Diversifying Product Portfolios Will Speed Manufacturers’ Pandemic Recovery

  • Celestica  |
  • 2020-10-26
Diversifying Product Portfolios Will Speed Manufacturers’ Pandemic Recovery

Diversification. One word that describes what will be a crucial component of many healthcare manufacturers’ business strategies as they recover from the pandemic’s global economic impact. 

We recently examined how the healthcare industry has led the world’s response to the coronavirus spread. Manufacturers prioritized the development and delivery of critical care equipment to frontline workers and partnered with government agencies to make telemedicine platforms available to more healthcare providers and their patients.

Today, pharma companies are progressing on developing a vaccine, and hospitals are better prepared for the inevitable second wave of infections to hit. The world is adapting, and many medical device manufacturers are reevaluating their product portfolios and looking at strategies to grow their business.

Diversification is critical
One key lesson the pandemic has taught manufacturers is the importance of diversifying their product portfolios to become more resilient when a crisis hits. 

Consider what happened when critically ill COVID-19 patients inundated healthcare facilities worldwide. Hospitals postponed most procedures not related to treating COVID-19 patients or trauma cases, including elective surgeries. Companies that specialize in manufacturing products for those procedures saw their demand drop significantly.

At the same time, OEMs that built critical care products such as ventilators, personal protective equipment (PPE), and diagnostics with the ability to detect COVID-19 infections experienced a sharp increase in demand. For some, meeting that demand meant halting the production of other products in their portfolios and their R&D programs.

Core vs. Non-Core
Victor Dubuclet, Global Business Unit Director, HealthTech shares his insight on the value of engaging with a partner that enables OEMs to focus on their core capabilities.

As manufacturers review their business strategies, some may need to explore how their product portfolios can support a wider variety of healthcare and patient needs driven by the pandemic. Devices such as remote monitoring products, rapid testing solutions, and telemedicine applications are in greater demand. Companies looking to invest in these areas will have to commit additional budget dollars and personnel to their R&D programs, pursue M&A opportunities, or both.

Whether building a new product in-house or acquiring a company, the product development and delivery road map should consider its core vs. non-core capabilities.

For example, consider a manufacturer of robotic surgical equipment. Demand for robotic surgery technology was growing before the pandemic struck. It has demonstrated lower complication rates and improved clinical outcomes for patients than open surgical procedures that a surgeon performs manually. The pandemic has revealed another critical reason for hospitals to implement robotics.

Until a vaccine is available, the risk of COVID-19 transmission among patients and healthcare workers remains high. Robotic surgical procedures can facilitate social distancing in the operating room and significantly reduces the amount of time a patient must spend recovering in the hospital. In the near future, these systems will enable surgeons to operate on patients remotely, just as telemedicine platforms today have brought doctors and their patients together virtually.

Because the OEM’s core capability is developing the software that enables the surgeon to control the robotic arms and instruments, it turns to an expert manufacturing partner to build the hardware. The OEM eliminates manufacturing overhead and ensures its internal personnel can focus on what’s core.

Celestica’s breadth and depth of experience in design, manufacturing, and supply chain management played a crucial role in helping many of our customers produce and deliver critical care equipment to hospitals. We can also provide the scale or localized support to ensure the integration of new products and personnel does not create any production and delivery delays and even speed the entire process.

Today, as the industry recovers from the pandemic’s impact, we are also working with customers to identify core vs. non-core activities. This process enables them to prioritize innovation and product diversification while also reducing manufacturing overhead, ensuring regulatory compliance, and speeding time-to-market.

Reshaping the Entire Industry Landscape
Companies that are developing innovative products for the on-going fight against the coronavirus, such as rapid COVID-19 testing devices, may already have prototypes in the field. Time to market with a high quality product is crucial to success. Partnering with an experienced design and manufacturing partner can help them accelerate and scale production, navigate regulatory reviews, and speed delivery.  

Healthcare OEMs have had to devote so much time and resources in 2020 to overcome the pandemic’s impact on all aspects of their operations and supply chains. Long-term planning became a luxury; the priority was to survive month-to-month.

Now the work to repair disrupted supply chains and explore how to spur business growth through innovation over the long-term can begin. Having a trusted partner like Celestica that can help address all areas of product design, build, and delivery will allow a manufacturer to focus on innovation and expanding its product portfolio by R&D and M&A.

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