EU competitiveness report pushes for greener and digitalised medical and IVD

The European Commission's report this September on the future of European competitiveness provides critical insights into the economic, regulatory, and technological challenges facing various industries, including the medical device and in vitro diagnostic (IVD) sectors.

The report, undertaken by Mario Draghi for the Commission, highlights how medtech companies must navigate a rapidly changing landscape where regulatory frameworks and market dynamics are in constant flux, as the wider pharmaceutical and biotech sector grapples with EU competitiveness.

Stricter controls and harmonisation

A central theme in the report is the increasing pressure on medical device companies to comply with stricter regulatory frameworks. In particular, the EU Medical Device Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR) continue to place heavy compliance burdens on companies, requiring more rigorous documentation, post-market surveillance, and clinical evaluations.

Despite the overall harmonisation introduced by the MDR and the IVDR, the European Commission report emphasises that fragmented regulations across member states have hindered the smooth implementation of these rules, resulting in delays in product approvals and market entry.

Medtech Europe, which represents the interests of the medical technology industry in Europe, has recently called for swift action from member states. The association underlined the need for comprehensive and cohesive reform of the two regulations, with the European Commission tasked to provide a proposal by the end of 2025 following its targeted evaluation.

CE-marking process and notified bodies

The Draghi report stresses the importance of the CE-marking process for medical devices, which is required for products to be marketed within the European Economic Area (EEA). The CE marking indicates that a product complies with the essential health, safety, and environmental requirements laid out in the MDR and IVDR.

Notified bodies, which are independently designated by EU member states, play a critical role in evaluating and certifying medical devices for CE marking. However, the Draghi report highlights concerns about the capacity of these notified bodies to handle the increasing volume of certification applications, especially with the introduction of more complex and high-risk devices. Medical device companies are encouraged to work closely with notified bodies early in the product development process to avoid delays and ensure compliance.

This issue has a long history, persisting through several legislative changes to the IVDR and MDR, including for the last time in July 2024. Recent Council conclusions have again noted the rising costs and extended timelines for conformity assessments. These challenges heighten the risk of supply disruptions and the withdrawal of essential medical devices and IVDs from the EU market. Additionally, this impacts the competitiveness and innovation capacity of the European medical device industry, particularly affecting small to medium-sized enterprises.

The Draghi report emphasises the need for more streamlined processes to ensure that innovation is not stifled by regulatory bottlenecks. Companies should invest in building strong relationships with notified bodies to facilitate smoother and faster approvals.

Interestingly, these recommendations come at a time when the EU has just introduced a new CE-marking obligation and additional notified bodies certification requirements under EU law for high-risk artificial intelligence (AI) systems in healthcare. AI's role in regulated products such as medical devices is significant for productivity, but the EU regulatory maze can be stringent for innovative businesses.

Sustainability in medical device manufacturing

In line with the EU's broader goals of achieving carbon neutrality and advancing the European Green Deal, the medtech and IVD sectors will be expected to reduce their environmental footprint. The Commission report highlights the potential for those companies to lead in sustainability by adopting greener manufacturing processes, reducing waste, and minimising energy consumption.

For example, companies can reduce the use of hazardous materials in medical devices and develop products that are easier to recycle at the end of their life cycles. In addition, the implementation of circular economy principles - such as reusing and refurbishing medical devices - can contribute to both sustainability goals and cost savings.

Unmissable growth opportunity via digitalisation

The integration of digital health technologies is another key opportunity outlined in the Commission's report. The use of AI, machine learning, and data analytics is transforming medical devices and diagnostics, making them more sophisticated, capable of real-time monitoring and highly personalised.

However, the report highlights that Europe is lagging behind other global players in developing and commercialising these digital innovations. The lack of investment in digital infrastructure and the slow pace of regulatory adaptation have created significant barriers for companies looking to scale these technologies throughout the EU.

Investing in AI-driven product development and collaborating with tech firms could be advantageous for medical device companies looking to enhance their digital capabilities. Additionally, regulatory teams should strive to stay updated on the evolving frameworks for AI and digital health technologies to help ensure that innovative products comply with all applicable EU regulations beyond the MDR and the IVDR when brought to market. Notably, in the devices and IVD industry, any business involved in medical technologies with a digital element should consider the EU AI Act and understand its scope.

Osborne Clarke comment

The Commission's report underscores the multifaceted challenges that the medical device and IVD sectors face, particularly in regulatory compliance, AI-driven digital innovation and sustainability. Companies must navigate the stringent requirements of the MDR and IVDR while also embracing AI and digital health technologies to remain competitive.

Early engagement with notified bodies and investment in digital infrastructure are crucial steps in this journey. Seeking strategic support can ensure that businesses remain agile and compliant in this evolving landscape. Furthermore, the push towards sustainability aligns with the EU's broader goals of carbon neutrality, urging companies to adopt greener manufacturing processes and circular economy principles. By focusing on these areas, medical device companies can not only meet regulatory expectations but also drive cost savings and market differentiation.