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In March of this year, COVID-19 was declared a global pandemic by the World Health Organization (WHO) which subsequently prompted the eventual shutdown of society as we knew it. The omnipotence of COVID-19 is creating challenges for industries across the board and these challenges are especially apparent in the medical device and healthcare industries. In the past few months, COVID-19 has greatly challenged the medical and healthcare communities and pushed them to the limits. Hospitals struggle as the disease spreads faster than companies can produce PPE and supply the necessary medical supplies. But supply is just one of the many challenges that COVID-19 presents to the medical device industry. In this post, we review all of the numerous impacts COVID-19 has had on the medical device industry.
The global healthcare industry has grown rapidly due to factors such as the growing size of the middle class, the aging baby boomer population and the uptick in prevalence of chronic diseases. As the industry continues to expand, so is the need to innovate in order to improve the quality of care while keeping costs low. According to Deloitte, with global health care spending expected to rise at a CAGR of 5 percent in 2019-23, it will likely present many opportunities for the sector.
Medical device / Medical device software manufacturers: COVID-19 induced supply chain constraints is a windfall to medical device manufacturers, especially for organizations focused on personal protective equipment (PPE), medical equipment for treatment as well a realization of increased medical device software needs such as tracking, monitoring and producing data for analysis related to the pandemic.
Telehealth: As providers limit the amount of in-person visits, virtual telehealth services and care are becoming the standard in the healthcare industry. Companies providing virtual services and in-home care have seen massive volume increases as the stay-at-home policies and self-quarantine continue to occupy society.
Digital transformation: Despite the challenges of COVID-19, there has been a great amount of progress in the digital transformation of the healthcare industry. With the progression of artificial intelligence and machine learning (AI/ML), the healthcare and medical device industries will diagnose disease better and earlier, treat illness more precisely, and engage patients more efficiently. With this growth, there are challenges to digital advancement in healthcare that include the costs and complexity of new technologies, the need for education/ innovation and cybersecurity.
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Clinical trials: Clinical trials and the organizations that implement them are impacted as access to patients becomes limited and ICU services are reserved for those with the most need. Clinical trials especially for Covid-19 Testing has been fast tracked and has received the backing of the FDA and government officials.
Healthcare providers / services: Unfortunately, providers of elective or non-emergent procedures are seeing a substantial decline in the volume of procedures which, in turn, results in a decline in revenue. Throughout the world, but especially in larger cities where stay at home orders have been enforced, many of these businesses have been closed for the foreseeable future. Data from Aidoc presented a 20% decrease in the volume of CT scans in the US compared to last month. As resources are being redirected to fight the pandemic, this reduction in the volume of elective procedures is likely to continue. Although cases have decreased and the medical system is starting to do elective procedures, there will be a cautious gradual reopening.
Financial Issues: As the levels of demand undulate violently during this pandemic, the effects will make its way through the supply chain causing financial strain. Over the next year, as orders are deferred or canceled, cash flow issues will limit operational freedom and eventually slow down projects, hiring and companies as a whole.
Global Medical /Drug companies: Because of the global nature of COVID-19, the impact on medical/drug companies that rely on a global supply chain are expected to be substantial. Because areas such as Asia are established as major drug and raw material providers, companies that rely on them for supply are impacted.
Globally, every industry is in uncharted territory right now and the future can only be speculated. The one certainty is that the Medical industry is working above and beyond to support the control of the COVID-19 pandemic and it is important that we are doing what we can as individuals to support them. If you are interested in more up to date posts on the medical device industry, check out Promenade's updated blog.
