Connect with us

Industry

MedTech recovering despite renewed Covid-19 pressures

While 2022 is a key year when, over the course of the year, we will get to an endemic stage, it will also be a chance for MedTech companies to establish themselves in a sector that is becoming increasingly in-demand with each passing year.

Is the long-awaited seismic shift in healthcare finally here? A collision of forces – a global pandemic of historic proportions; exponential advances in medical science; an explosion of digital technologies, data access, and analytics; informed and empowered consumers; and a movement from disease care to prevention and well-being – proving to be the catalyst for the clinical, financial, and operational transformation that healthcare has long promised to the world.

2022 marks the second full year of the Covid-19 pandemic, and it continues to dominate health systems’ attention and resources:

  • Global Covid-19 cases have climbed above 317.9 million as of January 13, 2022, and the death toll has exceeded 5.53 million. And certain racial and ethnic minority groups and underserved and marginalized populations have been disproportionately impacted by Covid-19, shining a spotlight on the recalcitrant issues around health equity and health outcomes.
  • Low vaccination rates have hampered many countries’ ability to contain the pandemic. More than half the world’s population has yet to receive a single dose of a Covid-19 vaccine, a figure that drops to less than 5 percent in low-income countries. Even in developed economies, access issues such as hesitancy, scheduling, transportation, and convenient hours are preventing many from receiving the vaccine.
  • Recognizing the interconnectedness of our global populations, The World Health Organization (WHO) and other aid groups have appealed to leaders of the world’s 20 biggest economies to fund a USD 23.4-billion plan to bring Covid-19 vaccines, tests, and drugs to poorer countries in the next 12 months.
  • Healthcare workers are experiencing incredible emotional, physical, and professional stress from responding to Covid-19. In the United States, for example, 55 percent of frontline healthcare workers report burnout, with the highest rate (69 percent) among the youngest staff. Healthcare organizations are fighting to support their employees and retain talent, especially in clinical populations, leading to renewed need to focus on the workforce experience.
  • The pandemic has also decreased access to and consumer demand for non-Covid-19-related medical care. Patients are postponing or forgoing a wide variety of services, including emergency treatment of acute conditions, routine check-ups, and recommended cancer screenings. The long-term health effects from the failure to intervene early, lack of chronic disease management, and undiagnosed conditions will be significant.

Despite Covid-19’s many devastating impacts, it does present the healthcare sector with a powerful opportunity to accelerate innovation and reinvent itself. Covid-19 has accelerated numerous existing and/or emerging healthcare trends; among them, shifting consumer preferences and behavior, the integration of life sciences and healthcare, rapidly evolving digital health technologies, new talent and care delivery models, and clinical innovation.

As sector stakeholders and the consumers they serve face an unfamiliar world of remote working, virtual doctor visits, and a supply chain marked by shortages of medical supplies, personnel, and services, the sector is transforming to meet the new challenges. This sector is also elevating the human experience of the workforce and reshaping what, how, and where work is performed; swiftly scaling virtual health services for Covid-19 and non-Covid-19 patients alike; and forming new partnerships to produce and procure desperately needed vaccines, treatments, and supplies.

Despite continuing challenges on multiple fronts, there is a growing optimism that many nations are now better equipped to manage the impact of Covid-19. While there is little chance that the coronavirus will disappear altogether, if no new, significant variant emerges, experts see Covid-19 transitioning from pandemic to endemic, meaning that it will be with us indefinitely but at more predictable, manageable levels.

Healthcare stakeholders in 2022 should remain alert, nimble, and flexible to deal with ongoing spikes and valleys in endemic Covid-19 cases and deaths and other communicable diseases.

In 2020, Covid-19 severely impacted the overall medical devices market worldwide, with different segments of the market experiencing wide-ranging effects. The rapid initial spread of the pandemic resulted in healthcare systems being severely overwhelmed, with resources and staffing being re-directed to address the surge in patients, particularly in intensive care units.

Medical devices markets that are imperative to supplying hospital equipment for the management of Covid-19, such as personal protective equipment, ventilators, and general hospital supplies, experienced a surge in sales to fulfil the overwhelming demand. However, the pandemic also resulted in postponements and cancellations of non-essential and elective procedures.

