Why medical device manufacturers need to act upon high global medtech values

Lu Rahman looks at the medtech sector activity over recent years

The digital health sector is increasingly influenced by healthcare professionals and consumers and the opportunities this brings for medical device manufacturers.

We know that the increase in connected technology is altering the way we access healthcare. In a few years the growth in online GPs and pharmacies has proliferated; the paperless NHS moves ever-closer; apps to help with a range of illnesses and conditions have become validated by the healthcare sector and there is an increasing number of hospitals incorporating digital technology into their processes and procedures on a weekly basis – digital transformation is rife.

This is great if you work in the NHS or if you’re looking for online health services. But the medical device sector, and those that supply it, have also seen a marked transformation too. Increased numbers of connected devices are being used on a global scale and whether it’s for personal health tracking, administering drugs such as biologics in the home setting, or monitoring conditions such as diabetes, the digital health sector is burgeoning.

Back in September 2015, Monitor Deloitte produced an industry study for the Office of Life Sciences – Digital Health in the UK. It found:

• The global market for digital health is worth £23bn in 2014 and is expected to almost double to £43bn by 2018
• The UK market size for digital health is £2bn and is expected to grow to £2.9bn by 2018, predominately driven by mHealth apps
• Digital health systems represent the largest market both globally and in the UK, where they contribute 66% of digital health sales
• The most promising market for growth is mHealth apps, which although is currently the smallest digital health market sub-sector, is predicted to grow at 35% in the UK and 49% globally from 2014-8.

The sector showed strong and positive opportunities. But there was one area in particular I found interesting and that’s how we seemed to be seeing a movement and drive for innovation shifting from manufacturers to healthcare professionals and consumers. Demand is driving the innovation from the ground, the grass roots if you like. EY picked up on this too.

Its Pulse of the Industry 2017 report highlighted some key medtech findings: “In 2017, the industry demonstrates resilience and agility even as the pace of change accelerates on technological, reimbursement and regulatory fronts and new digitally based operating models shift power to consumers”.

In the document, Klaus Schwab, founder and executive chairman of the World Economic Forum, described how a “blurring [of] the lines between the physical, digital and biological spheres” is altering “business models, as decision-making power shifts away from manufacturers to other health care stakeholders.”

It’s fascinating and showed potential for medical device manufacturers to become involved in collaborative work with these stakeholders to create and nuture technology in a way we don’t often see. It’s exciting to think that a device can be manufactured with first-class expertise behind it, from the user and the manufacturer. What better way to create products that work and really are fit for purpose.

Moving forward to 2019, EY’s latest Pulse of the Industry report is just as fascinating. It found that “global medtech revenues reach all-time high, yet innovation investments lag.

According to the report: “The global medical technology (medtech) industry continues to grow, but its long-term growth outlook is at risk due to underinvestment in R&D and lack of collaboration between industry providers, payers and patients. The 2019 EY medtech report, Pulse of the Industry, has found that in 2018-2019 the industry’s collective revenues increased by 7% to US$407.2b, representing medtech’s third consecutive year of growth and the highest revenues recorded to date. Valuations were also robust, as cumulative public valuation rose by 38% in the 18 months to 30 June 2019, far outpacing the broader life sciences industry.”

The opportunities are there however - much of it linked to digital technology. Jim Welch, EY global medtech leader, says: “Medtechs have a unique opportunity to capitalise on digital transformation. As devices become increasingly connected, medtech companies have a built-in advantage. They also have strong alignment with other health care ecosystem stakeholders, so they are well-placed to develop new business models and create value in the future. What they don’t have are broad, in-house capabilities to develop personalised health care offerings. Increased investment in digital collaborations that expand customer experience, as well as data and analytics capabilities, will continue to move medtechs closer to patients.”

The blurring of boundaries between science, technology and manufacturing is fascinating and holds real promise for a future where the entire medtech chain works in collaboration pushing the boundaries of healthcare, creating products with real expertise at their core. I can’t think of many industries that work in this way, where users and stakeholders help shape the sector.