Procurement experts say medical devices market is booming in face of widespread criticism
The chief executive of Smith and Nephew claims the UK MedTech industry is failing to innovate
The organisation responsible for procurement and the introduction of new products into the NHS has defended the industry after the chief executive of a leading MedTech firm claimed UK companies were using budget cuts as an excuse for a lack of innovation.
Speaking last week, Olivier Bohuon, chief executive of medical device manufacturer, Smith and Nephew, said the industry should be launching new, higher-price products as a way of stimulating the market, rather than cutting the cost of existing technologies.
You cannot say that just because it is difficult to innovate that you don’t want to go there
And he insisted providers would pay a premium for devices that would improve efficiency and save them money in the long-term.
He said: “When we talk about price erosion of around 3-4% a year, many people are blaming this on government austerity measures, but they are wrong. What is happening is that we as an industry are not bringing in enough innovative products to get higher prices.”
“When you don’t innovate, your portfolio becomes older, and then in order to be successful in tenders you have a tendency to drop your prices,” he said. “Innovation is the bread and butter of this business.
“We try to focus on where we need to go, but it’s also important not to remain a step behind our rivals. You cannot say that just because it is difficult to innovate that you don’t want to go there.”
But in response to his comments, Joanna Timmerman, managing director of procurement at NHS Supply Chain, said the industry had responded well to the current economic situation and had not put research and development on the backburner.
She told BBH that the organisation had its own Innovation Scorecard system through which new products could more easily enter the NHS via national framework agreements. This process takes between three to six months and has so far led to 24 new technologies making it onto the UK market. These include Tournistrip, a disposable tourniquet that helps to prevent the spread of infection; the bug-busting single-use Nail Nipper from Bailey Instruments; the Vision Vaginal Infection Swab; and the SportVis ankle support system.
The economic environment has forced people to look at the potential of their project, rather than just how sexy it is. It has to create value, and it creates value if it is innovative and if you are able to price it well
She added: “Innovation has a key role to play in supporting and improving patient outcomes in a rapidly efficient way. Bailey Instrument’s Nail Nippers is one such product that has come through our Innovation Scorecard. It provides, not only product cost savings, but it also generates savings on sterilisation costs for trusts and protects against cross contamination and anti-RSI.”
In an effort to promote innovation within his company, Bohuon has recently announced a shift in focus that will see the re-allocation of capital within the company to focus on the sports medicine and wound management markets. In line with this, the firm is increasing its R&D budget by $300m over the next five years with the aim of launching more bespoke products supported by computer-aided design.
This move led to the launch of 35 new products by Smith & Nephew in 2011 and it expects to match this during 2012.
Bohuon said: “Although the company is best known as Europe’s largest maker of artificial hips and knees, it is easier to innovate in areas other than orthopaedics. You don’t invent a new hip or a knee every other day.
“The economic environment has forced people to look at the potential of their project, rather than just how sexy it is. It has to create value, and it creates value if it is innovative and if you are able to price it well.”
Speaking to BBH following Bohuon's comments, Peter Ellingworth, chief executive of the Association of British Healthcare Industries (ABHI), the industry body that represents MedTech firms in the UK, said: "Mr Bohuon raises an important issue, both to the future success of industry and the ability of healthcare providers to innovate their practices.
In the ‘new NHS’ the potential to find new ways of doing business and bringing products to market has never been greater
"Industry needs to bring through products that make a demonstrable improvement to healthcare delivery and patient outcomes while also helping to improve efficiency. In achieving this industry will see a strong return on investment and at the same time patients will benefit from improved healthcare. In turn, this investment in R&D and the commitment to providing the necessary evidence must be reflected in the prices that healthcare providers pay for products.
"The nature of the NHS means that the UK is uniquely placed to tackle many of these issues. The recent Innovation Health and Wealth report set out how the Government will support this process, and in the ‘new NHS’ the potential to find new ways of doing business and bringing products to market has never been greater."