This article was first published in the January 2015 Ireland edition of Accounting and Business magazine.

The sector employs more than 25,000 people in Ireland, which represents 6 per cent of Europe’s medtech workforce. Ireland has annual exports of €8bn, making it one of the largest exporters. Eighteen of the world’s top 25 medtech companies have a base here, and 50 per cent of the 300-plus companies based here are indigenous. 

Investment and employment

More than 2,000 jobs have been announced over the past-two-and-a-half years, along with €300m investment in the industry. A lot of the recent investment is by existing companies in R&D and innovation. The latest announcement is by CR Bard (ClearStream Technologies), which will establish a 50,000 sq ft extension to its existing facility, along with 200 jobs. In October, Teleflex Medical also announced over 100 jobs at its plant in Athlone.   

The government’s investment in R&D through Science Foundation Ireland over the past five years is paying dividends, as it had allowed Ireland to develop significant facilities for medtech research, including Ireland’s first stem cell manufacturing centre at NUI Galway, which opened in January 2014 and, more recently, the announcement of the SFI CURAM Centre for Research in Medical Devices. The establishment of the national medtech innovation fellowship training programme, BioInnovate, enables participants to work directly with clinicians to develop new, innovative therapies. The healthcare innovation hub was established to help healthcare companies deliver commercial products and services more quickly by giving them access to the health service in order to test products in a real-life environment. 

While innovation is at the core of the industry in Ireland, the government is also committed to enhancing manufacturing competitiveness and has established a cross-sectorial manufacturing forum, with representatives from many stakeholders to work collaboratively to develop our infrastructure, competencies and skillsets. Oversight of current and future skill needs within the industry is critical to inform government skills policy, communicate career opportunities to potential graduates and inform our own skills strategy, part of which is implemented through the Irish Medical Devices Association’s (IMDA) Skillnet Network and IMDA’s Springboard, two government-funded initiatives. 

Global trends worth noting

Global trends, which range from reimbursement and regulation to supply chain and finance, are already having an impact here. Understanding global drivers and adapting business models will be key to the continued success.

Pricing and reimbursement will continue to be a challenge as governments, private payers, patients and competitors exert pricing pressures across different product categories. Furthermore, there are reimbursement and taxation challenges elsewhere – for example, the US medical device tax and more stringent EU and US product approval and safety oversight. We expect medical device manufacturers to be faced with constrained sales margins but this will affect companies all over the world. Although the prevailing outlook is positive, industry is concerned over the proposed changes to the EU regulation of the medical devices manufacturing sector. Instead of the EU introducing an overly bureaucratic system, our proposal would be to strengthen the notified bodies system to ensure that it has the relevant scientific knowledge and capacity to fully evaluate medical technologies.

Essentially, any future regulatory framework adopted needs to protect patients and safeguard Europe’s position as a world leader in innovation in the medtech sector. Institutional discussions are ongoing and IMDA continues to monitor developments in Brussels.

How can we take advantage? Multiple strategies exist to offset market challenges and drive growth. These are underpinned by need to develop cost-effective products and manage operating costs and product pricing to offset margin pressures and improve operational capabilities. Global drivers of change have been identified for the sector in the report published by IMDA and Deloitte Med Tech Ireland, Business Foresight Strategy, published in 2013. These include expanding patient base, growth in emerging markets, innovation to address unmet needs and emergence of medical apps. Growth in mergers and acquisitions and convergence of technology can also be key drivers.

Sinead Keogh is director at Ibec group representing the IMDA, Dublin.