In less than 12 months, the world’s second largest market for medical technologies is going to be turned upside down. The new medical devices regulation (MDR) and in vitro diagnostic device regulation (IVDR) — which set forth more stringent safety and data requirements for devices distributed in the EU — will go into effect in 2020, greatly increasing the complexity of keeping existing products on the market and introducing new ones.

The direct costs of complying with these new directives are high, and manufacturers will need to allocate a substantial budget annually for the first three years. With no indication by the European Commission of extensions, the cost and complexity of this transition are likely to cause hundreds, if not thousands, of products to leave the EU market.

Despite the challenges that these reforms present, they may also introduce a significant opportunity for some manufacturers to gain market share and promote new products — but only for well-prepared companies with a comprehensive business plan in place. Here we discuss:

1. The need for new business models under MDR/IVDR
2. The value of launching products outside the EU
3. The need for C-suite involvement when developing business strategies

The need for new business models under MDR/IVDR

As the 2020 deadline for MDR approaches, all 500,000 medical devices currently on the EU market will have to be recertified under stricter rules. These guidelines will require stronger clinical evidence than previous directives, and there will be no “grandfathering” process in place — whereas, until now, medical devices already on the market were considered safe by default. Companies will have to submit vast amounts of clinical data, in addition to implementing comprehensive post-market surveillance and reporting, that enables device tracking from manufacturer to patient. Additionally, there is growing concern that it may not be possible to get all products recertified before deadlines due to a shortage of notified bodies (NBs).

As a result of these challenges, early movers may have the chance to gain market share over slower competitors that may be temporarily pushed out of the market if they are unable to comply before the deadlines. Despite the urgency of these approaching regulations, and the opportunities they present, a recent ICON survey showed that 41 percent of respondents reported their companies’ transition to MDR and IVDR is still in the very early planning stages, with zero respondents reporting a nearly complete transition plan.¹

To harness this opportunity, companies will need to go beyond the expertise of regulatory experts and product managers, and bring together an interdisciplinary team with business strategists and executives. With the development of a new business plan — which will require significant direction and input from C-suite executives, board members and investors — manufacturers can gain a competitive edge.

Launching new products outside the EU

While gaining a CE mark in the EU has historically been easier than obtaining FDA approval, the lengthening timelines and increased data requirements under MDR/IVDR may make pursuing approval in the US or other countries more appealing.

Moreover, the fragmented nature of the new EU process — involving the extra step of running clinical investigations through a NB compared with working directly with the FDA — could easily push the cost and time required for European certification beyond US levels, thus allowing manufacturers to potentially gain a competitive advantage in the US Other factors that could make market entry to the US more enticing include:

• A single language
• Large patient populations
• Less restrictive data protection laws
• Robust IT infrastructure
• Central institutional review

Similarly, countries in the Asia-Pacific region may be more attractive for some devices, particularly regenerative medicine.

A strategic business plan will require C-suite involvement

Adjusting to the new global environment under MDR and IVDR may require engagement of C-suite executives — and possibly even boards of directors and equity investors. To do this effectively, the following would be required of upper management:

• Cost assessment — Allocation of significant funds will be necessary to comply with MDR/IVDR. The magnitude of the financial and operational implications suggests that the chief financial officer (CFO) and chief operations officer (COO) should take the lead.
• Product triage — For many low-volume products, the added cost of MDR and IVDR will not be worth the expense, which may lead manufacturers to trim their offerings in Europe. These financial, operational and strategic implications suggest a need for the involvement of the CFO, COO and CEO.
• Market entry strategy — As stated above, under MDR and IVDR, European clinical evidence requirements could end up being more stringent than US requirements, making US market entry potentially more profitable. This will call for the development of a comprehensive market entry strategy.

Getting started

The cost, technical complexity and market implications of MDR and IVDR are reshaping global markets. For many devices, the cost of compliance will be high and will require significant expertise, with the first deadline less than 12 months away. Manufacturers should immediately begin developing a strategic business model that will prepare them for success under the new reforms.

ICON offers a full range of services that can help sponsors develop a plan to take advantage of opportunities under MDR and IVDR. For more information, contact ICON’s Medical Device and Diagnostics Research team at ICONplc.com/devices.

References

1. ICON Webinar: How to ensure compliance with the new EU Medical Device Regulations, September 17, 2018. http://webinars.iconplc.com/detail/videos/medical-device/video/5837663459001/how-to-ensure-compliance-with-the-new-eu-medical-device-regulations_-mdr-ivdr?autoStart=true

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