Market Insight

Pressure builds in medical device industry as new MDR regulations loom amid COVID-19 crisis

April 14, 2020

Sharjeel Ahmad Sharjeel Ahmad Analyst, Healthcare Technology

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Synopsis
The EU's $125 billion medical device market is facing significant pressure as the deadline for the MDR requirements looms closer, coming into effect on May 26, 2020. The medical device industry faces major challenges in addressing the new regulatory requirements as manufacturers spend considerable time and resources to ensure current distribution flows are not disrupted. Those efforts, however, are now getting scrambled as the industry—with the rest of the world—wages a battle of survival against the raging novel coronavirus disease, also known as COVID-19.

The incongruous appearance at the same time of MDR and COVID-19 on the world stage has driven both growth and decline across the medical device markets. Chief beneficiaries include the markets for ventilators and portable digital X-ray systems, but image guided therapy systems have suffered delays in purchasing orders as hospital funds are diverted in the race to contain the virus.

There have been calls to delay the implementation of the MDR from the US, MedTech Europe, and the European Commission, the latter submitting a new proposal on April 3, 2020, to the European Parliament and Council requesting a review and a yearlong delay. The proposal also intends to address potential shortages or delays in obtaining vital medical devices certified through EU-wide derogations. It is imperative that market disruptions of essential medical devices be avoided.

The historical background
Jean-Claude Mas launched Poly Implant Prothese (PIP) in 1991, and 2 million women since then have had silicone breast implants and breast cosmetic surgery in the last 20 years. A scandal broke out in 2010, however, as PIP implants were found to be made from cheap, industrial-grade silicone not approved for medical use. The implants were also rupturing at a rate double that of the industry average. Silicone gel is known to cause inflammation, and the long-term effects of faulty implants are harmful.

The PIP implant scandal made it clear that a major overhaul of regulatory requirements on medical devices was needed. But since the original Medical Devices Directive (MDD) became law in 1992, the industry has been revolutionized by digital technologies, such as the development of the medical and business model called Software as a Medical Device (or SaMD). There has also been a growing push for greater transparency in medical device technical information for general public consumption, following the loss of confidence in the industry in the wake of the breast implant scandal.

The long process of change began on September 26, 2012, when the European Commission adopted the Proposal for a Regulation of the European Parliament and of the Council on medical devices, which replaces the current Medical Device Directives. The new European Medical Device Regulations (MDR) was announced on May 25, 2017, and manufacturers were granted a three-year transition period to meet the new requirements (Fig. 1). The MDR requirements take effect on May 26, 2020, but implementation of the new regulatory framework has been complicated by the emergence of COVID-19.

Impact on manufacturing and supply chain
Following the 2017 MDR announcement, medical device manufacturers have had to proactively work toward meeting these new regulations. Significant regulatory changes have prompted a change in the way manufacturers label products, which now require a Unique Device Identification (UDI) number to enable tracking at an item level. The overall impact of the changes is wide-ranging, and manufacturers have gone to great lengths to prevent disrupting current distribution flows. This is, indeed, one of the biggest risks to organizations as they prepare their supply chains to maintain continuity in business.

The global medical device industry considers the EU as an exemplary model in regulation; changes to regulations, therefore, have the potential to cause wide disruption to the global supply chain network. The new UDI requirement is only one of many new challenges for the industry, which will entail drawing product data from multiple sources and developing a consistent strategy to manage all data sets. While the digitization of supply chains and the integration of networks in recent years have positively impacted the world of medical devices, the online, e-commerce, or digital marketplace has meant that new customer demand must be met.

Medical device manufacturers who fail to comply with these procedures may have their medical devices withdrawn, the devices no longer becoming available to EU member-state markets. In response, manufacturers are racing to update supplier agreements as well as internal processes to be able to fully disclose information in potential unscheduled audits. Areas of focus for manufacturers in implementing the new regulations include:

  • Increasing the reliability of services

  • Improving customer satisfaction

  • Fast delivery and return cycle times

  • Increased availability of products

  • Competitive pricing

Impact on the medical device market
With the approach of the MDR deadline, manufacturers should take steps to prepare for changes. Entire product portfolios must be reevaluated to ensure compliance, clinical data updated to certify and re-certify devices. The industry is also developing post-market surveillance systems to provide safe and effective oversight of medical devices.

COVID-19 continues to disrupt business in Europe, causing many medical device manufacturers to shift their priorities to aid-relief efforts. As demand surges for life-saving medical equipment, manufacturers are reporting the depletion of their diagnostic and treatment inventory of medical equipment. The industry is now rushing to find solutions to contain and treat the virus, at the same time taking measures to increase the production of necessary equipment and supplies. In its destructive rampage across the globe, the virus has spared none. The medical device industry—from research and development, to manufacturing and marketing—has not been exempt.

The tag-team of MDR and COVID-19 has driven both growth and decline across the medical device markets, throughout the first quarter of 2020, one of the chief beneficiaries are the ventilators and portable digital X-ray system markets. However, as the governmental lockdowns continue across the world, supply chains and manufacturing facilities are becoming strained and a slowdown is expected. Medical devices markets such as image guided therapy have seen a delay in purchasing orders as hospitals funds are diverted in the race to contain the virus. 

While radiology continues clinical operations and patient care, hospitals have started to reschedule elective invasive procedures and rescheduled certain outpatient imaging services, including screening mammograms. As the patient volume for the modalities drop, a significant revenue reduction is expected, which may cause closure of some practices resulting in a market decline.

Calls for delay amid the crisis
Calls to delay MDR implementation started as early as July 2019 when the US, while supporting the development and enforcement of a well-defined medical device regulatory system, raised serious concerns over continued American access to the EU's $125 billion medical device market, of which $20 billion is supplied by products  from the US. Reported concerns include:

  • The insufficient number of Notified Bodies (NBs) to perform certification activities under the MDR/IVDR

  • The insufficient number of implementing acts needed to provide details about how industry can ensure that products comply with the new product standards

The US has subsequently requested the EU to delay the implementation of MDR by three years to give US exporters time to adapt to the new requirements while allowing legacy products currently deemed safe to be sold on the market until 2024, alongside priority access to testing and CE marking certification over products being re-certified to the new requirements.

More recently, amid the COVID-19 crisis, the European Commission and MedTech Europe have called for delay in the implementation of MDR. MDR postponement is crucial in order to take pressure off national authorities, notified bodies and manufacturers so they can focus on urgent priorities relating to the COVID-19 crisis.

Moving forward
The proposed one-year delay of MDR will be a crucial step in prioritizing resources to help ensure that increased demand for vital medical equipment across Europe is met. On April 3, 2020, the European Commission announced it had adopted the proposal but that it required the support of the European Parliament and Council through an accelerated co-decision procedure.

The proposal also intends to address potential shortages or delays in getting vital medical devices certified through EU-wide derogations. Any disruption to the market on the availability of safe and essential medical devices must be avoided at all costs.

As coronavirus containment measures evolve, Omdia will continue to closely monitor and track developments in the healthcare space to provide timely guidance and information. For further analysis, please contact [email protected]. We urge everyone at this time to take every precautionary measure available to stay safe.

This Market Insight is offered under Omdia’s Industrial research pillar. Omdia subscribers also have full access to this Insight in our Healthcare Technology research service with its research categories of Healthcare IT and Medical Devices & Equipment.

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