medical technologies in the west midlands skills and the prospects for growing new medical...

Medical Technologies in the West Midlands

Skills and the prospects for growing new medical technology businesses in the region

Medical Technologies in the West Midlands

A study carried out by:

Institute for Employment Research, University of Warwick

Warwick Manufacturing Group, University of Warwick

Medilink West Midlands

Funded by:

the European Social Fund & the Learning and Skills Council: Coventry and Warwickshire

Aims and Objectives

To identify:• Characteristics of companies that have diversified into

medical technologies• The skills needs that arise out of diversification

• Characteristics of potential diversifiers• The skill needs that potential diversifiers will need to

succeed

Sources of Evidence

• A review of the literature (international/national/regional)

• A questionnaire survey of companies that have diversified or have the potential to diversify

• A survey of Medilink West Midlands members

• A series of company case studies to identify further skill needs related to diversification

Why Diversify?

The West Midlands economy is facing a number of challenges

Highly uncertain future of the manufacturing base that has served the economy well in the past

Need to identify new high value, high skill, high wage employment for the future

► Medical technologies fits the bill

How to identify diversifiers

The Kompass database identifies a variety of outputs produced by businesses

If medical technologies mentioned along with outputs

= a diversifier

Where companies otherwise have the same characteristics as diversifiers but do not produce medical technologies

= potential diversifier

Schematic representation of the medical technologies cluster

Producers of Medical Technologies (services

and manufacture)

Supply of professional services (e.g.

accountancy, marketing)

Final consumer

Supply of scientificservices (e.g.

laboratory testing)

Other services (e.g. training, design)

Suppliers of intermediate

products

Distributors

Findings from the study

Findings from the study are presented in four sections:

• The state of medical technologies in the West Midlands

• Employment in medical technologies and skill needs

• The diversification process

• The potential to diversify

The State of Medical Technologies in the West Midlands I

There are many areas of the world where the medical technologies industry is well established (e.g. Baden-

Württemberg , Massachusetts)

Many areas where it is in an embryonic form with considerable potential (e.g. Medicon Valley in Denmark-Sweden)

In the former there are a mix of large dominant players (e.g. Siemens) but many small firms

In the latter it is principally smaller firms

The State of Medical Technologies in the West Midlands II

How does the West Midlands compare?

No major, dominant players

No evidence of a world-class niche developing

Tends to do a little bit of everything…

…but has a strong engineering basis

Evidence that many firms have dabbled in the production of medical technologies

The State of Medical Technologies in the West Midlands III

The global message:

• A long way to go with considerable potential to go far• But a better sense of direction may be required at a

strategic level in the region• If the region is to catch up with areas of the world with

world class producers, it needs to act quickly

The State of Medical Technologies in the West Midlands IV

Business conditions buoyant:

Diversifiers tending to better than non-diversifiers

Strong sense that the medical market will remain strong over the next five years

Diversifiers are looking to move into higher value added markets in the future (57 per cent)

Message: diversification pays

Employment and skill needs in Medical Technologies I

Employment tends to be concentrated in smaller workplaces

42 per with fewer than 10 employees

82 per cent with fewer than 50 employees

On average, the medical side of the business was modest:

Accounting for 16 per cent of turnover…

… and 32 per cent of employment

Employment and skill needs in Medical Technologies II

- Just under half of companies that had diversified into medical technologies designed their own products

- 6 per cent produced goods under licence

- 82 per cent with fewer than 50 employees

- 17 reported that medical technologies were their main output

- 35 per cent reported that general engineering was their main output

Employment and skill needs in Medical Technologies III

17

22

15

15

4

8

16

40

4

7

17

5

4

28

0 10 20 30 40 50

Electromedical equip.

