How will COVID-19 vaccine availability affect recovery of key medtech markets, R&D, M&A and supply chains?

COVID-19 vaccine availability and vaccination rollout are impacting key medtech markets, R&D, mergers and acquisitions (M&As) and supply chains – which in turn are exacerbating the direct impact of COVID-19 on the healthcare market.

Clarivate analysts have compiled key guidance and are continuing to monitor vaccination uptake to determine the effect on recovery. This article is an excerpt from the COVID-19 vaccine availability and medtech impact report.

COVID-19 vaccine availability and vaccination rollout have impacted not only healthcare utilization, as we discussed in a previous post in this blog series, but also on R&D, mergers and acquisitions (M&As) and supply chains, both in the short and long-term. These disruptions will affect the ability of and timeline for the healthcare market to recover.

Although there remains a great deal of uncertainty surrounding the continuing impact due to the lack of long-term data and the constantly changing landscape, Clarivate analysts have compiled some key takeaways for these market areas. Depending on the product category, type and shifting demand during the COVID-19 pandemic, specific impacts can be negative or positive. For example, we expect that patients returning to care centers will require more diagnostics, while the demand for PPE and capital equipment, which were in limited supply a year ago, will decline with fewer and less severe infections.

 

Table 1. Impact of vaccination availability, by product category

 

Product category Type Impact due to vaccination Commentary
Implantable devices1 Primarily elective Positive Considering that elective procedures were impacted the most due to the pandemic, we believe that strong recovery will be delayed until vaccination has reached a sufficient level to reopen the economy. Ultimately, we expect elective procedure recovery to extend well into 2023.
Primarily urgent Neutral Urgent procedures were less impacted during the pandemic because medically necessary procedures were mostly continued. Therefore, availability of vaccination is forecasted to have a positive but somewhat limited impact on urgent procedure recovery. Overall urgent procedure recovery is expected to be complete within 2021.
Capital equipment Primarily COVID-related Negative Vaccinations are expected to reduce COVID-19 related hospitalizations and therefore demand for ventilators or CT scan machines will likely return to normal levels, negatively impacting growth.
Not related to COVID-19 Positive Most hospital systems have experienced losses during the pandemic because of the deferral of elective procedures. Although vaccinations will bring a substantial number of those procedures back, the purchase of capital equipment will likely be delayed due to financial constraints and will observe gradual recovery beyond 2021.
PPE kits Negative At the height of the pandemic, there was strong demand for PPE kits to reduce transmission. While we do not expect to observe additional spikes in demand for PPE, increased mask-wearing among both providers and consumers is expected to persist. Therefore, as larger proportions of the population are vaccinated, sales of PPE are forecasted to stabilize, although at a higher level than pre-pandemic sales.
Diagnostics Primarily COVID-related Neutral During the pandemic, the need for COVID-19 related diagnosis grew substantially. We expect this trend to taper down as more individuals are vaccinated and overall infection rates subside. However, as countries reopen borders, workplaces and venues of entertainment, there will be an increased need for testing. Therefore, the impact of vaccinations on COVID-19 related diagnostics will likely be net neutral in 2021.
Not related to COVID-19 Positive Vaccinations will allow most people to return to their regular screening schedules for preventative diseases, and as patients return to hospitals for their treatments or surgeries, they will increasingly utilize diagnostic tests and tests to review effectiveness of therapy.

Notes: (1) Includes implantable medtech devices and related products from a variety of therapy areas.
Source: Clarivate analysis

 

We also summarize COVID-19 impacts that we expect to see for key areas:

Regulatory decisions and R&D

  • Removal of undue regulatory requirements (e.g., EU MDR postponement), particularly for COVID-19 products and services
  • Improvement of digital health care capabilities

M&As

  • Slowdown of M&A in early 2020, but encouragement in scaling supplies in the long term to mitigate risk
  • Increased interest in acquiring outpatient settings and owning complete continuum of patient care
  • Increased provider interest in self-distribution models and warehousing solutions to mitigate supply disruptions

Supply chains

  • Boost in onshoring and supply chain diversification to avoid overreliance
  • Continued manufacturing strength in Mainland China
  • Long-term benefits for smaller manufacturing hubs
  • Increased competition from non-healthcare and domestic companies
  • Rising incorporation of automation, robotics and 3D printing

 

Vaccination key to recovery

In the short term, application of public health measures and success of vaccination campaigns will likely determine the pace of recovery. As vaccination rates increase and public health restrictions start to loosen, we expect to see increased mobility and in-person care. Nonetheless, providers will need to contend with heightened costs due to personal protective equipment (PPE), patient safety requirements, limited capacity and unforeseen supply challenges.

Figure 1. Factors impacting health care recovery: short-term vs long-term

Source: COVID-19 Impact on ASCs, Clarivate, 2020.

 

In the long term, the COVID-19 pandemic has accelerated existing trends, including increased consolidation of various sites of service into larger health systems and an accelerated procedural shift toward outpatient settings. Moreover, industry players are increasingly focusing on the non-hospital setting, by providing setting-specific solutions and services and taking steps to improve affordability to more effectively compete with value players.

Of the various factors impacting recovery in 2021 and beyond, our findings show that the most significant factor for 2021 will be the emergence and increased availability of COVID-19 vaccines.

Download the full report COVID-19 vaccine availability and medtech impact for more findings on:

  • 2020 impact and recovery insights
  • Current vaccine development status and the various distinctions between different vaccines
  • How we believe the vaccination campaigns will roll out globally and how this influences forecasting
  • Impact of vaccination availability on health care markets and sectors

 

Analysis and data sources

Forecasts and insights provided in this blog were developed by Clarivate analysts using a diversity of proprietary sources:

  • Clarivate Real World Data™ product provides access to real world data, such as patient volumes by procedure group and site of service.
  • Market Tracking: Medical Supply Distribution data enables manufacturers to identify opportunities and risks by confidently assessing market share based on real-time insights.
  • Medtech Insights™ provides comprehensive data forecasts and analysis for global and regional medical device markets.
  • Market Assessment Epidemiology™ provides solutions to understand the complete disease landscape and size global markets with real-world data.

Clarivate experts who contributed to this article include Kevin Yin, Mark O’Reilly, Meenu Sankar and Raghav Tangri.

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