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

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...

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

More from Market Intelligence

More from In Vivo

Crisis Or Opportunity? US MFN Policy Could Test Japan’s Appetite For Reforms

 
• By 

While the adoption of most favored nation drug pricing in the US stands to affect Japanese biopharma firms now heavily reliant on this market, it might also present an opportunity for pricing and policy reforms at home.

Rising Leaders 2025: Ovid’s Meg Alexander On Neurology’s Next Frontier

 
• By 

Ovid Therapeutics' president and COO Meg Alexander is leading the company’s strategic pivot toward innovative neurological treatments, potentially creating a new class of medicines for rare neurological disorders.

The Goldilocks Isotope: Perspective Therapeutics’ ‘Just Right’ Alpha Radiotherapeutic

 
• By 

Thijs Spoor's bet on lead-212 is paying off as Perspective Therapeutics advances three clinical programs with promising early efficacy signals and a comprehensive manufacturing strategy.