Healthcare technologies in the UK
On Target interviews John Wilkinson, Director-General of the Association of the British Healthcare Industry (ABHI)
What is the role of the ABHI in the UK healthcare products industry?
ABHI is the voice of the UK Medical Technology Industry and has a membership that comprises manufacturers of medical devices, equipment and consumables, as well as service companies, distributors, professional groups (such as architects and lawyers) and other suppliers to the medical community.
As the most representative and largest healthcare trade association in the UK, the ABHI is best placed to represent the industry’s interests on critical issues affecting the UK market to key audiences. To be the loudest and the strongest voice is essential when representing membership interests. ABHI has strong relationships with a number of professional associations, other trade associations, NHS organisations, patient groups and healthcare professionals. These relationships come into their own when ABHI works towards the achievement of a goal, and broad stakeholder representation is needed to effect change.
How do healthcare companies benefit from membership of the ABHI?
As well as the macro benefits the ABHI delivers to the healthcare industry through influencing government policy and legislation, regulations and standards, and key groups and agencies, companies also benefit individually from ABHI membership.
ABHI members profit from networking at ABHI meetings, conferences and other events. We provide information on business development and competitiveness and give members exposure to UK and international business opportunities. We support companies in their exporting activities by helping them access new sources of funding. We regularly host international trade missions to target markets, and host a British pavilion at the major worldwide exhibitions.
ABHI members can participate in our Special Interest Sections: industry working groups that concentrate on promoting the interests of specific healthcare products or policy areas. The Association also helps individual companies to navigate the Government and regulatory environment when they have specific problems.
What are the key industry or NHS issues that the ABHI is currently seeking to address?
Through our Policy Groups and Special Interest Sections, ABHI tackles a wide range of horizontal and vertical industry issues. For example, the Research and Innovation Policy Group looks at all the issues within this par- Instruments Special Interest Section will look at all issues related to this product type. Of course, all our members are crucially affected by the vagaries of their biggest customer, the NHS. The recent pressure from Government to cut costs in the face of the NHS financial deficit has been felt sharply throughout the industry. In times of financial trouble the NHS looks to industry to share the burden, and it is able to use its position as virtually the sole buyer of medical technology in the UK to drive down prices. The NHS Purchasing and Supply Agency (PASA) and the Commercial Directorate are charged with setting costcutting targets and introducing procurement initiatives to help trusts slash their deficits. While the medical technology industry may look like fair game from a Whitehall perspective, the well-being of the industry is intrinsically linked to that of patients. If healthcare companies can no longer afford to fund research and development, or if they go under, this damages the UK healthcare system as a whole. It is the ABHI’s task to put these arguments across to the decision-makers in Government.
The ABHI is also at the centre of initiatives to encourage the creation of high valueadded jobs in the UK, and firmly believes that medical technology is a critical sector for the future of the UK economy. In this context we are very active in championing the cause of small and medium-sized businesses, as they are the source of so much radical innovation in patient care.
What do you see as the main challenges faced by UK healthcare companies at this time? Do major corporations and small to medium-sized enterprises (SMEs) face the same kind of challenges?
SMEs and major corporations are mutually dependent at a strategic level, though they may often tussle with each other on a day-today basis as all competitors in a vibrant market will. The vast majority of ground-breaking innovations come from the small business sector, and are often then incorporated into large corporations at a later stage. The large corporations are very good at quality and cost improvement, global marketing and steady incremental technology improvement.
All companies operating in the market are looking for innovative customers who value new technology for what it can offer the patient and the system. The UK remains “a late slow adopter” of technology, as Sir Derek Wanless said in his report on the state of the NHS, and changing that situation remains the biggest challenge for companies large and small. It is for that reason that the Association and Government are engaged in the Healthcare Industries Task Force (HITF), which reported in 2004 and is in the middle of implementation.
The ABHI firmly believes that medical technology is a critical sector for the future of the UK economy.
In an innovation-averse environment the small companies introducing new technologies obviously suffer badly, as they cannot build a business base in the UK and often have to go overseas for early sales. This increases risk by escalating costs, and often acts as a deterrent for investors who ask why they cannot see the technology in use in the home market of the company. Large corporations suffer in the longer term, as they increasingly look elsewhere to develop and launch new products. All of this means later access to life-saving technologies for patients in the UK and a reduced incentive for companies to invest in research, development and manufacturing in the UK.
How will current changes in NHS resourcing and procurement affect the healthcare industry? What are the positive aspects of these changes? What are the dangers?
The trend towards more centralised procurement in the NHS, with the increase in national contracts, is creating problems for the small and medium-sized businesses (or SMEs) that typify the medical technology sector. These companies do not have the capacity to tender for contracts on a national scale and are being driven out of the marketplace.
This leaves the market to just a few large suppliers. However, the larger companies are also under pressure from the dramatic price cuts the NHS is using these contracts to introduce. Many of these cuts are arbitrarily introduced and not sustainable in the long term.
The more choice and responsibility are placed in the hands of the patients, the more information they need; and undoubtedly, the industry is one of the key sources of that information.
The danger is that UK companies will be either driven out of business or forced to concentrate on selling to other countries (something that is already happening). The real loser in all this will be the patient as the NHS purchases older equipment to try and save in the short term, leading to patients not receiving the best possible treatments. This also removes the incentives for innovation, meaning a lack of investment in research and development for the future. The irony is that driving companies out of the marketplace means that the competitiveness of the sector is reduced, which will lead to higher prices in the longer term. Also, the use of older equipment actually increases the costs of healthcare, as it leads to longer hospital stays and reduced efficiency.
