The New Reality: 15 Business Insights to Future-Proof Your Life Sciences Company

The pandemic years have brought both obstacles and opportunities to life sciences companies. Even though venture capital medtech investments reached an all-time high in 2021, companies are still struggling to cope with supply chain disruptions, increased regulatory requirements, inflationary pressures, and competition from outside the sector. A recent survey of C-suite executives conducted by the Deloitte Center for Health Solutions reported that roughly 80% of surveyed medtech executives said the development of innovative products would be a top priority in 2023. But that’s perhaps easier said than done.

The need to control healthcare costs and improve patient outcomes were two themes discussed endlessly at this year’s JPM Healthcare Conference. U.S. life expectancy has increased only ~3 years between 1990 to 2021 while healthcare costs have gone through the roof, from $718.7 billion to $4.3 trillion. Today, we’re facing an aging population that’s more complex to treat, concerning trends in delayed patient care, healthcare worker shortages that show no signs of abatement, and approximately 50% of U.S. hospitals ending 2022 in the red. 

Life sciences companies must reorient themselves for a post-pandemic future and make shrewd decisions about how to adjust their sails to survive and thrive. The stakes are high, with little room for error. Rethinking your approach toward innovation is a necessity. 

Clearly, the traditional model of healthcare delivery has reached a breaking point. Which means there’s never been a more opportune time to disrupt the status quo. Grey Matter has been working with innovative life sciences companies for the last 15 years to help them do just that. As such, we wanted to share 15 key insights to help you accelerate innovation and adoption. Most of these you can start leveraging today to future-proof your company.

1. The legacy commercial growth model is dead. 

Yet that isn’t stopping companies from clinging to it in hopes they can meet their revenue targets. Even if you have a truly differentiated product, you’re going to struggle. Because Marketing is still relegated to coordinating expensive events with little ROI and making pretty brochures, and Sales is still relying on relationships and product features to make their numbers, but falling alarmingly short. A LinkedIn poll of nearly 300 medical sales reps showed that only 28% hit quota for two quarters, and 37% hit quota for four quarters in 2022. The traditional sales-driven, relationship-based commercial growth model is no longer relevant. Sales rep access to clinicians continues to decline precipitously—and it’s not coming back. Marketing efforts are focused on trying to capture a lead who is already looking for a specific solution versus creating demand for a new solution. This leads to inefficient spend, low ROI, and slow growth. You need a commercial growth model—not a sales strategy or marketing plan—that is aligned with how your audience wants to learn and buy.

2. One of the biggest problems you can have is not solving a problem. 

More than 50% of failed product launches didn’t solve a valid customer problem or showed little to no differentiation. And that’s a major reason two-thirds of product launches fail to meet pre-launch sales expectations in their first year. Of forecasts that lagged in year one, 78% continue to lag in year two, and 70% lag in year three. This means that most life sciences companies only have a one-in-three chance of success in their first year, with odds that continue to worsen over time. There’s really no such thing as a slow start. You never catch up. Moving forward, value-based care constraints have now made improvement in clinical- or cost-value table stakes. So, if you’re developing a new product, make sure it’s solving a legitimate clinical need in a different way. Otherwise, expect anemic results and short-lived product life cycle. 

3. The fastest regulatory path to commercial approval is not always the best. 

We understand commercial approval starts the clock on revenue. The sooner that approval or clearance, the sooner you can take orders and recognize revenue. Unfortunately, your regulatory pathway has significant implications to your labeling and indications—basically, how you can position and sell your product. And if there haven’t been serious internal conversations about the best approach to positioning your technology or treatment, you run a very high risk of being grossly hamstrung when it comes to your commercial strategy and success. It may seem smart to pursue a 510(k) clearance because it lowers costs and you can start selling sooner. But if you’re selling a substantially equivalent product compared to what’s already available, you'll likely find a very lukewarm reception to your product. It will be considered a “nice to have” and adoption will be low and slow (see Insight #2). You need to be playing a longer-term and more strategic game if you want to build market demand and, in turn, generate significant revenue. Don’t be too short-sighted. 

4. Most companies can’t divorce themselves from the legacy world. 

Executives and employees alike have an incredibly difficult time reframing the world in a new way when communicating the value of their product. The only context they seem to have is backwards-facing, anchored in the constraints of the old world. It’s akin to living in a black and white world; one can’t imagine color and what that would enable. You just accept the world as black and white. That’s the way it is, the status quo. Therefore, you default to legacy terminology and framing when talking about your product and why it’s better. But if you look at the world in color, what is a legacy premise you can reject to reframe the world? Is it that you have to take drugs to treat a disease? Or you have to perform surgery in an OR? Or you have to be inside a hospital to be monitored as a patient? Or you have to prick your finger to treat Type I diabetes? For maximum adoption, you have to cast off the handcuffs of the past. Forge a new future by reimagining the problem or solution for a specific audience to help them address their urgent problem. Start by saying, “You don’t have to . . . .” Or keep living in that black and white world, providing customers with a little bit sharper contrast, but only getting a little bit more market share.

