October 28, 2020    6 min read

For medical device manufacturers connected to the Covid-19 pandemic response, 2020 has been a year of growth. However more broadly the industry has faced the same challenges as other manufacturing sectors, with a -4.4% decline in US market size expected for 2020, according to IbisWorld data.

Whether 2021 will see a return to previous growth trends (2.7% per year in the US, from IbisWorld again), depends partly on global conditions – vaccine rollouts, and supply chain stability, for example. But also on how medical device manufacturers navigate other challenges specific to their sector.

Here are three key medical device manufacturing challenges that will affect the industry in 2021.

1. Regulations and Medical Device Manufacturing in 2021

Historically regulation of medical devices has lagged the more tightly controlled pharmaceuticals industry. This has been recognised and corrected for, however, with several major regulatory updates rolling out recently – or set to come into effect in the near future.

The key regulatory standards now at play in the medical device industry include:

  • ISO 13485:2016 – The International Organisation for Standardisation’s requirements for medical device quality management systems. This was reviewed in 2020 and has been adopted by many countries globally
  • 21 CFR 820 – Overseen by the United States Food & Drug Administration, this Code of Federal Regulations sets out quality system regulations and good manufacturing practices for medical devices made or sold in the United States. It roughly aligns with ISO 13485 without being equivalent.
  • The European Union’s Medical Device Regulation (MDR) – formally known as Regulation (EU) 2017/745 – which sets out rules for medical devices sold in the EU. Full compliance was due to be in force by May 2020 but has been delayed until May 2021 to avoid impacting the rapid rollout of a Covid-19 response, in particular the many new respirators needed worldwide.
  • The Unique Device Identification System (UDI) final rule – US legislation requiring medical devices to be uniquely trackable in line with new UDI rules set out in the EU MDR regulations above. As of June 2020 enforcement of UDI legislation has been delayed for some classes of medical device until 2022 due to Covid-19 disruptions.

Key regulatory themes

Two key themes emerge from these new and updated regulations. Medical device manufacturers and distributors – whether they’re selling tongue depressors or sophisticated diagnostic machinery – need robust and well-documented quality management systems in place.

They also need the ability to identify and track individual products – and sometimes components – through the entire manufacturing processes, and beyond into post-sales and servicing.

Serial number tracking of medical devices – and the ability to easily report on serial numbers from within medical manufacturing software – will therefore be a key ability for all medical device manufacturers in 2021 and beyond.

Accurate serial number tracking becomes increasingly relevant for medical manufacturers in 2021

2. Combating Counterfeiting in the Medical Device Industry

One in 10 medical products is substandard or falsified in low- and middle-income countries according to World Health Organisation (WHO) estimates from 2018.

That presents a serious challenge to medical manufacturers from a risk perspective: buyer trust is eroded when less effective or outright fraudulent products are presented under their branding. There’s also a significant impact on manufacturers in terms of complying with regulatory attempts to combat counterfeiting.

The two types of counterfeit medical product

The WHO classifies counterfeit products as ‘SF’, which designates them as either:

  • Substandard. These are authorised medical products that fail to meet either their quality standards or specifications, or both; or
  • Falsified. These are medical products that deliberately/fraudulently misrepresent their identity, composition or source

Both are of concern to legitimate manufacturers.

The existence of compromised componentry or ingredients in the supply chain in particular can lead to faulty end products and leave a business legally vulnerable, for example to a class action suit against a product that causes harm or fails in its intended use.

Counterfeit products remain a problem for medical manufacturers

Protecting against SF medical devices

Studies by WHO members on countermeasures against SF medical devices have assessed the multiple solutions at play, including:

  • Batch tracking of medical products – a means of identifying bulk items as they are produced, distributed and received
  • Serial number tracking for medical products – the gold standard, whereby products and even medicines are identifiable down to the individual unit
  • Bar code identification – a simple means of recording unique identifiers using inexpensive handheld scanners
  • Data matrix codes (also known as Q-codes) – these allow the storage of a large amount of information in a small space that are readable by mobile devices
  • Rfid tags – very large amounts of data can be stored, and reading can be passive, for example through sensors at warehouse entrances. However costs are higher making broad compliance more difficult

To date WHO research has pointed to serial number tracking as the best means of protection for end users of health products, with simpler scanning technologies as the most realistic and cost-effective way to authenticate serial numbers, given the scale and complexity of the problem, and the connected nature of the medical supply chain.

Meanwhile other technologies available to manufacturers of high-value medical devices include programmable DNA that can be incorporated into materials as well as packaging so that they carry a data signature – plus etched nanoparticles of silicon dioxide that can also carry invisible authentication data.

3. High medical device distribution costs

A third major issue impacting medical device manufacturers into 2021 and beyond is the high cost of accessing the market. According to Canadian medical device design service provider StarFish Medical, distribution costs routinely account for more than 50% of all margin for medical manufacturers.

This expensive model also affects procurement, with the task of sourcing reliable, compliant and traceable medical materials and components typically soaking up a further 25% of margin.

With such slim margins remaining to drive profitability it ultimately falls to CFOs and financial advisors to continuously monitor margins and track the performance of individual SKUs across different markets. And as disrupted supply chains and distribution networks bleed into 2021 these key financial decision makers will require much more responsive, real-time margin reporting from their medical manufacturing software.

Ideal solutions for the medical manufacturing sector should be able draw insights directly from manufacturing and inventory management software. Modules such as Unleashed’s BI Vision, for example, are able to interrogate precise margin data across hundreds of SKUs in any location – and with accurate landed costs factored in – allowing users to spot costly spikes before they become serious problems.

Medical device manufacturing software should be able to track margins in real time

Ultimately, if the medical manufacturing industry is able to navigate these unique regulatory and market challenges it will continue to expand as world demand for quality medical products and technology grows.

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