1. British medical device industry
1. Market overview
The size of the UK medical device market ranks third in Europe (after Germany and France) and sixth in the world. Moreover, it is the world's largest importer of medical equipment, and its medical equipment imports far exceed the export value, and imports mainly come from the United States, Germany, France, Spain and other countries. The local medical device manufacturers in the UK are mostly small and medium-sized enterprises, and the number of large medical device manufacturers is relatively small. According to data from the Office of Life Sciences in the United Kingdom, as of the end of 2018, there were 3,583 medical technology companies in the United Kingdom, with a total turnover of approximately 22 billion pounds, more than 120,000 employees, and an annual export value of approximately 5 billion pounds. It has strong market competitiveness in orthopedics, diagnosis, imaging, cardiovascular and other products.
2. Historical development
The UK's medical field is very innovative. There are 79 Nobel Prize winners in medicine from the UK, and half of the top ten in the global medical innovation rankings are from the UK. The UK's articular surface replacement technology (including soft tissue bioremediation, 3D imaging and printing) and medical imaging research are at the world's leading level. In this regard, the UK has a good historical heritage. Sir Godfrey Newbold Hounsfiled, an electronic engineer in Nottinghamshire, successfully developed the world's first CT imaging diagnostic instrument in 1969.
3. Medical system
The British Ministry of Health is in charge of the national medical and health affairs, but specifically only manages the national medical service system in England. The national medical service systems in Wales, Scotland and Northern Ireland are implemented and managed by their respective governments. Government procurement is implemented for national medical services in the United Kingdom. The Ministry of Health invites public tenders to purchase medical services every year. Public medical institutions, private medical institutions, and individual medical practitioners can all bid. There are 10 medical management agencies under the British Ministry of Health, which are responsible for bidding and purchasing medical services, signing contracts, managing the winning medical units, and conducting medical billing with contract medical units. Of the total medical expenditure in the UK, 90% comes from government financial appropriations, and the other 10% comes from social security funds, self-financed medical income, charitable donations, etc.
2. Major UK medical device companies
1. Shi Lehui Smith & Nephew (SNN.US)
Xeroxhui is a global leader in the field of sports medicine, and is also a world leader in the fields of orthopedic joint reconstruction, advanced wound management and trauma. The company was founded in 1856 and is headquartered in London. It currently has 17,637 employees. The company's main business is divided into three parts: orthopedics, sports medicine and ENT, and advanced wound management. Orthopedics business includes: implants for hip and knee joints to replace diseased, damaged or worn joints; robot-assisted technology to enhance surgeons' capabilities; trauma products for stabilizing severe fractures and correcting skeletal deformities.
Sports medicine and ENT businesses provide advanced products and instruments for repairing or removing soft tissues. In 2019, the company's total revenue was US$5.138 billion, of which orthopedics business was US$2.222 billion, sports medicine and ENT business were US$1.536 billion, and advanced wound management business was US$1.38 billion. The company attaches great importance to R&D. In 2019, R&D expenditure was US$292 million, an increase of 19% year-on-year.
2. LivaNova (LIVN.US)
Linuofa is a world-leading medical technology company focusing on the fields of cardiac surgery and neuromodulation, providing effective solutions for patients, medical professionals and medical systems. LivaNova was established in June 2015 by the merger of Italy's Sorin company (in the industry leader in the treatment of cardiovascular diseases) and the United States Cyberonics company (in the industry leader in the neuromodulation field). The company is headquartered in London, with neuromodulation and cardiovascular business headquarters in the United States and Italy, and offices in more than 100 countries around the world.
The company's 2019 operating income was US$1.084 billion, of which the cardiovascular business segment sales was US$656.6 million (including: cardiopulmonary products, heart valves and circulatory support systems), and the neuromodulation business sales of US$424.5 million (including vagus nerve stimulation therapy and sublingual Nerve stimulation therapy related products). In 2019, the company invested US$164 million in R&D for product design and development, clinical research projects and regulatory activities. As of the end of 2019, the company has more than 1,000 issued patents and 300 patents pending worldwide. The company has 4,036 employees, of which 16% are engaged in research and development.
