Guest Column | June 12, 2019

Latin America Offers Welcoming Entry Market Amid Tighter EU Regulations

By Julio G. Martinez-Clark, bioaccess

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The new European medical device regulations (EU MDR) will increase barriers for U.S. medical device companies attempting to commercialize their innovations in the European market. Many of these companies preferred to obtain market clearance in Europe first, due to its regulatory requirements being laxer than U.S. rules.

Now, such companies are reevaluating their sales strategies and opting to obtain market clearance in the U.S. first, due in part to FDA changes that make it easier for device companies to obtain clearance in the U.S., and this is causing a paradigm shift in companies' plans. However, there is a market closer than Europe that medtechs have mostly ignored to this point, but now is emerging as an integral part of their commercialization plans.

E.U. Changes Expected to Heavily Impact Medtech

The EU MDR — which replaces the MDD and the AIMDD — and the IVDR, which replaces the IVD Directive, will bring changes in three main areas: a) improved quality, safety and reliability, b) strengthened transparency of information for consumers, and c) enhanced vigilance and market surveillance:

  • Stricter controls on high-risk devices
  • Stricter controls on clinical trials and on the notified bodies that can authorize the marketing of medical devices
  • The new rules apply to cosmetic products that were not previously regulated
  • A new risk classification system
  • International guidelines will apply to in vitro diagnostic products
  • Patients will receive an implant card with all important information.
  • Each product must have a unique device identifier (UDI) that can be found in the new European Medical Device Database (EUDAMED).
  • Once devices are available on the market, manufacturers must collect performance data
  • E.U. countries will ensure closer coordination in market surveillance.1,2

These new barriers to entry into the E.U. market could reduce the number of certified devices by 30 percent, and at least double (6-12 months) their time for approval.3 For some device companies, the cost of remediation will exceed business opportunities, resulting in those companies abandoning certain product lines. Consequently, suppliers will leave the business and affect other manufacturers who have purchased from them. Some predictions estimate that 30 percent of all medical device manufacturers and 50 percent of all medical devices will die out.3

Further, almost half of the recently surveyed notified bodies (NBs) in the E.U. indicated that they do not intend to apply for designation under the IVDR.4 The new, stricter requirements will increase NB workload in both the device and IVD sectors. Indeed, if all IVDD NBs were to apply for IVDR status, each would have to assess an average of at least 1600 IVDs, which would represent a 780 percent — almost eight-fold — increase in the NB workload.4,5 Thus, it is unlikely that all manufacturers concerned will secure an NB audit and certification by the time the new regulation takes full effect (May 2020).5

Is Latin America the Answer?

By 2022, emerging markets are projected to make up nearly one-third of the global Medtech market, reports BCG. This, in contrast to the two percent share of revenues generated by emerging market companies among the top 200 global medtechs in 2015. Demand for healthcare is growing in emerging markets, and governments are increasing spending to combat chronic and critical diseases. Additionally, many such markets are bolstered by aging populations, as well as rising household incomes and discretionary spending.6

Latin America is the fastest ageing region in the world and leads the world's obesity epidemic. Healthcare expenditure is on the rise — with Chile, Peru, and Colombia at the forefront — and private insurance is expanding into the middle and working class at an annual rate of over 20 percent in some countries.7

In 2011, Peru, Chile, Colombia, and Mexico — with a combined population of over 200 million — signed a declaration to create the Pacific Alliance (PA) trade bloc; in 2012, those nations’ presidents signed a pact officially creating the bloc. The PA has great potential to significantly deepen economic and political integration in the region.8

Colombia, Chile, and Mexico are members of the Organization for Economic Cooperation and Development (OECD) — where the governments of 34 democracies with market economies collaborate to promote economic growth, prosperity, and sustainable development. Peru is on its way to membership and is enrolled in a special OECD program for its ascension. The U.S., Canada and other advanced economies are also OECD members.9

The PA's member countries have agreed on a model of economic and political integration aimed at attracting investment and creating export platforms for the global market. This collaboration has quickly become Latin America’s darling economic bloc in the eyes of global investors, and it has reached impressive levels of tariff elimination and standards harmonization, attracting 55 observer states in the process — including the U.S.10,11

It's likely that Mercosur — the trade bloc composed of Brazil, Argentina, Uruguay, and Paraguay — will merge with the PA. This convergence would easily become Latin America’s most ambitious trade integration project to date.

Starting with pharmaceutical drugs, the PA’s member countries are gradually homogenizing their regulatory requirements and are working towards a single regulatory environment. The goal is for the PA to have a unified and streamlined set of document requirements to make it easier for life science companies to obtain marketing approval in the individual member countries. Another ambitious goal could be to have mutual recognition of marketing approval certificates among the member countries.

