Medical technology companies differ widely in how capital intensive their respective product groups are. Despite that difference, our research shows that the higher performers share ability to extract considerably higher revenue as a percentage of their fixed asset base through greater efficiency at managing property, plant and equipment.
Medical technology companies must drive higher utilization of capital to maximize their fixed asset base. Our research indicated that the highest performing med-tech companies generated 50 to 100 percent more revenue per each dollar invested in property, plant and equipment than the average and low performers during the 7-year period between 2003 and 2009.
Our research found that medical technology companies can drive aggressive utilization by going after portfolio expansions that complement existing production capabilities. Extensive use of outsourcing and off-shoring helps optimize their processes and improve asset turnover. These capabilities hit at a fundamental level of business operations and mastering them will help medical technology companies reinvigorate investor confidence.