A More Inventive Europe?

16 September 2007 (Last Updated September 16th, 2007 18:30)

Research drives invention, yet the European medical device market seems to have failed to notice this. Maurice Wagner of Eucomed demonstrates why the continent is struggling.

A More Inventive Europe?

It is widely accepted that innovation is an engine to better treatments and better health, as well as a key driver of economic growth. It must be recognised that carrying out research is a prerequisite to successfully innovating and transforming knowledge into lucrative business activities.

The most successful companies of the 21st century are going to be those carrying out research not only in one continent, but in two or more of the key regions in the world. In the medical technology area, it can be observed that Europe is lagging behind the US, except in a few areas such as hearing aids, anaesthesia, imagery and dental implants.

LAGGING BEHIND

Many circumstances can explain why Europe is not as successful as it could and should be. The first obstacle is of an economic nature – money is necessary to carry out research. The manufacturers need a sufficient margin to be able to generate the cash needed to finance their R&D activities.

The reality is that because of healthcare budget deficits, European governments tend to arbitrarily cut the prices of medical devices, as has recently been observed in Italy and Portugal, and to treat medical devices like commodities.

To arbitrarily cut prices is bad: bad for innovation, since cutting prices creates disincentives to research, and bad for patients, since patients may then be deprived of innovative treatments.

"European governments tend to arbitrarily cut the prices of medical devices and to treat medical devices like commodities."

In addition, through cutting the prices of medical devices, the governments focus on expenses that in European countries represent an average of 6.1% of the total healthcare expenses (5.6% in Italy, 4.8% in Portugal). It cannot be expected that strategies focusing on reducing medical devices expenses are going to produce any substantial economical difference.

Public procurement practices, and particularly centralised purchasing practices, are illustrating some of the issues. Tenders are aiming at the lowest acquisition cost risk to reduce the treatment options available to the patient. They can deprive the patient of better quality medical devices and of devices which genuinely improve the patient’s comfort (such as incontinence clothes), which in turn can lead to poorer outcomes. These practices do not support R&D either, creating
disincentives to invest in research activities.

The second obstacle has to do with the lack of help offered to inventors in Europe. While a few countries have programmes aimed at supporting inventors and start-up companies, it can be said, in general, that inventors find it difficult to turn their innovation into a business.

This creates an additional hurdle to R&D: indeed, if a potential inventor does not know how to file a patent, how to finance the patenting, or how to write a business plan, is that inventor going to conduct
research in the first place? This seems doubtful.

WHAT CAN BE DONE?

If Europe wishes, it can address the issue of its R&D activities. Europe is not doomed to stay behind – it has potential. All stakeholders should work together to tackle the issues and to get over any existing hurdles. So, what can or should be done?

  • Governments should reinvent healthcare and accept that investing in healthcare contributes to improving the health condition of the population and in particular the working population, which ultimately will be beneficial, since a healthy workforce is paying taxes and is not depending upon the social state.
  • More specifically in the field of procurement, governments should reinvent the processes and introduce balanced and transparent processes, duly taking into account the key features of the medical devices industry.
  • Industry must demonstrate the value of medical technology. Eucomed is addressing that question and will soon announce an initiative in that area.
  • Industry and other stakeholders must demonstrate the benefits of better health from a societal perspective, by generating more data and by communicating them to the other stakeholders.
  • Industry must contribute to the development of research: Eucomed has recognised this reality. It has developed an industry response to the Commission and Member States’ willingness to work towards a more innovative Europe. This response consists of an initiative aimed at obtaining EU funding to facilitate, in all member states, the creation of innovation centres such as small infrastructures, or service providers that will help inventors. One of the ultimate objectives of Eucomed is
    to encourage those who wish to invest in research in Europe.
  • Patients also have an important role to play: they increasingly want to be able to make choices. This will create greater pressures on governments to finance the best quality treatments for a given condition.

While it is certainly true that too few industrialists are encouraged to invest in research activities in Europe, the continent has a number of assets to make research successful. What is needed is a more favourable framework, in particular in the procurement area.

Innovation also requires genuine governmental support to an industry that is employing well over 400,000 of the most highly qualified people in Europe, and genuine incentives to do research in Europe, be they aimed at helping
inventors’ activities or at providing support to them when it comes to commercialisation.