Overview of the Biotechnology Industry
Recently, the biotechnology industry has started witnessing considerable growth with the growing demand for food and limited availability of non-renewable natural resources. With the availability of a favorable regulatory scenario, companies specializing in biomedical engineering have started investing in R&D and applications to improve their service levels and enhance business efficiency. Apart from the conventional factors, the emergence of biosimilars and the increasing application of biotechnology in medical services are anticipated to define the future outlook of the market. Although the market for biomedical engineering is witnessing growth due to the presence of a plethora of companies focusing on the development of regenerative therapies, several factors may curtail the growth of the biomedical engineering market. They include:
- Product development: The level of competition is intense in the biomedical engineering industry and developing products can be an expensive and time-consuming affair. Moreover, companies are also facing the need to rely on innovations to reduce uncertainties around the product development cycle and ensure quality in the products being offered. Moreover, with only a few guarantees that the new products will succeed, companies should focus on consistency and reducing operational costs.
- Contract manufacturing: At present, biomedical engineering companies have started outsourcing their processes to reduce capitals and outlay costs. However, working with contract manufacturers can result in issues pertaining to product quality. This is a major problem for biomedical engineering companies as the current regulatory environment is compelling businesses to stay in line with the new production norms.
To counter such challenges and identify the key cost elements in the industry, organizations are utilizing cost model analysis solutions. In the biomedical engineering market, cost model analysis helps companies to identify the key cost elements and assess the impact of each cost driver on the overall cost. In addition, cost model analysis also allows companies to identify the gaps that need to be bridged to increase the use of resources to enhance business performance.
The Business Challenge and Our Journey
A renowned client in the biomedical engineering market wanted to understand the relative trends and create an accurate cost model to effectively negotiate with the suppliers. With the help of cost model analysis, the client wanted to gain adequate knowledge and insights to determine the fair market pricing to ensure maximum profitability. In addition, the firm specializing in biomedical engineering wanted to compare the outsourcing options with in-house capabilities and evaluate the potential costs and revenues that can be generated if the project is completed.
To compile a comprehensive list of all the costs and benefits, the procurement experts at SpendEdge carried out extensive research comprising interviews and discussions with prominent stakeholders in the biomedical engineering market. The experts also compiled information from a wide array of reliable sources such as trade shows, paid industry databases, and company presentations.
The cost model analysis solution offered by SpendEdge assisted the firm specializing in biomedical engineering to understand the direct and indirect costs, intangible costs, opportunity costs, and the cost impact of potential risks. The biomedical engineering client was also able to include all direct and indirect revenues and tangible benefits and further achieve the lowest cost mix.
Fundamental questions answered in this cost analysis solution include:
With our help, the biomedical engineering client was able to negotiate levers to ensure low-cost raw material sourcing. Furthermore, the client was able to determine the upcoming costs and develop cost model technologies to assist customers with their cost management needs.