The Health Industry in Germany and Europe

POSITION | HEALTH | HEALTH INDUSTRY STRATEGY

The Health Industry in Germany and Europe Why we need a strategy for the health industry in Germany and Europe

22 July 2020 The healthcare sector as a key industry For many years the healthcare sector has been a key industry for Germany as an industrial location.

Throughout the world the term „Made in Germany“ is rated as the hallmark of quality for diagnostics, medical devices, medicines, biotechnology and information and communications technology (ICT). The German health industry is internationally competitive and has for years been making a positive contribution to Germany’s balance of trade. Recent weeks and months have demonstrated how rapidly the issue of health can advance to the focal point of our political and economic activity.

Like no other industry the health industry is in a position to pave the way for Germany to emerge from the economic crisis and it has the potential to become a leading industry of the 21st century. This is a vital role which now above all as a decisive driver of growth and generator of jobs means the industry can have a stabilising effect and thus be a critical success factor for Germany as an industrial location.

Now is the time to create the proper framework for strengthening the innovative capacity of the health industry on a sustainable basis and for enabling it to fulfil this role to the maximum effect. What is primarily needed is an appreciation of value creation. Whereas in other branches of industry in Germany the value of progress is also discussed in terms of economic and social policy, this vital discussion is still in its infancy in the health sector. The attitude of regarding health as merely a „cost driver“ with regard to social welfare is outdated. On the contrary, these costs must be seen and valued as investments in our health and as added value for the whole of society. This is especially true when seen against the background of the keen international competition in world markets and considering the special features of a united Europe. This appreciation must be public, decisive and evident so that the health industry can continue to unfold its full innovative potential in German location in Europe. It is crucial to protect and to promote European innovative capacity and existing value creation chains, not least within the framework of the German presidency of the Council of the European Union 2020.

A stable economy and functioning healthcare provision also require an intact health industry.

As the umbrella organisation of German industry we seek to develop a cross-sector overall strategy for the health industry which will be available in the autumn of 2020. In this brief outline we focus on the areas of the European location, security of supply, research, innovation, investment, digitisation and data.

Michaela Hempel | Department Health Industry | T: +49 30 2028-1493 | m.hempel@bdi.eu | www.bdi.eu

The Health Industry in Germany and Europe

The health industry in figures

Gross value added 2019: 81.2 bn. euros Around one in five euros of gross value added in the health sector is generated in the health industry

53.8 bn euros of gross value added are additionally created by the demand for goods and services along the supply chain in Germany

4.1 % growth As against 3.3 % growth in the economy as a whole

Around 1 million persons employed 210,000 new jobs since 2010 For each person employed in the health industry, support is lent for another person to be employed in the value chain

55,000 persons employed in R&D The direct employment of two persons in R&D in the health industry safeguards around three jobs in the economy as a whole

14 % R&D intensity The coalition agreement targets a share of 3.5% for the German economy

Now running at 48.4 bn euros, the export volume of the health industry has risen by 1.7 times since 2010 Over 90 % of the exports of the health sector are accounted for by the health industry

Sources: ▪ The Federal Ministry for Economic Affairs and Energy (BMWi) (2020): Health Sector – facts and figures. Health sector accounts, issued 2019.

▪ Own calculations by the WifOR Institute, as of June 2020.

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The Health Industry in Germany and Europe

Location Europe Boosting the resilience of European health systems in cases of pandemics requires a general debate on the expansion of the health industry’s value chains in the locations of Germany and Europe. In this debate the focus should be on the longterm strengthening of Europe’s competitiveness as a location for the health industry with regard to already existing production and to further set-ups for the manufacture of innovative products. All measures designed to promote research into the development and manufacture of products for medical needs must lead to structures for production, development and services that can hold their own in the long term in international competition. To this end, working in close coordination with industry, there should be a highlighting of competition factors that must be promoted and expanded, such as fostering innovation, dismantling bureaucracy, training specialists and in particular the sustained digitisation of the health sector. Strengthening Europe as a location should also be ensured by a pro-active foreign health policy designed to secure access to the most important export and investment markets and equip it with an innovation-friendly framework.

Security of Supply

Promoting German and European production guarantees high product quality superior to the usual standards. The same is true of financial renumeration together with occupational safety and the protection of the environment. In order to improve security of supply by means of manufacturing in Germany or Europe, there is also a need for the modification of existing tendering regulations for discount agreements as well as the longterm promotion of the necessary investments, such as is carried out in Ireland through the Irish Development Agency. At present, „bringing back“ the production of active agents is only possible to a limited extent and above all is not expedient. For research-intensive products it is important that they not only be developed in Germany but also are produced here by establishing future production chains so that they are consequently applied more rapidly. The successful application in Germany as a reference market is essential for achieving successful exports. A country like Germany that is not rich in raw materials can only maintain its strong position if, as the „country of ideas“, it continues to create the necessary environment to be able to develop the products of tomorrow.

