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You’re Bleeding Money and Don’t Even Know It

Here’s a sobering thought: while you’re obsessing over R&D budgets and production efficiency, your company is probably hemorrhaging 5-7% of gross revenue through fraud and supply chain leakage. That’s not a typo—it’s reality.

I discovered this harsh truth during recent work in the MedTech sector. Frankly, I was shocked. Through discussions with colleagues and clients about these estimates, I realised many executives either don’t recognise this problem or dramatically underestimate its impact.

Consider this: if your company generates $100 million annually, you’re potentially losing $5-7 million to preventable leakage.

That’s serious money—money that should be flowing straight to your bottom line instead of disappearing into the supply chain black hole.

The Billion-Dollar Problem Nobody Talks About

Revenue leakage in healthcare equipment and medical device manufacturing isn’t some theoretical concern. Industry data shows pharmaceutical companies collectively lose over $15 billion annually from rebate abuse and chargeback errors alone. Medical device companies face identical risks with even less protection.

The gross-to-net gap—the difference between what you bill and what you actually receive—reached $236 billion across healthcare in 2021. While pharma companies were forced by regulation to build revenue controls, medical device and diagnostic equipment manufacturers are still catching up, despite facing identical complexity.

Here’s why this matters to your bottom line: unlike other business costs, revenue leakage is almost entirely preventable. Every dollar you recover from leakage flows directly to profit. No additional manufacturing costs, no new R&D investment—pure margin improvement.

Where Your Money Disappears: The Top Leakage Points

Revenue vanishes at multiple stages throughout your operation. Understanding these vulnerabilities helps you plug the holes:

Manufacturing & Procurement Losses

• Quality failures: Rejects and recalls from substandard components can trigger millions in losses
• Supply chain fraud: Counterfeit parts compromise your supply chain integrity while creating warranty claims
• Contract mismanagement: Poor supplier agreements allow pricing discrepancies to compound over time

Just last week, I heard a podcast about MedTech product packaging for air transport. The extreme temperature swings in aircraft cargo holds—from scorching tarmacs to sub-zero altitudes—can destroy highly calibrated diagnostic equipment. These “invisible” logistics failures create expensive writeoffs that directly impact revenue.

Channel stuffing fraud – a distribution problem

Distribution & Channel Partner Issues

• Unauthorised discounting: Partners who exceed agreed discount limits without approval
• Product diversion: Legitimate products sold outside authorised territories or channels
• Contract violations: Distributors who bend pricing rules or ignore territorial restrictions
• Billing errors: Complex pricing structures create opportunities for mistakes that favor customers

Product Diversion in the Healthcare Supply Chain: What’s the Problem and How Big Is It?

Sales & Service Revenue Gaps

The complexity of healthcare equipment pricing creates multiple leakage points:

Revenue Stream	Common Leakage Points
Equipment Sales	Unauthorised discounts, pricing errors
Service Contracts	Underpriced renewals, forgotten billing
Software Licenses	Unauthorised usage, poor compliance tracking
Diagnostic Consumables	Volume discrepancies, rebate abuse
Training Services	Unbilled hours, contract scope creep

The Hidden Threat to Your Bottom Line: How Sales Fraud is Bleeding Your Business Dry

MedTech is More Vulnerable Than Pharmaceuticals

Through my recent work, I’ve seen how medical device and diagnostic equipment companies face unique structural challenges that make revenue leakage worse:

Business Model Complexity: While pharma sells discrete products through standardised channels, MedTechs manage intricate bundles. A single “sale” might include equipment leasing, maintenance contracts, software licenses, training services, and ongoing consumables—each with different pricing structures and discount schedules.

Fragmented Distribution: MedTechs rely on more diverse partner networks than pharma companies. Specialised dealers, regional distributors, service providers, and system integrators all have custom contract terms and varying compliance capabilities.

