ABHI warns of fleeing medical device firms

10th May 2007

Struggling to win contracts in the UK healthcare market, small to medium-sized businesses (SMEs) are leaving the country in droves taking innovative ideas with them, an industry body has warned.

The Association of British Healthcare Industries (ABHI) seized on a new survey to voice concerns over the continued appetite or ability of medical device manufacturers to invest in the UK market.

The ABHI/Ernst & Young SME Business trends survey found a UK sales growth of only 2.2% compared to export growth of 10% from 2005 to 2006. This resulted in a fall in UK revenues as a percentage of total revenues from 66.9% to 65.2%.

“While applauding the success of companies in developing export business, the absence of a strong and demanding domestic market will inevitably drive businesses overseas in terms of both development and manufacturing jobs,” said John Wilkinson, the ABHI's Director General.

“Rather than being a springboard for growth, the UK market is seen as a drag on company development which puts UK SMEs at a significant competitive disadvantage compared with overseas peers.

“We hope that the recent outputs of the Healthcare Industries Task Force (HITF) will be actioned and lead to joined-up policy in order to ensure that the potential of this dynamic sector is realised for the benefit of both patients and the broader economy.”

Amongst the findings of the HITF report was a recommendation for a stocktake of the existing support mechanisms and access to private finance for SMEs. Measures to address any issues arising out of the stocktake will then be reviewed.

“Whilst it is positive that UK SMEs are achieving increasing success abroad, it is somewhat concerning that their domestic sales are, in real terms at least, growing marginally at best,” said Ernst & Young Director Ian Padmore.

“If the UK is not seen as an attractive market for SMEs will they continue to invest here? And if not, how will the future waves of innovation and ideas be funded?”

Last year a report for the Treasury by Sir David Cooksey also found that the NHS has to become an effective purchaser of new technologies, offering contracts for products still in development and not just focusing on the equipment and supplies that are already available in the market.