Diving Brief:
- AdvaMed Iis called on the Biden administration to send semiconductor makers “a clear and unambiguous message” that they need to prioritize the healthcare sector.
- With chip shortages affecting all industries, medical device companies are competing with major consumer electronics companies, automakers and other companies for limited inventory. AdvaMed wants the US government to step in to help medical technology, given the impact of industry devices.
- Specifically, the organization said it is pushing for prioritization of medical technologies, “full transparency for future allocations” to industry, and actions to ensure continuity of patient care in the United States.
Overview of the dive:
AdvaMed last year started asking that the White House is pushing semiconductor manufacturers and distributors to put medical device companies at the top of the list. Since then, evidence of the impact of the supply disruption on medical technologies has accumulated, with a call for comments by the government revealing that delays that were once measured in weeks are now counted in months. Some stocks were completely sold out as delivery times increased. AdvaMed said it saw a need for changes.
“In this challenging environment, we simply cannot compete with larger players for access to chips, especially given that we only represent 1% of the total market – and that is precisely because we only represent than 1% of the total market which we believe prioritizing the medical technology industry can be done with minimal disruption to the rest of the economy,” AdvaMed CEO Scott Whitaker said in a statement. communicated.
The request for support focuses on “two concrete steps”, the group said. First, AdvaMed wants the government to “use every tool at its disposal to ensure continuity of patient care in this country.” Second, the trade organization calls on the White House “to send a clear and unambiguous message to chipmakers and distributors that our healthcare system must come first and provide full transparency for future allocations to our industry.” .
AdvaMed has made similar requests in the past without triggering the desired changes. This time, the trade group met with Commerce Secretary Gina Raimondo and brought together executives from Hologic, BD, ResMed, Royal Philips, GE Healthcare, Boston Scientific, Stryker and Varian to advocate for change.
The companies, and others not present at the meeting, recently explained the impact of supply disruptions on operations during quarterly earnings conference calls.
Early 2022, Hological said the chip shortage would lengthen mammography delivery times, leading the company to adjust its full-year revenue forecast to reflect $200 million in deferred sales. Since then, Hologic said it secured a higher-than-expected chip allocation, but still expects another $50 million headwind due to supply chain volatility.
Hological CFO Karleen Oberton told investors that the additional $50 million was more timing-related.
“WWe’re delighted that we got a higher chip allocation than we thought, than we originally planned, but the timing is such that it won’t arrive until 2023,” Oberton said.
At ResMed, the chip shortage is affecting its bid to provide sleep apnea devices to patients affected by the Philips recall.
Due to supply chain challenges, ResMed is considering sourcing new parts from various vendors. However, changing components requires re-engineering and validation steps that slow down the process.
“Our issue around quality and patient safety is so important. So we can’t really take undue risks,” said Rob Douglas, President and COO of ResMed, tell investors. “We can’t just launch a new component and say, ‘Let’s see if it works.’ We really need to do all the life testing and verification that is necessary. That’s why it doesn’t happen overnight, but the teams are working on it.
Baxter is also rethinking some of its boards and the establishment of suppliers of secondary raw materials. The work will take time, and while the company has said it expects the disruption to last all year, Baxter aims to improve its long-term resilience.
