1. In Vivo
  2. >>Market Intelligence

Medtech Business Models: All Razor And No Blades – Is “Big Iron” Back In Vogue?

 
• By Mark Speers

The conventional wisdom in the medtech industry is to pursue the “razor-razor blade” business model, as each placement of capital equipment generates a lucrative annuity of recurring revenues from disposables. The corollary to this conventional wisdom is that so-called “big iron” is to be avoided as, in sharp contrast, it suffers from greater early cash requirements and longer sales cycles that create difficulties forecasting quarterly revenues, and provides no annuities. But that view is no longer the only one that counts, Health Advances CEO Mark Speers argues.

IV1901_Big-Iron_1268052778_1200.jpg
Big iron companies are challenging conventional business models • Source: Shutterstock

The razor-razor blade business model is pervasive in the medtech industry. As the conventional wisdom, it has a compelling logic. Each equipment placement leads to a lengthy revenue annuity. For example, over their seven-year lifetimes, the average volumetric infusion pump will consume over 1,500 proprietary IV set cassettes and the average breast biopsy device will consume about 3,500 needles.

For most razor-razor blade companies, disposable revenues dwarf capital revenues. For example, desktop chemistry analyzer company Abaxis Inc.’s revenue mix for fiscal year 2018 (ending Mar. 31, 2018) was 22% capital and 78% disposables. Even Intuitive Surgical Inc

Read the full article – start your free trial today!

Join thousands of industry professionals who rely on In Vivo for daily insights

  • Start your 7-day free trial
  • Explore trusted news, analysis, and insights
  • Access comprehensive global coverage
  • Enjoy instant access – no credit card required
Start Free Trial

Already a subscriber?

More from Market Intelligence

With 75 Pipeline Candidates, TIL Therapies Gain Momentum in Solid Tumor Space

 
• By David Wild

Tumor infiltrating lymphocyte therapies show promise for solid tumors, with a first FDA approval, but face manufacturing and access challenges as development continues.

NewAmsterdam’s Davidson On Reviving “Failed” Drug Class To Fill Cardiovascular Treatment Gap

 
• By David Wild

After a string of high-profile failures by big pharma, Michael Davidson is positioning his company's CETP inhibitor as the next breakthrough in cardiovascular medicine. The body of data to support this position is growing.

Unpacking The Impact Of Trump’s Tariffs On Drug Pricing And Production

 
• By Ed Silverman

Big pharma plans to invest billions of dollars in US manufacturing to avoid tariffs proposed by the Trump Administration. However, the implementation of these plans may be delayed due to regulatory complexities and rising costs from tariffs, potentially impacting drug prices for consumers.

Oncology’s Most Eligible Unpartnered Assets

 
• By Edwin Elmhirst

Evaluate's top five unpartnered clinical oncology assets reveals you have to get in early to snap up innovation in the competitive cancer space.

More from In Vivo

Protagonist’s Patel: Building A Differentiated Peptide Platform With Strategic Patience

 
• By David Wild

After revolutionizing the peptide therapeutic landscape, CEO Dinesh Patel reflects on the journey from surviving the 2008 financial crisis to developing a platform now poised to deliver back-to-back blockbuster approvals.

With 75 Pipeline Candidates, TIL Therapies Gain Momentum in Solid Tumor Space

 
• By David Wild

Tumor infiltrating lymphocyte therapies show promise for solid tumors, with a first FDA approval, but face manufacturing and access challenges as development continues.

NewAmsterdam’s Davidson On Reviving “Failed” Drug Class To Fill Cardiovascular Treatment Gap

 
• By David Wild

After a string of high-profile failures by big pharma, Michael Davidson is positioning his company's CETP inhibitor as the next breakthrough in cardiovascular medicine. The body of data to support this position is growing.