Growth amid disruption: The long-term impact of COVID-19 on the UK medtech sector
The UK medtech market is currently experiencing the most transformational chapter in its short history. In this article, we’ll look at how the various industry trends expedited by the coronavirus are likely to pan out in the long run.
The sudden eruption of a once-in-a-lifetime global health crisis has upended every industry, from life sciences to entertainment. For medtech, the impact has been seismic.
While the industry was gaining steady momentum up until 2020, the pandemic has triggered the wholesale development and adoption of medical technologies at unprecedented speed. This, in turn, has revolutionised just about every aspect of healthcare delivery in the UK and beyond.
No longer peripheral among the STEM industries, the UK medtech sector is now as important to the healthcare ecosystem as long-established industries such as pharmaceuticals.
Leading the charge
In STEM, disruption and innovation often go hand in hand. Indeed, the medtech industry has been at the forefront of the fightback against COVID, with companies harnessing emerging technologies such as Big Data, artificial intelligence (AI), and the Internet of Things (IoT) to better understand the development of the pandemic and consolidate vital medical supply chains.
Notable examples of medtech organisations innovating to support the COVID crisis include:
- Babylon Health. This medtech company developed a Coronavirus Care Assistant app to GPs track patient symptoms.
- accuRx. In a single weekend, this text messaging tool built a video consultation platform that is now used by 7,000+ GP practices and 15% of all NHS Trusts (messaging over 30 million patients in the process).
- Blue Prism. This software company’s cloud-based Digital Workforce automation programme has enabled NHS Trusts to meet unprecedented operational and hiring demands.
Without the innovation of companies in the medtech space, the crisis in the UK could have been far worse.
But for many in the industry, the upcoming changes in the post-COVID years will be just as profound. According to Wolfgang Emmerich, CEO of Zühlke UK (a key contributor to the development of the NHS COVID-19 test and trace app):
“We will see mobile medical technology increasingly bringing together a wealth of data for immediate analysis by artificial intelligence (AI) to help prevent illnesses, diagnose patients, and aid medical professionals with their treatment monitoring. Patients, doctors, nurses, scientists, researchers and pharmacists will all find medical technology driving changes to their roles – and, most importantly, better patient outcomes.”
Improving patient outcomes is undoubtedly the driving force behind the sector. In September 2020, the UK government announced £32 million of funding for six key medtech projects, all of which were aimed at transforming NHS delivery. One of the projects includes University of Edinburgh’s InlightenUs, which will receive £5.4 million to produce high-resolution 3D medical images via a combination of artificial intelligence (AI) and infra-red lasers.
This is just one of many examples of government and/or private equity investment into the sector since the start of the pandemic.
Though organisations in the medical device segment are directing their strategies towards post-COVID growth, the sector is very much still on the road to recovery.
As McKinsey reports:
“Providers are likely to face operational challenges as they try to ramp up elective care while dealing with deferred essential care. However, access to healthcare professionals and administrators may continue to be partially restricted. Provider systems will still be recovering financially and likely be cautious with capital expenditures.”
So, while medical device manufacturers remain focused on improving care pathways for non-COVID diseases, the pandemic has alerted organisations to the importance of reducing risk, building resilience, and improving data accuracy.
As populations continue to age and we see a concomitant rise in chronic health conditions, adopting a long-term, strategic, and agile way of thinking will prove crucial to medtech organisations. COVID-19 may have been the black swan event which gave the industry its baptism of fire, but the real test will play out over the next few decades as the healthcare ecosystem comes to terms with the growing health demands of an older population.
In-vitro diagnostics (IVD)
According to the Office for Life Sciences, IVD is the largest segment of the UK medtech sector, accounting for £24bn in turnover as early as 2018. MedTech Europe has even valued the UK’s IVD market at almost £1bn.
While Germany may have a larger share of the global market and greater testing capabilities, the pandemic has turned the UK diagnostics sector into a national economic asset.
In 2020, the health sector received the third-most venture capital investment in the UK (accounting for 15% of all investment). With diagnostics playing a huge role in the health ecosystem’s fightback against COVID-19 and proving its worth to the economy, attracting funding for health platforms related to conditions other than COVID should not be a problem for medtech manufacturers - even with regulatory changes in the area.
