The underlying drivers for medtech’s transformation have been increasingly evident in recent years, and in many respects, the COVID-19 pandemic has accelerated them and created more urgency. The rise of connected devices is drawing medtech into the internet of things and opening up new opportunities for data-driven improvements in clinical outcomes. Meanwhile, health care systems face growing cost constraints, and patient-consumers are increasingly demanding a more customer-centered health care experience.
Now, the industry has the chance to address its limitations and better position itself to thrive in the next and the beyond, in three key areas.
1. Changing business models
At the beginning of 2020, 80% of physicians in the US were not using virtual health in their patient interactions — but six months after that, 95% had increased their use of virtual technology, with 58% of them increasing it by over 50%, according to a recent EY survey. The movement toward virtualized, remote-operated business models for medical care is accelerating faster than anyone had imagined at the start of 2020.
The need for remote care of chronic diseases has suddenly become more relevant than ever before, and medtech is already at the forefront of delivering this new model, particularly with the rise of diagnostics and the integration of diagnostics with remote care delivery. Beyond chronic diseases, populations worldwide face the challenges of maintaining mental and physical health while being cut off from normal routines. In recognition of this, the FDA lowered barriers to bringing behavioral therapy devices to market in April 2020, with the aim of heading off a potential mental health crisis.
Yet not all business model change is based on virtualization of care. As new health challenges emerge, new breakthrough innovations are needed to address them: in 2020, medtech players have aimed not only to rapidly design, redesign or retrofit devices that can help with the COVID-19 crisis management, but also to bring forward innovative offerings that can address the crisis. For one recent example, consider ExThera Medical’s Seraph 100 Microbind Affinity Blood Filter, a first-in-class tool for reducing pathogens in the bloodstream, even before identification of the pathogen.
Efficient producers, too, have never been as vital as in 2020, with health systems worldwide needing commodity equipment, from protective personal equipment, ventilators and diagnostics to many other hospital basics, at scale and at speed. Efficient producers with robust and agile systems for manufacturing and distribution have been at the forefront of medtech’s efforts to mitigate the disruptions caused by the pandemic. Not least among these disruptions has been its impact on global supply chains.
2. Supply chain transformation
Supply chain issues for medtech didn’t begin in 2020. Industry insiders have in the past noted the inefficiencies associated with supply intermediaries and inflexible legacy systems, in addition to the lack of transparency for regulators and companies alike. Concerns around supply chain visibility and efficiency were already at the forefront of industry discussions, with companies considering the wider use of analytics to address these issues, reduce costs and better meet their customers’ changing demands.
Moreover, nationalistic criticism of globalized operating models also preceded the pandemic, and these tensions look set to continue no matter how the COVID-19 pandemic plays out from this point. Medtech companies are obliged to assume a disrupted global political environment for the foreseeable future.
Participants in an Ernst and Young LLP/AdvaMed medtech CEO roundtable said that companies in the industry are scaled for efficiency, not redundancy. One said that using digital technology and data could be used to track how much scale redundancy suppliers have and whether they can pivot toward greater production. In the longer term, the industry will need to accommodate the ongoing reality of travel restrictions between countries and even between US states. The industry also may need to bring some manufacturing capacity back to the US or Europe, to safeguard the supply base.
And as business models change, new supply chain problems also will arise. Consider the rise of remote care: in an “anytime, anywhere” model, how can medtech companies shift their supply chains to accommodate this change? Moreover, as medical devices become ever smarter and more reliant on software and data, this will increase the need for medtech companies to take a broader product life cycle approach to their devices.
3. A revolution in regulation
Whatever the lasting commercial impact of the pandemic, we can see already that it has transformed regulatory norms. In the US, concern over product supply has not only led to increased policymaker involvement in the supply chain, but also significantly cut in the barriers to market entry, with the FDA authorizing over 250 emergency use authorizations (EUAs) since February 2020. These EUAs cover many products, including in vitro diagnostics and other tests, personal protective equipment and ventilators, and equipment that can be repurposed as ventilators.