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How COVID-19 is Impacting the Medical Device Industry

Nov. 18, 2020
As they continue to work through the challenges brought on by the global pandemic, medtech companies are focusing on reducing risk and building resilience.

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Few industries have escaped the global pandemic’s wrath, with some supply chains continuing to be impacted by this monumental event. According to a new survey from Supplyframe, COVID-19 has had a particularly big impact on the medical device industry (“medtech”), which is now focused on reducing risk, building resilience and improving data accuracy.

“The pandemic has challenged and changed the medical device supply chains and has caused backlash over the mismanagement from professionals,” Supplyframe points out in a press release. Based on this findings, the company expects a “gradual path to recovery for the medtech industry over the next 18 months.”

One Year to Full Recovery

According to Supplyframe, the vast majority (74%) of survey respondents predict a recovery could take a year or longer, while a small percentage believe we are either back at full capacity, or that we will never reach that point again. The study further indicates agility, new forms of collaboration and data intelligence as critical elements that will help them adapt to the post-pandemic business landscape, the company reports.

“While the MedTech sector is among the hardest hit by the global pandemic, resulting in historic demand spikes and equipment shortages, it is also characterized by unparalleled innovation and collaboration from people around the world,” says Supplyframe CEO Steve Flagg. “With the pandemic still a reality in our day-to-day lives, it is clear that a new approach to supply chain planning and collaboration is required.”

Top Supply Chain Risks

The top medtech supply chain risks right now include supply shortages (for 15% of companies), lack of alternatives (12%) and delays in production issues (12%). Increasing the qualifications of multiple suppliers in the product design phase to improve supply chain resiliency was the most frequently cited strategy for mitigating these risks. To prepare for the next pandemic or natural disaster:

  • 16% recommend a supply chain redesign to source locally
  • 14% suggest improving qualifications of suppliers and the review process
  • 13% advocate improving visibility of supplier inventory, capacity and lead times
  • 12% endorse restructuring supply chains with second sources

“Establishing a trusted network of suppliers who can quickly adapt to shifts in demand and availability is a critical theme of this study,” Flagg says. “New risks and uncertainty require new ways of making decisions, including looking outside of the traditional medical supply chain.”

Closing the Data Disconnect

Supplyframe’s survey also uncovered a disconnect between data available to make planning and manufacturing decisions and the perception around the quality of available data. It says 92% of survey participants emphasized the importance of accurate COVID-19 case data to correctly forecast demand requirements and inform manufacturing efforts, yet 84% expressed worries about how that case data is being collected and reported in the U.S.

Supply chain data can be equally as difficult to collect, assess and use. “Procurement is often focused on reacting to supply challenges as they appear,” Flagg points out. “But medical equipment companies and other manufacturers that rely on semiconductor and electronics component suppliers can instead use data intelligence to get a broader view of what’s happening in their supply chains so they can build resilience into these solutions upfront.”

Returning to Growth

Even when industry growth restarts, McKinsey predicts a long road ahead for medtech companies. “Providers are likely to face operational challenges as they try to ramp up elective care while dealing with deferred essential care,” it reports. “However, access to healthcare professionals and administrators may continue to be partially restricted. Provider systems will still be recovering financially and likely be cautious with capital expenditures.”

Noting that medtech companies have historically been slow to move internal resources across business segments and across regions, McKinsey says these companies need processes that can anticipate market demand and shift staffing as needed to quickly accommodate changes. “This will require increased investment in employee cross-training as well as new processes to rapidly scale up support services,” it adds. “Companies that fail to adapt their resource allocation after COVID-19 may miss out on at least part of the return to growth.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.