium for improved patient outcomes?
What will a medical device market simulator do for your product development team?
The market simulator, an output of medtech conjoint analysis, is an important tool that utilizes statistically significant conjoint data to form a medical device go to market strategy tool that executive management will appreciate because it gives the ability to stimulate market alternatives and conduct “What-if?” scenarios.
Need more information on medical device market segments? The market simulator allows your medtech product development team to scrutinize new product designs and the medical device value proposition in combination with pricing strategies. The team can create go to market strategies around market segments (hospital administrators, clinicians or patients with differentiated preferences).
What is the cost of a conjoint analysis?
While there are less expensive medical device pricing strategy methodologies available, conjoint analysis is the go-to process for new, innovative products and designs that have multiple feature options. A conjoint survey is an investment, often at a cost of greater than $100,000 (depending upon the targeted medical specialty and decision makers involved). With the entire process of medical device development to the point of product launch estimated at $30 M for a 510(k) to $94 M for a PMA, removing these levels of risk and uncertainty in decision making makes investing in a conjoint worth every penny spent.
How can we help you? Let us know using the contact form below. Out most recent three client engagements were for:
- Pricing Strategy (non-conjoint)
- Due Diligence for a possible M&A
- Commercialization strategy for a European client entering the US in 2018