Changing the product range – opportunity or necessity in times of Covid-19?

Back to Healthcare and Life Sciences Committee publications

Christoph von Burgsdorff

Luther Rechtsanwaltsgesellschaft, Hamburg christoph.von.burgsdorff@luther-lawfirm.com


Franz Kauer

Luther Rechtsanwaltsgesellschaft, Hamburg franz.kauer@luther-lawfirm.com


Economiesand healthcare systems all over the world are facing great challenges at present. Authorities worldwide are currently focusing on increasing testing capacities and procuring masks and other protective material to deal with the Covid-19 crisis. As a consequence, many companies have had to stop, or at least cut back, production.

Production has come to a standstill in many places, particularly in the engineering and automotive sector. The current crisis is likely to lead to a major upheaval in the European car industry. The car market in the European Union has taken an immense hit in the last few months. According to the European Automobile Manufacturers' Association (ACEA), only around 271,000 new cars were produced in April 2020 – 76 per cent less than a year ago.[1] Car dealers in Germany reported that they had about 80 per cent fewer orders in March and April 2020 than usual,[2] and vehicle sales in the international automobile market are predicted to decline by a total of 18 per cent in 2020 compared to 2019.[3]

In addition, the pandemic is not the only challenge shaking the automotive industry. The switch to electromobility, the debate on diesel and the trade dispute between China and the US also affect original equipment manufacturers and suppliers.

Some products are currently not in great demand while producers of other products are unable to keep up with production – such as protective equipment, disinfectants and respiratory equipment. For this reason, more and more companies are wondering how they can use their free capacities.

Changing the product range as a solution

Most companies are currently aiming to protect their employees while keeping production up and running. It is imperative to generate revenues in these times of low demand. More and more companies are changing their production for this purpose and using their free capacities to manufacture protective equipment or medical devices. There are numerous examples of this – here are just a few:

  • Tesla and General Motors have recently offered to produce hospital ventilators to assist with patients who need ventilation.
  • German textile manufacturer Trigema has decided to switch its production from clothing to breathing masks.
  • This decision was also made by the German automotive supplier Zettl, which usually produces interior parts for the automotive industry. It now also produces breathing masks.
  • In France, luxury goods producer LVMH is using facilities normally making high-end perfumes and cosmetics to manufacture a special sanitiser.
  • The BMZ Group, which usually produces batteries for electric cars, drills and photovoltaic systems, modified its production to producing batteries suitable for medical technology, especially for respiratory equipment. In some cases, the number of requests for these batteries has increased by 50 per cent.
  • In the US, Ford cooperates with General Electric and 3M to speed up the production of ventilators.

It is rather obvious that there are vast differences between changing the production from clothing to breathing masks and from cars to complex hospital ventilators, both in factual and legal matters. It is therefore crucial to differentiate between the different forms of changing the product range: the production of rather simple protection products (eg, disinfectants and breathing masks) and the production of standard or more complex medical devices (eg, ventilators).

This especially applies since the lowering of regulatory hurdles for the production of simpler protection products. For instance, the EU has approved an accelerated test procedure for breathing masks in order to remedy the existing deficiency due to the current crisis.


Changing production comes with a number of challenges. These challenges can be illustrated by the example of a company in the automotive industry that decides to function as a contract manufacturer for a medical device company.

Some say that companies from the automotive industry may easily use their flexible production lines for other purposes as well. For example, car manufacturers may use their 3D printers to produce plastic parts for respirators. However, there are challenges in such a case of a company not involved in medical technology changing the production to more sophisticated devices like complex ventilators, such as the collaboration between two companies including the share of intellectual property and meeting regulatory requirements.

