Business

The year is nearing its end and as I look at the christmas tree being put up, the smell of pinewood slowly filling our office’s reception area, I cannot help but think that 2013 was a crucial year for patients, healthcare systems and Europe as a whole. This past year was dominated by one topic of mastodont proportions, but other actions, activities and achievements have been just as important to us.

Two years ago in our annual report on the medtech sector, Pulse of the industry, we warned that the sector was facing a perfect storm, caused by a general shift toward value-based care, growing regulatory pressure in the US and limited resources as a result of a global downturn. Those events came to pass, with the added complication of tougher new regulatory issues in Europe. It was time, we felt, in this year’s report to see how the sector is weathering the storm.

It’s increasingly clear that the Medical Technology (MedTech) industry is going through an unprecedented level of change. In Europe, budget pressures are impacting market access and reimbursement. Payers and providers require evidence of value at the clinical and socio-economic level. And buying processes are changing.

Value creation capabilities based solely on R&D investment are not generating as much growth as they used to. According to PwC’s “Operating performance in the Medtech industry: Trends and imperatives” report, which studied the performance of 56 global medtech companies, the impact of R&D on revenue growth declined at an average annual rate of 10% and the return on invested capital declined at a rate of 2% between 2005 and 2011. The impact on growth is evident by revenue growth rates declining at a rate of approximately 12% per year.

A surprising few things have happened lately. Firstly, the weather in Belgium CAN be nice and pleasing to a Franco-Italian such as myself. Secondly, the ENVI Committee vote that was scheduled to take place on 10 July was postponed to 18 September for both the Medical Devices and In Vitro Diagnostics Directives. If I did not know better, one could think this date was chosen to coincide with our housewarming reception. All joking aside, my third surprise was the realisation that we’re already in mid-July, and it’s been a year since I’ve joined MedTech Europe, EDMA and Eucomed. Going into everything that has happened would take me too far this time, but I will reflect on the past year in my next blog, so look out for that to come out mid-August.

In the past few weeks, the Swiss newspapers have been littered with an uncomfortable and poisonous prospect: the U.S. A financial force banging its chest from its modest economic recovery is demanding tax justice from Switzerland. The stable currency, neutrality and talented investment acumen that the Swiss have quietly touted to global investors has allowed them to amass some 30-40% of foreign investments. Now the tables are turning. With increasing pressure from the U.S., Switzerland is about to be forced into giving up one of its oldest and most sacred treasures – the hidden, numbered, off-shore Swiss bank accounts. So far this only seems to be relevant to U.S. account holders, but the vultures are already beginning to circle. France, Germany and the U.K. will almost certainly follow suit once the dust clears and the stage opens up for more opportunistic assaults on secret Swiss accounts.

Nowadays everyone seems convinced of the clinical benefits that medical technologies, devices and diagnostics, bring to the table. Many even recognise that our innovations bring about considerable socio-economic benefits. And yet, in the end I hear the same thing over and over again: medical technology drives the rise in healthcare expenditure.
EDMA and Eucomed have always refuted this claim and now we have research by the European Health Technology Institute (EHTI) which basically confirms two of our points of view:

The healthcare landscape is changing globally and on many levels: regulatory, economic, and technological. With the strong winds of change, entrepreneurs are increasingly required to build their companies into real, sustainable and successful high growth businesses in a much shorter time to stay viable. 

Innovation is poised to play a greater role in the evolution of the healthcare market as demographic, regulatory and financial challenges play out. Yet, new product and services concepts often struggle to gain momentum in the larger institutions. Entrepreneurs, in contrast, have the freedom to develop ideas, but are faced with limited resources that can just as easily stifle their innovations. 

Judging by the weather in Belgium (currently 10° and raining) you wouldn’t say it, but it’s almost summer. Well, at least according to the calendar. And apart from the supposed good weather, summer also brings with it a host of new information on the MedTech Forum. Speakers are being confirmed, registrations coming in and preparations being made. Less than 5 months from now, we will all be seeing each other again at the event no one in our industry can afford to miss. So what does the MedTech Forum hold in store this year.