Life Sciences Companies Face New Risks with Semiconductors

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By Travelers
2 minutes

The life sciences industry is experiencing a paradigm shift, driven by the evolving world of semiconductor technologies. Advanced chip technology is now embedded at every level of healthcare, transforming how patients are diagnosed, treated and monitored. Rapid advancements are revolutionizing healthcare and changing the risk landscape for medical device, pharma/biopharma and digital health companies.

"For risk managers in life sciences companies, recognizing the intricate relationship between semiconductors and medical advancements, understanding the associated risks and potential insurance solutions, is crucial," said Jennifer Ampulski, Life Sciences Lead for Travelers.

MEMS: Amazing benefits and a few watch-outs

Imagine a world where your health is constantly tracked by a discreet sensor on your wrist or chest. Semiconductor-based MEMS (microelectromechanical systems) make this a reality. These tiny sensors collect real-time data on everything from heart rate and blood pressure to sleep patterns and even emotional states. This continuous monitoring, especially in remote locations or resource-limited settings, enables early detection of health issues and timely interventions.1

“While semiconductor-led medical device innovations improve healthcare, they may also open the door to increased risks,” Ampulski noted, recommending that risk managers pay close attention to the potential for increased supply chain risk and data privacy risk.

Semiconductor supply chain dependency 

Though the relationship between the semiconductor industry and life sciences sectors is interdependent, it is not equal. “Even a mild turbulence in the supply chain of chips can have an outsized impact on life sciences companies,” said Ampulski.

Medical device manufacturers rely on a discreet network of global chipmakers, which can leave them vulnerable in the event of supply chain disruptions. Tensions between China and Taiwan, where most advanced semiconductors are fabricated,2 are a persistent source of concern. Another concern comes from adverse weather patterns that threaten to disrupt the supply of raw materials and vital components.

Ampulski recommends that medical device manufacturers develop a predefined, well-documented and tested business continuity plan that clearly communicates how to respond during a disruptive event. 

Data and privacy concerns

Ampulski also noted that wireless collection of continuously delivered patient data raises significant privacy and data security concerns. She suggests that Travelers’ five cyber readiness practices can help companies protect sensitive data and secure operations. These practices include:

  • Add multifactor authentication (MFA).
  • Update your systems.
  • Implement endpoint detection and response (EDR).
  • Have an incident response (IR) plan.
  • Regularly back up your data.

Insurance can help life sciences companies adapt to new semiconductor risks

Life sciences companies that take a comprehensive approach to managing risk may have the best opportunity to overcome devastating threats to their businesses. This includes acquiring the right mix of insurance coverages to address the unique variety of exposures they face.

For example, MedFirst® from Travelers is designed to empower businesses with coverage that is both broad and flexible to help address the complexity of risks facing life sciences companies.

  • Products/completed operations liability coverage helps cover costs of bodily injury and/or property damage arising from a company’s work, including for a clinical trial.
  • Errors and omissions liability coverage helps cover costs that arise from a loss caused by a company’s product or service due to their error, omission or negligent act.

Learn more about Life Sciences Insurance from Travelers or reach out to a Travelers representative.



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