Medical Device Link.

market place

A massive market

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In Germany, healthcare spending in the medical device sector (excluding capital goods) amounts to more than €23 billion, according to the latest official statistics. Medical technical aids accounted for approximately €11.3 billion in 2007, spending on other medical supplies represented €10.5 billion, and €1 billion was spent on medical dressings, which are listed under the pharmaceuticals category. The share of statutory health insurance in the total expenditure amounted to more than €14 billion.

The medical technology (medtech) industry employs 95000 people in nearly 1250 companies (those with more than 20 employees per company). In addition there are approximately 10000 small businesses operating in the sector with 75000 employees. The core industry in Germany thus employs approximately 170000 people in more than 11000 companies. Another 29000 people are employed in the retail trade for medical and orthopaedic products.

Survey reveals a robust sector

To what extent are medtech companies being affected by the economic and financial crisis? To answer this question, BVMed, the German medical technology association, conducted an online survey in March 2009, which yielded responses from 120 member companies. The results confirm that on the whole the medtech sector is a buoyant part of the German economy:

• A quarter of the companies surveyed currently feel no adverse effects on their businesses from the economic and financial crisis.

• Only one third of the companies report a fall in sales in the first months of 2009 compared with the same period the previous year.

• Measures such as halting recruitment were initiated by 32% of the companies. Only 4% of them, so far, have had to reduce staff levels because of the economic crisis.

• Drastic consequences such as problems in obtaining credit, withdrawal of investors, shutdown of production capacities or reduced working hours play no or only a slight role in the medtech companies’ operations.

• Companies are primarily concerned with the general problems of the industry, which have been observed for years and are independent of the economic crisis; these are an increased downward pressure on prices (cited by 57%) and a generally more strained financial situation (cited by 43%).

Innovative prowess

The medtech industry is dynamic and highly innovative. Germany ranks second behind the United States in its share of patents and worldwide commerce. German medtech manufacturers achieve approximately one third of their business volume with products that are less than three years old. Research companies invest on average approximately 9% of their sales revenues on research and development. Another proof of the industry’s exceptional capability for innovation is that according to the European Patent Office in Munich, medical technology heads the list of registered inventions with more than 15700 patents: 11.4% of patent applications originate from the medtech field, followed by telecommunications (10%) and information technology (6.7%).

Maintaining progress

BVMed is keen to ensure that Germany’s leading market position in medical technology is preserved and growing. The general conditions that are required to facilitate progress focus on the following three stages.

The idea. Physicians are often the source of ideas for innovations or advanced developments. The prevailing conditions for new ideas are outstanding in Germany. It has well trained doctors, researchers and engineers and a high standard of clinical research. These are the best prerequisites for developing new products and processes.

From concept to finished product. Once the idea for a product or process is taken up and developed by physicians, technicians and engineers, its development is geared to maximum safety. The process is accompanied by a risk analysis and assessment prescribed by law. Because of the detailed risk assessment, the CE mark stands for comprehensive safety. It also stands for performance capability because the law prescribes that a clinical trial is conducted for every medical device. This regulatory framework for medical devices with graduated risk requirements has proven reliable and should be retained.

New product application. Market authorisation does not yet ensure that the new product or process will be reimbursed by the health insurance funds. However, the dynamism and speed of innovation in the medtech sector means that it is important that new products and processes are rapidly introduced. To achieve this, the following policies are essential.

• The principle of “permission with the reservation of prohibition” in the hospital sector must be retained. Many innovations are initially applied in hospitals and these are subject to reimbursement by statutory health insurance. Providing no negative evaluation is made by the Joint Federal Committee (JFC) (Gemeinsamer Bundesausschuss), which decides on proof of benefit, the hospitals can continue to employ the innovative product. This principle must be maintained in the inpatient sector so that innovative medical technologies can be made available to all patients who require them and without delay.

• Medtech companies need unambiguous, objective guidance on the evaluating criteria used in health technology assessment procedures conducted by the JFC. This will allow its procedures to be concluded more rapidly.

• There should be greater flexibility in reimbursement schemes. BVMed supports more responsibility being taken by the insured and delta financing models used in selected sectors of medtech. These facilitate the introduction of innovative medical technologies. With this system, health insurance funds would reimburse the “value” of the conventional method or device and the “additional value” or benefit of the innovation, which is referred to as the Delta, would be covered by the patients. Accompanying investigations can document the benefits of innovations and provide patients faster access to them. If the system becomes more flexible, the health insurance funds will compete for the rapid introduction of innovations in the future.

Keeping the engine going

In summary, if innovations are promoted and coordinated properly while taking greater consideration of quality aspects, then medtech companies will remain a growth engine of the health economy for the benefit of patients in 2009 and beyond.

Joachim M. Schmitt is Director General and member of the Board and Manfred Beeres is Communications Director at BVMed, the German medical technology association, Reinhardtstrasse 29b, D-10117 Berlin, Germany, tel. +49 30 246 2550, e-mail: beeres@bvmed.de, www.bvmed.de