5. It takes a lot of time and effort to get people to change their behavior and adopt something new. 

The reason is our brain is lazy, so it uses shortcut methods to narrow and speed up decision making using cognitive biases based on instincts—not data. One of the most challenging realities of this brain science is that markets (which means people) are hostile to innovation, because humans naturally crave equilibrium. This lends stability to peoples’ expectations, validates their choices, and reinforces their behaviors. When an innovation enters the market, it upsets their choices and introduces uncertainty in decision making. While there may clearly be a need, most potential customers either don’t consciously realize it or can’t imagine a possible solution. They are happy to accept the status quo, especially when the status quo or standard of care is supported by medical guidelines or well reimbursed. Crossing the Chasm is as relevant today as it was 30 years ago when first published. There is no way to “flip a switch” at scale. 

6. Business growth is determined by how fast our brains can change in an uncertain world. 

When you understand brain science, you can see why market conditioning should be the #1 priority for company leaders. Because how quickly you can convince someone to use your product determines how fast your company will grow (see Insight #5). New categories give people a new alternative, but there is almost always no investment made to help prime the market for their new solution. You must educate your target audience about the problem that’s undermining their success or desired outcome—before commercial approval. If it’s the right target audience, they’ll instantly understand and demand your value proposition. Your “different” will align beautifully with their needs. Life sciences companies are laser focused on developing and manufacturing new products and navigating the regulatory process. That’s understandable but unfortunately means companies postpone the critical and hard work of getting the market ready for their product until too late in the game. We call this problem marketing, and it’s 100% within regulatory constraints prior to commercial approval. Start at least 12 months before you expect to commercially launch if you want to meet your revenue expectations. 

7. Specificity matters. 

Find the smallest audience or segment that has an urgent problem you can uniquely solve. Otherwise, you just become a “nice to have” product that no one feels a sense of urgency to buy or use. One way to do this is to think about an underserved or neglected segment you can own. Who does this problem keep up at night or who worries they could lose their job over it? Consider various dimensions such as time, cost, potential errors, quality, dependability, availability, ease of use, maintainability—any number of other satisfaction and dissatisfaction dimensions. By doing so you can hone in on a group that cares about solving that specific issue way more than any other group, placing your solution in a “must have” mental space. Find the beachhead niche you can gain credibility and traction with. You should have this figured out before you’re in clinicals. Honestly, it should happen before you start the product design phase. Once you have found your niche, you can determine how to expand to adjacent groups while maintaining your unique value proposition.

8. Data won’t change people’s minds. 

At least not in the short term. You can, however, encourage them to change their own mind. Start by finding people who believe what you believe. They may be a small niche, but they value the solution to the problem you solve and will pay a premium for it (see Insight #7). Help those who are conflicted by leading with social proof—from peers and KOLs—to make their own informed decision. To do this, leverage the cognitive bias shortcut called choice supportive to your advantage. This is the tendency to believe your personal choice is better than it might have been, and to over-attribute positive features to options you chose—even if the data doesn’t support it. So, get your brand/product loyalist (clinicians and patients), advisors, and investigators to talk about why they chose your product in the first place, what urgent problem they wanted to solve, what outcome they hoped to unlock, the most positive impact they’ve seen, the emotional payoff it provided, etc. Put that information on the homepage of your website, leverage it on social media, put it in a sales deck, etc. These “proof points'' can then help you tap into another cognitive bias called groupthink. As humans, we have a natural drive to form groups and to normalize our beliefs and actions. The more others hear and see their peers talking favorably about your product, the more they will believe your customers are right, and they don’t want to miss out on improving their life, too. With that said, ignore the detractors and focus on creating groundswell with your loyalists. 

9. The best product doesn’t always win anyway. 

Just because your product demonstrates the best efficacy or results compared to existing products on the market, it doesn’t mean people will switch. This reality drives most life sciences executives crazy because we’ve been falsely led to believe that clinical evidence is the greatest driver of market adoption. The true way to drive the fastest market adoption is to get your target customer to change their thinking, which in turn changes their behavior. Humans—which includes clinicians—are hardwired to make decisions based on emotions and instinct. However, humans will justify their emotion-driven decisions with data and logic. There are dozens of healthcare examples that demonstrate this. Please, I beg you, do not hang your future solely on having better data. 

