All signs point to growth in the year ahead for the medical device companies. More medical device companies are turning to a new source of hidden value to give them an advantage of real estate, as competitive and pricing pressure is intensifying. To extract more value from real estate investments, we anticipate that leading medical device companies will increasingly examine their real estate portfolios with these three perspectives in mind listed below.
Improving Operational Efficiencies Is Imperative
Medical device companies are seeking ways to achieve efficiencies and gain access to new markets and innovations. Some medical device companies are recognizing that the real estate portfolio of the combined company should be a major priority with regard to value creation. Evaluating the real estate portfolio to identify the right places for consolidation must be done with care. Operational costs are only one of numerous factors to weigh.
A big concern for medical device companies right now is optimizing the inventory they have in the field and being able to move it around the country with ease to get as much product turned as possible with as little inventory in the field as possible. The surgical trays are expensive and can be costly to ship, so finding ways to transfer product or restock quickly without incurring significant shipping costs is an increasingly important factor in real estate decisions.
Medical device companies are using the strategy of outsourcing facility management, to become more agile and realize greater efficiencies from their real estate. But the practice of facility management operations is becoming increasingly common as medical device companies are becoming laser-focused on innovation. With deep experience in managing sensitive and complex production, today, several medical device companies are turning to seasoned facility management providers with complex production and R&D environments, as well as office workplaces.
Attracting Talent for Future Growth
There is a high demand in medical device companies for talent pool, which includes researchers, data scientists and engineers. To find them, they are setting up shop near the source. The medical device companies aren’t settling on one location, either. They are placing their bets across multiple markets. Big names are investing in small R&D labs inside several major markets while keeping other employees at less expensive properties. Being in the center of the action can have a significant influence not only on talent and innovation, but also on customer relationships.
Getting More Customer-centric
Real estate strategies are getting a fresh look because medical device companies are pushing to make their business models and innovations more customer-centric. In the race to get to market, being physically close to the customer can make a big difference. Last year in November, Johnson and Johnson’s Medical Device Companies (JJMDC) opened a Center for Device Innovation at Texas Medical Center in Houston. It facilitates collaboration between the JJMDC and a leading medical center. The Center for Device Innovation gives the medical center access to emerging medical technologies and gives JJMDC a place to rapidly prototype and test new developments.
The key for maximizing real estate investments is the tight alignment between the real estate strategy and corporate goals. A well-planned future strategy provides a strong foundation upon which your business can scale appropriately, build a strong customer base and secure the best talent.