P3 Medical Ltd – Written evidence (LSI0029)

 

  1. P3 Medical Ltd. is a privately-owned medical device manufacturer and distributor based in Bristol. The company employs 70 people and has sales of £5 million. P3’s main market is the NHS but the company also exports to around 50 countries overseas. The business invests a significant amount of time and money developing new devices in collaboration with NHS professionals. The author of this paper has been employed in the medical device sector since 1992 and has significant experience in dealing with the NHS as a prime customer.

 

  1. Our submission is intended to highlight the conflict between the welcome interest shown in Life Sciences by the publication of the Life Sciences Industrial Strategy and the Accelerated Access Review, and the reality of the hostile, deteriorating, and discouraging environment faced by smaller companies in the sector which does not appear to have been considered or addressed.

 

  1. Questions 10-12 in the Call for Evidence refer to the NHS procurement landscape. We would suggest that this is currently hostile toward smaller companies and acts as a deterrent to investment and innovation. This is major factor acting against the development of science and innovation covered in Questions 1-4. While most organisations involved are working toward well-intentioned and worthy objectives, the lack of any counterbalance and strategic thinking produces unintended consequences which are damaging to business and therefore to UK plc. Some specific observations/suggestions are as follows:

 

    1. Other sectors have been successful in promoting and protecting SMEs by ring-fencing/allocating a proportion of public sector spending and by carefully managing public tenders. No such protection exists for suppliers in our sector. The published strategy is silent on this issue.

 

    1. Many companies such as ours re-invest a proportion of our income into R&D/product development in collaboration with NHS personnel and organisations. When successful, a proportion of revenues from these innovations is returned to the NHS as royalties. Procurement has no facility or mechanism whatsoever to recognise this so it becomes completely disregarded in sourcing decisions.

 

    1. The concentration on short-term piece price alone, regardless of economic benefit, is damaging and has become more acute since the Carter review. While the danger of protectionist measures are acknowledged and understood, some recognition of the economic impact of local manufacturing should be recognised. In short, the NHS structures currently encourage the export of jobs to China at the expense of its indigenous suppliers in pursuit of the lowest possible unit cost. (The same suppliers who, as mentioned above, have historically reinvested in supporting NHS developments). Some moderation and consideration of the true economic cost should be included in sourcing decisions. If the NHS continues on its current path, significant and lasting damage will be inflicted on smaller companies in the supplier base. The strategy calls for the expansion of UK Manufacturing. Current procurement thinking disregards the existing manufacturing base in pursuit of short term cost savings.

 

We do not seek to deny the immense pressure put on procurement staff to achieve cost reductions. We would simply urge that some consideration is given to the longer term damage which is being inflicted on current suppliers and the future viability of the sector.

 

    1. Collaboration between NHS trusts, universities, and companies is currently strong and is also improving. There is no shortage of ideas and some outstanding science. Schemes such as SBRI and I4I are powerful and should be applauded. The extension of the role of the AHSN’s in helping the gathering of evidence, and the Innovation Tariff introduced by NHS England, are very welcome initiatives and should be expanded. Even successful innovations fail to gain traction because of lack of evidence (and this reinforces the influence of poor procurement thinking mentioned above). Innovative products frequently fail to gain adoption in the same NHS trust from which they originate due to obstructive procurement processes which in turn limits the capacity to gain evidence.

 

    1. The diversity and duplication of procurement organisations is complex and inefficient. In general, the lowest price available to the NHS is a product of the amount of expenditure and the length of commitment applied to any product. It is not infrequent to have multiple intermediary organisations issuing tenders for the same commodity and the same target customers. This adds an administrative burden and is highly unlikely to produce a different result.

 

  1. Questions 6 and 7 in the Call for Evidence refers to support for SMEs.

 

    1. We would strongly argue that the nature and structure or our marketplace, with the NHS in all its diverse and conflicting forms, demands overarching consideration and management at government level to balance the forces of public sector spending constraint against business growth and development. The appointment of a “champion” similar to the roles previously deployed by Cabinet Office/ Crown Commercial Service would have a major impact. In the past, the NHS has been seen as a no-go area for these posts.

(see:https://www.gov.uk/government/news/leading-entrepreneur-emma-jones-appointed-as-new-small-business-crown-representative)

 

    1. As mentioned previously, initiatives to improve access to evidence are welcome and are particularly critical for SMEs. Improving access to NICE for smaller organisations would be beneficial.

 

    1. As mentioned above, some element of NHS spending should be ring-fenced or targeted toward SMEs.

 

    1. Exporting is acknowledged as being key to economic growth. The NHS should be a major strategic advantage to UK companies. It is, however, difficult for UK customers to gain adoption overseas when the NHS is resistant to adoption of new products and hostile towards its suppliers. A more collaborative and strategic relationship would be highly advantageous to facilitate growth.

 

  1. With regard to Brexit, the CE marking framework has provided a level playing field for UK companies to export across the EU. The cost of maintain regulatory compliance has been increasing substantially and is a major barrier for SMEs. Each additional regulatory regime, such as the FDA in the US, imposes additional burden and inhibits companies from growing exports. We strongly urge that the UK maintains mutual regulatory recognition with the EU whatever framework is adopted after leaving.

 

  1. Further on Brexit, Horizon 2020 has historically been a welcome source of funding for several collaborative projects. We would argue that the UK should remain in this programme or alternatively expand our local schemes to fill the gap which would otherwise be lost.

 

14 September 2017