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Impact of COVID-19 on the MedTech Industry

Catherine Higginson

Marketing & Communications Manager at Climedo Health

The COVID-19 pandemic is not only a human tragedy that has affected millions of people all over the planet; it is also having a massive impact on our global economy. With a new recession looming, the world as we know it has come to a halt, and we have yet to develop a robust exit strategy out of the crisis that will minimize the risk of a resurgence in new cases. Few industries have been left untouched by the outbreak — and the MedTech sector is certainly no exception. In fact, many MedTech companies now find themselves at the very epicenter of the crisis.

Medical devices, especially ventilators and personal protective equipment (PPE) are difficult to acquire during these times. The market is dominated by a few large manufacturers in a small number of countries, in particular the US (19%), Germany (9%), and China (6%). These three countries are responsible for a third of all global imports.

To assess how the COVID-19 crisis is impacting the MedTech sector, we have used this Whitepaper to analyze four key areas. In particular, we focus on how demand is outstripping supply for some devices, and sharply dropping in others. We will then take a look at how the crisis is fostering innovation and digital transformation and finally, we will consider the impact on the European Union Medical Device Regulation (EU MDR).

Of course, the situation is constantly evolving and not set in stone, so our findings are based on a snapshot from April 2020.

Demand is outstripping supply for some devices

In light of the crisis, MedTech companies are experiencing an unprecedented demand for certain medical devices, most notably respirators, PPE, and ventilators. New border controls have been implemented worldwide, originally in the interest of restricting the movement of people and thus the disease transmission risk. These measures, however, have also disrupted supply chains by slowing the movement of goods and in particular, components needed to make the crucial equipment needed to save lives in the pandemic.

As pointed out by Chris Newmarker in the DeviceTalks Weekly podcast by MassDevice with Tom Salemi, respirator and mask manufacturers such as 3M, which dominate in this market, are unable to meet current market demands. A news report in April 2020 showed that the company has doubled its usual production of N95 respirators to 100 million per month worldwide. In the European Union (EU), there are similar shortages of FFP2 masks, the equivalents of the N95. Other N95 manufacturers are increasing their output, yet there are still not enough respirators being produced to accommodate all of the medical professionals worldwide, let alone to meet general consumer demand.

Sharp demand declines in other areas

MedTech plays a crucial role in both supporting Coronavirus diagnostics and in providing frontline healthcare professionals with the right equipment. Manufacturers who have not traditionally worked within these areas must now adapt to a changing MedTech landscape where supply chains, face-to-face sales interactions, and elective surgeries have been disrupted. While healthcare suppliers are overwhelmed in meeting demand for some of the crucial devices mentioned in the first section of this paper, certain other devices are likely to face a temporary decline in sales. This applies in particular to companies whose main business line is in elective surgery.

Delaying elective procedures

Around March 2020, many governments around the world ordered hospitals to delay or cancel all elective procedures to ensure sufficient capacity for COVID-19 patients.

What qualifies as an elective procedure?

According to Johns Hopkins University, elective surgery is not necessarily optional, but it can be scheduled in advance. The surgery may improve someone’s quality of life, but not treat a life-threatening condition. In some cases, it may be for a serious condition, such as cancer.

Some examples include:

Plastic surgery to improves appearance and in some cases, physical function

Refractive surgery. Laser surgery for vision correction.

Exploratory or diagnostic surgery to determine the origin and extent of a medical problem, or to biopsy tissue samples.

Cardiovascular surgery. Non-emergency procedures to improve blood flow or heart function, such as angioplasty or the implantation of a pacemaker.

Musculoskeletal system surgery. Orthopedic surgical procedures, such as hip replacement and anterior cruciate ligament reconstruction.

This measure was also taken in the interest of supporting social distancing where possible, since the virus could be very easily contracted during a dental procedure, for example. American MedTech giants Zimmer and Stryker manufacture a lot of orthopedic equipment, and many surgical procedures requiring these devices can be delayed indefinitely. China makes up about 5% of Zimmer’s global revenue and there, too, elective procedures have been delayed in order to be able to deal with the pandemic. In early April, Zimmer Biomet reported that its quarterly revenue was down by roughly 10%.

Innovation — if not now, when?

COVID-19 is accelerating digital transformation and forcing business leaders to realign their strategies in every industry, including healthcare. Specialists believe that the pandemic will drive the health sector to embrace new technologies which may not even be considered under “normal” circumstances. According to several experts, the next phase of digital healthcare will most likely focus on increased interoperability between the many disparate systems used in health services. The goal is to provide patients and healthcare staff with a level of integrated data and services that are already commonplace in areas such as retail or banking. Without a doubt, MedTech has a crucial role to play in getting us through the pandemic, ranging from diagnosis, preventing infection, and protecting medical staff to tracking quarantined patients.

Medical diagnostics

In late March of 2020, the World Health Organization (WHO) appealed to European governments to significantly increase the number of tests in order to find and isolate those who are infected. Companies are racing to develop technologies for quicker and more reliable COVID-19 testing.