Manufacturers, focusing on devices used in such elective procedures, were extensively impacted financially during the worst-hit months of the pandemic, from March to April 2020. Many of these device markets had already recovered by H2 2020, however, with some even recording a surge in sales, while a few others had yet to experience such surges in 2021. Other device markets were less impacted overall by the pandemic, particularly those used in essential procedures, such as in the cardiovascular disease space.

By early 2021, nearly all medical device markets had fully recovered from the initial, significant dip in device sales caused by the pandemic. However, as the Alpha variant, first documented in the UK, spread globally for months, leading up to its peak in January 2021, many elective procedures were once again postponed. An analysis of the total healthcare spend in the US alone indicates that the cancellation of many procedures resulted in a temporary decline down to March 2020 levels, although the market had swiftly recovered by March 2021 and remained stable.

The emergence of new and deadly strains like the Delta variant, which peaked between summer and fall 2021 for most countries, once again halted many elective procedures, but the associated device sales were impacted far less than expected compared to previous cancellations. Financial statements throughout 2021 by some of the largest medical device companies also indicated a strong recovery for most of their business units, although the duration and sustainability of their recent growth remains volatile, as the current rate of global vaccinations and administration of booster shots may struggle to ward off emerging, potentially even more fatal variants of concern, such as the Omicron variant.

Excluding the sizeable IVD and hospital supplies markets, which had both grown significantly since the onset of the pandemic, GlobalData has estimated the remaining overall medical device market to exceed USD 335 billion in 2021, which reflects a more than 20 percent year-over-year (YoY) growth and a 2.4 percent growth in comparison to 2019 levels. While GlobalData forecasts the market to continue its pre-pandemic growth, the increasing prevalence of Omicron variant cases, leading to yet another round of elective surgery cancellations, may hinder the growth rate. Such cancellations have already begun in parts of the world, and the likelihood of this trend spreading to other countries remains high.

With the Covid-19 pandemic testing with the more developed healthcare systems globally, the foundations of India’s healthcare system have also been shaken.

From USD 10.36 billion in 2020, the Indian market for medical equipment is expected to reach USD 11.86 billion in 2022, and increase at a 37-percent annualized compound annual growth rate (CAGR) to reach USD 50 billion in 2025.

Despite secular growth, analysts remain optimistic about the healthcare sector, and anticipate a good rebound in non-Covid business, which could contribute to possible margin improvement via cost-cutting activities and a shift in mix. Sector companies under an ICICI Securities study have seen steep appreciation in stock price over the last year (~50%), driven by both hospital and diagnostic companies. Key notable points for CY22, including occupancy level, are expected to remain strong and recovery in international patients improve mix for hospitals’ likely improvement in volume growth for diagnostic companies with the shift from unorganized to organized players; reducing contribution from Covid-19 business, however, Omicron variant may change assumptions; and EBITDA margin to sustain with improving business mix and continuation of cost-control initiatives.

Hospitals’ occupancy levels are expected to improve, while the change in case mix and reduction in ALOS would improve ARPOB. Revenues from international patients are still below pre-Covid level, which is expected to normalize in CY22. Revenue growth is projected to be strong ~14 percent in FY23E despite a higher base. Companies would continue focusing on cost-control measures, which should support profitability.

Diagnostic companies will observe strong mid-teens growth in base (ex-Covid) business in CY22. Low base of non-Covid portfolio of H1 CY21 would likely help in registering very strong growth in H1 CY22, while Covid-19-related revenues would contract sharply. A faster shift is anticipated from unorganized to organized players in the current environment as larger brands are associated with safety and hygiene and have efficient home-collection process, which has seen increased traction as well as likely consolidation in the industry.

Again, the things are not based on a single root. Massive expansion of medical facilities factored in, and introduction of the Medical Devices (Amendment) Rules 2020, is also there to boost demand for medical devices in the market. On the policy front, the Indian government is undertaking deep structural and sustained reforms to strengthen the healthcare sector.