3. CONSORT MEDICAL
Consort is the world's leading one-stop development and manufacturer of drugs and drug delivery equipment. Consort consists of two companies, Bespak and Aesica. Bespak is a device manufacturer, leading the global market in the development and production of high-quality drug delivery devices. It provides pharmaceutical companies with inhalers, auto-injectors, nose and eye technologies, as well as development and manufacturing services, and produces more than 500 million devices each year .
Aesica is a leading pharmaceutical CDMO, providing pharmaceutical companies with development and manufacturing services for APIs and finished formulations. And it is one of the few independent CDMOs with semi-continuous manufacturing capabilities. Consort has 10 factories in the UK, Italy and Germany, with a total of approximately 2,000 employees. In 2019, Consort's revenue increased by 5.8% year-on-year to 311.1 million pounds, and its pre-interest and tax profit was 42.7 million pounds. In February 2020, Consort was acquired by the global drug CDMO Recipharm.
4. ADVANCED MEDICAL SOLUTIONS
AMS was established in 1991. It provides innovative and technologically advanced surgical products for the global surgical and trauma care market. It has 9 R&D centers and factories in the UK, Germany, France and Israel. The company's revenue in 2019 was 102.4 million pounds, of which 56.5 million pounds were from surgical products (including tissue adhesives, collagen, sutures, oxidized cellulose, internal fixation, alginic acid sealants, bone substitutes, etc.); Wound care products were 45.8 million pounds (including: alginate, hydrogel, antibacterial dressings and other wound care products). In 2019, AMS made two acquisitions: In January, it acquired Sealantis, an Israeli medical device company with a patent-protected sealant technology platform, for $25 million; in November, it acquired an innovative surgical biomaterial technology company headquartered in France for 8 million euros. Biomatlante, thus entering the synthetic bone substitute market.
5. Tristel PLC
Founded in 1993, Tristel is a manufacturer of infection prevention, pollution control and sanitation products, and is the only company in the world that uses chlorine dioxide to purify medical devices. It has legally granted 250 patents in 36 countries. Tristel's business includes: medical device disinfection, hospital surface disinfection, clean room and laboratory hygiene, and infection prevention in animal health. In June 2005, Tristel was listed on the London Stock Exchange and then began overseas expansion. It established distributors in continental Europe, the Middle East and the Far East, and established direct sales in New Zealand, Australia, Hong Kong, China, Malaysia, Russia and throughout Europe. business.
3. Changes in the British medical device regulatory system after Brexit
1. Introduction to Brexit and the transition period
Brexit is a major event for both the UK and the EU and the world. From January 23, 2013, Cameron first mentioned the Brexit referendum, in June 2016 the British referendum decided to leave the European Union, to March 29, 2017, the formal launch of the Brexit procedure, originally should be March 29, 2019 The UK, which officially left the European Union, did not officially end its 47-year EU membership until January 31, 2020. The whole process can be described as twists and turns.
The transition period is a period agreed in the UK-EU withdrawal agreement (from January 31 to December 31, 2020). During this period, the UK is no longer a member of the EU, but is still subject to EU rules and remains a single Member of the market and customs union. The transition period is to provide time for both parties to negotiate a new relationship, while ensuring that companies only need to negotiate an agreement before they can adapt to non-EU regulations.
2. The impact of Brexit on the British medical device industry
Brexit will have a long-term and far-reaching impact on the regulation and trade model of the British medical device industry. If it is a no-deal Brexit, the UK will no longer apply the EU's regulatory system, and relevant regulations and systems need to be reformulated. In addition to Northern Ireland, other regions in the UK will implement a new independent medical device certification system. Medical devices approved by the European Union also need to be registered with the Notified Body in the UK before they can be placed on the UK market. Correspondingly, medical devices approved by the UK's Notified Body require a new CE mark before they can be placed on the EU market. At the same time, the British medical device regulator will no longer be able to access the safety data of medical devices shared by EU member states after they are on the market.
