03.03.2020 | Insights

Medtech companies to undergo stress test under MDR

News

On 26 May 2020, the European Medical Device Regulation (MDR) will replace the previous Medical Device Directive (MDD). However, in the context of demanding preparations, many companies and notified bodies are not yet sufficiently prepared for upcoming MDR requirements.

Around 2010 and later, media reports of faulty breast implants, which tended to tear and thus leak silicone gel, shocked the public. The French company Poly Implant Prothèse (PIP), at the time the third-largest supplier of breast implants worldwide, had fraudulently used non-medical industrial silicone in its products – to the detriment of thousands of patients. This scandal and serious problems with some orthopaedic implants triggered a complete revision of the European Medical Device Directive.

The significantly increased demands on conducting clinical trials and new requirements for technical documentation stipulated in the new regulation will affect large companies to a lesser extent than small- and medium-sized enterprises. The lack of scaling possibilities in combination with consequently rising unit cost as well as bottlenecks in both personnel and know-how will put the competitiveness of SMEs under particularly high pressure. This will affect the majority of German medical technology companies, of which 90% are SMEs. In case the organisational challenges turn out to be impossible to be mastered in time, companies are under the risk of a possible loss of existing market approval for their respective products. In the worst case, this outcome could even lead to bottlenecks in patient care.

External factors also threaten the companies' business models and potentially affect patient care as well. The effect of more severe requirements imposed by the MDR is also felt by the so-called “Notified Bodies” (NBs) of the European Union, which assess all medical products regarding conformity before certification for market approval. Under the new MDR, the NBs must undergo recertification as well. However, at the present time only a few of them have cleared this hurdle, which has drastically reduced the number of active notified bodies. This results in a tremendous need to catch up.

From a global perspective, it is predictable that under the new regulation the European market will lose attractiveness for certain medical devices compared to the US. In the future, the US approval process for medical devices promises to be faster than the new European MDR. Please see the comprehensive article by our guest author Sarah Sorrel, MedPass International, on page 7 of our recent MedTech industry report.

The challenges caused by the new Medical Device Regulation are numerous and profound. It is unquestionable that MDR will become an additional driver for further consolidation in the medical technology industry and will certainly be a reason for an increased number of strategic partnerships.

In the recent industry report on medical technology in Germany and Europe, Taurus Advisory's industry experts examine the consequences for the capability to drive innovation and for M&A activities of European medical technology players under MDR.

 

Download M&A Outlook Medtech