Recently, the finance ministry allowed sourcing 128 types of medical devices and IVD instruments from global manufacturers, even if the value of order is less than ₹200 crore. These devices include flow-track cardiac-output monitoring, auto PAP cervical cancer screening system, visual filed analyzer, surgical operating microscope, dexa scan, transcranial doppler, stroboscope, optical biometer, portable mobile endoscopy unit, sweat collection and chloride estimation, rapid blood/fluid flow warmer, besides others. In the year 2020, in an effort to boost local manufacturing, the government took a policy decision to stipulate no global-tender-enquiry (GTR) for tenders up to ₹200 crore. Accordingly, the amendment was made in General Financial Rules (GFR).

However, relaxation was granted in special cases. The government has also announced conducive policies for encouraging foreign direct investment (FDI). In fact, India’s FDI regime has been liberalized extensively. Currently, FDI is permitted up to 100 percent under the automatic route (i.e., a non-resident investor or an Indian company does not require approval from the Government of India for the investment) in the hospital sector and in the manufacture of medical devices. In the pharmaceutical sector, FDI is permitted up to 100 percent in greenfield projects and 74 percent in brownfield projects under the automatic route. In the AYUSH sector as well, 100-percent FDI is permitted for the wellness and medical tourism segment.

The Department of Pharmaceuticals (DoP) has launched a PLI scheme for domestic manufacturing of medical devices, with a total outlay of funds worth ₹3420 crore for the period FY21–FY28. The department has released a revised notice on the Public Procurement Order (PPO), incorporating 19 medical devices in the revised guidelines of the PPO, which is expected to improve domestic medical-devices manufacturing, strengthen Make in India initiative, and reduce import bills by ₹4000 crore. In March 2021, the government also announced a new PLI 2.0 scheme for promotion of the in-vitro diagnostics market.

In September 2021, the union government notified a scheme to promote medical devices parks at a financial outlay of ₹400 crore till financial year 2024-25. The financial assistance for a selected medical devices park would be 90 percent of the project cost of common infrastructure facilities for the northeastern and hilly states. For the rest, it would be 70 percent. However, maximum assistance under the scheme for one such park will be ₹100 crore.

To sum up, Indian MedTech industry has been growing at double-digit rates, and has evolved significantly in the last decade. However, a number of challenges need to be addressed in providing access to quality, affordable healthcare, and making this sector self-sustainable.

Covid-19 outbreak in India has given tremendous opportunities to the Indian medical devices manufacturers to shine by addressing indigenous needs, and be a credible global player for medical devices manufacturing and supply.

As the world is now looking at India to be the hub for providing cost-effective medical devices components and devices, India being globally established as the IT leader has the potential to lead the era of digital healthcare solutions. It is time for the Indian government to continue with its multiple policy initiatives for creating an enabling ecosystem and catalyze the holistic development of Indian medical device industry to shine. India has the potential to provide quality medical devices products at affordable price points, which is unique to India.

India is finally poised to take giant leaps in the medical device sector.

The aftermath of coronavirus
Healthcare has never been more important to the global economy than during the past two years, and it will be central to the economic recovery.

Healthcare budgets will remain generous, but some areas will be squeezed. Global healthcare spending will rise by 4.1 percent YoY in 2022 as countries rise to the diverse challenges of coronavirus and non-coronavirus care. This will be a slowdown from the 9-percent growth seen in 2021, when many countries were spending heavily on vaccines. However, it will still be among the fastest growth rates for a decade. Moreover, as a share of global GDP, healthcare spending will remain at 10.5 percent, up from 10.2 percent in 2019, and only marginally lower than in 2020, when the economy contracted. Despite the cost of vaccination programs, from 2022 onwards growth is expected in healthcare spending to slow as governments seek to reduce budget deficits and pay down foreign debt. Some may be forced into austerity budgets as creditor patience wears thin. Nevertheless, the underlying trend in terms of global healthcare spending is still upwards, driven by economic recovery as well as population aging, advances in treatments, and the expansion of public healthcare systems.

Coronavirus and its aftermath will continue to strain healthcare systems. Coronavirus vaccines will remain the priority for most healthcare systems in 2022, given the risks of vaccine-resistant variants emerging or further outbreaks. While most developed countries will roll out booster shots, many citizens in developing countries are yet to receive their first shot – with economic consequences. Fortunately, vaccine-production capacity is finally set to expand rapidly, with new plants coming on tap (see box) and India’s export ban lifted.