Research

The spectrum of research disciplines in the healthcare sector (such as medical technology, pharmaceutics, biology, biotechnology, information technology etc.) can be rivalled by hardly any other sector and interdisciplinary cooperation is becoming ever more important. This also requires new forms of interdisciplinary cooperation. Matching between various research disciplines from private and public areas should therefore be promoted. There must be intensive cooperation between science and industry. Such joint projects between science and industry should be selectively promoted and further developed, in particular by means of application-oriented and non-bureaucratic invitations to tender. In order to

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The Health Industry in Germany and Europe

ensure that universities and non-university research institutes do not only focus on established business enterprises, new funding instruments and structures should be created to enhance the transfer of technology and the entrepreneurial spirit both into and out of the sphere of science. The goal should be location-bound value creation.

Innovation

In Germany innovations often find no quick route into the standard patient care offered under the statutory health insurance schemes because they are obstructed by controlling instruments on account of cost. Considerations of economic viability in the overall social context are ignored. Generating evidence is increasingly becoming a primary task in the development and marketing process for medical products and medicines. If the innovative capacity and competitiveness of the German and European health industry are to be at the centre of the political endeavours of Germany and the EU, then effective patent protection will be a further decisive factor. Maintaining the robust and reliable protection of intellectual property rights is essential for promoting research and development in Europe and for remaining globally competitive. Only in this way can innovative therapies continue to reach the patients. In addition, Germany must seek a pragmatic and innovation-friendly implementation of the EU Regulation on Medical Devices (MDR) and the EU In Vitro Diagnostic Medical Devices Regulation (IVDR) and also canvass support for these efforts at the European level.

The issues still unresolved now that the date of validity for the MDR has been deferred must be settled in the near term and the system of notified bodies must become operative. In the case of diagnostics, the IVDR poses the threat of gaps appearing in healthcare provision, an issue which the politicians must tackle at an early stage.

Investment

As a research location Germany features many strengths which are of great importance for the health industry. Nonetheless, investment is needed in order to keep pace with international competition. Public sector spending relevant to innovation is declining at important points. The financial strength of German hospitals must be bolstered: investment by the regional states and the refinancing of services are too low. The current economic stimulus package is only a first step. Cross-sector care must also be consistently depicted with regard to organisation and remuneration. All this improves patient care and at the same time boosts demand for health industry goods in Germany. Not least because of strict regulatory requirements, research and development in the health industry area are cost-intensive. In contrast to Anglo-American countries, in Europe the financial eco-system of innovation financing is largely lacking, since the availability of funding of development and growth through equity capital is highly restricted. Access to venture and opportunity capital must be enhanced.

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The Health Industry in Germany and Europe

Digitisation

Health information technology permits digital, sustainable and cross-sector care. The added value clearly emerges from the success of digital applications in controlling and combatting the pandemic. A successful digital transformation requires above all investment in a digital health infrastructure along with the networking of further participants with the telematics infrastructure. The following aspects have proved crucial for the responsible handling of the digital transformation. These deserve special attention and clarity must be jointly established for them within the framework of the development of a health industry strategy. They are data protection, (use of personal anonymised and pseudonymised data), cyber security (trust in applications), benefit assessment (access to new solutions for health care), standardisation (participation of medical users in standardisation work) harmonisation (cooperation capability and marketability), changes in occupational profile (further training and interdisciplinary approaches), and ethics (data sovereignty). Digital transformation requires trust in conjunction with a widely shared objective. The politicians should continue to push ahead with communications aimed at members of the public, doctors and other health care professions and with the dialogue on necessary and productive developments as a strategic task. In this connection what would be feasible is a joint campaign with Germany’s Federal Centre for Health Education (Bundeszentrale für gesundheitliche Aufklärung, BZgA). Efforts to press ahead with digitisation in the health sector should also be made at the multilateral level such as the G20, the WHO and WTO.

Data

Without the participation of all European member states and their central protagonists it will not be possible to exploit the full potential of the common data room, such as the use of data for research, development and applications for important innovations (example: Covid-19 vaccine). This would mean squandering Europe’s advantages as a location. In order to guarantee the best possible health care, all EU member states must be connected to the common European data room. Furthermore, the data must be mergeable and analysable (semantically interoperable). For this we need the application of existing international standards, a common European approach in data collection and storage and not, as at present, many different federal and regional regulations which prevent data from being collated. Data protection must no longer simply be understood as merely restriction of access and thus as a brake on innovations and medical care.

Instead, it requires politically enabled beacon projects, such as compiling data registers (tumour register, spinal column register etc.). At present central problems are fragmented national data protection regulations, the lack of acceptance in the political sphere and the general public for data sharing, patchy data infrastructure, an unclear legal basis for the sharing of data by patients for the purpose of industrial R&D and a lack of legal security with regard to anonymisation/pseudonymisation. It would be conceivable to make use of the General Data Protection Regulation (GDPR) by means of a Code of Conduct (CoC). Here a crucial requirement would be a speedy

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The Health Industry in Germany and Europe

political agreement by the EU member states that the CoC is the best way to regulate the handling of data.

Imprint Federation of German Industries e.V. (BDI) Breite StraĂ&#x;e 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Contact Michaela Hempel Senior Manager Health Industry +49 30 2028-1493 m.hempel@bdi.eu

BDI Document number: D 1219

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