The ongoing coronavirus disease (COVID-19) pandemic was caused by a novel coronavirus (SARS-CoV-2) - which leads to an unusual viral pneumonia in patients - that was first identified in Wuhan, China in December 2019. It has since then spread to 205 countries and territories, with the strongest impact observed in the US, China, Western Europe, Iran, and South Korea. Due to a long median incubation period of 5 days and a reproductive number (RO, the number of secondary infections from one infected patients) between 2 and 2.5, the rate of transmission of the virus is high; the overall mortality rate is currently estimated to be between 3 and 4%, which is far higher than seasonal influenza (0.1%) but reasonably lower than the SARS virus (9.6%).

In line with most businesses globally, including pharma and FMCG companies, the pandemic has already had and will continue to have an impact on the medtech industry. Presently, the impact has been observed in a decline in elective and noncritical procedure volumes, increased demand for critical care devices, disrupted supply chains, and delayed clinical trials and product launches.

Elective and Noncritical Procedures

The global COVID-19 pandemic will severely hamper elective and noncritical procedure volumes. With a number of states, cities, and counties issuing orders to residents to shelter in place to limit potential exposure to and transmission of infection, procedures that are not absolutely necessary, such as many dental and aesthetic procedures, will be postponed or cancelled. Moreover, procedures to treat conditions identified during regular screening or physician checkups will also be delayed as patients opt to avoid contact with others.

In addition, regulatory guidance issued to hospitals and health care providers in a number of geographies, such as that from the US CMS, will further limit such procedures. Consequently, elective and noncritical procedure volumes - and thus associated medical device unit sales and revenues - will be negatively affected in 2020.

Manufacturing Shifts

The immediate large-scale need for preventative, diagnostic, and critical care has grown substantially in 2020 relative to typical seasonal demand expectations. This has led some governments to issue laws requiring some manufacturers to shift their manufacturing in support of specific products, such as masks and ventilators.

In the US, for example, President Trump has invoked the Defense Protection Act (DPA), a wartime law meant to provide the government with more control over local manufacturing operations; the President has already ordered General Motors, GE, Hill-Rom Holdings, Medtronic, ResMed, Philips, and Vyaire Medical to produce ventilators, masks, and other essential medical supplies.

Local manufacturers in regions that are substantially affected by the pandemic will be increasingly expected to realign their operations to divert resources from less essential products.

Clinical Trials, Product Launches, and Regulatory Delays

As health care facilities and personnel look to free up capacity to diagnose and treat COVID-19 patients, ongoing clinical trials will be suspended until the COVID-19 situation is resolved. Similarly, planned studies will be delayed until a more appropriate time. In fact, in some regions, regulatory bodies have issued guidance to suspend clinical trials and many ongoing interactions with manufacturers; the US FDA, for instance, has delayed foreign inspections, while the NMPA and the FDA appear to be prioritizing regulatory submissions related to COVID-19 and critical-need cases.

This will delay ongoing and prospective clinical trials and product approvals. Already, Edwards Lifesciences has for the time being halted enrollment in pivotal transcatheter mitral and tricuspid therapies, while Abiomed announced it would pause its STEMI-DTU trial for the Impella heart pump; several other companies in various markets have also shared similar plans to delay trials and product launches. In most cases, these companies have cited current pressures on health care resources due to the COVID-19 response, as well as self-isolation measures for their employees, as justification for implementing such delays.

In addition, the European Commision has proposed a delay in the implementation of the EU MDR, which was set to apply in May of this year, for a full year. It is likely that this proposal will be adopted in the coming weeks.

Supply-Chain Disruptions

Considering most global medical device companies have their manufacturing centers in China, where lockdowns and quarantines have led to a breakdown in supply chains, sourcing products and materials from the country will be difficult, which may limit product availability in some cases. Though companies have temporarily been sourcing components from Europe and other regions, the expected expansion of the pandemic will also render this more difficult.

Additionally, medical device imports have been hampered due to some restrictions on the movement of goods, forcing some countries, such as the US, to rely on their internal manufacturing capacity and stockpiles, which may not be sufficient to meet demand in some regions.

However, as the situation - particularly in China - improves, manufacturing restrictions will be eased and the impact of import restrictions will gradually decline, which will be further supported by the implementation of measures to ease disruptions on the trade of medical equipment, such as the reduction or elimination of tariffs on medical equipment.

Medical Tourism

Markets relying on medical tourism revenues will be substantially affected by ongoing travel restrictions. For example, 800,000 Americans and Canadians travel abroad each year for dental care; it is expected that the majority of these individuals will forgo such procedures in the short term.

The impact of SARS-CoV-2 and COVID-19 on medtech device markets will be substantial and will vary from space to space depending on procedural necessity and resource availability. DRG's Medtech Insights team (part of Clarivate) will continue to monitor the situation on an ongoing basis to ensure we can provide up-to-date data and insights. We are actively incorporating the impact of the COVID-19 pandemic into market forecasts.

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