Even so, we calculate that vaccine delays (whether caused by supply constraints or vaccine hesitancy) will cost the world USD 2 trillion in GDP by 2025, a sum roughly equivalent to the annual GDP of France.

Living with the virus will be challenging in 2022. The aftermath will include long Covid and mental health problems, as well as a backlog of non-coronavirus care. A survey of 61 countries published in The Lancet concluded that one-seventh of planned cancer surgeries have been delayed in regions with lockdowns. McKinsey warns of a backlog of more than 1 million joint and spinal surgeries in the US by mid-2022. In the UK, the waiting list for treatment could reach 13 million in 2022, nearly triple its pre-pandemic level.

In Africa, delays to routine vaccinations could put 80 million children at risk of contracting preventable diseases, such as malaria, tuberculosis (TB), and measles across 45 countries. TB deaths are set to rise again for the first time in a decade.

The strain on healthcare systems will be exacerbated by rising staff turnover and international competition for healthcare workers. According to the British Medical Association (BMA), the UK is currently short of 49,000 full-time doctors, while, in the US, the Association of American Medical Colleges (AAMC) predicts a shortfall of between 21,400 and 55,200 primary-care doctors by 2033. Coronavirus has also killed between 80,000 and 180,000 healthcare workers worldwide, according to the World Health Organization (WHO). Clinics and hospitals around the globe are struggling to recruit and retain staff, and the pharmacy sector is facing a similar problem.

Pharmaceutical supply systems will come under regulatory scrutiny. Healthcare is not immune to the supply chain problems that have pushed up the prices of commodities and inputs. In 2022, global pharmaceutical sales are expected to increase by 4.6 percent in US dollar terms (about half the rate seen in 2021, but still faster than that seen in most of the previous decades). The disruption suffered in 2020 – when many countries were scrambling for MedTech supplies – has died down, but the pharmaceuticals industry is still suffering the knock-on effects of the broader logistics crisis. Coal shortages in China have affected the vital production of active pharmaceutical ingredients. Pharmaceutical companies reliant on Asia-US shipping routes are also experiencing delays and added costs as container prices soar, and the effect is likely to last for a few months. The magnesium shortage that is affecting carmakers might lead to shortages of foil packaging for drug makers.

During 2022 the EU and US will push ahead with the reshoring initiatives they started last year, when supply-chain disruption underlined their reliance on China. The US will use the purchasing power of public healthcare schemes to favor medicines produced within the US, although efforts to use the Defense Production Act to direct industrial production may fall foul of political gridlock in the Congress. The European Commission (EC) is currently wrapping up far-reaching consultations over pharmaceutical regulations, including supply chains, which should result in reform proposals in 2022. Meanwhile, in China, the government is slowly centralizing and reorganizing the process of drug procurement, a process that is likely to be to the benefit of domestic companies.

There will be fewer unexpected medical bills. The US No Surprises Act seeks to protect consumers from unexpectedly high medical bills when they seek treatment from out-of-network providers. It will become effective in the US from January 2022, making it illegal for providers to bill patients for more than the in-network cost-sharing fee under their insurance policies.

Africa’s vaccine-manufacturing capacity will expand. Less than 5 percent of Africa’s population is fully vaccinated against the coronavirus, partly because of problems with securing supplies. From late 2022 the Pasteur Institute of Dakar in Senegal will start producing 25 million doses of coronavirus vaccines a month, with international backing. Vaccine capacity will also rise in Egypt, South Africa, and Morocco as existing plants expand.

The EU will tighten MedTech regulations. The IVD Medical Devices Regulation, agreed in 2017, will be enforced across the EU from May 2022, setting uniform safety standards for the notified bodies that approve IVDs. However, some parts of the regulation will be delayed in order to avoid excessive disruption. The new EU Clinical Trials Regulation will also come into force in January 2022.

The UK will bring in a health and social-care levy. The pandemic exposed gaps in the UK’s social- and aged-care system, which the government plans to plug by increasing health and social-care funding by £12 billion over the next three years. It will fund this hike by adding another 1.25 percent to workers’ national-insurance contributions from April 2022.

