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Oliver Wight EAME Blog

Healthcare: why wait for a crisis to take care of your product portfolio?

By Jerry Shanahan, partner at Oliver Wight

27 July 2018


At a gathering of professionals from the Healthcare industry in Zurich, earlier this year, a number of key challenges facing the industry were discussed.

One of the top challenges identified by the group was that of “Managing Uncertainties”. As one can imagine, there were many aspects to the resultant discussions on what type of uncertainties are being faced, within the Pharma versus Medical Device versus Service sectors within the industry. What was particularly interesting, was the frenzied reaction that has been prompted within the Medical Device sector, as a result of the recent directive from the Medical Device Regulation (MDR), driving increased level of documentation to support the classifications of products and as a result, the potential re-classifications of products from Class IIb to Class III.

Faced with the prospect of a very laborious and resource intensive exercise, many companies have been prompted to take a long hard look at their growing Product Portfolio, and have been asking the tough questions on whether all of these products are essential to delivering the future success. For an industry that historically has been focused on adding and updating the existing portfolio, there now is a genuine drive to look at the other end of the life-cycle, with acknowledgment that there are many products that are no longer core to the product portfolio.

While this is certainly commendable, with the process itself opening up eyes to the massive cost of maintaining a burgeoning portfolio of SKUs, one has to ask why this would not just be part of an ongoing Product Portfolio Management process? With effective management of the product portfolio, the stage of each product in its lifecycle is clearly understood, with processes put in place to ensure discontinuation at the appropriate time, before products become a drain on the profitability being generated by the new products coming into the portfolio.

There are questions that healthcare professionals need to be asking themselves - how proactive are you at managing your product portfolio? Do you understand the cost of an ever increasing product portfolio? Do you have processes in place that enable business wide consensus on product discontinuations? Are you going to wait for the next crisis to take a serious look at this important aspect of effective business management?

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