Comparing the uncomparable? How to do portfolio optimization in medtech

If you’re in charge of making decisions for multiple business units serving different markets, it can seem challenging to compare diverse medtech products in unrelated markets. How do you compare the market opportunity for MRI systems to vascular stents to implanted neurostimulators? Which offers the best ROI? Which should get incremental investment? Should any be phased out?

These are tough questions to answer without comprehensive and consistent analytics to inform the comparisons.

Typically today, each business leader describes his or her market opportunity and challenges in terms unique to that market. Because of that, it’s hard to compare and prioritize across them. The result is what I call “the best presentation wins” – a good story, whether true or not – and not necessarily the best investment strategy for your business.

Using our Strategic Market Assessment framework to describe any medtech market, seemingly disparate products and markets can be managed as a single portfolio. You can look at all opportunities through a uniform lens, assess an objective “confidence score” in any defined growth strategy, and quantify the ROI of growth investment scenarios. This approach enables you to optimize the total portfolio returns by allocating growth investments objectively.

In addition, using a single objective approach enables everyone on the leadership team to understand one another’s opportunity. They will also recognize why the team decides to elevate investment in one business at the expense of another. With this approach, everyone’s using the same playbook and speaking the same language.

For example, using this approach, one global company leadership team learned of a major opportunity in one business unit. To capture this opportunity, they would need to increase investments into the technology to overcome the market barriers inhibiting growth. Using the same process, they learned their flagship product had limited untapped growth potential. So, the entire team reset internal expectations and agreed to shift investments and deploy resources more effectively. Make no mistake, this was a huge psychological change for this market leader.

Most multinational portfolio companies work hard to invest where they hope to get the best ROI. But it is a constant challenge to recognize the optimal time to start shifting investments away from mature markets and into new growth opportunities without uniform, comprehensive, and defensible analysis behind the decisions.