Strong growth and healthy margins have long been hallmarks of the medical technology industry. But the commercial model that has served as the accelerator for that success now acts more like a brake. Consolidation on the buyer side and intense downward pressure on prices make it increasingly costly for medtech companies to sustain a large sales force and not to take action on overly accommodating pricing policies. At the same time, the resulting margin squeeze limits companies’ abilities to take advantage of opportunities in the emerging areas of outcome-based health care and digital health.

How can medtech companies extricate themselves from the margin squeeze and put their foot back on the gas pedal? Addressing two important aspects of pricing will free up the resources to fund and monetize innovation, sharpen the focus on existing market segments, and seize opportunities to tap into new ones. Medtech companies need to fix their pricing basics by introducing greater structure and discipline to their pricing policies. They also need to secure their futures by implementing innovative pricing models aligned more closely with value created within and along the care continuum.