CHAPTER 2:

ESTABLISHING ECO-SYSTEMS IN SUPPORT OF MEDICAL DEVICES INDUSTRIALISATION

Harry Teifel

ORCID ID: 0000-0002-6144-0275

ABSTRACT

Africa is set to become the most populous continent in the decades to come. In contrast to this – and with minor exceptions – only a small fraction of the Medical Devices deployed here are sourced from Africa. This anomaly is not sustainable in the medium term and begs several questions:

1. How does one create an eco-system that is conducive to localisation in South Africa and other African countries?
2. What are the specific challenges that often lead to the non-conversion of ideas to viable products – and how can wasteful industrialisation be avoided?
3. Looking into the future, what is the nature of Systems Thinking solutions required to support optimal collaborative industrialisation in a 4th Industrial Revolution (4IR) environment?

The purpose of this write-up is to offer a high-level glimpse into these three issues with a view to defining the requirements for sustainable and future-orientated Medical Devices industrialisation in Africa.

ESTABLISHMENT OF MEDICAL DEVICES ECO-SYSTEMS FOR EFFECTIVE INDUSTRIALISATION

How does a country in Africa establish an eco-system, which supports the establishment of a vibrant and sustainable Medical Devices industry? Building on Michael Porter’s “Porter Diamond” (Porter, 1998), competitive advantage can be derived and improved by the optimal alignment of various aspects related to value creation, such as technology industry, skilled labour, and government support for a country’s economy.

2.1 Establishment of an overarching Industrialisation Eco-system Framework

Applying competitiveness enablement principles at a very practical level means dealing with two dimensions:

1. Definition and establishment of a Medical Devices Value Chain, to outline the respective stages that play a critical role in end-to-end and successful product industrialisation and deployment; and
2. Focus areas for the effective enablement of the respective stages in the Value Chain.

The proposed solution model sees the application of three primary industrialisation enablement focus areas overlayed with eight customized Medical Devices Value Chain stages:

1. Policy, intelligence, regulations and investment planning / funding;
2. Market demand / orders, tariffs, designation and partnering;
3. Ideation, Research and Product Development;
4. Prototyping, base product testing, 1st level regulatory solution and venture funding;
5. Regulatory compliance preparations incl. manufacturing site certification;
6. Sourcing, sub-assemblies, final assembly and regulatory compliance;
7. Distribution / market segment penetration: Local and international; and Business Development, sales, device deployment and post-sales.

In combination, this leads to the so-called “Medical Devices Industrialisation Ecosystem establishment Matrix”, Figure 1, where the shaded areas indicate which industrialisation enablement area applies to which stage in the Medical Devices Value Chain:

2.2 Enablement focus area: Research & Development, Skills Development, industrialisation, regulatory compliance and similar

The next level of industrialisation eco-system development relates to the detailing of the three focus areas as outlined in section 2.1. For obvious reasons, the focus area to be detailed relates to “Research & Development, product industrialisation, regulatory compliance and industrialisation skills”. The following enablers are believed to be critical for enablement:

1. Use of academia and publicly funded institutions as extended R&D workbench of industry;
2. Use of public funded IP development and alignment with industry;
3. Testing and prototyping facilities incl. Technology stations;
4. Regulatory measures - Local and export focused (“Extensive” such as FDA and CE Mark) and Local-only (“Lite” such as SAHPRA as regional body)
5. Securing and channeling various sources of funding and investments in capacity building and eco-system enablement;
6. Use of public and private sector resources (funding, support, facilities etc.) for optimal eco-system enablement;
7. Inspection authorities- and enablement support;
8. Support programs to curb illegal or illicit activities;
9. Critical number of ISO 13485 companies and optimal use of multi-national registration for activities in-country and overseas; and
10. Skills Development and on-going industrialisation training.

When the critical enablers of this focus area are aligned with a Value Chain perspective, this leads to the so-called “Medical Devices focus area 2 Enablement Matrix”, Figure 2, where the shaded areas indicate which industrialisation enabler applies to which stage in the Medical Devices Value Chain:

The establishment of a localisation-friendly Medical Devices eco-system is not a haphazard and laissez-faire occurrence, but instead requires multi-party buy-in, value chain thinking and the alignment of various measures for success.

