Medtech companies are at the forefront of healthcare innovation, developing life-changing devices and solutions to help clinicians diagnose diseases earlier, perform interventions more precisely, and monitor patient health more effectively. Innovations such as minimally invasive surgical robots, AI-powered diagnostic imaging, and connected diabetes management systems have transformed patient care.

Introduction

As the industry emerges from a period of margin compression and dampened multiples, AI, enhanced by gen AI, can play a critical role in advancing medtech value creation priorities to boost productivity and, ultimately, profitability. McKinsey estimates that medtech companies could capture $14 billion to $55 billion per year in value from productivity gains and add $50 billion or more in annual revenue from product and service innovations. Gen AI’s potential is particularly compelling for the medtech sector, given the ubiquity of data-enabled products and numerous critical but repetitive workflows ripe for digital enablement, including regulatory documentation, contract compliance tracking, and customer support.

Early Adoption Trends

A fall 2024 survey of 40 medtech executives responsible for gen AI strategy and budgets shows encouraging early adoption trends. Roughly two-thirds of respondents say their companies are already implementing gen AI. Although about half are still in the pilot phase, nearly 20 percent are scaling their solutions with successful early results. All respondents reported positive qualitative or quantitative improvements from gen AI, with nearly half seeing measurable quantitative and qualitative productivity benefits. Most notably, 15 percent of those implementing gen AI have reported a positive impact on their P&L.

Gen AI Use Cases in the Medtech Value Chain

According to the results of our survey, gen AI is deployed across several domains, including R&D, commercial, and operations. The most promising use cases emerging from these efforts include innovation acceleration, process automation, and decision support. Companies seeing the greatest impact are prioritizing use cases that drive meaningful business value through specialized knowledge agents and industry-specific process improvements.

Faster, More Productive R&D

R&D is the most frequently identified medtech domain for gen AI adoption; this group is typically tech-savvy and more willing to explore new tools. Tools more customized to the medtech R&D workflows could provide additional impact and help R&D teams streamline processes and get products to market faster.

Smoother Commercial Workflows

Gen AI is transforming key commercial workflows in medtech, including marketing, insight generation, and customer interactions. More than half of survey respondents report gen AI deployment across commercial use cases.

Streamlined Operations

Medtech organizations are prioritizing AI solutions in three areas of operations: inventory management, contracting, and procurement negotiations.

Challenges to Gen AI Implementation

The ambitious yet largely decentralized rollout of gen AI across medtech has limited some organizations’ ability to achieve scale and P&L impact. This broad but diffused deployment strategy creates challenges in strategy, data integration, and training and change management.

Keys to Effective Gen AI Implementation

A strategic, focused road map

Develop a strategic road map that focuses transformation efforts on one or two domains. Organizations that build solutions within a focused area are more likely to realize value at scale.

Centralized talent management

Medtech leaders launching gen AI initiatives should balance creating solutions for an individual business with developing technical foundations that can be leveraged across businesses and use cases.

An agile operating model with IT and business participation

Build with an agile operating model that includes IT and business partnership from day one. Early partnership of these functions throughout the journey improves feasibility assessments, accelerates scaling beyond pilots, and addresses critical integration and data privacy challenges.

An expansive IT–business partnership

Expand the IT-and-business partnership to technical and data needs. Advancing gen AI use cases across domains will require more reusable data products.

Prioritized adoption

Prioritize adoption as much as technical implementation. Embedding AI into existing processes increases productivity and maximizes return on investment.

FAQ

Q: What are the key areas of gen AI adoption in the medtech industry?

A: Gen AI is being adopted in domains such as R&D, commercial operations, and procurement in the medtech sector.

Conclusion

The moment for medtech companies to act on gen AI is now. Companies that move decisively but strategically will be best positioned to capture the technology’s full potential.