10. Your customers don’t care about your product. 

If I’m being kind, I’d say 9 out of 10 times when we ask clients, “What triggered your customers to buy from you?" they can’t answer. Or they answer with a hypothesis around functional benefits instead of tangible insights around the true value their customers seek. Start by analyzing who your ideal target customers are and explore what they’re really buying. It’s not your product. It’s an outcome that wills them to act. Talk with (not to) them and learn what that is—saving OR time, reducing missed diagnoses, minimizing friction with prior authorizations, etc. Then beyond that, identify the emotional payoff of that outcome—reduced anxiety, reputational assurance, decreased hassles, etc. Figure out what outcome you can unlock for them. 

11. Listen to your audience’s language. 

Listening is one of the most underrated skills in business. Pay careful attention to your target audience’s word choices. Listen to how they describe their life, their job, their challenges, their fears, and their vision of success. “Tell me more” is one of the most effective questions to ask your customers or stakeholders to extract the deepest insights when they share feedback and suggestions. Then consistently use their exact lexicon in all forms of communication. This will drive your audience to believe you understand them better than any other option, and therefore, you can uniquely solve their problem to unlock their desired outcome. 

12. Be different, not better. 

Most life sciences companies choose to compete in an existing market category versus creating a new market or sub-market category they can own and dominate. Companies often default to comparing themselves to another option to demonstrate they’re superior. It’s called the “better trap,” but it forces you to compete on price or features. That’s a race to the bottom. Your goal is to differentiate yourself simply and specifically from the legacy market category. Then you can create a new space in your audience’s mind and widen the distance between you and the other legacy options. 

13. Name the enemy. 

One of the most powerful strategies a life sciences company can have is to stand for something. Not like “to enhance patient quality of life” or “improve the delivery of healthcare.” But a real declaration of your point-of-view (POV) about what you fundamentally oppose and want to change—the enemy. This fight against the enemy draws people of a common mind (the people who believe what you believe) together and activates them to want to join your cause. This is 100% not about your product but what your product is designed to make happen (see Insight #9). It can be a broad range of things: an outcome, a process, a state of the world, an intolerance, etc. Is it to change one in three delayed cardiothoracic disease diagnoses to none in three? Is it to fight the deadly “widowmaker” heart attacks and win? Is it to prevent adverse events caused by “trial and error” prescribing? Is it to create pricing transparency for drugs? Be a rebel with a cause. It’s also one of the most effective ways to generate earned PR and increase your visibility by standing out. 

14. Word of Mouth (WOM) is the most valuable currency for business today. 

Healthcare professionals trust their network a lot more than Google search results or paid advertisements. For business growth now, you need to understand how your target audience is learning about and discovering new products and services. They ask for referrals from colleagues they trust and admire, they read respected medical journals with peer-reviewed articles, and they attend events where thought leaders share their experience with new products and procedures. One of the most overlooked ways to cultivate WOM is with an organic digital strategy on social networks and content platforms where your audience frequently spends time. By creating easily shareable digital content filled with information that shows you understand their challenges, gives them insights to solve their urgent issues, and helps them be the hero, the more likely they are to believe you are a credible partner for them and their community. And most importantly, they will proactively share or repost that content with friends and colleagues. This might be via direct messaging on social networks (i.e., LinkedIn), email or text, and verbally on Zoom or phone calls. You can’t pay for that. You’ve got to create it.

15. Do more with less doesn’t work. 

When it comes to the health and viability of your body, you know there are non-negotiables. We need 7.5 – 15 liters of water/day per individual for short-term survival. There are non-negotiables for your business survivability, too. You can’t cut your way to growth. A common theme between these examples is intake/investment vs. expected output/outcome. There is heightened pressure to “do more with less” today. There will be dire consequences if you underfund the non-negotiables tied to your business survivability. This relates to both product launches and market expansion. Investment shows up in two ways: time and money. It is not about how much money is needed to get through the regulatory process. It is about what’s needed to prepare the market for your product and then what digital content, tools, and community is needed to change thinking that, in turn, changes behavior in favor of your product. Most companies grossly underestimate what they should be prepared to invest when it comes to market conditioning. There is much more to consider beyond headcount and tradeshows. 

Given the current challenges and dynamics of the life sciences and healthcare landscape, it’s clear the old path to commercial growth is never coming back. The true innovators accept this and understand that in order for their companies to thrive, they must lean into an entirely new business model strongly centered around critical customer needs and challenging the status quo. While the stakes are high, why not stack the cards in your favor?

Ready to position your life sciences company as a Category King?

Grey Matter Marketing is the first-and-only Life Sciences Category Design Firm. Don't leave the success of your innovative life sciences company to chance. Partner with us and let our proven business strategy, rooted in brain science, help you create true differentiation and carve out an entirely new market space for your device, drug, or therapy.

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