One year on from the barmy EU referendum, concerns about the NHS as a customer, consequences of Brexit and the impact of the weak pound top the list of concerns for Britain’s MedTech industry.
The Association of British Healthcare Industries (ABHI) has conducted a survey of its members about business conditions. And while it’s not surprising that Brexit and the state of the NHS are uppermost in company minds, the change in 12 months is stark. Back in August 2016 46% of companies surveyed highlighted concerns about the NHS as a sustainable and optimum customer. That figure has now grown to 70%, driven presumably by direct experience of trying to sell into an ever more cash-strapped organisation.
Secondly, the weakening of the pound sterling had clearly not bitten last August, with only a third of companies describing it as a major challenge. Now that figure is nearer two thirds. On the flipside, well over a third of companies say export orders have increased as a result of the currency weakness. Almost none had recognised this a year ago, although half had admitted it was too early to tell. Now that figure is a quarter, these respondents presumably seeing the whole thing as a bit of a slow burner.
Brexit clearly remains a key priority, 54% of businesses rating it among the most important challenges they are facing. What’s telling though is that while companies see increasing business outside the EU as a priority, almost 20% say they need to increase the share of their business that comes from inside the EU too. Half as many said this last year. That may be a deliberately optimistic stance, presumably reflecting the view that “it’ll all work out well in the end.” Contrastingly, there is less optimism about the domestic market, fewer prioritising growth at home than a year ago.
So, while Brexit clearly remains a critical matter, UK MedTech is also worried about maintaining a strong domestic market. This issue has increased dramatically in importance from when the survey was run in 2016 and illustrates the widely held view that the NHS is difficult to do
business with. Trouble in Europe, trouble at home then… a perfect storm.
In its press release, the ABHI says that “Unchecked, the situation will continue to deteriorate and have a significant and lasting impact on the industry and the patients it serves. We call on government and the NHS to allow greater contracting flexibility to offset increased manufacturing costs. The NHS must take a more long-term, value-based approach to purchasing, not simply buying the lowest-priced product.”
Strong words indeed, although really nothing new to anyone who has dealt with the NHS over the years. It clearly suffers from stubbornly endemic institutional problems of bigness and bureaucracy, and lecturing it about value-based purchasing is as likely to bear fruit as telling Kim Jong Un to behave himself. Procurers for the NHS are hamstrung by budgets and short term goals, as anyone peddling a technology that reduces length of stay will know. If it costs more, it’s a tough old argument that one.
Back to the survey and its context, having been performed under the auspices of the ABHI. MedTech companies clearly need to explore markets beyond the EU (but then again wasn’t that always the case?). The real question is what practical trade support will be forthcoming from government? The ABHI does its bit by supporting trade missions and pavilions at major overseas events, the value of which is clear from the number of participant companies. Beyond that, it’s down to making Brexit as small a bump in the road as possible. UK MedTech is clearly nervous about barriers to trade, whether financial or regulatory, so kicking the can down the road with an extended transitional deal seems like the best way to assuage the fears of industry. Politicians talk about our divorce from Europe, but a trial separation in which both parties continue to cohabit might just work better.
ABHI Chairman Philip Kennedy said: ‘Brexit brings both risks and opportunities for MedTech companies, and the industry foresees a significant impact from both. We have set out our recommendations to government in our document “Healthy outside the EU.” Implemented, they will ensure both that the industry can flourish and prosper as we leave the EU, and that NHS patients continue to benefit from innovative medical technologies, saving and enhancing millions of lives every day.”
Find the full report and press release here