Ushering in 2021

2021 should be the year we put COVID-19 behind us with the aid of a vaccine. The pandemic monopolised our attention in 2020 but brought to view insights that have the potential to change the organisation and regulation of healthcare and life sciences products in 2021 and beyond.

The medical devices industry in 2020 faced severe headwinds, with an intense focus on producing equipment such as ventilators and PPE, and a fall in the production of other equipment. Major production lines have been disrupted by the pandemic, and a mass deferral of elective surgeries has upended expected demands and associated supply chains. Some specific areas, which are non-essential and elective, such as orthopaedics,for example, have seen a significant drop-off in demand.

ADIEU 2020
Year 2020 dealt severe blows to the Indian medical technology sector in different ways. The first blow came even before COVID-19, which was the 5 percent ad valorem health cess imposed on imported medical devices. This, coupled with the Indian rupee depreciating by almost 8 percent in March 2020 against the EUR and the USD, meant a significant hit. Then came the COVID-19 pandemic along with the nationwide lockdown, and elective surgeries shrunk dramatically.

Innovation-led global medical device manufacturers in India suffered upto 85 percent drop in revenue in most segments during April-June 2020. Many healthcare workers migrated to their hometowns. In the July-September quarter, the downfall slowed a little.

Occupancy levels in hospitals had fallen to 30-40 per cent by the end of March this year, whereas pre-COVID, they were around 65-70 per cent, according to an EY report. Star doctors, who are the magnets for procedures, also became less available in hospital premises due to their vulnerable age.

The already bleak financial situation for hospitals did not improve, with margins down month over month, and volumes and revenues continuing to fall across most metrics. Expenses also remained high compared to last year and above budget.

Inpatient admissions were the only meteoric to rise, surpassing 2019 levels for the first time since the pandemic began, as COVID-19 hospitalizations more than doubled in November. Discharges remained down though, as higher-acuity patients, including those with COVID-19, ticked up average lengths of stay.

Non-emergency treatments, elective surgeries, and medical tourism had come to a grinding halt in 2020 hitting revenues. In 2021, with the pandemic still not coming to an end, for H1 at least, the medical facilities will continue to earn revenues on its account. The RT-PCR tests will carry on, and so will the antibody tests, that may be required before the vaccination and post vaccination too to test if immunity has been developed. Procedures for orthopaedics, spine, and neuromodulation should come back more quickly than others.

The sector will end the fiscal with a 15-20 per cent dip in revenue and about a 60 per cent fall in Ebitda, says an ICRA estimate. Thanks to the low base of FY21, the next fiscal would show a robust rise in revenue and Ebitda.

“We expect revenue growth to be strong, 25 per cent in FY22 on a low base and the return of normal double-digit growth. The companies focused on various cost-control measures during the lockdown, which may be partially sustainable and can help in improving RoC,” said a statement by ICICI Securities.

The digitisation of health services will also be a major focus for both hospitals and diagnostic labs. Remote reviewing of pathological cases will take dominance. The share of preventive health check-ups in the overall portfolio is likely to increase in the coming months. According to research by McKinsey & Company, the adoption of telehealth in the US has grown very significantly, from 11 percent of consumers using it in 2019 to 46 percent in April 2020. We expect that telehealth provision is here to stay and will become even more widespread. Physicians previously resistant to telemedicine rapidly changed their views as lockdowns became the norm. Avoiding infection or being an agent of infection has meant avoiding in-person patient interactions. It now feels like common sense that immunocompromised patients accessing oncology clinics, for example, benefit from not having to attend in person unless absolutely necessary.
COVID-19 has also seen the advent of the use of apps to monitor and track the health of the nation. The digital health industry has continued to innovate, including developing apps that monitor and track diseases and well-being. We predict that during 2021, apps will go even more mainstream and, as with all new technologies, a small handful will become the preferred option for specific diseases, for example in diabetes care.

Market dynamics
In 2019, the global market reached nearly USD 460 billion, but that is expected to shrink by more than 3 percent through 2020 as a direct result of the pandemic, and the lockdowns imposed by governments around the globe. The market is tipped to recover from 2021 at a rate of more than 6 percent, pushing past USD 600 billion by 2023. Private expenditure is expected to help boost financials, along with public injections of cash.