Fulfilling the requirements of the medical device law and passing a certification process has become more challenging within the EU since the introduction of the new Medical Device Regulation (MDR). As a consequence of the introduction of the MDR, regulatory authorities have raised requirements for the production of medical devices. In particular, companies that have no experience with the MDR will have difficulties with the higher demands on the quality of clinical data and the more detailed requirements for technical documentation. These more stringent requirements often still apply, even though the EU Commission postponed the implementation of the MDR by one year to 26 May 2021 in view of the effects of the Covid-19 crisis

Additionally, many medtech industry players have strong concerns when inviting companies that are not familiar with medical devices to cooperate. For example, the German company Dräger, which produces high-end ventilators, is concerned about collaboration with automotive companies.[4] Dräger claims that the core technology of today's ventilators – electronics and software that control the pneumatics – is fundamentally different from the manufacturing operations of car manufacturers. Dräger points out that most materials are specially developed designs, not standard parts, and that both the material qualification at the suppliers and in the production operation is carried out with specially developed product-specific test equipment.

Resulting need for legal advice

Irrespective of how sceptical one is about the entry of companies from other industries into the medical (device) sector, it is likely that the Covid-19 crisis will affect the day-to-day business conduct of many companies of the engineering and automotive sector for some time. It remains to be seen how sustainable and permanent the change of production to medical products will be even after the Covid-19 crisis. Due to a higher awareness of hygienic and medical requirements throughout the world, it seems very likely that the medical device sector will grow in the long term. For this reason, it is highly probable that the demand for legal advice during and after such conversions will also grow.

This applies to companies which are converting their production as well as to companies that are generally entering the medical device sector. The most obvious need for legal advice will be in the area of regulatory requirements (especially regarding the MDR). In addition, a change in production may also bring with it many other legal issues for which undertakings need to be prepared. For instance, new supply chains and supply contracts need to be negotiated and the question of how one company may use the intellectual property of another company needs to be clarified.

Corporate lawyers may deal with the question if and how a drastic change of production needs to be agreed to by stockholders of a stock company. Undertakings need to be aware of potential risks of product liability if, for example, a member of the medical staff or a patient is injured because the protective equipment or medical device was defective.

In May 2020, Luther Rechtsanwaltsgesellschaft issued the market study Medical Technology 2020 in cooperation with the consulting company Clairfield International and the German industry associations BVMed and VDMA.[5] The study summarises the above-mentioned topics, amongst others, analyses current market development and the most important trends in the med-tech industry worldwide. The study shows that the expansion of health care systems and steady growth in the emerging markets are mainly responsible for a sustained increase in demand for medical technology products.

Companies may not be aware of the legal issues to be considered and steps to be taken before entering the medical technology sphere. It is therefore essential in these demanding and uncertain times that undertakings reconsider legal chances and legal risks for their changing business model. This is an enormous development which no law firm or in house counsel should ignore.

[1] ‘Autoabsatz in der EU sinkt um 76 Prozent’, Frankfurter Allgemeine (19 May 2020), seewww.faz.net/aktuell/wirtschaft/corona-folgen-autoabsatz-in-der-eu-sinkt-um-76-prozent-16776719.html

[2] ‘Nagelprobe für eine Branche im Umbruch’, Deutschlandfunk (6 May 2020), see


[3] Preuß, Olaf, ‘Das doppelte Desaster der deutschen Autoindustrie’, Welt (13 April 2020), seewww.welt.de/wirtschaft/plus207231137/Autoindustrie-Umsatzeinbruch-und-Ueberkapazitaeten.html

[4] Eckl-Dorna, Wilfried, ‘Deutschlands Autobauer und der überhastete Beatmungsgeräte-Wettlauf’, Manager Magazin (2 April 2020), seewww.manager-magazin.de/unternehmen/autoindustrie/coronavirus-beatmungsgeraete-was-deutsche-autobauer-anders-machen-als-usa-uk-a-1305865.html

[5] Medical Technology 2020, Luther Rechtsanwaltsgesellschaft (accessed 10 June 2020), see www.luther-lawfirm.com/fileadmin/user_upload/20200509_MedTech_Studie_final.pdf. The study is currently available only in German. An English version will be published soon and is available upon request from the authors of this article.