Could the U.S.-China trade war stifle medical device innovation?

Makers of high-value medical devices such as MRI machines will likely swallow the cost of the U.S.-China trade war, but that means cutting R&D and other costs, according to a new report from Frost & Sullivan.
The report — “U.S.-China Tariff War Implications for the Healthcare Industry” — also predicts that when it comes to low-end consumable medical products, U.S. health providers, payers and even the people using the products will have to pay more. The report cites a previous American Hospital Association prediction that the tariffs will raise the costs of medical equipment and supplies by at least $160 million per year.
“Overall, the increasing tariffs on MedTech and supplies, along with duties on imported steel and aluminum, are expected to result in $600 million-$800 million of increased costs for the healthcare industry and for U.S. patients,” said Kamaljit Behera, transformational health senior industry analyst with Frost & Sullivan.
Under President Donald Trump, tariffs have become a go-to negotiating tactic with other countries — with perhaps no trade dispute appearing as deep or long-lasting as the confrontation between the world’s two largest economies. The U.S. medical device industry initially faced nearly $1 billion in tariffs after the Trump administration had Customs and Border Protection start collecting additional dues on goods imported from China in July 2018, trade group AdvaMed reported at the time. Medical device companies since then have had success getting some types of products including surgical, radiotherapy and dental devices exempted.
AdvaMed CEO Scott Whitaker said at the trade group’s MedTech Conference last month that he suspected the medical device space was in a better position than other industries — but he wasn’t optimistic the situation would continue, a sentiment repeated by others at the conference.
“As it continues, I think the fear is that everything gets swept up. Then, it will become a bigger problem for us, ” Whitaker said.
One of the reasons that the U.S. targeted medtech from China with tariffs is because the Chinese government has signaled a goal of making the country a leader in the space, according to Frost & Sullivan. The country’s  “Made in China 2025” plan seeks to turn China into an advanced manufacturing leader, including in the high-performance medical devices space.
Frost & Sullivan noted China is the fourth-largest importer of medical technologies into the United States, after Mexico, Ireland and Germany. But the U.S. also happens to be the largest supplier of medical technology into China. Even as the overall trade deficit between the two countries has widened, the U.S. has run a trade surplus with China when it comes to medical devices.
While the tariffs might spur some reshoring of medical device manufacturing back to the U.S., it’s more likely to cause “right-shoring” to other low-cost manufacturing destinations including Malaysia, Vietnam and Cost Rica, medical device contract manufacturing executives told sister site Medical Design & Outsourcing earlier this year.
Original Article: (https://www.massdevice.com/could-the-u-s-china-trade-war-stifle-medical-device-innovation/)