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Successful domestic market
A recent survey of small to medium-sized businesses (SME) in the medical device sector has confirmed fears that UK sales are sluggish in comparison with their export activity. The ABHI/Ernst & Young SME Business Trends survey reflected the results of a similar survey of large companies in 2006 in showing a UK sales growth of only 2.2 per cent compared to export growth of 10 per cent from 2005-2006. A separate survey of larger companies has shown similar results.
These results raise concerns over the continued appetite or ability of medical device manufacturers to continue to invest in the UK market, and actually suggest that investment is already moving elsewhere. Given the dependence of the whole industry in the UK on innovation fuelled by successful SMEs this is a cause for considerable disquiet, the absence of a strong and demanding domestic market will inevitably drive businesses overseas in terms of both development and manufacturing jobs. It seems that rather than being a springboard for growth the UK market is now seen as a drag on company development which puts UK SMEs at a significant competitive disadvantage compared with their overseas peers.
While the UK industry (currently valued at over £7bn) has a trade surplus and is attractive to venture capital, reflecting the success of innovative UK start-ups in attracting investment, what we are finding is that these companies then have difficulty growing due to the lack of market access in the UK. We need to make sure that the UK market environment allows med-tech SMEs to flourish through sensible public procurement policies and investment in research and development.
The findings of the Wanless Report, which noted the description of the NHS as a “slow and late adopter of technology”, remain relevant. Unless the NHS opens its doors to innovative new products the repercussions will be felt not just within the industry, but by the patient who will be denied access to the best treatments available. UK companies already targeting US and European markets will see little reason to remain based in the UK, and the delay between the creation and adoption of a new idea will grow ever wider.
Healthcare Industries Task Force
The solution to these problems already exists in the form of the Healthcare Industries Task Force (HITF) recommendations. Set up in October 2003 and jointly chaired by then Health Minister Lord Warner (now Lord Hunt) and Sir Christopher O’Donnell, Chief Executive of Smith & Nephew, HITF has been the most important initiative to date between Government and the medical devices industry. HITF was established to explore issues of common interest and identify opportunities for co-operation that would bring benefits for health and social care services, patients and industry.
The Task Force published its report “Better health through partnership: a programme for action” in November 2004. It focused on market access, R&D and the industrial base, regulatory issues and international trade. The emerging theme was how to stimulate innovation in the NHS and industry, and how to increase adoption of new useful medical technologies.
The final report on the implementation of the nine key HITF outputs, Innovation for health: making a difference, was published in March 2007. It sets out progress with accelerating the use of medical innovation more widely across the NHS for the benefit of patients. It also gives a clearer picture of what the medical device industry needs in order to grow and prosper.
The government and industry sides of the HITF implementation group agreed six recommendations to take forward:
- implementation across the NHS of a procurement framework for its collaborative procurement organisations and involving key stakeholders, including patients, clinicians and industry. The framework will support the uptake of technologies and innovations which can lead to improvements in healthcare provision, patient safety and value for money;
- a stocktake of existing support mechanisms and of access to private finance for small and medium sized (SMEs) medical device companies, and a review of what measures would be needed to address any issues that are identified;
- development of a UK marketing strategy covering both inward investment and export opportunities for the main industry sub-sectors;
- measurement and analysis of the UK healthcare industry environment – further development of key indicators to focus on success factors related to innovation, trade surplus and inward investment;
- Government and industry to play an active role in the European Commission’s inquiry into the competitiveness of the European medical devices industry;
- creation of a new mechanism for continuing the engagement between Government and industry.
Collaborative working with key stakeholders has already enabled practical measures and mechanisms to be identified to help improve patient access to the latest treatments medical technology companies can provide by improving adoption of new technologies by the NHS. Key achievements include:
- establishment of a National Innovation Centre which is already beginning to link innovators with appropriate financial, clinical and commercial partners to help them bring promising new products successfully to market
- inclusion of medical devices and technologies within the work programme of the UK Clinical Research Collaboration;
- development of a new device evaluation service (the Centre for Evidence-based Purchasing) within the NHS Purchasing and Supply Agency (NHS PASA) to provide objective evidence to support uptake of useful, safe innovative products;
- launch of a training hub to support use of the NHS of advanced training tools for key innovative surgical procedures;
- development of two pilot Healthcare Technology Cooperatives from April 2007 to pioneer new technology-based treatments in areas of unmet clinical need.
Industry will be working closely with government over the coming months to ensure that the HITF recommendations are acted on (and also those of the recently published Cooksey Review into medical research funding). Delivery of the recommendations will go a long way towards opening up the NHS market to small and innovative suppliers of technology. NHS procurement policy needs to refocus from cost-based to value-based priorities in order to ensure that patients reap the full benefit of the most modern and effective technologies, as well as allowing home grown businesses to flourish in the marketplace.
The Association of British Healthcare Industries (ABHI) is the lead trade association for the medical devices and systems industry (manufacturers of medical devices, equipment and consumables and other suppliers to the medical community.
For more information
Phone: 020 7960 4360
Website: www.abhi.org.uk includes reports mentioned in article