How could Corona affect the MedTech branch in future times?

Covid-19´s impact on the economy is undoubtedly big. Due to regulations on the part of Germanys legislative, the economy and all impacted competitors suffer from partly heavy financial and organizational complications. Experts forecast massive changes on the market. But which trends can be expected for the MedTech branch for the post-covid era?

The backlog of surgeries

An article by the German medical newspaper from 31 July 2020 investigated the decrease of interventions, which were postponed due to the intensive bed occupancy. According to the professional association of German Surgeons, 41% of all surgeries decreased.

Compared to the numbers of the federal statistical office, Germany recorded a backlog of 2.9 million interventions per year, compared to the 7.1 million interventions in 2019. Assumed that the situations won´t change till September this year, experts forecast a backlog of 4.35 million investigations in total. 

According to McKinsey an alarming concern is, that when the recovery begins, it could be accompanied by a resurgence of demand for both elective and delayed essential procedures, straining business models and financial resilience.

Reasons for the trend tightening

One of the reasons is the steady aging of the population – considering that the half of the interventions are taken on 60+ year old men and women. Secondly the increasing number of overweight people is leading to more obese surgeries. 

The number of those interventions quintupled in the years from 2006 till 2014. Its estimated, that today, round about 15% of all health expenses are spend on obese interventions. It was determined that the average weight of the populations increased by 1.7 kilograms. 

How is the impact on the producers of medical products?

On one hand, the effect can be noted as positive, especially for producers for surgical consumables. On the other hand, the development tends to be negative, due to the lack of nursing stuff. This backlog might be reduced very slowly. An increased need of 20% is forecasted for the post-covid phase.

Producers of simple diagnostic devices or similar products could benefit from this development as well. Additionally, this could affect all producers of hospital utensils positively. 

The negative effects of the pandemic

Due to the cost implications of the pandemic for the whole health care system, producers of complex surgical devices or x-ray machines might suffer from an upcoming, complicated situation. Increasing costs for investments might be not sustainable for hospitals.

For small and medium sized companies, new challenges arise to regulatory requirements. Entering the market with new products will be much harder because the admissions process will be slower and more complex. 

This is not a result of the pandemic but an effort of the European union to install uniform requirements for the access and regulation for those products to make the European market safer.

A response to the crisis

MedTech companies are focussing on immediate crisis response. They try to keep employees safe, ensuring business continuity and dealing with upcoming regulations. The teams adapt to fast shifting care and patient behaviours and develop new models for upcoming complications.

But the immediate response needs to be stress-tested to identify if their operational models work for the long run. The crisis could possibly leave us with incisive changes and the MedTech branch must be aware of possible late consequences.

A growing competition on the MedTech Market

Due to the growing competition for the MedTech companies, the competitors rethink commercial models to fully cover the needs of the costumers. Companies revise their sales strategies and portfolio proposition. 

According to Bain and Company, one way to improve the odds of winning, is to embrace a category leadership strategy. In addition to that, forward-looking companies are also building commercial capabilities to compete effectively for the business of ambulatory surgery centres and office-based labs. 

the annual revenue growth of the MedTech branch from 2000 – 2019 ©EY


Pros and cons of ASCs and office-based labs

The number of procedures continues to migrate away from hospitals, paving the way for outpatient centres. MedTech companies also tend to develop stronger virtual selling strategies, flexible contracts, and more just-in-time distribution. 

On the other hand, ASCs and office-based labs could be a reinforcing factor on the pressure on MedTech companies` costs, if sales won´t take place as expected. Keeping costs down means streamlining intern processes. This is particularly important for multidivisional companies.

Developing new product features

The ongoing developments and events on the MedTech market is forcing the competitors to face new standards and to develop new product features. The new and innovative products are directly addressing the costumers needs. 

Investments into data-enable, connected devices for real-time tracking of location and status shall cover the needs of alternative sites of care. To expand their product-portfolios, the MedTech branch needs to review acquisition opportunities regularly. 

Seizing the opportunity

Even though COVID-19 is presenting the branch a big amount of complication, it still presents an opportunity for reforming healthcare. Reimagining the system is the next logical step into the future. Without COVID the MedTech branch would not need to face their own weaknesses and the need for improvement.

The focus shifted from traditional healthcare models to a more flexible and versatile system. Team all around the world now focus on those innovations and the digitalization. We expect new models and technologies, that could affect the being of the MedTech industry forever.  

An outlook to the future

Those are reasons to digitize your company, to streamline intern processes and to invest into the connection to electronical ordering systems and service systems. The lack of professional staff still will be a challenging task for producers, but a positive one on the long run.  

Companies need to stress-test their new business models, to fully determine rather they can handle late consequences or not. Now is the time to reflect and to analyse the success of the company and the possible danger waiting behind the next door. 

Corona still is a challenge to the MedTech Teams and will be soon. Innovation and Digitalization are not an option anymore. The branch must reimagine itself.