Performance improvement: A strategic focus for MedTech players in Europe

Europe is the world’s second-largest MedTech market after the US, growing at an average annual rate of 5.4% over the last 10 years. However, the sector faces significant headwinds. The implementation of the EU Medical Device Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR) has increased compliance complexity, particularly affecting smaller companies due to extensive documentation and data requirements. As a result, Europe is becoming less attractive for new product launches than the US.

Post-pandemic supply shortages, rising manufacturing costs, and inflationary pressures on energy, raw materials, logistics, and labour have squeezed margins. MedTech companies have responded by adopting regional manufacturing, dual sourcing, and predictive analytics to improve supply chain resilience.

While AI has been applied in medical imaging for decades, broader digitalisation and AI adoption within internal processes lag behind other sectors. Data fragmentation and risk-averse cultures slow progress, though predictive analytics and automation are increasingly used to improve operational efficiency.

The sector is committed to reducing environmental impact, focusing on materials, transportation, and decarbonisation aligned with global initiatives like the UN Sustainable Development Goals.

MedTech companies are focusing on operational improvements across manufacturing, supply chain, commercial operations, and support functions. In manufacturing and supply chain, standardisation, vendor consolidation, SKU rationalisation, and automation are key levers. Commercial operations efforts focus on standardising customer relationship management, pricing excellence, and order-to-cash processes, while leveraging AI for administrative tasks and customer insights. However, local market differences and traditional sales practices limit rapid change. Support functions continue to be centralised in shared service centres, with ongoing process simplification and IT standardisation.

Resistance to change is a major obstacle to delivering the expected outcome of performance improvement initiatives, amplified by long employee tenures and entrenched behaviours. Embedding change managers within programmes and prioritising initiatives to avoid overburdening teams are critical to success.

Fragmented systems limit data interoperability and hinder data-driven decision-making. Advanced techniques like process and task mining, alongside predictive analytics, are emerging to provide actionable insights. However, system integration and data readiness remain prerequisites to fully realise benefits.

One-off events such as regulatory and fiscal changes or M&A can accelerate transformation by prompting companies to reassess and optimise their core operations.

Europe remains an attractive but challenging market for MedTech players. To sustain competitiveness amid regulatory, cost, and market pressures, companies must embrace operational simplification, digitalisation, and robust change management. Strengthening data capabilities and fostering a culture open to transformation are essential to unlocking performance improvements and building resilience in a rapidly evolving environment.

How can Deloitte help?

Deloitte can assist you in structuring your approach to performance improvement or in delivering the benefits of your current initiatives. In particular, our Operational Excellence experts can explore with you the potential of task and process mining as tools to optimise your operations. We would be pleased to discuss how to maximise the impact of your performance improvement initiatives in greater detail. Please do not hesitate to reach out to us for a conversation.