Business Management: Penumbra's Strategic Approach and Market Position

This report provides a comprehensive analysis of Penumbra's business-level strategy, focusing on its approach to cost leadership within the neuro and vascular medical device market. Penumbra employs a strategy of producing quality products at competitive prices to gain an edge over competitors like Nevro and Medtronic. The company heavily invests in research and development to foster innovation, developing unique selling propositions and adhering to medical device regulations such as FDA and QSR. Penumbra utilizes a direct sales channel to reduce operational costs and maintain control over pricing and customer relations. The report highlights Penumbra's financial performance, including revenue and R&D expenses, and emphasizes the importance of expanding its product range to enhance its market competitiveness. The analysis is supported by references from various sources including APBK Capital, Business Wire, and Penumbra's financial reports.

Business Management

BUSINESS LEVEL STRATEGY OF PENUMBRA
Penumbra has wide range of products in neuro and vascular segment that best fit with
different use by surgeon and doctors. However, it faces key competition from Nevro, MUSC,
Masimo, Aspen Surgical and Medtronic who also offering similar set of products in hospitals.
Due to this, Penumbra faces intense rivalry from its competitors. In order to tackle the same,
Penumbra adopts cost leadership approach of Porter’s generic strategy where it produces quality
products at relatively cheap prices (APBK Capital. 2015). The company is developing cheap
medical devices of different use by using different material such as steel, bio-plastic, ceramic,
polymers, biomaterial and other related. This certainly reduces the cost of one time used device
and hence assist in attaining an edge over their rivals. This strategy helps the company in
expanding its market share and also supports in gaining re-order from same clients. In the year
2018, cited company has earned a revenue of $444.9 million with an increase of 33% from prior
year (Penumbra. 2019).
In addition to it, Penumbra solely focuses on innovation in order to develop devices that
can be used in most complex scenario also. For this, company invest heavily in R&D department
that assist in designing device for every scenario. It has a budget of 39.93 million in the year
2018 (Penumbra Research and Development Expense. 2019). This certainly develops the USP
of the company in market and makes its distinct from competitors (Business Wire. 2018).
Through this, company is also adhering with medical device regulation in local and foreign
market such as Food and Drug Administration (FDA), Quality System Regulation (QSR), Patient
Protection and Affordable Care Act etc.
In addition to it, Penumbra follows one-level distribution strategy where it has direct sale
channel. The company sells its products to varied hospitals from its direct sales team by
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appointing distributors. This business level strategy certainly helps the company in reducing its
cost of operation and supports in practicing cost leadership strategy (PENUMBRA TODAY.
2019). Also, this strategy helps Penumbra in having full control over the pricing and selling of its
products. This assists in developing healthy relation with its customers by offering high variation
in pricing. However, it needs to enhance its device range under other segment also such as
medical electronic device, dental equipment, cardiology and other related in order to boost its
competency.
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REFERENCES
APBK Capital. (2015). Penumbra - A Cheap Medical Device Company With Growth Potential.
[Online]. Available through: https://seekingalpha.com/article/3513506-penumbra-cheap-
medical-device-company-growth-potential.
Business Wire. (2018). Penumbra, Inc. Announces Acquisition of Controlling Interest in MVI
Health. [Online]. Available through:
https://www.businesswire.com/news/home/20180904005259/en/Penumbra-Announces-
Acquisition-Controlling-Interest-MVI-Health.
Penumbra Research and Development Expense. (2019). [Online]. Available through:
https://ycharts.com/companies/PEN/r_and_d_expense.
PENUMBRA TODAY. (2019). [Online]. Available through:
https://www.penumbrainc.com/company/.
Penumbra. (2019). [Online]. Available through:
https://www.sec.gov/Archives/edgar/data/1321732/000119312515291880/
d923792ds1.htm.
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