To what extent does the increased emphasis on homecare and patient choice mean that the market for medical technologies is becoming more consumer-driven? How should the industry respond to this?
There is undoubtedly a very sensible shift in emphasis from managing patients in expensive hospital environments to more treatment at home. This benefits the patients, the system and the economy as a whole. In parallel with this is the inevitable increase in the need for patients to manage themselves more effectively as they become less packages going through a hospital system and more responsible for their own care. The more choice and responsibility are placed in the hands of the patients, the more information they need to exercise the choice and take an active role in their own care. All of this means that reliable information needs to be available; and undoubtedly, the industry is one of the key sources of that information.
To deliver this in an efficacious way the industry will need to look at raising standards to the level of the best in class, and I believe that regulatory systems will be introduced to support this either on a voluntary basis or, if there are significant examples of poor practice, via externally enforced regulation.
How are current changes in public healthcare need affecting the UK medical technologies market?
We are at the very earliest stages of reform of public health, and there remains a significant reluctance to employ technologies designed to help manage patients in their homes.
Hopefully, the planned shift of the balance of resources towards community care will encourage a strong stimulus to the use of appropriate technology, and the temptation to just throw people at the problems will be resisted.
How will the impact of new technology change the healthcare industry over the next few years?
The pace of technological change in healthcare is accelerating all of the time, and individual companies will have to be even more alert and responsive than they have been in the past. The incremental changes that characterised the industry for most of the last century are giving way to disruptive changes that have a radical effect on both the cost and the effectiveness of care. For example, managing colon cancer has moved from late open and radical surgery, through more effective in vitro and in vivo diagnostics, to management via endoscopy. Not far away are virtual colonoscopy, where tumour cells are illuminated via bio-markers, and very targeted surgical interventions at an early stage of disease development. The cost and outcomes impact of such massive innovative changes is huge, and will be replicated in many other areas of clinical care as computing, biochemistry and engineering converge in ways that just a few years ago would have seemed unimaginable.
What are the commercial prospects for innovation in the UK medical technologies field?
The UK is still a net exporter of medical technology, and this situation is built on a legacy of top-class medicine, engineering and science. HITF is all about ensuring that the legacy is not squandered, and that we increase the productivity of research and development and translation of that legacy into businesses that can benefit the economy as a whole. Getting the market and research environment right is critical to making the UK a springboard for businesses. Failure to do so will see an overall decline in medical research (as industry is a key contributor) and a migration of jobs overseas. I am optimistic that we can get the virtual circle operating.
How do you see the structure of the healthcare industry evolving? Does the future belong to large corporations or to diverse and specialised SMEs?
Neither. The market has been and will remain dynamic, with innovative small fry populating the emerging end and large multinationals consolidating at the more mature end of the business cycle.
Occasionally the consolidations don’t work and break up into new configurations, but essentially I do not see industry structure changing too dramatically though individual companies will continue to change status as sectors evolve. Small non-innovative SMEs will continue to be under greater pressure than most as economies of scale become increasingly an issue. They will have to generate some very specific local service value in order to continue to exist in the face of large broad-line suppliers.
How will the ABHI provide support to the industry in a changing environment?
The ABHI will continue to inform members ahead of changes, so helping them to adapt.
We will continue to endeavour to be valued stakeholders when policy is being developed, so moving from reactive to proactive in policy development. We will continue to explain to Government and other stakeholders why medical technology is fundamentally different from pharmaceuticals and needs to be understood for effective policy to be developed.
We will continue to explain to Government and other stakeholders why medical technology is fundamentally different from pharmaceuticals and needs to be understood for effective policy to be developed.
Most important, we will continue to work to ensure that technology is part of the solution for the NHS rather than part of the problem.
What should sales and marketing –professionals in the healthcare sector be most worried about? What should they be most encouraged and motivated by?
Sales and marketing professionals should be most worried about threats to the unique and valued relationship that they have with clinicians, as buyers are increasingly trying to manage them out of the hospital in some cases. The level of professionalism demonstrated by sales and marketing people can substantially influence this tendency. Highly ethical and knowledgeable professionals will continue to be welcomed for their ability to inform, train and support customers. The opposite is, of course, the case for those who do not operate to the most exacting standards.
|The Association of the British Healthcare Industry |
|The ABHI has been representing the medical systems industry for more than ten years, providing the lead and expertise on general and specialist healthcare issues for the industry. A key factor in the Association’s success is the active participation of member companies. If you are looking for a trade association to represent your interests in both the UK and European Medical Devices industry, please contact email@example.com or tel: 020 7787 3061. |
There is still a huge paucity of training in the NHS, and I believe that the role of sales and marketing organisations will continue to be crucial to the NHS if it is to accelerate new technology adoption. I believe that there is, through the HITF process, a growing opportunity to get buyers, managers and clinicians constructively engaged in the procurement of products that offer best value rather than lowest price; and the message about redesigning clinical pathways and processes around opportunities afforded by new technologies will get through more broadly.
The role for professional sales and marketing teams is pivotal in project-managing these interactions and ensuring that sales are followed by training and effective support for change management. The pace of change will increase, and that creates opportunities for those who wish to take them.
John Wilkinson is Director-General of the ABHI. More information about the ABHI is available on their website at www.abhi.org.uk