Device firms fear effect of EU overhaul

According to a report in the Financial Times (FT), US medical device businesses that have relocated to Europe in search of a more favourable regulatory climate and quicker access to finance and markets, fear an overhaul of EU rules will slow down approvals.

Following the Poly Implant Prosthese (PIP) scandal, regulations to more tightly monitor medical device manufacturers have been approved by the European Parliament. It is expected that legislation will be finalised after negotiation with member states after the European elections in May.

The newspaper reports that unlike the US, where approvals are handled by the Food and Drug Administration, medical devices in the EU are assessed for safety by private companies (notified bodies) which are certified by member states and paid by manufacturers.

Regina Hodits, Wellington Partners, which led a syndicate of European investors in Middle Peak Medical – a developer of a device to treat heart valve disease which set up operations in Munich in 2013 – told the FT that in Europe a new medical device could be approved if it was the same standard as a current device. However, in the US, new devices have to be proved to be better than current products.

“For very established treatments like heart valve treatment, that is very difficult. The US has cut itself off from certain paths of innovation with this policy.

“For that reason, it is difficult for medical device start-ups to finance through to market. It has become less interesting for US VCs to finance early start-ups,” she told the newspaper, adding that there was strong interest from US companies in tapping funds across the Atlantic.

The newspaper also spoke to Peter Crosby, chief executive of Mainstay Medical. The company relocated to Dublin from Minnesota. Crosby said the financial crisis had also been a factor in pushing US companies to Europe. However, he believes that if regulation does change he envisages an exodus of medical companies from Europe. This would make countries such as China a more appealing option.