Corporate Governance and Operational Resilience in Medical Tech: A Risk Assessment for Investors

The medical technology sector, a cornerstone of modern healthcare innovation, faces a dual challenge: navigating rapid technological advancements while ensuring robust corporate governance and operational preparedness. For investors, understanding these dynamics is critical to mitigating risks and identifying resilient players in a high-stakes industry. Recent case studies and regulatory trends underscore the urgency of rigorous due diligence in this space.

Corporate Governance: Lessons from Novo Nordisk's Collapse

The most striking governance failure in 2024–2025 emerged at Novo Nordisk, the global leader in GLP-1 weight-loss drugs. A LinkedIn Corporate Governance Case Study: The Fall of Novo Nordisk highlights how the company's rigid, foundation-controlled governance model-once praised for its long-term focus-became a liability as market conditions shifted. Key governance flaws included a stagnant board (8 of 11 directors served over a decade) and an overemphasis on stability over agility. This rigidity delayed responses to emerging threats like compounded drug alternatives and telehealth disruptions, culminating in a 53% share price collapse and the CEO's abrupt removal. The case underscores the dangers of board complacency in fast-evolving industries.

In contrast, Hong Kong's recent corporate governance reforms-mandating director training, board performance reviews, and restrictions on overboarding-offer a blueprint for proactive oversight, as noted in a Skadden report. While these measures target listed companies broadly, their emphasis on diversity and independence could serve as a benchmark for medical tech firms seeking to avoid Novo Nordisk-style pitfalls.

Operational Risks: AI, Cybersecurity, and Workforce Pressures

Operational risks in medical tech are equally pressing. According to a WTW Top risks in healthcare for 2025-26, the integration of AI and digital health tools introduces vulnerabilities such as algorithmic bias, misdiagnosis risks, and reliance on incomplete data. Cybersecurity threats further compound these challenges, with healthcare organizations experiencing frequent ransomware attacks that disrupt care delivery. For example, Creative Medical Technology Holdings Inc. reported a quarterly adjusted loss of $1.12 per share in late 2024, reflecting financial strain exacerbated by operational inefficiencies, according to a Reuters earnings summary.

Workforce shortages and rising labor costs-accounting for 50–60% of hospital operating expenses-add another layer of complexity, as noted in the same WTW report. Rural healthcare providers, in particular, struggle with recruitment and retention, creating a ripple effect on medical tech firms reliant on these markets.

Investor Due Diligence: A Framework for Risk Mitigation

For investors, due diligence must extend beyond financial metrics to evaluate governance structures and operational strategies. Key considerations include:
1. Board Composition: Prioritize companies with diverse, independent boards and regular performance reviews.
2. Technology Audits: Scrutinize AI and cybersecurity protocols, particularly for firms handling sensitive patient data.
3. Regulatory Alignment: Monitor compliance with evolving standards, such as the U.S. False Claims Act (FCA), which secured $3 billion in healthcare-related settlements in 2024, according to a BIPC regulatory update.

Positive examples exist. Vivos Therapeutics, for instance, reduced operating expenses by 21% in 2024 while expanding its market reach through strategic partnerships, as noted in the WTW report. Similarly, ONWARD Medical's FDA-approved ARC-EX System and collaboration with Ottobock demonstrate how innovation paired with prudent governance can drive growth, as reported in a TradingView news summary.

Conclusion

The medical tech sector's future hinges on its ability to balance innovation with accountability. Novo Nordisk's collapse serves as a cautionary tale, while companies like Vivos and ONWARD illustrate the rewards of proactive governance and operational agility. Investors must adopt a holistic approach, leveraging both governance frameworks and operational risk assessments to navigate this dynamic landscape.