5 Reasons German Medtech SME increasingly want to cooperate with eHealth startups

The demand for healthcare supplies is gradually increasing around the world. This has assisted the German MedTech industry in establishing itself as one of the fastest and largest growing fields in the German health sector. The industry has developed new medical products and techniques in areas such as clinical engineering, ultrasound imaging, regenerative medicine, and rehabilitation. Growing digitization in the economy and all aspects of life is opening new opportunities for the development of future digital health care. It is imperative for small and mid-sized (SME) German MedTech companies to have collaboration and cooperation with digital health startups.

Let’s review why it is of utmost importance for German MedTech SMEs:

1. Presence of significant technology clusters and start-up clusters provide tremendous innovation synergies

While medical technology companies can be found all over Europe, several regional industrial clusters have developed. Those regions have a high concentration of medical device companies, clinics, component suppliers and research facilities with an emphasis on medical research. One of the biggest clusters in Europe is situated around Tuttlingen, Germany. With 400 plus MedTech companies employing over 13.000 people, the region pride itself to be “world hub of medical technology.” Centered around the endoscope maker Karl Storz, and surgical instrument manufacturer Aesculap, more than 90% of the companies in the cluster are SMEs.MedTech SMEs can highly benefit in inviting more digital startups in the clusters. Fresh Brains Can Bring Innovations. With the power of innovative apps, ultra-modern technologies, SMEs can evolve and beat the competition in no time.

2. Traditional SMEs must move towards services and digital health products.

The hottest trend is to make progress towards beyond-the-pill solutions. Confronted with the risk of generics and the patent cliff, digital health (software) and Medical devices (hardware) are the perfect travel buddies for the healthcare industry. Right now, more than 80% of the global market share is with the top 15 MedTech companies worldwide. Alternatively, 95% of all MedTech companies are SMEs in Europe. To shift from the traditional way of delivering healthcare solutions, SME MedTech companies must move towards services and digital health companies. The case of Medtronic is an example of this, acquiring Diabeter (a Dutch company providing diabetes management services for kids and teens using monitoring and follow-up technology).

3. SMEs must lower costs, through new digital technologies

Per a report conducted by Analysis Group, prices for implantable medical equipment has dropped between 17% and 34% from 2007 to 2011. Medical technology companies are trying to adapt to the changing conditions by introducing cost-saving technologies, such as mobile health solutions, and new business models. To gain this, MedTech SMEs are eying successful eHealth startups, which majorly focus on mobile technology and app developments for partnerships. For instance, MIMI, a German digital health company that wants to change your smartphone to a hearing aid device. The company has created a mobile app which uses its hearing technology based on algorithms to help those with hearing loss or disability. The app first takes a sample test for both ears before personalizing sounds for the individual using the app. Digital and Analog can be the perfect combination for the German health care system.

4. Startup cooperation may facilitate entry into emerging markets

Emerging markets currently hold less than one-quarter of the MedTech industry’s global income, but this is likely to touch 1/3 by 2022. The MedTech market in China, already the 2nd largest in the world, is liable to grow by 13% annually from 2015-2022. India’s MedTech market, currently the 5th largest, could rival Germany and Japan in size by 2022, while it continues to grow by 17% annually. Emerging-market MedTech companies still have lower costs than their European and Western competitors. To beat the competition, a formal tie-up, M&A, and partnerships are must for SME MedTechs in Germany.

5. Startup cooperation helps SMEs innovate new business models

A traditional business model that is highly dependent on physical structures (buildings, labs, equipment) and very less on modern digital technology (online healthcare solutions and big data) have kept the German MedTech Companies at bay while others flew away much faster. All the big ones are already working in the health arena: Apple, Google, Facebook, Amazon, Microsoft with smaller startups. The challenge facing digital health and MedTechs in the coming years will be to use big data for predictive analytics, which let to transform the services provided, making them more focused on preventing than curing. It is the need of the hour to do the same in Germany with relaxed regulations.

A final thought on the German Medtech industry

The medical tech industry in Germany faces challenges in many areas. Regulatory changes are pending, new players are entering the market, and public healthcare budgets are ever declining. However, the prospects for the industry still look promising. A globally growing middle class and ageing populations are valid indicators that the demand for medical technology will only upsurge in the future.

Small and mid-sized pharmaceutical companies in Germany must employ new technologies to adapt to changing situations, as investors and health insurances will only demand that new drugs not only improve the treatment but also help to save money.

Image credit: www.istockphoto.com