Brexit plan

When the UK leaves the EU in March 2019, the implications for industry will be far-reaching. While the full impact may not be understood for some time, it seems clear that Brexit will bring new challenges and opportunities to every sector.

With a turnover of £17 billion (6% of the global market), the UK’s medical device technology industry is internationally recognised for its contribution to R&D. Brexit is likely to knock the status quo, with businesses worrying about funding, talent retention and trading.

According to a report by the Institute of Mechanical Engineers (IMechE), these concerns are not unwarranted. As they see it, Brexit could place many jobs and export opportunities in jeopardy, unless certain steps are taken.

Dr Helen Meese, head of healthcare policy at IMechE, says, “Many of the companies in this sector are SMEs, often spin-outs from academic research, consisting of just a handful of people.

“It is imperative that these smaller medical technology businesses are protected, in transition and [the] long term, to safeguard them against these impacts. This will be a huge challenge, but the institution believes it is not insurmountable.”

Key concerns

A report, ‘Medical Devices and CE Marking: The Impact of Brexit’, was commissioned following discussions with the institution’s Biomedical Engineering Association (BmEA).

Meese says, “Engineers in the BmEA work in a range of healthcare sectors across industry, academia and the NHS. This report reflects their concerns regarding the UK’s exit from Europe. It also considers the opportunities for creating a more resilient UK healthcare and medical technology sector post-Brexit by strengthening the links between the key healthcare stakeholders.”

It is said that medical technology SMEs could pay a high price for Brexit, including losing access to research funding and being priced out of the market, as parts and preparatory items become more expensive.

They may also face additional costs for customs and certification administration, and may lose skills as engineers and scientists move abroad in search of more stable employment.

While this is a worst-case scenario, it is not beyond the realm of possibility. For the UK’s 3,000 medical technology companies, there is a real danger that innovation could be stifled.

Aligning regulations

However, the report is not all doom and gloom: it makes several key recommendations about how the sector can be protected. The first, and most pressing of these, is directed at the UK Government, recommending that it should negotiate a medical technology compliancy agreement with the EU to ensure continuity in the medical device directives and the CE marking process.

One way to do this might be via mutual recognition agreements (MRA), which are similar to those already used by Switzerland. Under this kind of agreement, notified bodies in the UK would be able to carry out conformity assessments without having to undergo further evaluations in Europe. This should be supported by parallel policies that promote long-term investment in the sector.

Meese says, “The imperative is to ensure that government manages the process of change from EU to UK law effectively, and listens to the needs of the industry while doing so.

“This will demonstrate clearly that they recognise the contribution the med tech industry makes to the UK economy, and provide a stable platform from which investment and innovation can flourish.”

Next, the UK industry and the NHS should work together to ensure they retain influence over future European regulation.

Meese adds, “The NHS is the biggest single purchaser of healthcare equipment in the UK and, for many SMEs, the NHS is their only customer.

“Yet the NHS is often cited as being slow to adopt new technology. This results in a less than dynamic environment for medical technology businesses to create innovative solutions. The institution believes that by more efficient collaborative working, the medical technology industry and NHS could generate significant leverage.”

In principle, better technology would attract more private investment and funding into the UK sector. This would enable manufacturers to sell products in the EU and, in turn, have some sway over EU rulings.

Securing funds

The report’s third recommendation is that UK research and innovation must address the EU funding shortfall.

Between 2007 and 2013, the UK contributed €5.4 billion to EU framework programmes and won grants worth around €8 billion. Being outside the EU will not necessarily stop the UK from receiving grants, but it will put researchers at a disadvantage.

“Presently, the UK could not match this level of funding through the usual routes,” Meese says. “A full commitment by the government to implement the Accelerated Access Review will at least go some way to addressing the problem, but this will only provide several million pounds a year to the R&D sector. Long term, the government will need to look to incentivise finance companies to invest in the medical technology industry, and must use upcoming trade negotiations with Europe and other countries to develop new med tech markets.”

Opportunities to help

Aside from these three key recommendations, the report suggests that medium-sized medical technology companies would benefit from more support. Following the recent wave of consolidation, there are no longer many companies occupying the middle ground between the small and the very large.

Redressing this situation would help the UK industry gain a foothold in other markets outside the EU. This is because medium-sized companies are often the best placed to pull through new technology, as they are able to combine the research capabilities of a smaller company with the commercial acumen of a larger one.

Meese says, “There are opportunities for the government and the NHS to help by awarding contracts or funding initiatives with small and medium-sized companies.

“The government can also be a significant confidence booster to venture capital investment, a highly valuable funding pool already well accessed in the US.”

Future hopes

Since the report was released in 2017, it has been welcomed across the medical technology industry.

“We will continue to call for the government to act on behalf of the med tech industry throughout Brexit, to ensure continuity of regulatory practices and encourage long-term commitment to investment and research,” explains Meese. “Not doing so could seriously weaken our vibrant community. We are confident that the government will act on some, if not all, of these recommendations.”

The medical technology sector, of course, is just one among many, and there are limits on how much can be accomplished over a span of two years. However, as the medical device industry is so critical to the UK, its interests are unlikely to be neglected.

Meese says, “We are confident that developing [an] industrial strategy will recognise sectors that need either funding, support or exploitation, thereby cementing the UK’s position in global markets, creating jobs and, most importantly, wealth for the nation.”

Medical devices and CE marking: The impact of Brexit

Medical devices are highly regulated, and the current UK legal framework that governs these devices originates from long-established EU directives that have taken EU member states decades to achieve.

Ahead of the UK leaving the EU, it is imperative that the UK Government acts quickly to create a stable regulatory platform from which device manufacturers can implement any changes necessary to maintain their access to market. IMechE recommends:

• The government negotiates a med tech compliancy arrangement with the EU to ensure continuity in the CE marking process for UK manufacturers. This arrangement should be supported by parallel policies to encourage long-term investment in the sector. The goal is to attract med tech SMEs to the UK through clear support for innovation and product development.
• UK industry and the NHS work together to ensure that they retain influence over future European regulation. This influence could flow from the purchasing power of the NHS, but should also be based on more formal post-Brexit arrangements negotiated by the UK Government on its behalf.
• UK research and innovation must address the EU funding shortfall. This must take the opportunity to remove the current imbalance in support between early-stage start-ups and large established companies. A full commitment to implementing the Accelerated Access Review would go a long way to addressing this.