India as a market for medical devices is among the top 20 countries in the world, worth almost USD 11 billion, poised to grow to USD 50 billion in the next five years. At the moment, India imports almost 85-90 per cent of sophisticated medical devices from other countries, prominent among them being China. In the year, 2019-2020, medical equipment worth almost Rs 4560 crores was imported from China. Presently, local medical equipment manufacturers are mostly involved in the production of low-end products for domestic and as well as international consumption. After Japan, China, and South Korea, India is the fourth largest market in Asia with the potential to grow at 28 percent.

Niti Aayog is working out a roadmap for the promotion of medical equipment manufacturers in the country. The Government has also allowed 100 per cent foreign direct investments in companies manufacturing medical devices through the automatic route. The Indian Government has already chalked out plans intending to remove all roadblocks and offer tailor-made solutions to attract investment to make India a manufacturing hub for medical devices.

Under initiatives like Make in India, several state governments have taken up the onus of setting up medical device manufacturing parks in their respective states and have got the approval from the Government of India to do so. There will be six medical devices manufacturing clusters in the country in states like Andhra Pradesh, Kerala, Telangana, Tamil Nadu, Maharashtra, and Sikkim. These clusters will provide a huge boost to domestic manufacturing of high-end medical devices at a lower cost and significantly enhance job creation.

Welcome 2021
The healthcare industry has had to pivot completely this year and 2021 will see it emerge a transformed industry. The impact will be seen on policies, how ecosystems evolve, and most obviously on healthcare provider organisations. COVID-19 has shifted the business priorities of healthcare providers and how these organisations invest and use technology. It will be impossible to restrict another reset in 2021. Given the immense impact of the pandemic, it would be near-the prediction to only one year; and several of the trends will firmly define the industry way beyond 2021.

There will be new business opportunities. Enterprises and innovators will find opportunities in supply chain arbitrage, investments in pharma/ vaccine/ diagnostics manufacturing, and distribution will be driven more by short-term horizons, defensive capacity building, and supply security concerns; innovation and new businesses will see an upsurge in demand and supply of alternative medicines and devices as well, although these may still not be accepted in conventional medicine.

MedTech and providers will find new synergies. Medical devices which generate clinical data and are driven by clinical data will attract greater investment and higher R&D expenditure, and will either dominate or begin to set the direction for future consumer devices in the healthcare space.

The popularity of telehealth and digital health will put pressure on healthcare providers to further draw data-driven insights from personal devices. They are likely to mandate the devices that they would be willing to use the data. They will have greater power to demand interoperability and operating system convergences in the next few years from device developers and manufacturers.

2021 will see an increased use of devices such phones, bracelets, and even anklets to track the spread of COVID-19. It will also see the transition of the smartphone to a medical device. The collection, sharing of data, running AI/machine learning will make smartphones an integral part of remote patient management.

Putting quality first. The biggest trend for medical device development will be a keen focus on quality. Regulation is about to experience an upheaval. In what Deloitte has dubbed the most significant change to medical device regulation in nearly three decades, the new European Medical Device Regulations (EU MDR 2017/745) implementation date is fast approaching. Initially scheduled to go into effect in May of this year, the European Parliament and the Council of the EU adopted a proposal to extend the transitional period to May 26, 2021. The new regulation that emphasizes patient safety, traceability, and transparency—key aspects under the quality umbrella—will impact all medical device developers as they are required to comply. It will prioritize fundamental changes throughout the entire device lifecycle and is expected to provide better, more comprehensive regulatory guidance.

Medical device recalls are on the rise this year with Stericycle’s latest “Recall Index 2020 Edition 2” stating recall activity exceeded “300 recalls for the first time since Q2 2018”. Further safety issues were noted as the highest contributing source. This demonstrates the growing complexity of device development and risk points, as well as the active regulatory enforcement for failed device testing. For engineering teams under pressure to bring products to market quickly, balancing the inherently intricate regulatory environment can be a lot to handle. This is where mistakes start to happen—mistakes that are magnified for companies that haven’t modernized their approach.