Colorimetrix, for example, has created tests where a single drop of blood from a finger prick is mixed with a solution in a test tube and can be analyzed using a smartphone app to scan the solution. An algorithm interprets the result, and the test subject is able to find out immediately whether their body has developed antibodies against SARS-CoV-2.

Diagnostics.ai is working on the full automation of PCR testing using artificial intelligence (AI). Their solution works with just any reliable test kit. After a test sample arrives at the lab, an ‘extraction’ machine cleans the sample and extracts any DNA/RNA. A qPCR thermocycler amplifies any COVID-19 RNA present in the sample. Now being tested in the UK and soon in the USA, the pcr.ai method could potentially double the number of daily samples tested without increasing staffing needs.

Meanwhile, Digid is developing test kits based on saliva samples that are rinsed in a test liquid and placed on a Biosensor chip. This chip is analyzed in a small reader while the results are sent to the cloud in real time. Such tests are said to be more reliable and definitive than existing tests, and they significantly speed up the process.

Beware the cybersecurity risks

Although the above-mentioned solutions look extremely promising, it is important to remember that medical devices often present targets for hackers, since they can potentially be used as entry points into hospital networks. Cyber experts and law enforcement agencies have been pointing out for years that vulnerabilities of networked medical devices in healthcare present a major risk. Now, the Coronavirus pandemic has created what some call the perfect storm for hackers to exploit their weaknesses. To keep up with the speed required to prevail in these challenging times, data protection officers should focus on maintaining the abstract principles of data security in healthcare, such as proper data separation and trusted third-party infrastructure for pseudonymization. This will vastly reduce the amount of damage that could be inflicted in the event that the day-to-day data hygiene fails.

EU MDR Delay

Finally, one major area that has been affected by the COVID-19 outbreak is the EU Medical Device Regulation (EU MDR). Adopted by the European Commission in April 2017, the regulation aims to progressively replace the current directives, such as the MDD (Medical Devices Directive).

Under MDR law, medical device manufacturers across all EU member states — and any organization selling devices within the EU — must make significant changes in their product development, data reporting, and quality assurance. The long-term objective of the MDR is to establish a modernized and robust legislative framework to ensure that public health and patient safety are better protected. As such, key elements of the existing approach will be enforced, including vigilance and market surveillance, while concurrently ensuring transparency and traceability. The original three-year transition period for adopting the new requirements was set to end on May 25, 2020.

Even before the COVID-19 outbreak, however, many had challenged the difficulties in complying with all new demands on time. Many companies complained that they would lose significant market share, and experts believe that 30% of devices could be taken off the market altogether or fail to be recertified on time under MDR law.

Survey: Were MedTech companies ready?

Prior to the EU MDR delay announcement, Climedo conducted a survey to assess the industry’s readiness for the new regulation. Consisting of 14 questions, the survey received responses from all over Europe, although the majority (86%) came from the German-speaking region. 85% of participants were medical device manufacturers.

EU MDR Survey results at a glance

77% considered the new regulation to be “very challenging”

The top challenges named were “lack of clarity” and “increased resources and costs”

Around a third believed that MDR will cost >5% of annual turnover

Only 26% had a fully MDR-compliant QMS

34% did not yet have a Notified body or were still switching

47% did not (yet) have a PMS plan.

Many companies still used paper (48%) and/or Excel spreadsheets (69%) for clinical data capture.

Overall, the results showed that only few companies were fully prepared for the new regulation in terms of their Post-Market Surveillance (PMS), Quality Management Systems (QMS), Notified Bodies, and data capture systems. This may be partly due to the extended transition period affecting certain device classes. Nevertheless, 77% considered the regulation to be “very challenging” (they rated it 6 or higher on a scale of 1–10) and just 26% had an MDR-compliant QMS in place. Furthermore, many companies said they work with paper (48%) for their clinical data capture, a system which will be hard to sustain in the post-MDR era, since one of the key MDR requirements is to present technical documentation in a “clear, organized, readily searchable and unambiguous manner”.

Conclusion

COVID-19 will certainly not be our last pandemic. Given that we live in an air-connected world, we will see more and more interaction between people and as a result, faster disease spreads in future. The outbreak has exposed many flaws in our global healthcare system. At the same time, however, it has spurred unprecedented levels of innovation across nearly all industries, which has been highly encouraging. If Coronavirus has taught us one thing, it’s that we need to expect the unexpected and be prepared for sudden economic changes at all times. For MedTech companies, this means ensuring sufficient stock of certain devices that could be crucial in a future airborne pandemic, and having a strategy in place for being able to diversify products, should demand suddenly drop with no pre-warning. It also means that embracing digital transformation is an absolute necessity to make processes more efficient and to be able to track devices and products. Electronic processes and data capture will also give companies affected by the EU MDR a significant competitive advantage in terms of their PMS and PMCF.

You can download the  white paper here : Impact of the COVID-19 Pandemic on MedTech (https://discover.climedo.com/en/impact-covid19-medtech)

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