Market Research & Insights

MedTech sector’s demand surge from COVID-19

Health Industry Hub | September 9, 2020 |

Market Research & Insights: The COVID-19 pandemic has caused a significant operational challenge for the medical devices industry with dramatic increases in demand for certain products above and beyond any historical or expected peaks. 

When supply shortages occur, the immediate requirement is that medical device manufacturers increase capacity quickly. This request fails to recognise how long it takes to build new capacity and that increasing production from existing capacity is a complex task in a highly regulated and often global supply chain.

According to a recent McKinsey report, high demand impacts medical device companies in stages:

  1. The rise in demand can often be met with existing inventory. But as that inventory dwindles, shortages and back orders build up, prompting manufacturers and distributors to place products on protective allocation to preserve the remaining inventory.
  2. Manufacturers aim to increase production rapidly. But bottlenecks in their supply chains can soon emerge because of limited production capacity and shortages of supplies (such as raw materials) and services (such as logistics and the sterilisation of finished goods).
  3. Supply problems can worsen as a result of lockdowns and subsequent plant closures and travel and trade restrictions. The problems can spread to products that aren’t directly associated with the products experiencing the initial surge of demand. Essentially, more products enter stage one of the cycle.
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How to Unlock Supply in High Demand

1. Maximise use of existing stock

Healthcare facilities in one region could have an abundance of a certain device or product, perhaps because of poor inventory management, that those elsewhere desperately need. Allocating supply to where it’s most needed, therefore, is often a quick means of easing supply constraint. But it isn’t easy to accomplish without a clear, real-time view on where supplies sit and coordinated efforts to match them with demand and synchronise logistics. In the absence of such a system, hospitals and other care providers can waste time trying to track down supplies or find themselves competing for them unnecessarily.

2. Transfer existing inventory from other sectors

Certain medical devices required for responding to the COVID-19 pandemic are used in industries other than healthcare and can be redeployed for a period of time. Construction companies, for example, donated respirators, gloves, and other personal protective equipment (PPE) to hospitals during the pandemic. As technical specifications vary in different sectors regulators need to advise on whether redeployment is feasible.

3. Optimise use of existing capacity

Manufacturers may find that they can increase supply by making better use of existing capacity. Equipment failure, the time it takes to set up equipment, sub-optimal production rates, and poor quality are among the factors that can compromise overall equipment effectiveness, while some production lines might simply be underused.

Sometimes, capacity constraints do not lie with the manufacturer but with suppliers. Companies need to evaluate their end-to-end supply chains to identify two to three key bottlenecks. Otherwise companies may waste time fixing symptoms rather than causes.

4. Develop new manufacturing capacity

The capital investment, process development, and workforce training required in an industry with high regulatory requirements means that ramp-up timelines are long.

There are two main alternatives to obtaining new capacity. One is to recruit contract manufacturing organisations with relevant capabilities to support part- or end-to-end production. The other is to form partnerships with manufacturers outside the medical devices industry with transferable skills and capabilities. For example, automotive, electronics, and industrial- and domestic-appliance manufacturers might be able to produce medical device components rapidly and at scale.

In any such arrangement, intellectual property might have to be shared. Additionally, regulators will need to streamline approval if extra capacity is to be brought online rapidly.

5. Develop new specs and designs

Product design or retooling could be the key to unlocking supply constraints when components are limited or manufacturing processes make it challenging to deliver new supplies at scale.

According to the McKinsey report, below are examples of how that has been implemented during the COVID-19 pandemic:

  • CRISPR-based diagnostic detection. The US Food and Drug Administration (FDA) recently granted Emergency Use Authorisation to a CRISPR-based diagnostic-detection protocol for COVID-19. The protocol might prove to be more sensitive than other tests available and will relieve pressure on supply chains for diagnostic tests, as it uses a different set of enzymes and reagents.
  • Gown manufacturing. A shortage of the main material traditionally used to manufacture disposable isolation gowns has been the primary bottleneck in their supply. Some smaller manufacturers have already assisted local hospital systems by finding alternative materials.
  • Emergency ventilators. Numerous organisations, including academic institutions and manufacturers outside the medical devices industry, have suggested ways to manufacture emergency supplies of ventilators. Those machines might be basic compared with the usual ventilators, but by using a simplified bill of materials composed mostly of off-the-shelf, easily sourced components, they can be produced quickly and at scale. In some cases, rapid-innovation laboratories and universities have partnered with certified medical-device manufacturers so that regulatory compliance is ensured and production can begin without delay.

“Understanding and addressing the vulnerabilities that have emerged in the medtech supply chain is essential as the COVID-19 pandemic continues. And doing so makes good business sense for medtech companies, whatever the future holds. The supply-chain muscles that are strained today will be stronger tomorrow, and the sector will be better prepared for any future call to action,” concluded the McKinsey report.

Reference: Adapted from

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