Originally Published on: SpendEdge | SpendEdge’s Cost Model Analysis Helped a Renowned Biomedical Engineering Client Create a Profitable Cost Mix

Industry Overview of Biotechnology
With the expanding demand for food and the limited availability of nonrenewable natural resources, the biotechnology industry has recently begun to experience rapid expansion. Companies specializing in biomedical engineering have begun investing in R&D and applications to improve service levels and increase business efficiency in response to favorable regulatory conditions. In addition to conventional factors, the emergence of biosimilars and the expanding use of biotechnology in medical services are expected to define the market's future outlook. Despite the fact that the market for biomedical engineering is expanding due to the large number of companies focusing on the development of regenerative therapies, the market for biomedical engineering may be restrained by a number of factors. They consist of:

• In the biomedical engineering industry, the level of competition is intense, and developing products can be an expensive and time-consuming endeavor. In addition, businesses must rely on innovations to reduce uncertainties surrounding the product development cycle and ensure the quality of the products offered. Moreover, since there are few assurances that the new products will be successful, businesses should prioritize consistency and cost reduction.

• Contract production: Currently, biomedical engineering companies are outsourcing their processes to reduce their capital and operating expenses. However, collaborating with contract manufacturers may result in product quality issues. This is a significant issue for biomedical engineering firms, as the current regulatory climate requires businesses to adhere to the new production standards.

Organizations are implementing cost model analysis solutions to combat these challenges and identify the industry's main cost elements. In the market for biomedical engineering, cost model analysis assists businesses in identifying the main cost drivers and evaluating the impact of each on the overall cost. In addition, cost model analysis enables businesses to identify the resource utilization gaps that must be closed in order to improve business performance.

The Business Obstacle and Our Travels
A well-known client in the biomedical engineering market desired to comprehend the market's relative trends and develop an accurate cost model in order to negotiate effectively with suppliers. With the aid of cost model analysis, the client desired to acquire the necessary knowledge and insights to determine the fair market pricing in order to maximize profits. In addition, the biomedical engineering firm wished to compare outsourcing options with in-house capabilities and assess the potential costs and revenues that can be generated if the project is completed.

To compile an exhaustive list of all the costs and benefits, the procurement specialists at SpendEdge conducted extensive interviews and discussions with key market participants in the biomedical engineering industry. In addition to trade exhibits, paid industry databases, and company presentations, the experts compiled information from a vast array of credible sources.

SpendEdge's cost model analysis solution enabled the biomedical engineering firm to comprehend direct and indirect costs, intangible costs, opportunity costs, and the cost impact of prospective risks. In addition to including all direct and indirect revenues and tangible benefits, the biomedical engineering client was able to achieve the lowest cost mix.

Included in this answer to fundamental cost analysis concerns are:
The Outcomes
The biomedical engineering client was able to negotiate mechanisms for low-cost raw material sourcing with our assistance. In addition, the client was able to forecast future costs and develop cost model technologies to assist customers' cost management requirements.