Author | Sources
Mc Kinsey & Roland Berger
Mc Kinsey & Roland Berger
Health 4.0 | Lab 4.0
Economists are intensively discussing the effects of the fourth industrial revolution on the economic growth of various sectors. “Technologies and innovations are at a turning point and massive productivity surges are to be expected,” is what some business magazines and analysts are saying. Klaus Schwab writes in his book, “The Fourth Industrial Revolution”, about the competitiveness of companies. If a company wants to remain competitive, it must be considered a pioneer for all possible innovations. Focusing solely on cost-cutting strategies will not pay off equally in the future. This makes it all the more worthwhile to pursue strategies in which products and services are offered in innovative ways (Schwab, 2016). Digital disruption also falls into this area. A topic with which many companies or entire industries often only deal with when it is already too late. On the one hand, it is a matter of recognising risks to one’s own business model in good time. What happens if these dangers are not reacted to early enough could be seen in examples such as Uber in the taxi industry and Airbnb in the hotel industry. On the other hand, there is the question of how digitalization can be used to expand one’s own business model and thus become an emerging disrupter and put pressure on other companies.
In developing fundamental solutions, the four main effects of the fourth industrial revolution will be taken into account.
These include the following points:
The medical technology market
Medical technology has been subject to natural growth for years. The demands on medicine in society are increasing and are one of the reasons for the fundamental growth in sales. In 2017, the global market was estimated at 405 billion US dollars (Radtke, 2019). In the automated liquid handling market environment, the market volume in 2016 was USD 585 million (Sumant & Shaikh, 2017).
According to a study published by management consultants Roland Berger (Berger, 2018), the medical technology sector will develop considerable potential in terms of sales and jobs in the coming years. The study, which was presented at MEDICA and commissioned by the industry association SPECTARIS and Messe Düsseldorf, is based on a survey of more than 200 medical technology companies, as well as numerous other expert interviews with suppliers, start-ups, representatives of health insurance companies and politicians. According to this study, sales of digital products and services will more than quadruple in Germany alone by 2028, from EUR 3.3 billion to up to EUR 15 billion and in the global market from USD 405 billion to USD 594.5 billion (Radtke, 2019). Using new technologies that characterize Industry 4.0 – from connectivity to advanced analytics, robotics and automation – these have the potential to revolutionize every element of the pharmaceutical laboratory within the next five to ten years. The global automated liquid handling market is predicted to grow by 7.8% annually until 2024, reaching a volume of $1 billion in 2024 (Automated Liquid Handling Market Size, Analysis, Growth, 2018).
The first real-world use cases have led to a productivity increase of 30-40% in already mature and efficient laboratory environments and a number of improvements could reduce the total cost of quality control by more than 50%. Digitization and automation will ensure better quality and regulatory compliance by reducing manual errors and variations and enabling faster and more effective problem resolution. Use cases have shown a more than 65% reduction in variation and a more than 90% reduction in completion times. Avoiding key compliance issues alone can save millions of dollars in costs. In addition, improved agility and shorter testing times can reduce lab lead times by 60 to 70% and ultimately lead to real-time approvals (Han, Makarova, Ringel & Telpis, 2019).
In the Trend Report 2019 for Analytical, Bioanalytical and Laboratory Technology, Dr. Martin Brudermüller, Chairman of the Board of Executive Directors of BASF SE, notes that the phase of isolated solutions in laboratory environments is now definitely coming to an end (Brudermüller, 2019). With regard to Laboratory 4.0, the focus is on smart and networkable laboratory and analysis devices that can be controlled centrally and within the Verbund and are flexibly integrated into the IT environment along the entire value chain. Interoperability of instruments across individual application areas is in demand today. Standardized data formats and protocols, as well as first-class training of the instrument users, are decisive and prerequisites for smart solutions.
Disruption and new ways
What is the reason for this brief excursion into predicted growth figures in medical technology? Like many other industries before it, many market players in this segment were able to rest on healthy sales growth, expand their customer bases, create additional jobs and open up new markets. In view of this starting position, the focus for new business models, the inclusion of new technologies and the fundamental expansion of the degree of digitalization often only plays a secondary role. And this is precisely the initial point for a future disruptor to position itself in the market with new methods and put existing companies under pressure. Whether this can be achieved by entering the market with cheaper products can be questioned. Especially here, many direct sales customers as well as OEM customers (Original Equipment Manufacturers), attach great importance to the safety and quality of the delivered equipment. Not only because of the significant costs that can be incurred in the event of a quality defect (take cross-contamination during the storage and management of a blood sample, for example, because the relevant hygiene measures were not observed), but also because of the associated reputational risks, which could result in irreparable damage.
No, the core of the disruption here lies much more in offering a holistic solution that makes it possible to replace repetitive manual and error-prone work steps with automation and digitalisation. Well-functioning isolated solutions must be transformed into an overall concept in the direction of Lab 4.0. Machines must not only be able to communicate with each other, keyword IOT (Internet of Things), to ensure their maintenance and management, but the entire laboratory space must become an intelligent hub in which a smart transport system ensures connectivity and connection between the various machines, to return to the example of the samples. A system that can be controlled autonomously from the outside and provides the necessary controlling parameters in real time, makes logistics more efficient and provides an interface to the internal ERP system. Why? Here comes the next point of long-term cost savings in project management.
A large number of the companies surveyed currently still work with a selection of individual tools and manage their customers’ communication and support requests manually. This is where the future disruptor comes in again and improves the user experience with direct access to the software interface. The data exchange must be real-time and the customer should always be informed about the current status of his products, machines, projects, research progress and so on.
This is where the first challenge comes in, who offers such a software application that can function at the required security standard and does not require any significant retraining? We know that disruption begins in the simplicity of the innovation, which has the potential to be adapted to a large market. Next, there is the complexity of implementing a described laboratory environment. The general standard solution is unlikely to be applicable due to the individually designed and nested laboratory space, unless a prospective customer considers starting from scratch. One must therefore develop transport systems which are not characterized by too high logistical requirements.
What could this be, not a rail system, but perhaps more a drone solution or self-propelled transport vehicles, but how can this be scaled? The environment definitely seems to offer scope for ingenious developers and engineers who want to realize smart lab solutions and connectivity, both digital and physical.
However, one approach to be able to win further parts of this growth market for themselves today would be to use the existing know-how for the conditional requirements and the construction of such a system and its prior planning. The outsourcing of a robotics manufacturer for medical technology devices, from a pure hardware catalogue to an extended software provider. A software with which I could already visualize my ideas of the perfect laboratory 4.0 in 3D. I could place products, adjust connections, ensure connections and clean rooms and implement the entire transport system. This time, however, not as a proprietary solution for a specific manufacturer, but openly usable as a freemium / subscription model for the entire and specific market of medical technology. Not only would this be a further step in the right direction towards the overall solution described above, but the providers of such software can also play a role in completely different markets and customer segments that were not previously within the radius of these companies. Customers and prospective customers who primarily want to use a pure planning instrument, but who may later also want to use the hardware product range due to the quality of service provided, become additional revenue drivers. The rounding off of an optimized user journey, as a reaction to the change in consumer behaviour.
So far, this is only a first thought-provoking impulse. In our other blogs on digitalization in the health care sector and specifically in medical technology and robotics, we will take up these initial thoughts again and elaborate on them further.