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The road to recovery for medical device supply chains starts with technology

November 08, 2021
Business Affairs
Dhaval Shah
By Dhaval Shah and Manan Shah

Like many industries reliant on the dissemination of physical goods, the medical devices market experienced significant issues in 2020 due to COVID-19-related disruptions. This growing field, which witnessed a 4.4% CAGR since 2015 and reached $457 billion in 2019, was plagued with a variety of supply chain issues: High prices, stringent barriers to entry, limited competition, increased lead times for distribution, and complex country-specific tariffs were just the beginning. Sourcing of parts became difficult due to shortages, and medical device organizations faced the difficult task of optimizing their available parts inventories while ensuring their provider facilities and hospitals had the stock they needed to serve patients. Because medical device supply chains are highly regulated, there were also challenges in staying compliant with the myriad of related requirements (one example is the CARES Act Section 506J, which requires organizations to notify the FDA of an interruption or permanent discontinuance in manufacturing). Perhaps most importantly, the need to adhere to strict quality standards for medical device parts is a top priority for all device organizations as it impacts the subsequent safety of patients – preventing them from rapidly engaging new parts suppliers due to both lengthy quality-assurance and compliance processes.

Further, accurately forecasting demand for medical devices was difficult because of the dynamic nature of the pandemic. While the demand for medical devices had significant impact on the overall supply chain, some trends emerged regarding the effects of the pandemic based on product types:

Impact across devices
Positive Impact:
○ Ventilators, dialyzers, air purifiers, PPE, testing equipment, catheters, hematology products, needles and syringes, vital sign monitors, infusion pumps and anesthesia devices
Neutral Impact:
○ CT machines, ECMO machines, mobile X-ray equipment and ultrasound equipment
Negative Impact:
○ Orthopedic implants, devices for ophthalmology, aesthetic, MRI, surgical devices (both minimally invasive and robotic) and mammography equipment

Leveraging technology to optimize supply chain operations for medical devices
Manan Shah
An important lesson that came out of these obstacles related to COVID-19 is that hurdles in the medical device supply chain can be addressed through the adoption of digital technologies. Device organizations must utilize and synchronize two supply chains: the physical supply chain, consisting of tangible products, and the digital supply chain, which contains clinical, operational and financial information generated across various subsystems of the supply chain. The clinically linked, digitally optimized device supply chain plays a key role in achieving lower costs and improving healthcare outcomes.

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