As healthcare systems across the world scrambled to contain the spread of COVID-19 in the spring of 2020, resources were shifted away from many areas of healthcare to treat patients with the virus. The stay-at-home public health messaging advised people, at least initially, to avoid unnecessary healthcare to reduce transmission and as a result many consultations and procedures in other areas of healthcare were cancelled or done remotely.
It comes as no surprise that amidst a public health crisis that medical devices, an industry that is inextricably tied to healthcare systems – from clinical trials to prescriptions – has not escaped the unprecedented negative impact of the pandemic. To be sure, not all medical devices have been impacted negatively; as products deemed to be vital for the treatment of COVID-19, notably ventilators, personal protective equipment (PPE) and equipment needed for diagnostic tests, were prioritised. Governments did what they could to ramp-up manufacturing capacity, approval and delivery, to avoid shortage of these and as a result some of these devices have experienced growths of over 300%. Other devices, not essential to treating or preventing the spread of the virus, have been side-lined and have experienced sharp declines in their usage. Devices used in hospitals have been particularly impacted, due to reallocation of resources and drop in hospital visits, though devices in other areas such as in dentalcare have also seen declines. Whether in decline or not, what is common to all areas of medical devices is a shift towards digital health, a shift that presents players with both challenges and opportunities.
How the pandemic affected wound care
Due to the staggering number of cancellations and postponements of elective surgeries (estimated to be at around 28 million worldwide), there has been a sharp decline in the use of hospital-based wound care products. In some instances, clinics have temporarily closed altogether. One surgery department in New York used to see around 350 patients a week with vascular issues before the pandemic. In March, it largely shut down; staff shrank from 25 to four as they were triaged to ICU or sent home to work remotely. Hospitals have also reported a decline in emergency department visits, likely due to the change in patient behaviour as a result of national lockdowns and stay-at-home messaging. This has meant a reduction in trauma-based wounds, with the exception of burn wounds which have remained more or less stable.
Treatment of chronic wounds has been impacted too, though not to the same extent as surgical ones. As clinics and other facilities became potential hotspots for transmission, healthcare professionals were forced to adopt new forms of treatment. Given chronic wounds are often associated with underlying conditions – such as diabetes – that are also conditions that make people more vulnerable to COVID-19, it is unsurprising that patient behaviour changed, given the risk of exposure to the virus. Of those that continued treatment, 76.1% stated that the pandemic changed their treatment one way or another. As consultations and patient monitoring moved online, treatments were simplified by nurses to allow familiars or patients themselves to make the dressings. In the case of missed appointments it was reported that 12.8% of patients did not have their wound dressing changed during the pandemic, contributing to the overall reduction in use of products as well as leading to an increased number of patients with untreated, worsening wounds.
Wound Care players with more hospital focus were more affected
Of the key players in the market, including 3M, Smith & Nephew, Mölnlycke, ConvaTec and Coloplast, none came out of the first quarter of 2020 unscathed. All companies reported declines in revenues, with Advanced Wound Care and NPWT being amongst the worst affected segments. Companies such as Smith & Nephew that were most associated with hospitals, and therefore exposed to the cancellations of elective procedures, fared worst. On the other hand, companies such as Mölnlycke and Coloplast that focus more on homecare have proved more resilient and quicker to recover. Coloplast reported 2-4% overall growth in Q2 (though it was -2% in wound care), whereas Smith & Nephew faced a sharp decline in revenue with -29.3% of negative growth. Within Smith & Nephew’s portfolio, wound care was more resilient with only -17.6% decline (compared with -34% in Sports Medicine and Orthopaedics), but has been far slower to recover, due to the continued closures and changes to patient behaviour throughout summer.
China and, to some extent, Germany were quicker to bounce back
As with all aspects of the pandemic, there has been an unevenness across geographies in terms of impact and recovery. In Europe, differences in responses and preparedness brought about significant variations in the impact on the broader healthcare industry. Germany is widely reported as being the least impacted, whereas the UK is amongst the worst in terms of hospital admission rates, with over 516,000 cancelled surgeries.
Some companies have reported a speedier recovery in the US compared with other markets. However, within the US itself there is great unevenness in recovery, as New York and New Jersey continue to grapple with an enormous burden of transmission, whilst hospitals in Seattle move to restart elective procedures. Smith and Nephew reported slow recovery in emerging markets, with a negative growth of -14.5%, mainly due to restrictions in India, South Africa and Latin American markets, offset by a return to growth in China in the summer.
Future outlook: demographic trends are likely to revert revenue declines
Looking ahead, it is critical to recognise how declines in revenues for some medical devices are situated within a changing landscape of healthcare, catalysed by the pandemic. Whilst most healthcare systems are still grappling with the virus, the eventual return to elective procedures in hospitals will allow companies to recapture at least some of the growth experienced before the pandemic. In the case of wound care, growth was at 4.6% CAGR, and demand is likely to continue to increase, assuming the continuation of demographic trends – an ageing population and growing prevalence of diabetes and vascular diseases. This is particularly the case for chronic wounds, which continue to be a significant burden for many countries (the UK National Health System spends £5bn each year treating them) and which may have worsened for many patients during the pandemic.
Opportunities to capitalise on the growing importance of digital health
The pandemic has given healthcare a digital makeover. Digital health has boomed in 2020 and is unlikely to fizzle out, as remote healthcare options are cheaper and more convenient for many patients. Even during the summer as the virus waned, the proportion of face-to-face appointments remained far lower than prior to the pandemic. Both healthcare professionals and patients have shown a willingness to adapt. Remote appointments have shot up across the world: in the US, remote visits to Mayo Clinic, a healthcare provider, rose from 4% to 85%, whilst in China Ping an Good Doctor, an online health portal, had 1.1bn visits at the height of the pandemic. Regulators and governments have also facilitated this shift, passing laws urging reimbursement of online services and facilitating approvals of these.
Companies in the medical devices industry should capitalise on these changes, particularly as global digital health revenues are estimated to rise from $350bn last year to $600bn in 2024. Critically, companies would be advised to rapidly scale up their digital capabilities and develop online support for their devices as they are increasingly likely to be used in a homecare setting. With increased patient engagement and comfort, digital and remote healthcare could propel all areas of medical devices into greater growth than before the pandemic. If, however, companies fail to reorientate their portfolios towards these new healthcare needs and innovations they may miss out on this opportunity.