Medical device compliance is achievable with the right, well-documented product lifecycle and real-time collaboration tools. This is especially true for systems that are already aligned with industry standards, making traceability a simple process. Often, they will come equipped with frameworks where industry regulations are inputted, saving precious set-up time and ensuring development can begin right away.

For any medical device company seeking to improve the development lifecycle of their products, simplify compliance, and speed-time-to market in 2021, they will not be able to dismiss quality.

Medical devices marketing trends
Few fields are as innovative or impactful as technology and healthcare, where new discoveries are being made daily. When you combine the two fields, the opportunity for life-changing innovations is seemingly endless.

Robotics. Surgeons and their teams have been using robotics for some time now. First, it was the Gamma Knife and CyberKnife systems. These noninvasive, robotic delivery systems deliver radiation therapy to treat cancerous and noncancerous tumors in especially sensitive or difficult to reach areas, such as the brain. Next, surgeons used collaborative robots like the da Vinci surgical robot. This allows surgeons to perform laparoscopic, minimally invasive surgeries in delicate areas like the abdomen.

Today, robots are used to help doctors treat patients in a variety of surgical procedures and assist with post-surgical rehabilitation. Beyond that, they are used to automate research laboratories and help disinfect hospital and clinic rooms—an even more pressing need in the time of COVID-19. The newest trend in medical robotics is nanotechnology or microbots.

Telemedicine and telehealth. Researchers also see robotics playing a large role in another trending area of healthcare: telehealth and telemedicine. While telehealth covers the broader scope of remote healthcare services, including non-clinical services, such as provider training, administrative meetings, and continuing medical education, in addition to clinical services, telemedicine refers specifically to remote clinical services. It can help make healthcare more accessible, cost-effective, and increase patient engagement.

Wearable health devices. Given the proliferation of smartwatches (Apple, Garmin, Samsung to name a few), and other health monitoring devices like Fitbits, “wearable health devices” may not seem like a new trend. There is a massive trend of people wanting to monitor their own health, and they want to do more than just count steps. The demand is for using mobile devices and technology to track health information, from heart rate to oxygen consumption and body-fat ratio.

One of the latest developments in wearable health devices is biosensors. They are able to provide continuous, real-time physiological information via noninvasive measurements of biochemical markers in fluids like sweat, tears, saliva, and even interstitial fluid—the fluid that helps bring oxygen and nutrients to cells and removes waste.

Artificial intelligence. Artificial intelligence (AI) too is not new, but the technology is advancing faster than ever. AI and machine learning are transforming healthcare as it’s being used to diagnose conditions and diseases, identify trends, and create efficiencies in both the research laboratory as well as the exam room.

Extended Reality. AR, VR, and mixed reality have found a home in healthcare. According to BIS Research, the global market for augmented and virtual reality in healthcare is expected to grow to USD 11.4 billion by 2025. These tools are often used in surgical simulation, as well as routine patient care.

Virtual reality, or VR, has been used during psychological therapy and has shown promise in treating depression, post-traumatic stress disorder (PTSD), and even eating disorders. VR works by using content designed to aid exposure therapy, in which patients are exposed to anxiety-inducing stimuli in a safe, controlled environment.

Augmented reality, or AR, helps surgeons, their patients, and even patients’ families. AR allows surgeons to gather data in 3D format, which aids in surgery planning and patient treatment. It also helps providers explain complex medical situations and procedures to patients and their family members. Additionally, AR has the potential to enhance how physicians conduct medical and scientific research.

Mixed reality, or MR, works in a similar fashion as AR. It’s an extension of augmented reality that allows real and virtual elements to interact in an environment. Using MR, physicians can gather key imaging information and visual complex medical data, both before and during procedures. It’s another way to help providers deliver efficient, exceptional care.

Changes in health technology sector in 2021
While the industry has fast-forwarded in areas like telehealth, remote monitoring, and artificial intelligence by at least three years, this will cause disruptive changes that will significantly impact the technology market. Communication and collaboration tools are expected to explode in 2021.

From analytics to telehealth to care coordination around COVID-19 testing and tracing, providers are integrating more data sources and conventional patient matching methods will no longer suffice.

Some changes that will come for the healthcare technology sector in 2021.

Consumers will be in the driver’s seat in 2021. The way patients experience healthcare is evolving and these changes, catalyzed by consumer behavior, COVID-19, and technology, among other accelerants, are causing healthcare economic dynamics to restructure.

