A view from Europe

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A view from Europe

• 5 May 2009
• John Wilkinson
• Chief Executive

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Contents

• Some facts about the sector in Europe
• How Europe works
• The financial crisis How will it affect us in
  Europe
• What is going on in Europe
• Trends
• Regulation
• Politics

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Some facts
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The European medical technology industry

• Nearly 11.000 manufacturers
• 80 are SMEs
• Annual growth rate of ca 6
• 8 of total sales reinvested in RD ( EUR 5.8
  billion)
• Average life cycle of 18 months
• 529,000 employees (EUEFTA)
• 6.8 of total healthcare expenditure
• ( 0.55 of GDP)

• Total sales EUR 72.6 billion
• nearly 33 of world market share (EUR 219
  billion)
• Trade
• Germany (14.0 bn), Ireland (6.6 bn), France
  (6.1 bn), and the UK (5.6 bn) are major
  exporters of medical technology
• Germany, Ireland, the UK, Denmark, Sweden and
  Finland have trade surpluses in medical
  technology
• As a comparison (in billion EUR)
• USA 98.0 (45)
• Japan 23.1 (11)
• China 3.7 (2)
• Brazil 3.0 (1)

Source Eucomed
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The European medical technology industry 2007
Percent of Total European Medical Technology
Sales (72.6 bn) Finland, Sweden, Denmark,
Norway, Netherlands, Belgium, Luxembourg,
Portugal, Austria, Greece, Ireland Estonia,
Latvia, Lithuania, Poland, Czech Republic,
Slovakia, Hungary, Slovenia, Malta, Cyprus,
Bulgaria, Romania
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European Medical Technology Imports Exports
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Ration of GDP Spending
Source OECD Health data 2006
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Percentage of total healthcare spending allocated
to medical technologies
Source OECD Health data 2006
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Health Spending in Europe in 2005 Percent of GDP
Europe Average 8.7
Source Eucomed Medical Technology Brief, May 2007
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Health Spending in Europe in 2005 Per Capita
Europe Average 2,073
Source Eucomed Medical Technology Brief, May 2007
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How Europe works
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Subsidiarity

• The subsidiarity principle means that EU
  decisions must be taken as closely as possible to
  the citizen.
• i.e. the Union does not take action (except on
  matters for which it alone is responsible) unless
  EU action is more effective than action taken at
  national, regional or local level.
• The concept of subsidiarity has both a legal (EU
  Treaty) and a political dimension.
• As a result, there are varying views as to its
  legal and political consequences.

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Subsidiarity and Health

• Article 152(5) of the EC Treaty states that the
  Community has to respect the responsibilities of
  the Member States for the organisation and
  delivery of health services and medical care.
• In combination with Article 152(4)(c) of the EC
  Treaty, action in the field of public health is
  not allowed under the EC Treaty.
• On the other hand, where the Commission has the
  competence to regulate, it should strive for a
  high level of public health protection according
  to Article 152(1) of the EC Treaty (e.g. in the
  Medical Device Directives and Cross Border
  Healthcare).

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EU Commission
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New technologies a cost driver?

• We all know that new technologies save lives,
  increase patient safety and greatly improve
  healthcare.
• But they can be very costly. We must therefore
  ensure that technology and medical devices are
  properly evaluated and used in the most effective
  way.

Androulla Vassiliou, EU Health Commissioner 12
February 2009 Speech at European Policy Centre,
Brussels
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So what is stopping us?

• Barriers to information Reliable and transparent
  information on available healthcare facilities
  and treatments should be made accessible to
  patients
• Barriers of access procurement Silo budgeting
  and cost containment still main drivers for
  decision-making
• Barriers of structure One size fits all for
  gt100,000 products?
• Barriers of human resource Most European
  countries have a shortage in healthcare personnel
  (quality and quantity)
• However industry needs to improve communication
  of value

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How will financial crisis affect business in
Europe?
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FT 9th April 2009
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Economic downturn is accentuating changes in
treatmentpractices and reduction in healthcare
consumption

• Percent who say they or family member have done
  the following in the past year because of cost

SIMILAR TRENDS SHOWING IN EUROPE
SourceKaiser Family Foundation Kaiser Health
Tracking Poll Election 2008 (10/8-13 4/3-13)
McKinsey CF/PMP joint venture
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Mixed impact

• Short-term impact limited
• - High public sector provision
• - Capital spending hit first
• Debt Mountain will mean
• Public spending under pressure
• Years of cost cutting exercises
• Danger that crude cost saving exercises will
  prevail
• Innovation constrained or seen as answer?

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What is going on in Europe
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What is going on in Europe?

• Erosion of Subsidiarity of Health
• Cross-Border healthcare (patients rights)
  directive
• Patient safety initiative
• Late payments directive
• Free movement of labour
• Steady increase in regulation

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Regulation

• Medical Devices Directives
• Recast Consultation
• Suspended but not gone away
• Over-reaction to needed modifications of the
  management of the system
• Pthalates/PVC
• Directive 2007/47/EC Annex I, Essential
  Requirement 7.5 related to phthalates classified
  as CMR 1 2 (comes into force March 2010)
• Risk assessment, labelling, justification
• Reach
• DEHP, DBP and BBP on priority list of substances
  for Authorization
• Use in medical devices would need special
  approval
• ECHA consultation on this list was open until
  April 14
• Our focus exempt DEHP from the need for
  authorization

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Does the patients rights directive have the
answer?

• Legal certainty on patients mobility, effective
  liability and insurance, simple redress

• Equal access to high quality and cost-effective
  health technology innovation

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BUT

• Still huge variation in resources across EU
• Absolute
• and
• Distribution of those resources (x2 number of
  MDs in Italy versus UK)
• Huge variation in reimbursement systems
• Varying mix of public/private sector involvement

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New Parliament/New Commission 2010

• Unknown new priorities but likely to include
• Security (includes energy)
• Environment
• Financial stability
• ? Health

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What role for the EU going forward?

• Reduce barriers and red tape for patients and
  industry alike
• Invest commitment, time and leadership in the
  medical innovation sector -innovations are
  critical to sustain Europe's economic and social
  systems and to remain competitive
• Promote long-term investment that will lead to
  considerable savings for national health security
  systems as well as strong EU exports
• Safeguard incentives for industry to invest in
  RD
• Industry perspective but what will happen?

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• Uncertainty
• But opportunity for those aligned with system
  needs

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More information?

• Visit www.eucomed.org