Aside from the economic shot to the arm that investment in diagnostics brings, the tangible impact on patients’ lives will be massive – particularly as testing systems become faster and more reliable at detecting a wider range of health risks.
Increasingly, the related fields of medtech and digital health are converging ever closer. The burgeoning area of telehealth, which the WHO defines as the "delivery of health care services, where patients and providers are separated by distance,” benefits from innovation in both industries.
On the one hand, medtech companies develop the products and devices which enable remote monitoring and more personalised healthcare delivery. On the other, digital health companies are developing increasingly sophisticated data-gathering capabilities and building user-friendly interfaces to integrate to medtech devices.
According to some timely 2019 research conducted by Now Healthcare Group (NHG), telehealth services could save NHS England £7.5 billion – reducing GP appointments by 56% and hospital appointments by 3%.
One of the most far-reaching changes brought about by COVID-19 – across all industries – has been the move towards remote, flexible working. With a marked increase in the use of video appointments and health tracking apps, it’s likely that these digital alternatives will, in many cases, continue to be favoured over face-to-face consultations.
The successful adoption of remote technologies has also highlighted the need for more medtech products within the UK health ecosystem. As the industry moves on from COVID-19, a higher number of effective, low-cost medtech products can usher in a more equitable healthcare ecosystem in which in-demand (such as remote monitoring devices) give patients more autonomy and control over their health.
Likewise, Big Data insights from these devices will give healthcare professionals more scope to provide early diagnosis and deliver more effective, preventative treatment plans.
In a bid to quickly meet unprecedented demand and increase capacity, many medtech manufacturers have been forced to rapidly overhaul existing operational models.
For one, we can expect to see the proliferation of smaller diagnostics labs rather than the consolidation of so-called “mega-labs” within the industry.
COVID-19 has placed a premium on speed, and smaller laboratories can attain better turnaround times and pivot to diagnose different diseases if needed. Moreover, these more agile, smaller labs can be more effectively mobilised to target local populations if another concentrated outbreak occurs.
Another operational trend we can expect to see more of is the strategic “near-shoring” of R&D. This process essentially involves UK life sciences and medtech organisations outsourcing aspects of product development to nearby countries in mainland Europe.
Despite Brexit initially disrupting supply chains and realigning the regulatory landscape, more multinational companies are beginning to see the benefits of sharing resources across geographies – including access to new technologies, sharing risk, protecting intellectual property, and maximising ROI.
Another key long-term trend that COVID-19 has accelerated is the rapid process of digitalisation across the life sciences.
From an end-user or patient standpoint, rapid diagnostics technologies enable people to report back to an interface, while other real-time apps enable people to check their health. Meanwhile, increased integration with digital health providers is enabling more efficient, better-performing factories and laboratories.
A particularly prominent area where this is occurring is the move away from traditional paper-based systems towards electronic quality management systems (EQMS). This process has been ongoing for years but has hastened by lockdown measures preventing workers from physically collecting paper documents.
The NHS has traditionally been risk-averse towards digital solutions, particularly those from a third-party source. As new technologies emerge which offer more robust and resilient healthcare solutions, however, we will likely see further innovation aimed at driving down costs and democratising the landscape for the end-user.
According to Wolfgang Emmerich, medtech companies – regardless of size – need to think and act like startups to best make the most of industry trends and growth opportunities.
“To get the test and trace app developed quickly, we worked alongside the UK government’s Department of Health and Social Care (DHSC) to establish a working group that could operate like a tech start-up.
“This made it much easier to respond quickly to the changing needs of the pandemic and is in stark contrast to the DHSC’s usual role of overseeing the UK’s National Health Service – the biggest single employer in Europe, with 1.3 million employees.
“People were pulled out of their silos – we had policy, user research, and development all working as part of the same team, using lean delivery techniques and cloud-based backend infrastructure to release new versions of the app via the Apple App and Google Play Stores weekly.”
Looking forward, tech integration will be crucial for medtech organisations – not only for designing user-friendly product interfaces, but also ensuring that business processes are fully digitised and up to date with competitors both inside and outside the sector.