China will tighten the regulation of health apps. Under its 14th Five-Year Plan, China aims to integrate telehealth services into the basic health-insurance system, to alleviate pressure on overcrowded hospitals. However, the government also wants better regulation of health apps, such as Tencent’s We Doctor, Ping An’s Good Doctor, and Ali Health. Draft rules, released for consultation in October 2021, caused share prices to drop.

Support for digital health ecosystems will increase. The Covid-19 pandemic accelerated the need for cost-controlling measures and the rise of online pharmacies that facilitate patient access to virtual care. In 2022, expect to see greater demand for the funding and reimbursement of digital health solutions in Continental Europe, particularly in Germany and Switzerland. Increased use of digital therapeutics is also anticipated to cost-effectively complement traditional treatments as well as the evolution or, in certain countries, the further development, of a legal framework for certification of digital apps to achieve digital therapeutic status and reimbursement.

Due to a favorable policy environment – with Singapore arguably leading the way with its Diagnostic Development Hub as a national platform for MedTech development – many countries in Asia are providing emerging companies with high-profile visibility to healthcare investors, stakeholders, and decision makers. Asian governments are already focusing on digital health policy at the national level, with an acceleration in the adoption of comprehensive electronic health records and private-public partnerships. Additionally, the convergence of regulatory standards both within Asia (particularly among ASEAN countries) and international norms can be observed. In 2022, expect to see further adoption of MedTech tools to enhance the effectiveness, efficiency, and accessibility of healthcare in Asia.

Covid and consumerism will drive interest, investments. The Covid-19 pandemic shined a spotlight on health tech as consumers turned to virtual health and other technologies to help them manage their conditions and stay connected to their doctors and care teams. But the healthcare sector is still catching up to more consumer-focused industries – such as finance, entertainment, and retail – that have adopted technologies to empower their customers. From appointment logistics to virtual care to the development of at-home testing kits, many niche companies have seen significant upticks in funding as a result of the pandemic. Private equity firms, venture capitalists, and increasingly corporate venture capital investors appear to be very interested in virtual health, access, health equity, mental health, and consumer-driven platforms.

2021 might have been the biggest year ever for digital health investments. The year ahead could be even more impressive, if companies focus on integrated solutions that address healthcare costs, access, interoperability, health equity, and the drivers of health.

New technologies. The ground-breaking technologies behind the Pfizer and Moderna coronavirus vaccines, which use mRNA delivered in lipid nanoparticles, are being developed to produce better treatments or vaccines for other diseases in 2022. Researchers are investigating the use of mRNA vaccines for cancer and HIV treatment, as well as infectious diseases, such as influenza, rabies, and zika. Lipid-based delivery systems are being assessed for their potential to allow chemotherapy or immunotherapy drugs to target cancer cells more directly to enhance effectiveness or reduce side effects. Other research focuses on their use for gene therapies, and to treat neurological diseases, especially those that provoke strokes. Data will be one of the most important commodities in healthcare in 2022. To analyze that data, healthcare providers, payers, and suppliers will increasingly rely on machine-learning algorithms and software to improve diagnoses, treatment, and outcomes. Regulators will be struggling to catch up, focusing on issues around data security and privacy, as well as competition and intellectual-property rights. Such regulation may also cause controversy, as the EC has found in the reaction to its draft EU regulation on artificial intelligence.

Headwinds for MedTech in 2022
The MedTech market is fast becoming a powerhouse of the global healthcare sector. A growing geriatric population and trend toward therapeutic and rehabilitative treatments could push the global value of this market as high as USD 657.98 billion by 2028, according to 2021 market research.

Yet, for as prolific as the runway appears, the MedTech market faces challenges – particularly once the pandemic is behind us. Here is a look at some of the significant challenges facing medical device manufacturers today and how they could persist in the future as the market becomes more in-demand and more competitive on all fronts.

Disrupted supply chains. Supply disruptions are going to carry over from 2021 to 2022. Demand is coming back for the industry, but while inventory levels are slowly rebounding, supply challenges are impacting the delivery of materials. This market dynamic has created a perfect storm. It is a very challenging supply environment across the medical sector. Until global supply chains settle and device manufacturers get the materials they need, the market will remain depressed. Moreover, until raw material prices settle back to pre-pandemic levels, the cost of producing many devices could become prohibitive.

