SEE-Impact-Study of the German MedTech industry

The managing director of the WifOR Institute, Prof. Dr. Dennis Ostwald, presented the sustainability study "SEE Impact Study of the German Medtech Industry – An Analysis of Social, Ecological, and Economic Factors," which was commissioned by the new BVMed Institute, at the association’s annual press conference on October 13, 2022. "With this world-first study on the social, economic, and ecological footprint of an industry, we are laying the foundations for a comprehensive sustainability measurement of our supply chain based on key indicators and in an industry comparison," said BVMed CEO Dr. Meinrad Lugan. "The study is a good first assessment of the situation, making it clear that the external effects in the environmental and social areas primarily occur in the indirect supply chain."

Download the full study in English or German language.
LinkedIn Post by Professor Ostwald

It is a true pioneering work together with the renowned WifOR Institute, which has been conducting the Health Economic Accounts (GGR) on behalf of the German Federal Ministry of Economics for more than ten years, explains BVMed CEO and board member Dr. Marc-Pierre Möll. "WifOR and BVMed Institute are setting a new scientific standard with this study. We want to be pacemakers on the way to a more sustainable healthcare industry."

The SEE study examines the entire value and supply chain of the medical technology industry and shows not only the economic but also the ecological and social footprint of the production side. This is the first time that a location assessment of an industry for the social and ecological factors has been created, which identifies and quantifies the challenges. With this, BVMed creates an orientation framework for the industry and its member companies for the development of a sustainability strategy.

About the methodology of the study

The methodology of the SEE Impact Study is based on extensive preliminary work. Among other things, the methodology is based on the goods-related delimitation of the medtech industry according to the Health Economic Accounts of the Federal Ministry of Economics and Climate Protection (BMWK). However, it is also consistent with work done for the WHO and the G20 and enables a coherent industry comparison for the year 2020.

In addition, the study commits to the dual materiality approach, i.e., capturing the social and environmental impacts of doing business in the global supply chain. This methodology is also set as a standard by the Value Balancing Alliance and we empirically capture it here for the first time for an industry.

About the data basis

Such a project requires a comprehensive and solid data basis covering almost all countries in the world, which are recorded in a standardized manner. For this purpose, the study is based primarily on publicly available official statistics of the national accounts for five economic indicators and the publicly available environmental economic accounts for four ecological indicators. The three indicators of the social dimensions are based on publicly available statistics from various organizations. Data is transparently linked at the state level, which does not allow any conclusions to be drawn about individual companies.

Among the core results of the SEE Impact Study:

Economic factors

Five indicators for the economic footprint of the German medtech sector for the years 2012 to 2021 were calculated by WifOR. The most essential indicators for the economic dimension are gross value added, employed persons, export and import activity, and research and development of the industry. The definition of the sector is based on the definition of the National Conference on the Healthcare Sector from 2005 and is therefore clearly distinguishable from other sectors.

  • Healthcare spending in Germany amounts to around 1 billion euros per day. The healthcare industry in Germany generates more than 1 billion euros in gross value added per day.
  • Every euro of gross value added in the medtech sector is associated with more than 1 euro of gross value added in the economy as a whole. We are also able to look in more detail at other subsectors of the healthcare industry, such as the industrial healthcare industry. For example, more than 1 million people are employed in the industrial healthcare industry, and we can also use the study to gain insight into whether and to what extent the pandemic has affected the industry's economic indicators.
  • It can be observed that growth and employment in the medtech industry have taken different paths. While the number of people in employment fell by 0.3 percent in 2021, partly due to the shortage of skilled workers, value added increased by 5.4 percent.
  • The research and development activities of the medtech sector, with a gross value added of around 1.0 billion euros and 10 thousand employees in 2021, create growth and employment. In addition, it also generates important added value for keeping the population healthy by means of innovative medical devices and solutions.

Ecological factors

The economic activity of the German medtech sector is associated with ecological impacts. In this study, the ecological footprint is quantified using the indicators of greenhouse gases, air pollution, waste, and water consumption. These indicators were calculated for the year 2020 for the location of Germany, the supply chains in Germany, and global supply chains (so-called upstream).

