UK NHS Procurement Might be Killing Home Grown Innovation

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One of the advantages of my line of work is that I get the opportunity to speak with a lot of industry leaders, and one of the questions I often ask is “what do you see as your greatest challenges in the next year?” As you can imagine, the answers vary significantly, particularly geographically, as I work with healthcare companies all over the world.

However, one of the biggest challenges that seems to be pretty much global is the changing nature of procurement. The days when the clinician held all the buying decisions are over. The power of the procurement professional is massively on the rise, with significant consequences for medical device companies, particularly with respect to traditional sales and marketing models, many of which have not changed for decades. The king is dead, long live the king! Large company response to this has been understandably a heavy focus on health economics and product and service bundling, thereby offering the customer greater value for money in exchange for increased sales, often at the expense of smaller suppliers.

The implications in the UK are particularly significant, and may have some quite serious unintended consequences that raise questions for policy makers both here and elsewhere. The UK National Health Service (NHS) is funded directly through taxation. It is a large government controlled virtual monopoly. It is constantly short of cash, and the pressures to squeeze savings are irresistible. However, if the NHS continues down the path of aggressive procurement, the consequences for the UK’s own medical device industry could be very serious.

According to the ABHI, the UK medical device sector is now worth over £17bn to the UK economy. These companies are innovators, developers, manufacturers and exporters. A significant proportion of them are SMEs. CEOs of early stage companies (so-called “start-ups”) tell me that it is becoming progressively harder to sell new innovative products to their home market. The simplistic purchasing decision based on price rather than value is forcing some companies with great technologies to have to admit to their investors that they can’t sell in their home market, possibly with highly damaging consequences.

A recent survey conducted by ABHI found that the single greatest challenge to their members was the increasing cost of doing business with the NHS. This is a highly worrying trend.

Politicians are often talking about “joined up thinking”. The political masters of the NHS need to wake up before they unintentionally squeeze the life blood out of this highly important high tech sector, and engine for economic growth. In their haste to buy cheaper imported products, for short term savings they are damaging the UK’s own exporters. Not very clever really.      

If you are looking to find expertise to overcome the challenges outlined above please follow this link to book a free 15 minute meeting with me.

Have a great day! 

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