The Medical Device industry and manufacturing outlook looks very strong and the industry continues to involve rapidly.
If the dynamic nature of the medical device industry drew you to it, you’re going to enjoy 2017. While many of 2016’s challenges – cybersecurity risk and merger mania – will continue this year, transformations are on the horizon.
# 1 Disruption from non-traditional healthcare companies
Following Apple and Google, some have predicted that e-tail giant Amazon would be the next Fortune 500 company to disrupt the healthcare market, but could it be FedEx instead? The company was a host sponsor of AdvaMed 2016, the leading medtech conference in North America, causing speculation that the shipping giant is expecting healthcare logistics – estimated to be a $70 billion global market – to become a major revenue stream.
DHL and UPS are also attracted to the healthcare logistics sector, and all three companies have invested in their healthcare supply chains. FedEx’s SenseAware technology monitors shipments and tracks everything from temperature and light exposure to barometric pressure. DHL has a similar shipment monitoring system, SmartSensor, and collaborates with two pharma giants. UPS’ extensive New Jersey facility is dedicated to shipping and logistics of high-end medical devices, such as a 300-piece spine surgery kit which it ships to hospitals on a loaner basis. Components not implanted in patients are shipped back to New Jersey where the kits are replenished and reshipped to other hospitals within 36 hours. Reusing portions of the kits saves the manufacturer Alphatec Spine money by not having to make as many kits.
# 2 Benefits from 2016 election
With the surprising victory of Donald Trump and the Republicans’ sweep of the House and Senate, never has one party held such power over the health benefits of so many American citizens. Trump campaigned on repealing and replacing the Affordable Care Act (ACA, also known as Obamacare) which will impact device makers. Business Insider predicts that the medical device industry is likely to be one of the first industries to benefit from the new administration.
The ACA’s controversial medical device tax on non-retail medical devices, such as pacemakers, heart valves, and artificial hips, is expected to go.
The tax has been on temporary suspension since December 2015. Although it is not expected to be reinstated anytime soon, industry groups like AdvaMed are pushing for a full repeal in early 2017, rather than later in the year. If this happens, it will be a huge boon to device manufacturers.
# 3 FDA reshuffling
The new administration will not just impact healthcare policy, but the policy makers themselves, and the FDA seems to be one organization that is firmly fixed on Trump’s radar. In his First 100 Days Action Plan, he indicates that one of his initial reforms will include “cutting the red tape at the FDA…to speed the approval of life-saving medications.”
Some would argue that the FDA has already started down this path with its approval of eteplirsen, a drug recently approved to treat Duchenne muscular dystrophy (DMD). The approval was highly controversial because the efficacy of the drug was in question, and the agency is responsible for protecting the public from unsafe and/or ineffective drugs and devices.
In 2015, the FDA introduced an Expedited Access Program that allows manufacturers of devices designed to treat life-threatening or irreversibly debilitating conditions, which are usually subjected to the rigorous 510k premarket approval process or the de novo clearance program, to request for fast-tracking at the agency to jumpstart the approval process.
At this time the media is reporting that Trump may name libertarian Jim O’Neill as the new FDA commissioner. If tabbed to lead the FDA, he would replace the current commissioner, Dr. Robert Califf, who was appointed in February 2016.
O’Neill, who is neither a physician nor a scientist, supports eliminating the agency’s mandate to establish the efficacy of new medicines and devices before approving them for sale, a view that could radically overhaul the agency. Moreover, what would become of FDA’s Center for Devices and Radiological Health (CDRH) and its three strategic priorities for this year and next year: the establishment of the National Evaluation System for health Technology (NEST), to partner with patients, and to promote a culture of quality and organizational excellence?
# 4 Design, manufacturing convergence
Cost control will continue to drive innovation in the industry, and the consumerization of medical devices shows no signs of slowing down. In response to cost reduction and customer needs/desires, the medical device business model is evolving from product maker to problem solver.
Device and diagnostics manufacturers must adopt a design-for-value orientation, which will require more collaboration between design engineers, manufacturing, and sales/marketing. A stronger alliance between these functions will ensure that customers get the device they need, when they need it, with minimal supply chain waste and maximum innovation.
The author, KetanDeshpande, lives in Minnesota and writes about a variety of topics in his blog such as global economy, market and industry trends, successful strategies for businesses, and others. Leveraging his global strategic leadership experience from the manufacturing industry to offer insights in to how businesses can meet the sustainable growth and profitability goals.
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