Lab. Equip

Rescue and emergency equip

Diagnostics

Drugs

P hysiotherapy/ortho. Equip

ICT

Commodities/consumer goods

Facilities management

Fabrics

Medical furniture

Building technogies

Services and publishing

None of these

% respondents

Types of medical activity in which

workplaces engaged

Base: All workplaces engaged in medical technologiesSource: LSC/ESF Medical Technologies Skills Survey 2005 (IER/IFF)

Employment and skill needs in Medical Technologies IV

Principal customers for medical products:44 per cent NHS

But where the main output was medical:76 per cent said NHS was main customer; and

More likely to be dealing with private medical practices and directly with patients

Employment and skill needs in Medical Technologies V

Main markets are national ones:

17

35

15

3

3

18

6

0 5 10 15 20 25 30 35 40

Medical

General Engineering

Chemicals

Other manufacturing

Construction

Distribution

Services

Mai

n in

dust

ry

% respondents


Main activity of workplaces

producing medical goods/services

Employment and skill needs in Medical Technologies VI

Skill needs:

- 13 per cent of employers experienced recruitment problems over last two years

- Where medical products were the main output recruitment problems more common – 32 per cent of

employers

-The main reasons are skill related

- Not just technical skills, but softer skills too

Employment and skill needs in Medical Technologies VIIRecruitment problems and skill shortages can have dramatic

consequences:

Impact of recruitment difficulties


8

4

5

6

5

3

0 1 2 3 4 5 6 7 8 9

Any of the above

Delays meeting orders

Failure to develop new markets

Loss of sales for medical side of business

Problems meeting ciustomer carestandards

Subcontracting to other companies

% respondents

The Process of Diversification I

• At the point companies diversify this requires investment in skills:

– hiring more R&D people– investing more people with medical related skills

– hiring people with regulatory knowledge

The Process of Diversification II

• Why diversify?

- Existing markets in decline (24 per cent of diversifiers)

- Developed customer base with a demand for these types of product (51 per cent)

- Approached by customers (61 per cent)

- Medical market a source of growth (44 per cent)

The Process of Diversification III

Does the availability of skills limit diversification?

2

40

18

9

29

18

84

26

62

0 10 20 30 40 50 60 70 80 90

Availability of capitalfor new processes

Availability of capitalfor new products

Availability of skills

% respondents

Not a problem

A problem

A great problem

Base: All workplaces diversifying into medical technologiesSource: LSC/ESF Medical Technologies Skills Survey 2005 (IER/IFF)

Problems encountered upon diversification

The Process of Diversification IV

• The future of the medical market

– Most companies confident market will be strong over next five years (64 per cent)

– Medical outputs will increase a percentage of total output for most companies (61 per cent)

– NHS procurement is a disincentive for a substantial minority of those who have diversified (31 per cent)

– A shortage of skills will limit development for a quarter of diversifiers (26 per cent)

The Process of Diversification V

Future critical skill needs

Critical skill needs in relation to medical applications and markets


26

31

28

35

20

0 5 10 15 20 25 30 35 40

Knowledge of theNHS

Knowledge ofmedical issues

R&D skills

Design skills

Biotechnologyknowledge

% respondents

The Process of Diversification VI

• Actions taken to acquire critical skills:– Training (43 per cent)

– Recruitment (25 per cent)– Nothing (34 per cent)

• Training most commonly provided by private training providers (40 per cent)

• Main message: skill availability is limiting the development of the cluster, but this is not the only barrier

The potential to diversify I

Potential diversifiers had the following characteristics:

- Around 2,500 employers have the potential to diversify

- 10 per cent of the sample said they had considered diversifying into medical technologies

- 77 per cent had never considered doing so

The potential to diversify II

- Around a fifth of the sample of employers thought their products had a potential medical application but had not

pursued it

- 14 per cent said NHS procurement was a barrier

- Most not looking to diversify because existing markets were strong

- Tended to be cautious about diversification

The potential to diversify III

- Those with the potential to diversify have tended to experience recruitment problems over the past two years

(around a third)

- This suggests that diversification into medical technologies may further exacerbate recruitment problems and skill

shortages

- These recruitment problems were impeding the current business

Conclusions I

There is considerable scope for employers in the region to enter the medical technologies market

Skill is a limit on the diversification process…

…but only at the point of diversification

The main barrier is the decision to diversify into medical technologies in the first instance

Conclusions II

Diversification relies upon a level of creativity in the business at a senior level

But once the decision to diversify is made, then skill problems will arise…

…and these will limit business development

Encouragement to diversify needs to be simultaneous with skills development

Conclusions III

At a strategic, regional level there is a need to broadly identify where the region has potential

This is not about picking winners…

…but about identifying where scarce resources can be optimally expended

At the moment the cluster is inchoate and possibly lacks a clear identity given the various activities in which current

medical producers are engaged

medical technologies in the west midlands skills and the prospects for growing new medical...

Documents