Increasing healthcare costs. Speaking of rising costs, the already high cost of healthcare continues to trend upward. For those who require medical devices to treat or manage a chronic condition, there is concern that these products will become unaffordable and out of reach. This is compounded by the fact that many medical devices exist outside traditional insurance coverage. Patients are left fighting for even partial coverage of new and innovative devices – or footing the bill themselves. For many, even some financial assistance from insurance is not enough to bridge the gap between cost and need.

Regulatory hurdles. The medical device market is highly unregulated – except for the spaces where it is heavily regulated. This inconsistency ultimately makes it difficult for patients and device manufacturers alike. Unregulated devices are not covered by insurance, which makes getting them into the hands of patients difficult due to cost concerns. Likewise, the FDA evaluation process for new devices is lengthy, expensive, and largely cumbersome, which dissuades many startup device manufacturers from seeking approval. Until there is a more succinct and responsive approval process or a change to regulatory guidance, this gap will persist.

Cybersecurity concerns. As more and more devices become digital, cybersecurity concerns rise. Even something as simple as a Bluetooth-enabled device serves as an access point for data theft. Device manufacturers now find themselves facing concerns about patient privacy and protection per HIPAA, which makes manufacturing smart devices more complex and costly. A staunch cybersecurity approach can add months to the development timeline, zeros to the production cost, and headaches when it comes to seeking approval from regulators. In simpler terms – data security is not optional and it is creating challenges for manufacturers.

Counterfeiting and imitators. IP theft and iteration is now becoming a new trend. Too often, a new and innovative product hits the market only to see imitators and counterfeit examples alongside it within months. This is a devastating prospect for the medical device market, for a multitude of reasons. Responsible manufacturers bear the burden of doing things right, while counterfeiters flood the market with unproven devices. Patients can experience poor results or, worse still, illness or injury – all because they were duped by a clever lookalike. To perpetuate the problem, these knockoffs are competitively priced and often well-packaged, further mingling them as imposters. Everyone suffers at the hands of counterfeiters.

Product recalls and lawsuits. In a market as diverse and demanding as the medical device sector, recalls and lawsuits are a frequent occurrence. Many times, the former preempts the latter. As they continue to iterate and innovate, many manufacturers recall old models as a precautionary measure – a move that costs money, yet could save multitudes more by avoiding a lawsuit. Likewise, lawsuits are common in a market where definitive medical claims may draw scrutiny from the FDA and customer expectations are high. Device manufacturers need to set and maintain patient and practitioner expectations to avoid litigation. Here again, a better medical device-approval process would deescalate tension and safeguard both producers and consumers.

Interdisciplinary competition. With the significant milestone of a Covid-19 vaccination, the world has seen the power of molecular drugs in the modern age. This, combined with amazing advancements in therapies like CRISPR and pharmacogenomics, is shifting the future of healthcare toward personalized solutions. While the industry is unlikely to see gene-editing breakthroughs for at least another decade, forward-looking device manufacturers see the competition that will come from molecular medicine. Curing a disease at the DNA level could eliminate a swath of medical devices from the landscape – the likes of insulin pumps, for example.

The healthcare industry is changing rapidly and new challenges crop up regularly. It is vital for healthcare administrators to find new ways to improve patient outcomes, reduce costs, and improve the productivity of healthcare organizations. Acknowledging these challenges and keeping them in focus serves to harden manufacturers, to help them stand tall in a market prone to change.

Finally, the MedTech industry’s exponential expansion over the last two years is predicted to continue beyond 2022. As the world proceeds toward a post-pandemic future, 2022 will be a critical year in the MedTech arena. The MedTech industry, as well as the national and supranational authorities entrusted with regulating it, will face new problems due to its fast expansion and quickly altering business models. Despite the emergence of some interoperability standards, medical technology inventors continue to face a patchwork of laws, rules, and practices throughout the world. As a result, companies, who embrace a global approach to compliance in the design and implementation of their MedTech products and services, will reap the benefits of future-proofing their solutions as they grow.

Copyright © 2024 Medical Buyer maintained by Fullstack development

error: Content is protected !!