Legacy Revenue Controls: The MedTech and diagnostic equipment sector has been slower to implement systematic revenue controls. While pharma companies invested heavily in rebate management and contract compliance systems under regulatory pressure, many healthcare equipment manufacturers still operate with outdated processes.

This complexity creates opportunities for revenue to slip through cracks that pharma companies sealed years ago.

Building Your Revenue Defense System

Protecting revenue requires systematic action across multiple areas. Here’s what works:

1. Implement Real-Time Monitoring

• Install automated systems that flag unusual discount patterns
• Set up alerts for pricing exceptions that exceed thresholds
• Monitor partner sales data for territorial violations or volume discrepancies
• Track service contract renewals to prevent revenue gaps

2. Strengthen Contract Controls

• Automate discount approvals with clear escalation paths
• Build dynamic pricing systems that adjust for market changes
• Create partner scorecards that track compliance metrics
• Implement regular contract audits beyond just financial reviews

3. Enhance Supply Chain Integrity

• Deploy serialisation and track-and-trace technologies
• Validate partner credentials and monitor their performance
• Create digital twins that link physical inventory to service claims
• Establish rapid response protocols for integrity breaches

4. Data-Driven Partnership Management

• Cross-reference sales transactions, service logs, and rebate submissions
• Use analytics to identify patterns that indicate fraud or process failures
• Reward partners for validated outcomes, not just volume metrics
• Conduct operational audits that assess pricing integrity and territorial compliance

Product Serialisation – a tool to help counter diversion and illicit trade

The Board-Level Questions You Need to Ask

Revenue protection belongs on your executive agenda. Start asking these questions:

1. What’s our independently verified leakage rate?
2. Can we trace our products through their entire lifecycle?
3. Do we have complete visibility over channel partner behavior?
4. Who specifically owns revenue protection accountability?
5. Are we prepared for regulatory scrutiny on supply chain integrity?

If you can’t answer these questions clearly, that’s where your risk lives.

Your Next Steps: Stop the Bleeding

Revenue leakage is fixable. Companies that address it proactively enjoy stronger margins, reduced risk exposure, and better competitive positioning.

Start with these immediate actions:

Week 1: Audit your last quarter’s discount exceptions and pricing variances. Calculate the financial impact of irregular patterns.

Month 1: Implement automated alerts for pricing exceptions that exceed your predetermined thresholds. Review partner compliance with territorial and discount agreements.

Quarter 1: Deploy analytics tools that cross-reference sales data, service logs, and rebate submissions to identify anomalies.

Year 1: Build comprehensive revenue protection systems with real-time monitoring, automated controls, and regular partner audits.

The companies moving first will capture disproportionate advantages while competitors struggle with eroded margins. In an industry where innovation drives growth but operational excellence determines profitability, revenue protection has become a competitive necessity.

Your money is disappearing right now. The question is: what are you going to do about it?

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Ready to plug the revenue leaks in your organisation? Start by conducting a comprehensive revenue audit to identify your biggest vulnerability areas. The sooner you act, the sooner you’ll see those lost millions flowing back to your bottom line.

Further Reading:

• Curwell, P. (2023). Product Serialisation – a tool to help counter diversion and illicit trade
• Curwell, P. (2023). Channel stuffing fraud – a distribution problem
• Curwell, P. (2025). The Hidden Threat to Your Bottom Line: How Sales Fraud is Bleeding Your Business Dry
• Curwell, P. (2025). Product Diversion in the Healthcare Supply Chain: What’s the Problem and How Big Is It?
• International Centre for Trade Transparency (n.d.). Case Studies: Notorious Supply Chain Fraud Scandals.
• Miller, Young, Dobrow, Showjania (2021). Vulnerability of the medical product supply chain: the wake-up call of COVID-19, BMJ Quality & Safety
• OECD (n.d.). Securing Medical Supply Chains in a Post-Pandemic World.
• Syed, I.U. (2024). Rethinking counterfeit medical supply chains: A critical review.
• Vincke, P. (2016). Fraud and corruption with medical devices.

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