Consumer expectation levels around virtual and digital healthcare are also rising, and business processes will change to meet those expectations. Healthcare organizations will be pushed to leverage technology to support patients as they go about their daily lives.

Virtual care services will expand, but there will be risks. Reimbursements for virtual care will likely be expanded through 2021, as a new hybrid model combining telehealth check-ins and in-person visits will become the norm.

Employers are taking notice of this shift with expanded virtual health services becoming a top priority, and this number will quickly rise as employers look to offer flexible and convenient benefits in support of employees and to drive productivity.

Cash will continue to flow into digital health. During the COVID-19 pandemic, the industry garnered an influx of public and private investment at a level the industry hasn’t seen before. The pandemic forced non-digitally native companies to rapidly develop the ability to care for patients through digital means and these factors drove up the value of companies providing these services.

An acceleration of the 2020 trends in deal flow, such as M&A and IPOs for quality assets will be rare and competitive, driving up valuation will be seen in 2021.

The shift to the cloud will ramp up. The financial pressures of the pandemic has led many providers to re-evaluate the overhead costs of managing their IT infrastructure on-premises and this is leading a shift to cloud-based EHR platforms. Cloud-based systems will enable providers to access patient data anywhere, enabling telehealth and better care coordination.

India may engineer a Walmart model, perhaps Amazon or Reliance may take the plunge. With 85 percent of Americans living within a 15-minute drive to a Walmart—it’s one of the most accessible resources with ample opportunity to serve rural populations or Medicaid recipients. By establishing healthcare facilities within a reliable, low-cost no-frills environment that is functional bright and clean, Walmart will introduce predictability, innovation, and standardization that align with the social determinates of the working core. This ultimately means Walmart will become both the health plan and the provider and eventually lead to the creation of own its insurance distribution as well.

Healthcare forecasting for an uncertain 2021
The pandemic highlighted the importance of viewing healthcare in the round. Ventilators are of no use if there are not enough ICU facilities and staffing for those facilities. Drive-through test centres do not help if there are not enough laboratories available to quickly process the samples.

Into 2021, we will see that world-leading research for the super-fast development of vaccines is unable to reach an entire population without the rapid manufacture of delivery devices, manufacturing plant meeting GMP, a cold-chain infrastructure, and finally a healthcare system able to deliver vaccines to the population at large.

Governments and other stakeholders have directed vast sums into healthcare to address the health crisis of the pandemic, but this may not be sustainable in the long-term. Already stretched health budgets are going to come under even greater pressure due to the greater national debt once the population is vaccinated against COVID-19. While fiscal pressures might deter investment, those allocating budgets will also know that many digital health technologies have the potential to offer efficiencies in the provision of healthcare.

Compulsory licensing of patents for COVID-19 vaccines. Once COVID-19 vaccines start to be authorised by competent authorities, governments will want to have them manufactured and administered as quickly as possible. This might be done either with the agreement of the patent owners, via a commercial deal, or some governments of a more authoritarian persuasion or who can’t achieve the commercial deal they expect, might require a compulsory licence to those patents.

The IVD industry has been the second, possibly third, child in the life sciences industry after drugs and general medical devices. Getting reimbursement for and allocating severely limited budgets to IVDs is hard, and making space for IVD machines and employing technicians and physicians to operate them and interpret their output can feel like a less justifiable expense than patient-facing activities and direct patient treatments. The pandemic has, however, shown that diagnostics should be at the front of the queue- they enable treatments to be properly directed and can be used to stop infectious diseases in their tracks.

A health industry that found itself fighting in the dark during the opening waves of the pandemic will need a forecasting system that provides a lens for the uncertainty ahead. Better sightlines can help health companies prepare for shifts in the insurance market, the economy, utilization, consumer behavior, and future waves of infectious disease.

This capability to forecast the future could be as important to healthcare survival in 2021 as a mask may be for slowing the spread. No longer can healthcare organizations review the past 30 days of claims or historical behavioral trends to determine next steps. They need real-time insights to create the healthcare industry’s own forecasting system to alert healthcare leaders to the shifting fronts that may have a major impact on their business.