For the development of the medical device industry in the UK, Brexit will reduce investment and jobs, and medical device companies will face many problems such as shortage of funds and personnel. According to the estimates of the Trade Division of the Confederation of British Industries (CBI), by 2022, the UK will need more than 250,000 engineers. If the UK stays in the EU, British companies can acquire talent from any of the other 27 member states. Once the UK leaves the EU, these positions may be more difficult to supplement.
Similarly, the production line staff is also difficult to obtain, currently there are approximately 185,000 EU nationals on the UK production line. Not only in manufacturing, but in the hospital system, since the Brexit referendum, a total of 11,600 EU employees have left their jobs, including 4,783 nurses. Under this trend, the hospital cancelled thousands of surgical lists and outpatient departments. If there is any positive impact of Brexit, it is because Brexit will depreciate the pound, which will make product prices more attractive in export markets.
3. Changes in British medical device supervision after Brexit
Current medical device regulation in the UK
In the UK, the agency responsible for medical device and pharmaceutical regulations is the Medicines and Healthcare Products Regulatory Agency (MHRA). MHRA was established in 2003 and its headquarter is located in London, England. At present, the British regulatory requirements for medical devices and in vitro diagnostic equipment must meet the basic requirements of the EU Medical Device Directive. Medical devices that have been certified to meet the requirements of the directive are marked with the "CE" mark and can be located anywhere in the EU and the European Economic Area Go on the market and sell.
The UK uses the same risk-based classification system as the EU countries: I, IIa, IIb, and III. Currently, medical devices in the UK are regulated by the following regulations: (1) Directive 90/385/EEC (EU AIMDD) for active implantable medical devices; (2) Directive 93/42/EEC on medical devices (EU MDD) (3) Directive 98/79/EC (EU IVDD) on in vitro diagnostic medical equipment. These directives are in effect in the UK law through the Medical Device Regulations 2002 (SI 2002 No 618, as amended) (UK MDR 2002). These regulations will continue to take effect in the UK after the transition period.
Medical device supervision after Brexit
The Brexit agreement reached between the British government and the European Commission stipulates that EU law will continue to be applied during the transition period before the end of December 2020 and the European Court of Justice has jurisdiction over the United Kingdom. During the transition period, the UK and the EU will reach a longer-term arrangement, in which medical devices between the UK and the EU will continue to flow freely. As the Brexit agreement has not been finally reached, the current regulatory outlook is not clear. After Brexit, there are two possible outcomes for the UK's medical device supervision: one is that the UK remains in the EU regulatory system, and the other is that MHRA becomes an independent regulator.
On September 3, 2019, MHRA released the "Further guidance note on the regulation of medicines, medical devices and clinical trials if there's no Brexit deal" on its official website, reiterating that if there is no Brexit deal, the Guidance on changes to medical device regulations. The guide details how the UK system will operate, including: obtaining device certification; device CE marking; registering devices with MHRA. It also includes how to supervise the devices after Brexit. After the Brexit date, all medical devices, active implantable medical devices, in vitro diagnostic medical devices (IVDs) and customized devices will need to be registered with the MHRA before they are put on the UK market. Due to the special circumstances, a grace period has been given to the registration requirements to allow sufficient time to comply with the new registration procedures, as shown in the figure below:
The EU CE mark will be allowed to continue to be used before June 30, 2023, and compliance with the Medical Device Directive (MDR) and the In Vitro Diagnostic Medical Device Directive (IVDR) will also be recognized. After June 30, 2023, all equipment requires the UKCA mark.
Conclusion
The British medical device market is an important part of the global medical device market, and the impact of Brexit on it affects the hearts of millions of people. Generally speaking, after Brexit, there may be more processes, higher operating costs, and the flow of personnel, capital, and technology may also be more restricted, especially if there is no agreement to leave the European Union, the impact will be greater . For the majority of device manufacturers, distributors and investors, it is still necessary to actively respond, understand and adapt to new regulations and regulatory systems as soon as possible, comprehensively evaluate the impact of Brexit, reduce risks and losses, and seize new policies. , Favorable factors in the new environment.