INDUSTRIALISATION CHALLENGES RELATED TO THE “VALLEY OF DEATH”

One could be tempted to assume that industrialisation is largely a technocratic and mechanistic process, where an optimal “sausage machine” assures a constantly pipeline of successful Medical Devices. This is not the case! Instead, a variety of factors are at work and involving people – with their inherent strengths and weaknesses. Outcomes are much more difficult to predict, than one would imagine. Also, not all stages of the value chain are equally prone to failure with certain specific hand-over stages being particularly susceptible to ineffectiveness and problems. Welcome to the phenomenon called the “Valley of Death”.

3.1 The “Valley of Death” phenomenon plaguing Product Development

There is an extensive body of knowledge dealing with the so-called “Valley of Death”, as the gap between invention and (implemented) innovation or the challenge of accelerating an innovation after proof of concept has been given.

The Valley of Death, as described in Markham, Ward, Aiman-Smith, & Kingon (2010) is defined as the space between opportunity discovery and product development as shown in Figure 3. It occurs between the Product life-cycle stages of pre-New Product Development (pre-NPD) and completed Development:

Sandberg & Aarikka-Stenroos (2014) further assert that the Valley of Death phenomenon is most likely to occur in the following Technical Readiness Levels (TRLs):

• TRL 4: Technology validation in lab;
• TRL 5: Technology validation in operation;
• TRL 6: Technology demonstration in operation; and
• TRL 7: System demonstration in real world.

This, in turn, leads to affected parties being confronted by the following type of challenges inhibiting successful industrialisation:

• Product challenges (Quality, performance, sustainability etc.);
• Business challenges (Costs, production efficiency, profitability etc.);
• Innovation challenges (Commercial success, market attractiveness, customer feedback etc.); and
• Process challenges (Expertise, relationships, diverse goals etc.).

3.2 Understanding contributors to the Valley of Death phenomenon

To illustrate the challenges of industrialisation, it is apt to create an analogy between Product Development and rugby with a multitude of "passes" between parties being necessary to achieve winning results. Simplistically put, the current game is characterized by undefined teams, poor passes and the ball often being dropped.

After extensive exposure to the phenomenon during Covid 19 and the personal involvement in a number of Medical Devices industrialisation projects, a list of the most prominent Valley of Death contributors has been created, Table 1:

Table 1: Most Prominent Valley of Death contributors

3.3 Active avoidance and countering of the Valley of Death phenomenon

Equal emphasis should be given to both Valleys of Death, which are arguably equal in their negative effect on successful product industrialisation:

• Valley of Death 1: Space between opportunity discovery and product development, i.e. between “idea” and “product”; and
• Valley of Death 2: Space between successful product development and commercial success, i.e. “product” and “market”.

The following checklist, Figure 4, has been created to avoid the Valley of Death phenomenon from negatively affecting Product Industrialisation outcomes of Medical Devices:

Similar to the establishment of localisation-friendly eco-systems being strategic and deliberate, so too is there a need for concerted Systems Thinking solutions to effectively counter-act and avoid the Valley of Death phenomenon from negatively inhibiting national and regional Medical Devices industrialisation.

INDUSTRIALISATION IN A DIGITALLY ENABLED COLLABORATIVE 4IR ENVIRONMENT

Is it possible to deal with the significant challenges of industrialisation, as outlined in the previous chapters, without significantly altering the make-up of the industrialisation “system”? The author believes that product industrialisation value chains will increasingly experience seismic change through 4th Industrial Revolution (4IR) factors. This will necessitate a fundamental re-invention as to how parties collaborate to create value around new products. Current outcomes are simply not good enough – and “tweaking” existing industrialisation systems will not lead to the desired results.

4.1 Imagining a new industrialisation paradigm for Medical Devices

As the world becomes increasingly globalized and competitive, people and organisations are challenged in the following areas, as shown in Figure 5:

1. Dramatic increase in the amount of data and information needing to be processed;
2. Dramatic increase in competitive pressures and client expectations;
3. Dramatic increase in the reach and spread of localized competition; and
4. Dramatic increase in the number of relationships and networks to be maintained.

In contrast to this, however, the there is a reduction in the available resources to deal with these increases, as shown in Figure 5, namely:

1. A reduction in the time available to perform tasks;
2. A reduction in resources and an expectation for costs to be reduced; and
3. A change in people, who are increasingly impatient to do perform activities deemed to be time-wasting in nature; and
4. A reduction in the time-scale that learned knowledge is relevant and topical:

It is argued that the ever-increasing “imbalance” created will drive new forms of collaboration, both at a macro- as well as people level. This will herald a fundamental shift to digitally enabled collaboration, as the only way for the increased demands to be accommodated, as shown in Table 2:

Table 2: Implications and benefits of digitally enabled collaboration

It is envisaged that the future state collaboration baseline, as described in the table above, will become an indispensable enabler to achieve the necessary level of competitiveness required for success in a 4IR environment.

