Growing Competition in Medtech Space More about Quality than Cost

By Tricia Rodewald When three medTech industry leaders at AdvaMed 2011 were asked which countries they are likely to move their manufacturing process to, their answers weren’t what you’d expect. There’s a lot of talk about China and India as…

By Tricia Rodewald

When three medTech industry leaders at AdvaMed 2011 were asked which countries they are likely to move their manufacturing process to, their answers weren’t what you’d expect.
There’s a lot of talk about China and India as the hotspots for manufacturing labor intensive products. However, it’s not all about low cost. In medtech especially, quality should not be overlooked.
Germany, Switzerland, and Eastern Europe are rapidly emerging as countries that offer high-level precision expertise. Even though they are high-cost labor locations, they have a high engineering component and the approval process is more efficient and timely.
According to Caroll Neubauer (B.Braun Medical Inc.) medical technology products are approved in half the time and half the cost with the E.U. approval process (versus that of the U.S). Furthermore, products are just as safe (he noted that studies have just come out supporting this).
The panelists (Steve MacMillan, Stryker Corp., Carroll Neubauer, B.Braun Medical Inc., and Robert Davis, Baxter Healthcare) all agreed that competitive advantage stems from a well-educated work force and highly qualified life scientists and engineers.
Medtech companies are attracted to countries that are cultivating those expertise and are easier to work with. The simple fact is that, if the regulatory pathway is shorter in Europe, companies are going to plan their product launch in Europe and then roll out in the United States later.
Because of this growing trend, patients in Europe gain accesses to innovative, life-enhancing products a good two years earlier than patients in the United States.
Curtailing innovation and competition, as many feel is being done in the United States, may do more to hurt than help in the long run.
Another major concern is the proposed medical device tax. The 2.3% excise tax that is expected to take effect January 1, 2013 is seen as a dark cloud over the medical technology industry. Some companies are facing an additional tax bill of $150 million one year to the next, which can have serious implications for their ability to conduct business and stay innovative and competitive.
So what can be done? A few suggestions offered were:
  • To connect with your congressional representatives. Take them on a tour of your facilities. Get them to understand and appreciate the reality that the medical device tax will have on your day-to-day operations and ability to conduct business. You must make the numbers real for congressional representatives.
  • Work collaboratively with FDA and keep the eye on the main goal, which is patient safety.