Colombia’s INVIMA allows for automatic approval of lower risk devices (Class I, IIA) upon submission of the marketing application, and boasts a 90-day review time for higher risk devices. Contrary to most other countries in Latin America, Colombia allows foreign device manufacturers to hold title of the marketing approval certificate under the foreign entity’s name. This gives the foreign manufacturer total control over the 10-year validity of the registration (as opposed to allowing a local distributor to control it).

Mexico’s COFEPRIS allows foreign medical device manufacturers without home country approval (e.g. FDA, CE Mark) to obtain marketing clearance. Approval in Mexico takes anywhere between 60 to 365 days and offers different pathways for approval; thus, the time variance. These pathways are based on whether the foreign manufacturer has home country approval or not, and on whether the foreign manufacturer chooses to use an authorized third-party private reviewer or not.

Depending on the device risk classification, Peru’s DIGEMID takes anywhere between 30 to 90 days to review a device marketing application and has a reasonable set of requirements and a straight-forward approval process.

Chile has an open medical device regulation, and its regulatory agency — ISP-ANAMED — only demands marketing approval for some low-risk medical devices (i.e., gloves, condoms, needles, and syringes). All other devices are free to enter the country after quickly obtaining an import permit online. Except for the aforementioned devices, regulatory registration in Chile is voluntary, but suggested, in anticipation of a new regulation currently being debated by Chile’s legislature.

Conclusion

U.S. medical device companies are experiencing a paradigm shift in their commercialization strategies. The E.U., once seen as the easier major market to enter, is now becoming the most unpredictable and difficult advanced economy for a device company to enter.

Emerging and developing markets are the engines of growth today, and thus performing in these markets is critical for the majority of device companies. Under the PA, Latin America, once perceived as an opportunistic market for most device companies, now is shaping up to become a major market that companies must seriously consider in their 3-5-year strategic plans.

About the Author

Julio G. Martinez-Clark is CEO of bioaccess, a U.S.-based contract research, regulatory, and market access consulting company focused on Latin America. Julio is the host of the LATAM Medtech Leaders podcast and holds a bachelor’s degree in electrical engineering (B.S.E.E.), and a master’s degree in business administration (M.B.A.).

References

1. The EU MDR and IVDR have been approved. So, what’s next? (2017). Retrieved from https://www.nicelabel.com/blog/2017-04-07/eu-mdr-ivdr-approved/

2. New requirements for medical devices (2018). Retrieved from https://www.tuev-sued.de/product-testing/news/new-requirements-for-medical-devices_1

3. Europe braces for harder times in medical device innovation while US FDA eases regulations (2018). Retrieved from https://vascularnews.com/europe-braces-for-harder-times-in-medical-device-innovation-while-us-fda-eases-regulations/

4. Survey Highlights Looming Shortfall of IVDR-designated Notified Bodies (2019). Retrieved from https://www.raps.org/news-and-articles/news-articles/2019/1/survey-highlights-looming-shortfall-of-ivdr-design

5. New EU Medical Device Regulations are set to replace the current directive from 2020, here’s what you need to know. Retrieved from http://www.eurekamagazine.co.uk/design-engineering-features/technology/new-eu-medical-device-regulations-to-replace-current-directives-from-2020/213636/

6. Medtech May be Emerging Markets’ Next New Thing. Retrieved from https://www.bcg.com/en-us/publications/2017/globalization-medical-devices-technology-medtech-may-be-emerging-markets-next-new-thing.aspx

7. Key LatAm Healthcare Trends for 2019. Retrieved from http://globalhealthintelligence.com/ghi-analysis/webinar-key-latam-healthcare-trends-for-2019 

8. Regionalism: The Pacific Alliance (2013). Retrieved from https://www.americasquarterly.org/content/regionalism-pacific-alliance

9. OECD. Retrieved from https://www.oecd.org/about/history/.

10. SICE - the Foreign Trade Information System of the Organization of American States (OAS) - Pacific Alliance. Retrieved from http://www.sice.oas.org/TPD/Pacific_Alliance/Pacific_Alliance_e.asp

11. Latin America's Future Begins with the Pacific Alliance (2018). Retrieved from https://www.atlanticcouncil.org/blogs/new-atlanticist/latin-america-s-future-begins-with-the-pacific-alliance

12. Pacific Alliance Free Trade Agreement. Retrieved from https://dfat.gov.au/trade/agreements/negotiations/pacificalliancefta/Pages/pacific-alliance-free-trade-agreement.aspx

13. Pacific Alliance. Retrieved from https://alianzapacifico.net/alianza-del-pacifico-sigue-avanzando-en-temas-regulatorios/