4.2 The need for digital platforms to enable future state eco-system collaboration in the Medical Devices sector

Can future state industrialisation be achieved without technology? The author is of the belief that this is not possible, and that the improvement potential of existing multi-party industrialisation activities is limited.

Inherently, the limitation is human in nature and the ability of people to deal with the enormous and ever-growing challenges associated with industrialisation. Effectively the work requirements of people operating along the industrialisation value chain are so complex, specialized, time intensive and silo-specialized that a dramatic improvement is ONLY possible through the effective deployment of technology to support value creation of the individual parties – as well as their collaborative efforts.

People need support from technology for industrialisation outcomes to be dramatically improved!

It is not possible to train every party along the value chain up to be a Systems Engineer, who understands all interactions. Neither is it possible nor feasible to try and upskill an innovator to also be an expert on patent law – and vice versa.

It is argued that substantial improvements to industrialisation outcomes are only possible through the application of digital platforms or eco-systems, which allow parties to work together in a cloud environment and where is technology is systematically deployed to support people. The envisaged platform solution:

1. Supports each of the parties in better performing the role that they play (e.g. innovator, testing laboratory, manufacturer etc.) – while supporting with the best “interface” or “translation” when dealing with other parties;
2. Creates a common “game-plan” or reference framework for industrialisation for all parties to alleviate current communication and position themselves in terms of TRLs and other parameters;
3. Uses sector-specific “language” to facilitate communication and process flow along the industrialisation value chain and between parties;
4. Builds on standard human phenomena, which is one of making acquaintances, establishing relationships / trust and seeing a track-record when partnering; and
5. Leverages the “system framework” created by the measures above to enable digitalisation as the critical instrument to enable improvements for people, organisations, collaborating partners and sector eco-systems.

Industrialisation in the future is likely to be very different to today’s relatively ineffective and hit-and-mis practices. Continuous improvement of current industrialisation systems is unlikely to lead to breakthrough results. It is argued that dramatic improvements in industrialisation outcomes are only possible through the intelligent application of technology to deal with current systematic shortcomings and play a key enabling role in maximizing the ability of people to add value.

IMPLICATIONS FOR MEDICAL DEVICES INDUSTRIALISATION IN AFRICA

Africa needs to industrialize more Medical Devices and reduce its dependency on import. This process will not be easy – nor will it happen overnight. However, there are certain guidelines that the continent can draw from in charting its Medical Devices Industrialisation Roadmap:

1. Medical Devices Eco-systems can be established for sustainability, provided that these are well designed and based on Systems Thinking design principles;
2. Universal phenomena such as the Industrialisation “Valleys of Death” are reasonably well understood, and measures can be undertaken to counteract their debilitating impact – provided that this is done systematically;
3. Industrialisation is set to change in an emerging 4IR world and Africa would be well advised not to emulate current ineffective practices and systems – which are set for a fundamental overhaul in the years to come. Instead, platform solutions offer significant potential to leapfrog African Medical Devices industrialisation to global levels of competitiveness.

It is hoped that the consideration of the pointers provided will in some way contribute to the development of a sustainable and future-orientated Medical Devices industrialisation in Africa.

REFERENCES

Klitsie, J.B, Price, R.A., & de Lille, C. (2018). Overcoming the Valley of Death: A Design Innovation Perspective. In Next Wave: The 21st dmi: Academic Design Management Conference Proceedings (pp. 958-972). Design Management Institute.

Markham, S.K., Ward, S.J., Aiman-Smith, L. and Kingon, A.I. (2010). The Valley of Death as Context for Role Theory in Product Innovation. Journal of Product Innovation Management, 27: 402-417. DOI:10.1111/j.1540-5885.2010.00724.x

Porter, M. E. (1998). The competitive advantage of nations: With a new introduction. New York: Free Press.

Sandberg, B., & Aarikka-Stenroos, L. (2014). What makes it so difficult? A systematic review on barriers to radical innovation. Industrial Marketing Management, 43, 1293-1305.