Health Business

The Association of British Healthcare Industries (ABHI) is the lead trade association for the medical devices and systems industry in the UK, consisting of manufacturers of medical devices, equipment and consumables, and other suppliers to the medical community. An important part of ABHI’s work is focused on helping UK medical technology companies to raise their profile in the international marketplace and increase exports.   

As part of its commercial services the ABHI provides information on business development and competitiveness, and gives members exposure to UK and international business opportunities. The external relations department works alongside UK Trade and Investment (UKTI) to organise a strong UK presence at important regional showcase events such as Medica and Arab Health, and also assists companies in their exporting activities by helping them access new sources of funding.

High export values
Healthcare technologies are a significant and dynamic global industry with the UK a key player. The UK medical device market is valued at over £7 billion with the total value of products exported from the UK in 2003 estimated at £3.5 billion. Medical device companies represent an important employment sector providing around 55,000 UK-based jobs.   

A 2007 survey of small to medium-sized businesses (SME) in the medical device sector has confirmed fears that UK sales are sluggish in comparison with their export activity. The ABHI/Ernst & Young SME Business Trends survey1 reflected the results of a similar survey of large companies in 2006 in showing a UK sales growth of only 2.2 per cent compared to export growth of 10 per cent from 2005-2006. A separate survey of larger companies has shown similar results.2   

These results raise concerns over the continued appetite or ability of medical device manufacturers to continue to invest in the UK market, and actually suggest that investment is already moving elsewhere. Given the dependence of the whole industry in the UK on innovation fuelled by successful SMEs this is a cause for considerable disquiet, the absence of a strong and demanding domestic market will inevitably drive businesses overseas in terms of both development and manufacturing jobs. It seems that rather than being a springboard for growth the UK market is now seen as a drag on company development, which puts UK SMEs at a significant competitive disadvantage compared with their overseas peers.   

While the UK industry has a trade surplus and is attractive to venture capital, reflecting the success of innovative UK start-ups in attracting investment, what is happening is that these companies then have difficulty growing due to the lack of market access in the UK. The UK market environment needs to be encouraged to allow med-tech SMEs to flourish through sensible public procurement policies and investment in research and development.   

The findings of the Wanless Report, which noted the description of the NHS as a “slow and late adopter of technology”, remain relevant. Unless the NHS opens its doors to innovative new products the repercussions will be felt not just within the industry, but by the patient who will be denied access to the best treatments available. UK companies already targeting US and European markets will see little reason to remain based in the UK, and the delay between the creation and adoption of a new idea will grow ever wider.

Solving the problems
A potential solution to these problems already exists in the form of the Healthcare Industries Task Force (HITF) recommendations. Set up in October 2003 and jointly chaired by then Health Minister Lord Warner and Sir Christopher O’Donnell, former chief executive of Smith & Nephew, HITF has been the most important initiative to date between Government and the UK medical devices industry. HITF was established to explore issues of common interest and identify opportunities for co-operation that would bring benefits for health and social care services, patients and industry.   

ABHI works to ensure that the HITF recommendations are put into practice by the government through continuing dialogue. This is essential to ensure that the UK continues to be a world leader in developing cutting edge technologies.   

UK Government policy now seems to be recognising the challenges facing the medical technology industry in the UK laid out in HITF. The interim report of the NHS next stage review being conducted by Lord Darzi announced the creation of a National Innovation Council with a budget of £100 million to “act as the overarching guardian for innovation from discovery through to adoption, holding the Department of Health and the NHS to account for taking up innovation and helping overcome barriers to doing so.”3

Health research spending
Also in the 2007 Comprehensive Spending Review (CSR) the Chancellor Alistair Darling pledged to fund in full the recommendations of Sir David Cooksey’s review into health research funding to maximise translation of research excellence into health and economic benefit. This will take department of health research and development spending to over £1 billion by 2010-11. This, taken with the £682 million from the Medical Research Council, will help take the single fund for health research to £1.7 billion.   

The CSR also states that the Government wishes to save money by “reducing variations in productivity across the NHS by spreading new technologies and best practice across the NHS”. According to the CSR “reducing such unnecessary variation could potentially generate net cash savings of £1.5 billion per year by 2010-11”.4

Improving procurement
This is, however, accompanied by a commitment to improve procurement practices, which the government claims could “realise net cash-releasing savings of up to £1bn per year by 2011”. We must hope that this does not signal a continuation of the cost-cutting measures that have contributed to the current poor level of uptake of new technologies by the NHS. In order for Britain to continue to develop world class technologies, a healthy domestic market is essential and in order for that to be maintained we need an NHS that procures intelligently, placing an emphasis on value rather than cost.

Notes
1. ABHI/Ernst &Young SME Business Trends Survey 2007 – www.abhi.org.uk/multimedia/ downloads/2007/SME.pdf
2. Ernst & young Business Trends Survey 2006 www.abhi.org.uk/multimedia/downloads/2006/Business_Trends_Survey22.8.06.pdf
3. Our NHS, Our Future – www.ournhs.nhs.uk/ 2007/10/lord-darzi-laun.html
4. Pre Budget Report and Comprehensive Spending Review 2007 – www.hm- treasury.gov.uk/pbr_csr/pbr_csr07_index.cfm