With Brexit just around the corner, a report by the Institution of Mechanical Engineers has called on the UK to align its medical device regulation with that of the EU to reduce the risk of losing export business and jobs. Abi Millar takes a look at its recommendations and asks what can be done to secure future business for the sector.
When the UK leaves the EU in 2019, the implications for industry will be far-reaching. While the full impact may not be understood for some time, it seems clear that Brexit will bring new challenges and opportunities to every sector.
With a turnover of £17bn (6% of the global market), the UK medical device technology industry is internationally recognised for its contribution to research and development (R&D). Brexit is likely to knock the status quo, with businesses worrying about funding, talent retention, and trading.
According to a report by the Institute of Mechanical Engineers, these concerns are not unwarranted. As they see it, Brexit could place many jobs and export opportunities in jeopardy, unless certain steps are taken.
Head of healthcare policy at the Institution of Mechanical Engineers Dr Helen Meese said: “Many of the companies in this sector are small and medium enterprises (SME), often spinouts from academic research, consisting of just a handful of people.
“It is imperative that these smaller medical technology businesses are protected, both in transition and long term, to safeguard them against these impacts. This will be a huge challenge, but the institution believes it is not insurmountable.”
A report ‘Medical Devices & CE Marking – the Impact of Brexit’ was commissioned following discussions with the institution’s biomedical engineering association (BmFA).
Meese said: “Engineers in the BmFA work in a range of healthcare sectors across industry, academia and the NHS.
“This report reflects their concerns regarding the UK’s exit from Europe. It also considers the opportunities for creating a more resilient UK healthcare and medical technology sector post-Brexit, by strengthening the links between the key healthcare stakeholders.”
It is said medical technology SMEs could pay a harsh price for Brexit, losing access to research funding and priced out, as parts and preparatory items become more expensive. They may also face additional costs for customs and certification administration, and may lose skills as engineers and scientists move abroad in search of more stable employment.
While this is a worst-case scenario, it is not beyond the realm of possibility. For the UK’s 3,000 medical technology companies, there is a real danger that innovation could be stifled.
However, the report is not all doom, it makes several key recommendations about how the sector can be protected. The first and most pressing of these is directed at the UK Government recommending that it should negotiate a medical technology compliancy agreement with the EU to ensure continuity in the medical device directives and the Conformité Européene (CE) marking process.
One way to do this might be via mutual recognition agreements (MRA), similar to those already used by Switzerland. Under this kind of agreement, notified bodies in the UK would be able to carry out conformity assessments without having to undergo further evaluations in Europe. This should be supported by parallel policies that promote long-term investment in the sector.
“By more efficient collaborative working, the med tech industry and NHS could generate significant leverage.”
Meese says: “The imperative is to ensure that government manages the process of change from EU to UK law effectively, and listens to the needs of the industry while doing so.
“This will demonstrate clearly that they recognise the contribution the med tech industry makes to the UK economy, and provide a stable platform from which investment and innovation can flourish.”
Next, the UK industry and the National Health Service (NHS) should work together to ensure they retain influence over future European regulation.
Meese adds: “The NHS is the biggest single purchaser of healthcare equipment in the UK, and for many SMEs, the NHS is their only customer.
“Yet the NHS is often cited as being slow to adopt new technology. This results in a less than dynamic environment for medical technology businesses to create innovative solutions. The institution believes that by more efficient collaborative working, the medical technology industry and NHS could generate significant leverage.”
In principle, better technology would attract more private investment and funding into the UK sector. This would enable manufacturers to sell products in the EU and in turn have some sway over EU rulings.
The report’s third recommendation is that UK research and innovation must address the EU funding shortfall. Between 2007 and 2013, the UK contributed €5.4bn to the EU framework programmes and won grants worth around €8bn. Being outside the EU will not necessarily stop the UK from receiving grants, but it will put researchers at a disadvantage.
Meese says: “Presently, the UK could not match this level of funding through the usual routes.
“A full commitment by the government to implement the accelerated access review will at least go some way to addressing the problem, but this will only provide several million pounds a year to the R&D sector. Long term, the government will need to look to incentivise finance companies to invest in the medical technology industry, and must use upcoming trade negotiations with Europe and other countries to develop new med tech markets.”
Aside from these three key recommendations, the report suggests that medium-sized medical technology companies would benefit from more support. Following the recent wave of consolidation, there are no longer many companies occupying the middle ground between the small and the very large.
“Being outside the EU will not necessarily stop the UK from receiving grants, but it will put researchers at a disadvantage.”
Redressing this situation would help the UK industry gain a foothold in other markets outside the EU. This is because medium-sized companies are often best placed to pull through new technology, twinning the research capabilities of a smaller company with the commercial acumen of a larger one.
Meese says: “There are opportunities for the government and the NHS to help by awarding contracts or funding initiatives with small and medium sized companies.
“The government can also be a significant confidence booster to venture capital investment, a highly valuable funding pool already well accessed in the US.”
Since the report was released in May, it has been welcomed across the medical technology industry.
Meese says: “We will continue to call for the government to act on behalf of the med tech industry throughout Brexit, to ensure continuity of regulatory practices and encourage long-term commitment to investment and research.
“Not doing so could seriously weaken our vibrant community. We are confident that the government will act on some if not all of these recommendations.”
The medical technology sector, of course, is just one among many, and there are limits on how much can be accomplished over a span of two years. However, the medical device industry is so critical to the UK, its interests are unlikely to be neglected.
Meese says: “We are confident that the developing Industrial Strategy will recognise sectors which need either funding, support or exploitation, thereby cementing the UKs position in global markets, creating jobs and, most importantly, wealth for the nation.”