CBI Trendmapping:

Medical Devices

CBI | Market Intelligence Product Factsheet Cloves in Germany | 1

Introduction

Many countries in the EU are currently facing financial pressure on their healthcare budgets. However, the medical
technology sector isnt as vulnerable to this recession as other industries and the market still offers a range of
opportunities to exporters from Developing Countries (DCs). For DC exporters who can offer cost-effective, innovative and
/ or sustainable products, future success is within grasp. In addition to selling through the traditional channel of
distributors, good opportunities could include the growing subcontracting trend among European manufacturers and the
new trend for end users like hospitals to purchase directly from DC manufacturers.

Figure 1 reveals the key trends on the EU market.

Figure 1: Overview of key trends on the European market for medical devices

POLITICAL SOCIAL

Reimbursement policies Ageing population

Revision of EU Directives

ENVIRONMENTAL TECHNOLOGICAL

Green technology Innovation

ECONOMIC

Costs & efficiency

Privatisation
Insurance companies
Subcontracting

Social market driver

Growing ageing population

With 23% of the population currently aged 60 or older, the EU is the most aged population in the world and is ageing
faster than any other population (except for Japan), with an increasing share of persons aged 80 years or older. This is a
result of the higher life expectancy and decreased fertility rate. By 2020 a quarter of the population will be 60 or older, and
in 2050 this will be 34% of which 20% will be 80 years or older.

The growing senior population is an important driver of growth for healthcare. According to Johnson & Johnson, people
over the age of 65 years use approximately seven times more healthcare-related products and services than younger
people. This means that there will be more demand for healthcare centres and products for elderly patients, like medical

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equipment for non-communicable / chronic diseases (NCDs). Products that improve the lives of patients at home will be in
demand, including homecare services / devices, self-care products, and remotely monitorable diagnostic equipment.

In the self-care market segment, products like digital blood pressure equipment - self-diagnostic units for diabetics - will
continue to be sold to an increasing extent as over-the-counter (OTC) products by retail organisations. In addition, an
increasing number of elderly individuals will also generate demand for orthopaedic devices, as musculoskeletal disorders
are common in this population group.

Tip:
Provide healthcare products that are especially useful in the care for elderly patients.

Technological market driver

Technology means opportunities

Despite the pressure on cutting healthcare costs, hospitals also want to maintain their high standards of healthcare.
Innovation continues to play an important role. In 2013, more than 10,000 patent applications for medical technology
were filed with the European Patent Office (EPO), 41% of which were filed from European countries. Examples of
innovations that are expected to create market opportunities include:
Development of minimal invasive surgery by robot technology in combination with endoscopic techniques.
E-health: development of digital patient technologies such as e-prescriptions and electronic health records.
M-health: development of mobile health technologies such as health apps and mobile solutions (like wearables) to
facilitate patient care e.g. by collecting patient data.
Development of rapid, low-cost diagnostics for superbugs, to contain epidemics.
Replacement of re-usable devices by disposable devices, such as surgical instruments.
Use of imaging technology, especially combined technologies like X-ray and ultrasound.
Application of nanotechnology (e.g. semiconductor manufacturing techniques) in medical devices.
Replacement of traditional latex by low-protein latex, medical grade plastics or silicone rubber.
Impregnating of antimicrobial agents into medical devices, such as central intravenous catheters.
Integration of the medical technology and pharmaceutical sector, which continues to increase.
Development of 3D printed, patient-specific medical devices.
Introduction and use of mobile medical units for mammography and lithotripsy.

In addition, according to Frost & Sullivan, areas of technological advancement that European medical device producers are
looking for are: better features of the device, size reduction and portability, improved reliability, and power sources for
portable devices.

Tips:
Provide cost-effective and innovative products.
Conduct research on how your company can provide cost-effective contributions (e.g. parts or modules) to EU
manufacturers innovative products. For example, approach EU companies that are in your network, and discuss
business opportunities with them as a potential supplier of parts or modules for their products.

