Emergo Survey: Tempered Growth Expectations for Medical Device Markets in 2018

Medical device manufacturers’ growth expectations for markets worldwide have decreased for 2018 compared to previous years due to various regulatory and economic factors, a recent survey shows.

Emergo’s Global Medical Device Industry Outlook for 2018 included responses from nearly 4,000 participants on which markets they expect to yield the most growth this coming year. As in the 2017 survey, companies anticipate higher growth opportunities in the US and Europe than other markets. However, growth expectations for all markets have fallen since Emergo’s last survey in 2017.

Double-digit decreases for US, European growth expectations

Although 41% of survey respondents anticipate strong European market growth in 2018, 51% of our 2017 respondents expressed similar expectations. US market growth expectations saw an even more dramatic decline: Whereas 60% of 2017 respondents saw the US as a high-growth market, only 43% of our 2018 participants see significant growth opportunities there this year.

In Europe, the effects of implementing the new Medical Devices Regulation (MDR) and In-Vitro Diagnostics Regulation (IVDR) have no doubt affected manufacturers’ near-term expectations in the world’s second-largest market. The complexities of the new Regulations as well as new, stricter requirements for Notified Bodies have created near-term challenges for companies seeking and renewing CE Marking in Europe.

Responses to a separate question in our 2018 survey provide further context for firms’ lower performance expectations for Europe. When asked how closely they understand the upcoming MDR and IVDR, more than half of all companies reported only a basic understanding of the new Regulations and how they will affect European regulatory compliance. (Less than 30% of firms cited strong understanding of the MDR and IVDR.)

No similar massive regulatory overhauls have recently occurred in the US, but other factors in that market help explain lower expectations for 2018:

• The return of the Medical Device Excise Tax (MDET), which had been set to take effect after a two year moratorium in early 2018 while our survey was being conducted (yet another two-year moratorium has since delayed MDET implementation again).
• Ongoing efforts to limit the scope of the Affordable Care Act (Obamacare), Medicaid and other federal healthcare funding systems, which may impact manufacturers’ reimbursement arrangements and contribute to overall uncertainty in terms of US FDA compliance.
• FDA application fees under the Medical Device User Fee Amendments of 2017 (MDUFA IV) increased by more than 30% for many types of registrations, including a major increase of 125% for 510(k) premarket notification submissions. (510(k) registrants with sales of less than $100 million may qualify for lower small-business user fees, however.)

BRIC and emerging market expectations also tempered

Respondents’ expectations for emerging markets such as Brazil, China and India also decreased between 2017 and 2018 surveys, but at much lower rates than those for the US and Europe:

• Brazil: from 17% of respondents in 2017 to 12% in 2018
• China: from 33% in 2017 to 23% in 2018
• India: from 18% in 2017 to 12% in 2018

Each of these markets presents its own mix of appeal and challenges for medical device manufacturers. Current economic and regulatory conditions in specific emerging markets explain companies’ more tempered performance outlooks. Faltering economic conditions in Brazil, sudden regulatory changes pushed through by the China Food and Drug Administration with little to no transparency, and moves by the Indian government to dictate price caps on certain types of medical devices may have given pause to manufacturers eager to commercialize in these countries but wary of market and compliance conditions.

Still, longer-term developments in emerging markets may yield better-than-expected growth for device registrants. The China FDA has rolled out a series of measures to ease some aspects of market entry such as testing and clinical investigation requirements, while the Indian Central Drugs Standard Control Organization (CDSCO) launched a new registration system in early 2018 that may ultimately lead to more efficient paths to market for foreign manufacturers. Time will tell.

Additional medical device regulatory resources from Emergo:

• European CE Mark consulting for medical device companies
• US FDA 510(k) consulting for medical device and IVD manufacturers
• China FDA medical device registration consulting
• Brazil ANVISA medical device registration support
• India CDSCO medical device registration support