  • Overall, the economic activity of the German medtech sector was associated with the emission of 8.9 million tons of greenhouse gases. More than 60 percent of all greenhouse gas emissions in the medtech sector (5.5 million metric tons) are generated indirectly in the global medtech supply chain. Of these 5.5 million tons, China emits by far the most greenhouse gases (1.2 million tons).
  • The economic activity of the medtech industry is globally triggered with air pollution by so-called particulate matter in the amount of 2,953 tons, almost 90 percent of the air pollution is emitted in the global supply chain here as well. In a sector comparison, the economic activity of the medtech sector is less strongly associated with the causation of particulate matter than in other sectors such as automotive or mechanical engineering (93 vs. 132 PM2.5 in kg per million euros of output).
  • The economic activity of the medtech sector in Germany generates a total of about 1.8 million tons of waste; more than 80 percent in the global supply chain. In an industry comparison, the medtech sector has a low "gate to gate" waste generation of 56 tons per 1 million euros of output in 2020.
  • The key figure of water consumption in particular shows the connectivity to the SDGs. The economic activities of the medtech sector in Germany are associated with a total water consumption of 61.2 million m³. Of this, 53.4 million m³ are consumed indirectly in the global supply chain (approx. 87 percent). Again, hotspot analysis makes it possible to identify the country with the highest water consumption in the global supply chain: this was highest in China in 2020 at 15.7 million m³.

Social factors

The economic activity of the German medtech sector is associated with social impacts, e.g., through occupational health. In the SEE Impact Study, the social footprint is determined using the 3 indicators of work-related illnesses and accidents, and child labor. These indicators were calculated for the year 2020 for the location of Germany, the supply chains in Germany, and global supply chains (upstream).

  • In the context of cases of occupational diseases, the economic activity of the medtech sector is associated with a total of more than 20,000 cases, of which 7,300 cases occur directly at production sites in Germany, and more than 10,000 cases in the global supply chain. In an industry comparison, the medtech sector is in the midfield.
  • In 2020, the economic activity of the medtech industry is associated with 23,900 cases of occupational accidents. 62 percent or about 15,000 cases of occupational accidents in the medtech industry occur in the global supply chain, again China was identified as the country with the highest number of occupational accidents.
  • Due to the global supply chains, the economic activity of the medtech industry has the the risk of child labor. When analyzing this indicator, it should be noted that there is no case of child labor in Germany, but around 3,000 cases in the global supply chain.

The initial assessment of the results

The medtech sector is already one of the most important subsectors of the industry and is particularly significant for gross value added and employment in the industrial healthcare industry.

In an industry comparison, the medtech industry is in a good overall position in terms of environmental and social factors. The study is a good initial assessment of the situation, which makes it clear that the external effects in the environmental and social areas primarily occur in the indirect supply chain. In this first step, neither the benefits from the use of medical technology nor the environmental and social "footprint" in the use and consumption of the products and devices are assessed (downstream). BVMed and the industry are aware of the special challenges in this area and will continue to work on solutions together with users.

On the demands on politics

Strengthening Germany as a production location contributes to more sustainable production and better resilience of the healthcare system. The medtech industry has set out on this path. It is already making a good contribution to sustainable business. It wants to and can help shape the environmental and social transformation upstream and downstream, but is often not allowed to do so due to regulatory hurdles. The use of, for example, electronic instructions for use (eIFU) for medical devices could significantly reduce paper, water, and energy consumption in manufacturing and also in logistics. The industry is ready to take concise steps, but it also needs framework conditions that make this possible.

The SEE Impact Study shows the very great depth of supply chains, which pose a major challenge in terms of direct influence. It is important for us to have a clear, balanced, and realistic description of corporate responsibility in taking social and environmental care. Companies should only be required to do what is appropriate in view of their corporate structure and their ability to exert influence. We therefore advocate limiting due diligence requirements to direct suppliers.

BVMed conclusion

Modern medical technologies serve people and their healthcare. In this context, the livelihoods of people must be kept in mind. Human rights must be comprehensively respected and ensured. This must be a central concern in a globalized world with complex supply and goods flows. As a medtech industry, we face up to this special responsibility. Only if we know where we stand can we successfully navigate the path toward environmental and social sustainability. To this end, we want to create transparency and take all relevant stakeholders along with us on this journey.

Download the full study in English or German language.
LinkedIn Post by Professor Ostwald
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