Economic market drivers

Increasing focus on costs and efficiency

Although the medical technology sector isnt as vulnerable to the current recession in Western Europe as other industries,
many countries in the EU are now facing financial pressure on their healthcare budgets. Consequently, several
governments are striving to contain health costs and improve efficiency. This provides opportunities for medical devices
that can achieve such goals. This includes, for example, medical devices that facilitate minimally invasive surgery, which
can increase the number of operations in day surgery and ensure a faster turnaround of patients, or heart monitors that
allow one nurse to take care of a number of patients simultaneously. DC exporters should view this trend as the focus of
product development and value propositions.

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 Tips:
Benchmark your products against your industry peers in terms of cost-effectiveness.
Provide products that increase efficiency and reduce costs.

Privatisation of public services

Privatisation of healthcare is being considered as an option to an increasing extent in view of pressure on public spending
on healthcare and increasing healthcare needs due to the ageing population. Some EU countries have already privatised
part of their healthcare. In the Netherlands, Independent Treatment Centres have been established as privately run units
of hospitals. In the EU, privatisation has already occurred in orthopaedics, plastic and corrective surgery, aesthetic surgery
and total pain management, for example.

An important change due to the privatisation of healthcare is that price is becoming more important in procurement
processes. Whereas in the past decisions could partly be based on previous experiences and brand names, in the new
situation decision-makers have to clearly state why they prefer a certain product. This provides opportunities for lesser-
known brands that can offer the same (or even better) performance at lower cost.

Tips:
Benchmark your products against your industry peers in terms of cost-effectiveness.
Provide products that increase efficiency and reduce costs.

Insurance companies

Insurance companies will dictate the price level to an increasing extent and reimburse the products as agreed in contracts
with healthcare institutes. This trend will work to the benefit of exporters of products that have good value propositions. In
this situation, negotiations between exporters from DCs and insurance companies can be very important in entering an EU
market. If your products are accompanied by publications in well-respected literature and from independent doctors, you
will enjoy an advantage in these negotiations.

Tips:
Benchmark your products against your industry peers in terms of cost-effectiveness.
Provide products that increase efficiency.
Prepare well for negotiations with EU insurance companies. Make sure your employees have the right skills for
such negotiations (this can also be done by the representative, in case a DC exporter has one).

Increasing subcontracting to DCs

Several years ago, subcontracting of medical devices used to be difficult due to strict medical legislation. However, in
recent years, economic advantages have outweighed the regulatory burden. The outsourcing / subcontracting trend is
primarily driven by the need of EU producers to reduce the high costs in the EU (e.g. labour and energy costs) and to focus
on other activities, especially product development and marketing. The low labour costs in DCs continue to be the
attractive factor for EU producers. Despite a slower growth in subcontracting of medical device production to DCs during
the economic recession in 2009-2010, the market picked up afterwards, and is expected to continue steadily into the
future.

The majority of subcontracting to DCs concerns low-value products. Nevertheless, both low- and high-value product
segments provide opportunities for DC producers as long as DC producers can fulfil all requirements. Usually, quality
management standards, such as ISO and CE certifications, help to establish trust with EU partners.

Tips:
Look for EU manufacturers / distributors that might be suitable for you to cooperate with. Use resources like the
medical industry portals Qmed and MedicalProducts1.com.

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Environmental market driver

Green medical technology

Awareness of sustainability issues is continuing to grow and is becoming even more important among governments,
industries and consumers. Government organisations in the Netherlands, for example, have developed a sustainable
purchasing programme that includes several medical appliances. Many national governments in the EU have also taken
initiatives towards more stringent environmental legislation and measures for the medical industry. You will have an
advantage if you can prove the environmental benefits of your products to the EU buyer, like products that are recyclable
or reusable. An important means of doing so is the implementation of a CSR (Corporate Social Responsibility) policy. New
studies regarding Implemented CSR and Process Flow Control have shown a reduction of >15% in total energy costs and a
significantly reduced CO2 footprint.

Important legislation is the Ecodesign Directive 2009/125/EC and the Waste Electrical & Electronic Equipment (WEEE)
Directive 2012/19/EU. In 2014, the European Commission published its Green Public Procurement (GPP) Criteria for
Electrical and Electronic Medical Devices (Healthcare EEE), a voluntary instrument with clear, verifiable, justifiable and
ambitious environmental criteria, based on a life-cycle approach and scientific evidence.

