Digitisation and medtech – threat or opportunity?

Matthew Jefferies – senior associate, Marks & Clerk LLP, examines data from the European Patent Office (EPO), and analyses what it means for medtech manufacturers. 

Necessity is often the mother of invention and, whilst COVID-19 has been a significant challenge for the medtech sector, it has also put a spotlight on medtech innovation. As global demand for ventilators grew and supply chains failed, medtech manufacturers worked together to 3D print ventilator parts quickly, giving a lifeline to numerous intensive care units.  

This served to highlight the power of 3D printing and other ‘Industry 4.0’ technologies to the medtech sector. These technologies will be of increasing importance to medtech in coming years and this episode demonstrates how companies embracing these technologies can have an edge over those that do not.   

Industry 4.0 aims to merge physical production with smart digital technology to improve efficiency. It involves an increased reliance on computing systems to improve automation within manufacturing, supply chain logistics and industrial practices.

The increased centrality of these digital technologies to innovation is reflected in recent statistics published by the European Patent Office. Whilst medtech has for a number of years been the largest single category for patent filing at the EPO, in the last 12 months for which full data is available it was overtaken by patent filings in the category of ‘digital communications.’  

This was off the back of an impressive 20% increase in patent filings for innovations in digital communications (relative to a 1% increase for medtech). Computer technology also saw patent applications up more than 10%. 

This recent surge in patent filings for digital technology reflects the overall movement of most industries to embrace digitisation and, in particular, advances in machine learning. In fact, many of the patents filed for digital communications technology will likely find applications in other technical fields, ranging from medtech to aerospace. Accordingly, the latest figures do not necessarily represent a slowing in medtech innovation, but rather the increasingly important role of, for example, AI programmes in making medtech and other technical fields smarter and more responsive.

The risk posed by this increase in digital innovation is that traditional medtech companies may lose out to ‘tech first’ software companies. Many industries that have previously relied heavily on manufacturing innovation alone have seen increased competition from data driven technology companies. For instance, in the automotive sector, the next major technical milestone is arguably self-driving vehicles.  This is likely to be one of the key developments in the next 10-20 years, but many of the companies that appear to be leading this space are software companies, rather than traditional automotive manufacturers. Traditional medtech companies will need to be aware of the threat of innovation from primarily digital technology companies to avoid being left behind.

Another key development over the last decade is the increased availability and decreased cost of additive manufacturing, which can allow the manufacture of a wider array of shapes, reducing assembly and reducing material wastage associated with traditional manufacture.  

Whilst additive manufacturing offers new opportunities for innovation, it also offers competitors a simple means for producing counterfeit products. With recent reductions in the cost of 3D printers, there is a reduced barrier to entry for manufacture. Where traditional manufacturing may have required specialised tooling and manufacturing expertise, additive manufacturing allows products to be produced effectively “at the push of a button.” Digital models of products can be easily obtained through 3D scanners, allowing counterfeiters the opportunity to easily backwards-engineer mechanical products.

In an increasingly digitised world, digital security and effective IP protection is paramount. The recent EPO statistics show that innovations in the digital sector are outpacing other fields. Traditional medtech research and development strategies that revolve solely around mechanical innovation may be at risk of falling behind digital competitors. Furthermore, IP protection aimed solely at traditional manufacture may be at risk of being easily circumvented through the use of more “digital” methods, such as additive manufacturing.  

Nevertheless, whilst increased digitisation will post a challenge to some more traditional manufacturers, the potential rewards for those that can successfully adapt will be great. Using intellectual property strategically, to get ahead of these issues, will be key to success.