For Immediate Release
Chicago, IL – September 4, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Medtronic plc (MDT - Free Report) , Abbott Laboratories (ABT - Free Report) , Myriad Genetics, Inc. (MYGN - Free Report) , Zimmer Biomet Holdings, Inc. (ZBH - Free Report) and General Electric Company (GE - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
3 Coronavirus-Led Threats to MedTech that May Linger
The just-concluded second-quarter reporting cycle has provided us with a lot of clarity about the load of the pandemic so far on the Medtech space while giving an idea about the potential losses. On the one hand, even amid the worldwide manufacturing halt and disruption in supply chain, the MedTech space seems to have been more resilient compared to many others, thanks to the emergency medical procedures that have been unavoidable even amid the crisis. Also, this sector’s several new COVID-19-related healthcare support products have by far performed well.
On the other hand, market watchers have been flustered by the depressed and delayed research and development scenario, which might deal a lasting blow to the industry’s health. Also, MedTech devices’ mass recalls and growing number of cyber-attacks have compounded woes.
Let us delve deeper to get an insight into the not-so-talked-about threats to MedTech.
Mass De-Prioritization of Elective R&Ds
This refers to the postponement of innovation related to non-COVID elective medical procedures. In the second quarter of 2020 alone, there was a 60–80% decline in elective procedures in Europe and the United States, with an additional 40–50% decline projected for the third quarter (data by McKinsey).
Needless to say, this mass deferral of procedures has impacted the regulatory environment in a severe way. In EU, the European Commission recently proposed a one-year delay in the Medical Device Regulation (MDR), taking into account the unprecedented challenges as a result of the pandemic, and put more emphasis on coronavirus-related healthcare research.
In the United States, the impact of the pandemic was clearly visible on clinical trials, which were postponed due to lockdowns, reduction in hospital visits, study visits to research institute and mass implementation of social distancing protocols. These have significantly impacted the budget and flow of clinical research and hampered patient data set.
In July 2020, the FDA came up with a new set of guidelines related to the conduct of clinical trials of medical products during the ongoing public health emergency where it mentions the delay in assessment of the ongoing clinical trials. This de-prioritization mainly applies to cardiac, orthopedic and oncology devices. Companies like Medtronic and Abbott have taken quite a lot of initiatives to advance their COVID-19 led respiratory devices, and ventilator-related R&D while putting their non-COVID clinical developments on hold. Oncology product maker, Myriad Genetics and musculoskeletal leader, Zimmer Biomet with their specialized non-COVID niche businesses are among the biggest victims of the scenario.
Alarming Rate of Product Recalls
Going by the 2020 Stericycle Recall Index, MedTech recall activity reached a two-year high level, surpassing 300 recall events for the first time since the second quarter of 2018. Alone in the second quarter, Medical device recalls increased 31.2% to 341 events. If this trend continues, the MedTech industry is projected to experience about 1,200 recalls by year end.
This data, excluding state-level unofficial recalls of face masks and PPE, indicates a 35% increase in recalls from 2019. Medtronic alone reported four recalls within businesses like neuro and diabetes care. GE Healthcare too registered two major recalls in this period.
In this regard, according to a Stericycle report, related to Allergan’s BIOCELL breast implants and/or tissue expanders recall, it has turned out that while robust efforts were made to reach patients, device tracking data was incomplete, leaving a section of patients unaware that they may have been impacted by the recall.
Rising Instances of Cyber Attacks
The pandemic has significantly boosted demand for telemedicine, remote patient monitoring and robotic surgery options, thus leading to a paradigm shift in MedTech. However, this growing cyber dependency has also made the space vulnerable to cyber-attacks. Interpole’s recent report claims that cybercriminals are particularly targeting hospitals, medical centers and public institutions for ransomware attacks as these institutions are already entangled in a healthcare crisis and cannot afford to be locked out of their systems.
What’s concerning is that only a handful of MedTech players have come up with an adequate cyber security response. Australia’s Therapeutic Goods Administration (TGA) report, published in July 2020 (per Stericycle), noted that there were as many as 627 software-related recalls of medical devices in the first half of 2020, affecting nearly 1.5 million units. Given the extremely complex regulatory and functional procedures associated with the implementation of any powerful new software, there is good reason to believe that the systems may remain exposed to such threats.
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