The race for medtech talent
According to our 2021 STEM Survey, produced in partnership with New Scientist Jobs, 83% of UK medtech respondents were satisfied with their jobs – making it the top STEM sector for satisfaction. This reflects the buoyant mood across the sector as new opportunities for partnership and innovation abound.
Currently, the UK medtech employs around 121,900 people – a number that will likely rise as technologies and the innovative companies behind them scale to meet demand.
However, the figures on the supply side may prove a headache for medtech hiring managers. According to the Life Sciences 2030 Skills Strategy, 133,000 skilled scientific workers will be needed across the next decade – 90,000 of which will be in medtech (particularly in R&D and manufacturing).
Factoring Brexit into the equation
Of course, COVID is not the only era-defining element to exert a huge influence on the trajectory of the sector in the last half-decade. As the pandemic rages on, Brexit is still at the forefront of every medtech CEO’s mind. Indeed, getting to grips with the immense regulatory changes caused by the UK’s exit from the EU is a number-one priority for UK-based medical device industry stakeholders.
According to Medtech Insight, however, “the early foundations of the future UK device regulatory system are [already] in place.” With the passing of the Medicines and Medical Devices Act 2021, the government can now enact the necessary legislation, while the system of device regulation (using UK Conformity Assessed marking) came into force on 1 January and has “got off to a good start.”
CE-marked devices will continue to be allowed on the UK market until 30th June 2023. From 1 July 2023, UKCA marking will become mandatory for all medical device products in the UK.
With these promising new regulatory developments, the UK’s chief regulator, the Medicines and Healthcare products Regulatory Agency (MHRA), can make strides “future-proof” UK medical device regulatory processes. In doing so, the MHRA can prepare the system to “handle the new generations of digital, artificial intelligence, combination products, companion diagnostics and ATMPs now coming through R&D.”
With the UK market’s response to COVID demonstrating that processes are already in place to ensure safe regulatory oversight, we can expect further early adoption of innovation and the pooling of resources and device expertise to improve patient care.
Conclusion: Turning recovery into growth
Throughout the pandemic, rebuilding a more resilient NHS has been the primary goal for the UK government and industry. This has included digitising health data and optimising information sharing in a bid to tackle issues like long waiting listings, as well as outlining a recovery roadmap for patient care and staff wellbeing.
Areas of focus within the plan include whole system thinking, manufacturing and supply chains, procurement of critical devices, and trade negotiations. The result has been the development of a more integrated, collaborative healthcare ecosystem with more agile processes in place, while digital transformation initiatives are significantly improving diagnostics and patient care.
The medtech sector also has its own roadmap in place. As the Life Sciences Recovery Roadmap report shows, the sector’s COVID-19 response has demonstrated that the rapid scale-up of existing treatments, devices, and diagnostics can substantially improve patient outcomes while making more effective use of NHS resources.
The report has highlighted six ways in which UK medtech can work with the NHS in the future:
- Transform NHS partnership and support the Long-Term Plan
- Develop a comprehensive strategy to improve UK manufacturing capability and supply chain resilience in medicines, medical devices, and diagnostics
- Encourage ‘globally competitive’ R&D incentives
- Transform the UK’s clinical research process
- Take an innovative approach to regulation
- Accelerate deployment of new and existing technologies
Moving forward, these six areas will be central to the strategic direction of UK medtech organisations. As funding, R&D, and manufacturing opportunities multiply, we can also expect to see a more pronounced medtech presence across the UK’s fast-growing life sciences clusters – from the Golden Triangle (Cambridge, London, Oxford) to the Northern Cluster (Edinburgh, Glasgow, Durham, Newcastle).
As for the workforce itself, as more young people become interested in science-based careers (particularly in areas such as quality assurance and regulatory affairs), we can expect to see a more diverse, equitable talent pool develop across the medtech space. In 2020, the UK government announced a £188-million investment package to encourage more young people into STEM careers – investment that will prove vital in plugging the forecasted hiring demand gap.
For more insights into the ever-changing medtech sector, stay tuned to the SRG blog.
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