DISCLAIMER: At the time of writing I am an employee of Cochlear LTD. All information used in this, and related, articles are based on publicly available sources. At no point was privileged or internal information used in any way. This was done as a part of a master's degree assignment.
Introduction
Cochlear is the dominant leader in the Cochlear Implant (CI) and assisted hearing health global market. Society is approaching the early middle phase of the fourth industrial revolution, and companies that adapt and embrace change are the ones to survive and thrive.
It is not the strongest of the species that survives, nor the most intelligent that survives. But, it is the one that is the most adaptable to change - Charles Darwin.
What are the key challenges that we face in the current competitive environment of rapid digital disruption?
The 4th industrial revolution will not impact the medical and surgical nature of our products; however, we must anticipate the disruptive effects of technologies specifically around the quicker pace of innovation Machine Learning and Artificial Intelligence will bring to R&D, manufacturing, logistics, and client services.
The stringency of the regulatory environments for our products, as well as the more competitive patent processes, will require a more comprehensive data regime, or Data Mastery, around all our research, testing, and development. Current litigation against Cochlear by the University of Pittsburgh as a case in point. This will assist us in patent protection, product speed to market, and further opportunities in R&D spend maximization.
The advent of a new inflationary cycle must also be planned for, as we can expect significant downward pressure on both consumer and government health spending over the coming years. We can effectively mitigate these pressures with innovative cost-cutting in our research and production, using Intelligent Workflows, Flexible Infrastructure, with AI innovations and automation.
The existing skillsets required by the business are also under strain due to a changing geopolitical environment, in which travel, and migration have slowed down. The requirements for new skillsets specific to ML and AI technology innovations will require both investment and innovation, such as Open Talent networks, to facilitate.
Below is an indexed list of identified challenges, ranked by durations, and anticipated impact.
The CI market and Competitive landscape comparison
The Cochlear implant market had a $1.5 Billion global value in 2021 with ~$3.2 billion worth by 2030, following a projected CAGR (Compound Annual Growth Rate) of 8.71%.
Advanced Bionics is a subsidiary of Sonova, a Swiss-based group that holds ~20% of the total hearing aid market. Their holding company also has subsidiaries in several audio-related markets, most notable Sennheiser consumer electronics and Phonak, an integrated wireless communications company. Advanced Bionics product offering is very similar to Cochlears in almost all aspects; however, they are heavier (~25% heavier across the range), require an intermediary device for wireless streaming, and do not have Remote Assistance; however, has a Roger Pen option & Contralateral Routing of Signal, both of which Cochlear products do not.
MED-EL (Medical Electronics) is a privately held Austrian company that is almost precisely aligned with Cochlears' market focus. Their focus and innovative research agenda are significant, specifically Hearo – a surgical robot designed to assist with cochlear implantation, Dexel – a device that emits healing improvement drugs post-implantation, and TICI – a fully contained CI that has no Above the Ear or Behind the Ear component. In terms of products point of difference, the Med-El devices do not offer Remote assistance or any hearing aid collaborations. They do have an auditory brainstem implant product, which Cochlear does not.
Demant A/S is a Danish-based company that is the dominant market leader in Hearing Aids; however, they do not directly compete with Cochlear in the CI market anymore as Cochlear purchased Oticon this year.
Zhejiang Nurotron Biotechnology is a privately held China-based competitor and has a relatively insignificant impact on the market presently.
How Cochlear can leverage AI (Artificial Intelligence) technology
Current best practice advice is to advance towards AI maturity in well-defined and controlled phases:
Create and implement Data Strategy – Data Mastery
Map all the data our organisation has, regardless of where it is or how it is stored.
Unstructured, uncategorised and uncleaned data is difficult to derive value. Data needs to be catalogued for use, needs to be governed, access needs to be controlled for regulatory compliance, and data must be cleaned for accuracy.
Analyse the data using machine learning – the lesson is to do many well-defined small experiments towards defined and well-thought-out goals – fail fast and often until winners are identified.
Commercialise and monetise successful experiments into products and services wherever possible
Infuse AI throughout the organisation - think of AI as a force multiplier, not a replacement for people.
The key areas where ML (Machine Learning) and AI technology implementation currently have more effective ROI are Prediction, Optimisation and Automation. The leading consultancies of Deloitte, Capgemini and Accenture have identified seven distinct areas ("pivots”) in which organisations can pivot for demonstrable revenue growth.
Source: Deloitte - Uncovering the connection between digital maturity and financial performance
Alignment of AI potential use-cases to Cochlear challenges
References:
3 Areas Where AI Will Boost Your Competitive Advantage. (2021, December 6). Harvard Business Review. https://hbr.org/2021/12/3-areas-where-ai-will-boost-your-competitive-advantage
Advanced Bionics | The Cochlear Implant Technology Innovation Leader. (2022). Advanced Bionics. https://www.advancedbionics.com/us/en/home.html
Cochlear Implant Market Size & Share Report, 2030. (2022). Grand View Research - Cochlear Implant Market. https://www.grandviewresearch.com/industry-analysis/cochlear-implants-industry
Columbus, L. (2020, September 1). Why Digital Transformation Always Needs To Start With Customers First. Forbes. https://www.forbes.com/sites/louiscolumbus/2020/08/30/why-digital-transformation-always-needs-to-start-with-customers-first/?sh=185632f02c61
Fourth Industrial Revolution. (2020, April 7). World Economic Forum. https://www.weforum.org/focus/fourth-industrial-revolution
Gartner Predicts The Future Of AI Technologies. (2019, November 5). Gartner. https://www.gartner.com/smarterwithgartner/gartner-predicts-the-future-of-ai-technologies
Kartini, J. (2021, July 4). What Different Types Of Cochlear Implants Are There? Attune. https://www.attune.com.au/2021/07/02/different-types-of-hearing-implants-from-cochlear-med-el-and-advanced-bionics/
Koehn, E. (2022, July 4). ‘Baseless’: Australian biotech Cochlear steps up fight against US university over hearing device. The Sydney Morning Herald. https://www.smh.com.au/business/companies/baseless-australian-biotech-cochlear-steps-up-fight-against-us-university-over-hearing-device-20220704-p5aysw.html
MED-EL | Cochlear Implants for Hearing Loss. (2022). Med-El Medical Electronics. https://www.medel.com/en-au/
NI Business Info. (2020). Examples of artificial intelligence use in business | nibusinessinfo.co.uk. https://www.nibusinessinfo.co.uk/content/examples-artificial-intelligence-use-business
Pivoting to digital maturity. (2021). Deloitte Insights. https://www2.deloitte.com/us/en/insights/focus/digital-maturity/digital-maturity-pivot-model.html
Thomas, R., & Zikopoulos, P. (2020). The AI Ladder. Van Duuren Media.
Uncovering the connection between digital maturity and financial performance. (2021). Deloitte Insights. https://www2.deloitte.com/us/en/insights/topics/digital-transformation/digital-transformation-survey.html
Villegas, C. (2018a, April 6). Roger Pen/ Roger EasyPen (For Cochlear Implants). Arizona Hearing Center. https://www.azhear.com/roger-pen-roger-easypen-for-cochlear-implants/
Villegas, C. (2018b, April 12). Streaming Technology (For Cochlear Implants). Arizona Hearing Center. https://www.azhear.com/streaming-technology-for-cochlear-implants/
Witcomb, G. (2018, July 11). The truth about Cochlear’s market share. Intelligent Investor. https://www.intelligentinvestor.com.au/recommendations/the-truth-about-cochlears-market-share/142882
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