Transitioning from Medical Device to Medtech

Big tech facilitated contract-tracing and the roll-out of electronic vaccine records, the medical device sector significantly scaled-up production of much-needed ventilators, and developed vaccines and treatments for the longer term.

FREMONT, CA: The medical equipment industry dramatically increased the manufacturing of desperately needed ventilators, big pharma developed vaccines and therapies for the long term, and big tech facilitated contract tracing and the roll-out of electronic vaccine records. The emergence of telemedicine is one example of a practice that was still in its infancy before the epidemic but has since become widespread. The year that life sciences businesses, however, push even further into the realm of big tech appears to be 2023.

Early on in the development of the industry, medical gadgets used physical ways to provide their therapeutic effects. However, the definition of medical devices has almost invariably changed to encompass software that serves a medical purpose as technologies and treatments have become more advanced.

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In certain judicial systems, like the European Union, it also includes goods with prognostication or prediction capabilities. The use of software, including cutting-edge artificial intelligence (AI) and machine learning technology, has become essential to the delivery of healthcare in ways that were unimaginable even ten years ago, such as in the burgeoning fields of digital therapeutics and robotic surgery. Even where the therapeutic effect of the device remains physical. Since many of the biggest technology companies have seen the prospects in healthcare, the traffic has not been entirely one-way.

The rise of wearables: These tend to be more concerned with general well-being metrics and "healthcare-lite" applications (such as heart rate, temperature, and sleep trackers), but more and more healthcare organizations are looking to take advantage of this technology - whether that be to facilitate remote clinical trials, make potential diagnoses, or even as a platform for novel treatments.

For instance, drug developers are increasingly using wearables to collect real-world evidence (RWE) about how their therapies work outside of the strictly regulated clinical trial setting. Regulators and health technology assessment agencies around the world are beginning to recognize the advantages of employing RWE to close knowledge gaps left by conventional clinical trial designs.

Additionally, there are evident opportunities for smart devices and wearables to be developed beyond their current use cases, and MedTech and healthcare businesses will probably be able to take advantage of their institutional knowledge and scientific research in this area in a way that more conventional technology businesses cannot. Given the enormous amounts of health information these devices collect, data privacy laws should also be top-of-mind for lawyers, product managers, and engineers alike. In particular, the need to incorporate data protection and security considerations from the earliest design stage through to product launch and beyond.

Capacity for (non-specialist) investment: One concern for the life sciences industry has been that some investors, especially private equity, may not be appropriate for investing in scientifically complex and/or unproven enterprises. Medtech is one industry where non-specialist investors or partners can participate, similar to the projected trend in transactions involving contract research organizations.

Business model shift: Historically, medical device makers have operated as B2B product sellers, with an emphasis on quality assurance and defect risks. However, 2023 offers chances for both B2B and B2C service development, it is important to think about how one approaches this commercially. For instance, healthcare businesses may choose to concentrate their efforts on creating software or apps to work with their products or devices or to work with currently available, well-liked equipment (such as smart devices or wearables) created by (the more agile) big tech. As a result, prospective collaboration with big tech and both B2B and B2C licensing models (and income stream structures) should be taken into account.

Additionally, MedTech companies will require larger teams to manage intellectual property and IT difficulties as continuous services are added to complement devices. The change to copyright and database rights software protections (and related ownership concerns) will be crucial, as the manufacturing of devices has traditionally placed a strong emphasis on patent protection. The original design, development, and licensing are only the beginning, regardless of whether a B2B or B2C model is chosen. Ongoing support for constant maintenance, patches, upgrades, and new versions will also be crucial. It is unclear if they will handle this internally or if there is a chance for outsourcing; in either scenario, it will be important to make sure that the appropriate contractual safeguards are in place. It's essential to keep in mind that if a MedTech product meets the requirements to be considered a medical device, the producer will still be responsible for complying with all applicable regulations regarding its safety, even though maintenance tasks, software upgrades, etc. may be outsourced.

Ensuring patient safety: As MedTech alternatives become more readily available, developers must ensure that patients' safety is not jeopardized. Patient safety considerations were top-notch throughout the Independent Medicines and Medical Devices Safety Review (the Safety Review), which intended to forensically evaluate the high-profile failure of particular pharmaceuticals and medical devices. This is an urgent issue that the medtech industry needs to solve because it has already begun to take shape.  For instance, the General Dental Council published a statement highlighting the necessity for virtual consultations to be supplementary to, and not a replacement for, in-person asessments in light of the rising frequency of remote direct-to-consumer orthodontic firms. As long as patient safety problems persist, authorities will tighten their inspections and public trust will be eroded.

Patients desire a bigger role in their treatment and a more personalized experience, as we've previously highlighted. This trend is something we predict will continue. The Safety Review argued that to reduce the burden of preventable injury, there should be more patient involvement. This is made much simpler by wearables and other technological advancements, and in certain situations, it can even be done in real time. In the same vein, the pandemic has increased public comfort with self-testing and self-diagnosis. Innovative private-sector solutions may get significant government backing and public favor in some countries, especially if they can ease the strain on public health services and reduce wait times for appointments.

Greater risk of data breaches: Big data and advanced analytics will probably play a major role in future advances in this field. Large-scale data collection from additional devices raises the security surface area and increases the risk of security breaches. Internet-connected devices frequently have high-profile security issues, and malicious actors continue to find databases with vast amounts of health data to be an alluring target. In addition to the GDPR, the reputational damage caused by big breaches of patient data can be significantly more harmful to a firm than the one-time hit to its finance sheet, even though a hefty punishment can temporarily dominate the news cycle.

A business model gap between the USA and Europe: Personal data legislation in the UK and Europe is comparatively restrictive, which is a common problem for US firms looking to expand there. The difficulties healthcare organizations confront when navigating European privacy rules have been previously mentioned. However, two recent events should provide some solace to medtech companies traveling across the Atlantic: The UK's data reforms aim to create a more hospitable environment for the advancement of the life sciences. The authoritative French data protection agency has issued guidance confirming that service providers—as medtech companies would be categorized for some of their product offerings under the GDPR—may reuse customers' data for their purposes, such as product improvement.

For companies whose software uses AI and machine learning technologies, this will be very crucial.