Tips:
Provide products of which you can prove the environmental benefits.
Use sustainable materials in your products, like biodegradable, bio-based or recycled plastics.
Ensure that your CSR policy is superb and advertise it clearly (on your website and in brochures, for example),
preferably using quotes from your CE audit report.
Consult the Frequently Asked Questions (FAQ) on the Ecodesign Directive and the WEEE Directive.
Refer to the EU GPP Criteria for Health Care EEE for information on its recommendations to buyers. Use this
information to anticipate future buyers requirements.

Political market drivers

Stricter reimbursement policies

Important changes have also taken place in the reimbursement policies of medical products in all EU countries.
Governments and insurance companies are demanding hard evidence of the products value, to an increasing extent, or
they will not reimburse the medical device. As mentioned earlier, with the pressure of the economic recession, more and
more insurance companies will dictate the price level and reimburse the products as agreed in a contract. In this respect,
products that are easy to use, of high quality and price competitive and products that provide the most benefits to the
consumer are more likely to have the best opportunities in the EU.

A new technology or medical product will be able to apply for reimbursement if it can fulfil one or more of the following
requirements:
More treatments can be done at the same time;
Shorter recovery time, fewer overnight stays in hospital;
Elimination of the need for other medical procedures;
Improved quality of life;
Less pain and suffering for the patient;
Early diagnosis that makes treatment less costly and more effective. For example, a very new development is the
detection of breast cancer at an early stage by means of X-ray and ultrasound.

Generally, insurance companies together with the medical specialist organisations decide whether a product will be covered
by insurance. Medical devices that increase efficiency and quality of life to a significant extent have good chances of being
reimbursed. Although reimbursement policies differ from country to country in the EU, the fundamental dynamics of all
reimbursement systems are the same. Therefore, if a set of questions is drawn up to assess the reimbursement potential of
a product in the UK (for example), the answers will also apply to Germany and Spain (for example).

Tips:
Provide products that fulfil one or more of the requirements for reimbursement.
Enter the EU market through EU intermediaries or through subcontracting (also see Market Channels and
Segments for medical devices). These trade partners are aware of all the relevant information on reimbursement
policies in their specific markets.

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Revision of the Medical Devices Directives

In 2012 the European Commission released a proposal to replace the existing three European medical devices directives
with two European regulations, to achieve a suitable, robust, transparent and sustainable regulatory framework for the
development of safe, effective and innovative medical devices. The two regulations are expected to be approved in 2015,
meaning they will be implemented by 2018-2020.

These are some of the most significant changes in the regulations for manufacturers of medical devices:
Prior to approval, a specially selected committee of authorities from EU member states and overseen by the European
Commission will be able to review products when moving through the regulatory approval for CE Marking via a
scrutiny procedure.
The European Commission will be able to create common technical specifications (CTS) for all medical devices.
A Unique Device Identification (UDI) system that enables the identification of different types of devices will be
implemented and the European Databank on Medical Devices (Eudamed) will be expanded.
Certain devices will be reclassified as Class III devices, which will require a design dossier.
All medical devices will be considered reusable, unless scientific evidence supports a designation as single-use.
Reprocessing of a device wont be allowed in case of a single-use designation.

These are some of the most significant changes in the regulations with regard to Notified Bodies:
The European Medicines Agency will designate Special Notified Bodies. Only these Special Notified Bodies will be able
to issue CE Certificates for certain high-risk devices such as implants.
The Assessment Committee for Medical Devices (ACMD), a new expert body, will perform additional case-by-case
checks of conformity assessments.
Notified Bodies will conduct unannounced audits of manufacturers.
Competent Authorities will jointly perform audits of Notified Bodies for compliance with the new regulatio

Tip:
Keep up-to-date on the revision of the Medical Devices Directives

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CBI Market Intelligence

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marketintel@cbi.eu

This survey was compiled for CBI by Globally Cool

in collaboration with CBI sector expert Leendert Santema

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

May 2015