The medical device industry is highly regulated, capital-intensive, and dependent on innovation cycles. Despite high growth potential, many medtech companies experience operational challenges, clinical trial failures, stalled reimbursement pathways, or commercial underperformance. When these issues compound, a medical device company may require a strategic turnaround to regain momentum and deliver stakeholder value.

Turnaround teams are typically composed of seasoned executives, regulatory experts, financial strategists, and commercial operators who play a critical role in reviving struggling medtech enterprises. Being part of a medtech turnaround team is challenging and rewarding. It requires a unique blend of technical, strategic, operational, interpersonal, and leadership capabilities, as well as a mindset oriented toward transformation and resilience. A medtech turnaround team is assembled to revitalize underperforming organizations or divisions, drive innovation, and create or restore sustainable growth. Having once been part of a turnaround team and working with others since, I understand the good, the bad, and the ugly. 

Key requirements include change management expertise to navigate organizational resistance; build alignment with the board, investors, and employees; and instill a performance-oriented culture. Depending upon the board’s expectations, the team may need experience with restructuring or M&A since turnaround teams often prepare companies for sale or acquisition, divestiture, or private equity recapitalization. This means knowledge of due diligence, valuation, and exit strategy planning is critical.

This article shares best practices firms must follow to drive successful, sustainable transformations (Table 1).

Why This Is Important

Medical device startups face extremely high failure rates: 21% fail in the first year, 30% by year two, 50% by year five, and 70% by year 10.¹ Don’t let that deter you. The failure rate for other industries can be even higher. 

Step 1: Conduct a Comprehensive Diagnostic Audit

Before prescribing solutions, turnaround teams must first diagnose the root causes of underperformance. This means conducting a 360-degree assessment across the business, including:

• Regulatory and clinical affairs: Are there delays in FDA approvals, gaps in clinical evidence, or poor-quality systems?
• Financial health: Conduct a burn rate analysis; investigate the cash runway, balance sheet risks, and cost structure misalignments.
• Commercial performance: Is there weak sales execution, pricing inefficiencies, or an implausible value proposition?
• Operations and supply chain: Are there problems with manufacturing scalability, quality compliance, and COGS inefficiencies?
• Leadership and culture: Are there misaligned goals, poor governance, or toxic work environments?

This diagnostic phase usually takes 30 to 90 days and results in a clear roadmap of critical interventions. It sets the foundation for all future work.

Step 2: Engage Stakeholders with Transparent Communication

Turnaround firms must communicate openly, recognizing failures while instilling confidence in the recovery plan. Clarity and credibility will be critical to gain the trust of external and internal stakeholders, including board members and investors who will require regular updates, restructuring plans, and forecast visibility. Your employees must understand the “why” behind strategic pivots to stay motivated and aligned. Customers, distributors, and strategic partners will need reassurance that product support, delivery, and service will continue. In some cases, regulatory agencies may require proactive disclosures or re-engagement strategies.

Step 3: Ensure Deep Industry Knowledge

Anyone with medtech experience understands that deep industry knowledge is a must-have requirement. Regulatory, quality, R&D, and marketing must have customer knowledge, such as clinical workflows, a basic understanding of healthcare economics, and payer/provider dynamics. These are all critical to success, but it doesn’t stop there. Your team needs to have expertise with product development cycles in medtech (e.g., Class I vs. Class III devices), sales, IP, and more. If deep industry knowledge does not reside in the organization, strategically hire to ensure the influence of industry knowledge affects all decision-making aspects of product development. 

Step 4: Strategic and Operational Acumen

Your team will need to work together and with organizational leaders to analyze and restructure operations, including supply chains, manufacturing, and quality systems. Their experience with portfolio rationalization is necessary so the company can cut non-performing products to streamline the business, optimize costs, and create a lean organization.

Step 5: Prepare for a Commercial Reboot 

Rebuild or retrain your sales and marketing teams rigorously.  Ensure members of sales know how to educate, sell, and close customers on your products. Be certain marketing teams understand how to provide sales with the critical tools they require. Turning around or eliminating underperforming commercial pipelines removes a distraction for the marketing and sales teams and focuses them on high-performing products. Focus on high-urgency, reimbursable indications with clear economic value. 

A narrower, better-positioned product portfolio is easier to sell, fund, and scale. Start the process of identifying new growth markets or channels.

Step 6: Ensure Financial & Analytical Rigor 

Your CFO needs to have medtech experience and a strong grasp of P&L management, cash flow turnaround, and working capital management. You and your C-suite team will need his/her ability to drive financial modeling for a turnaround’s ROI, cost-saving initiatives, etc. This will be critical to explain to your board, investors, strategic partners, and other stakeholders (at a high level) so they have faith the organization is being well managed.

Team Members

If you are asked to join this kind of team, expect to be in the company of former medtech execs with a track record of business turnarounds; consultants from firms like McKinsey, Medi-Vantage, BCG, or specialized healthcare/PE shops; operational specialists (e.g., COO or chief transformation officer roles); regulatory and quality experts with remediation or crisis experience; and interim executives or advisors with prior turnaround experience. In addition, expect to be seeking a key differentiator, something about the company that sets it apart from its competitors and increases its valuation. That will make the organization more valuable to an acquirer. 

To succeed as a member of a medtech turnaround team, professionals need a rare combination of regulatory knowledge, technical acumen, cross-functional collaboration, and emotional intelligence—often to a greater degree than required in other industries. The stakes are higher, the speed is faster, and the margin for error is lower, given the direct impact on patient safety and health outcomes 

The Medi-Vantage Perspective

If you’re considering joining such a team or building one, it’s often about assembling complementary skill sets across finance, operations, regulatory, and commercial functions, all under a unified, fast-moving leadership culture. Seek people frustrated in their current roles who have been proposing new, disruptive technologies in their current positions. Engage consultants who can help your team uncover new, unmet needs and articulate new value propositions. There are many opportunities out there in the healthcare space.

References

1. tinyurl.com/mpo250701
2. tinyurl.com/mpo250702
3. tinyurl.com/mpo250703
4. tinyurl.com/mpo250704
5. tinyurl.com/mpo250705

MORE FROM THIS AUTHOR: Conducting Your Medical Device Reimbursement Landscape Assessment

Maria Shepherd has more than 20 years of experience in marketing in small startups and top-tier companies. She founded Medi-Vantage, which provides marketing and business strategy for the medtech industry. She can be reached at mshepherd@medi-vantage.com. Visit her website at www.medi-vantage.com.