Covid-19 Insights: Medical Devices (Part 1)

Rene van de Zande, Managing Director, Zeeland Ventures LLC

• Current Status: Along with the pharmaceutical industry, COVID-19 placed the medical device industry at the forefront of the battle of this virus. As a result, the device industry is under tremendous pressure to meet the demand and to innovate at the same time.
• Longer-Term Concerns: Short-term impact of COVID-19 will see a decline in annual growth rate of the global medical device market in 2020. Depending on the variables outlined below, overall the long-term impact on the device market is projected to be limited.
• Noteworthy Aspects: We have seen an exponential growth in the demand for healthcare products such as Personal Protective Equipment (PPE), respiration care devices like ventilators, in-vitro diagnostics, diagnostic imaging and general hospital and healthcare supplies. COVID-19 forced government regulatory agencies to allow for fast-tracking for devices and therapies under the emergency access pathways in the US, Europe, Asia and other markets. Growth for devices which in elective and non-essential procedures, however, came to a screeching halt as the result of COVID-19. Orthopedic and cardiovascular devices, minimally invasive surgical devices, and dental equipment, to name a few, and the manufacturers that sell these devices rely on elective surgeries and as a result have been hurting badly. In China and Italy, which went into a lockdown well before other countries did, the number of elective medical procedures declined by up to 90% in the months of February and March.
• Important Variables: Important variables that can have a positive or negative impact on the fight against COVID-19 are a strong COVID-19 recurrence in the Fall and Winter, discovery of a therapy and/or a vaccine that will protect people against COVID-19, a continued political divide in the US, and the ability for manufacturers to control and manage their supply chain going forward.
• Analyst Assessment: COVID-19 has had a major effect on the global supply chain and logistics and shown where weaknesses in the supply chain exist. Many leading medical devices companies headquartered in the US have their manufacturing facilities located in China. As a result of the COVID-19 outbreak, China had to suspend most of its manufacturing activities, which negatively impacted the supply of materials, components and medical devices. Looking into the future, US-based medical device manufacturers will reevaluate their suppliers and assess which of them are best organized and able to supply materials, components and products which stopped as a result of the pandemic.
• Ones to Watch: Will we see US manufacturers move manufacturing back to the US. There will be delays in M&A activity in the medical device sector.
• Personal Note: We currently live in a very politically divided country and if one can ever say that there is a good or a bad time to experience a pandemic, the political divide has not helped the people of this country. We are in dangerous waters when health becomes predominantly political, preventing a healthy balance between politicians and scientists so desperately needed to agree on what is right for the country and its people. Decisions to ease regulatory scrutiny and limit the need for clinical data in support of safety and efficacy should not be taken lightly. There are regulatory pathways in place that have been created to ensure when the need is there to allow for critical devices to be placed on the market expeditiously. But when these pathways are based on solely politically colored pavements and where agencies like FDA and CDC cannot act as intended, we should reconsider the easing of regulatory oversight in the context of emergency access pathways.