U.S. Medtech Is Gobbling Up Europe

 

Posted in Medical Device Business Qmed by Nancy Crotti on September 19, 2016

 

The trend of American medical device companies buying their European counterparts may slow, but Europe is unlikely to hop into the driver’s seat, a new report says.

When U.S. medtech companies acquire European firms, the deals tend to be worth much more than those of European firms taking over American concerns.

That’s according to a report by EP Vantage, which chalked the imbalance up to the fact that Europeanmedtech companies are generally smaller and less well-funded than their U.S. counterparts. Excluding Medtronic’s $50 billion purchase of Ireland’s Covidien, the biggest U.S. to Europe deals to date include:

•            Johnson & Johnson’s $19 billion purchase of Synthes in 2012;

•            Dentsply’s $14.5 billion merger this year withSirona;

•            Baxter’s $4 billion takeover of Gambro in 2013;

•            Thermo Fisher’s $3.5 billion purchase of Phadia in 2011.

In a technically in-Europe deal, Medtronic also agreed in May to buy Smith & Nephew’s gynecology unit for $350 million.

The top five Europe-to-U.S. deals the service listed for 2010 to 2015 were:

•            Novartis’ $51.6 billion staged takeover of Alcon, completed in 2010;

•            Endo International’s purchase of American Medical Systems in 2011;

•            Covidien’s $2.6 billion acquisition of ev3 in 2010;

•            Fresenius’ $1.7 billion of Liberty Dialysis Holdings in 2012;

•            Grifols’ $1.7 billion purchase of Novartis’ blood transfusion business in 2013.

Endo later sold off the urology device business it landed through the American Medical Systems acquisition to Boston Scientific.

 

European venture capitalists may have begun to lose their reluctance to invest heavily in medtech, particularly early-stage companies. European VC has raised several large medtech-focused funds this year. In March, Geneva-based Endeavour Vision raised a $275 million fund solely for medtech, the news service noted. Swiss/Dutch device maker G-Therapeutics (Switzerland/Netherlands) put together $40.2 million for a spinal cord neurostimulation product, according to EcolePolytechnique Federale de Lausanne in April. And VC fund Forbion (Netherlands/Germany) earmarked about 30% of a $208 million healthcare round for medtech that same month.

 

But it may be awhile before European medtech companies can really compete at the level of U.S. companies in terms of having the financial heft for making acquisitions. European companies also carry the cachet of lower tax rates than those domiciled in the U.S., making them more attractive for takeover. U.S.-based companies looking to save on their taxes are more likely to seek out takeover targets in Switzerland and the U.K., which each have lower corporate tax rates than the United States, the site said.

 

U.S. companies keep trying to complete these so-called tax inversion deals, despite the U.S. Treasury Department’s efforts to curb the practice. DOJ won one in April, when Pfizer and Allergan called off their proposed $160 billion deal.

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Smart Contact Lenses Monitor Glucose Levels, Correct Vision  

From EMDT May 10, 2015

Google and Novartis have joined forces to develop ‘smart’ contact lenses that help monitor glucose levels and automatically correct vision for people with diabetes. The smart lens technology pairs a Novartis-designed lens with Google’s noninvasive sensors, communications devices, and miniature processes sensors. 

For diabetic patients, the contact lenses analyze the chemical composition of tear fluid and monitor the levels of specific compounds, including proteins, indicating whether or not glucose levels are within normal ranges. They also help those suffering from presbyopia by changing the lens focus in real time in order to offer automatic vision correction. As part of a refractive cataract treatment, the lenses help restore the eye's natural autofocus on near objects as well.

Google and Novartis are also expected to add additional diagnostic and treatment options to the lenses beyond glucose-level monitoring and vision correction that should be commercialized by 2020, according to Swathi Allada, research analyst, advanced medical technologies, for Frost & Sullivan.

The contact lenses should eventually contain additional sensors to measure cholesterol and cortisol, Allada said. “This innovation will provide an invaluable source of data for individuals, medical professionals, and other third parties wishing to deliver predictive care, particularly for coronary heart disease, strokes, and other cardiac diseases.” 

Such smart lenses have the potential to transform not only how vision-related ailments are treated, but how patients can track their own health, according to Allada. “The smart contact lenses as a medical diagnostic tool have the potential to fundamentally disrupt the healthcare industry and save millions of lives, but they can do even more.”

China's top health authority calls for more homegrown med tech

 

 August 18, 2014

Global med tech companies could soon face mounting competition in China, as the country's top health authority is calling for a new set of initiatives to promote homegrown products and jumpstart the domestic industry.

The Chinese health ministry will lay out new incentives for local hospitals to use Chinese-made medical devices, a move that counters "unreasonable increases" in healthcare costs and reduces the burden on patients, the ministry said in statement posted on its website, as reported by Reuters. A push for local products could also complicate business for foreign med tech outfits, as global device makers now dominate three-quarters of China's estimated 212 billion yuan ($34.51 billion) medical device market.

"We want to strongly advocate health ministry organizations to use domestically-made medical devices, especially pushing top level class III hospitals to use domestically-made products," Li Bin, the head of China's National Health and Family Planning commission, said in the statement (as quoted by Reuters).

The government action could deal a crushing blow to medical device companies looking for a piece of China's rapidly growing device market. The country's medical device sector is set to double to more than $50 billion by 2020, according to the research firm Global Data, and McKinsey & Co expects annual growth rates at around 20% for the next few years.

Big names like Johnson & Johnson ($JNJ), Medtronic ($MDT) and Stryker ($SYK) already have established footholds in China, but are tailoring their approach to meet local demand. Last year, Stryker snatched up Trauson Holdings for $764 million, getting its hands on an established local brand and expanding its presence in the country's emerging market. In May, J&J announced that it would introduce plates and screws manufactured at its Suzhou facility, bolstering its local presence. In July, Medtronic teamed up with China's LifeTech Scientific to manufacture and distribute cardiac devices for the country's cardiovascular sector.

Meanwhile, local companies with a domestic focus could give bigger, foreign-based operations a run for their money. Shanghai's Kinetic Medical enjoys a nearly 50% share in China two years after filing its IPO and touts its patient-specific technologies as superior to those of multinational rivals. Chinese medical device maker Mindray scooped up $152.5 million in net revenues during the second quarter, a 3.4% gain year over year. The company saw slower sales at home, but said it would turn to private hospitals to boost profits and improve its bottom line.

"Private hospitals will account for 20% of all national healthcare services in China by 2015, compared to the current level of 9%," chief investment officer May Li said during the company's Q2 earnings call. "This segment will be an important strategic focus for us going forward."

China Orthopedic Devices Market outlook to 2020
China Orthopedic Devices Market outlook to 2020

November, 2013

The Total Wrist Replacement sales market across the United States, France, Germany, Italy, Spain, the United Kingdom, Japan, Brazil, China, and India was worth an estimated $32.1m in 2012, and this value is predicted to grow at a CAGR of 6.08% to $46.1m in 2018. The Total Wrist Fusion market was estimated to be worth $30.4m in 2012 across the same markets, estimated to reach over $33.7m in 2018 following growth at a CAGR of 1.67%.

source Global Data

November 11, 2013
recent research report cites 10 medical device technologies with significant growth potential that are valued at roughly $454.3 billion. The technologies include:
  1. Diagnostic imaging, including nuclear imaging, interventional radiology, and capsule endoscopy.
  2. Drug-delivery technologies.
  3. Molecular diagnostics, which spans nanotechnology breakthroughs and proteomics.
  4. Mobility-assistiance technologies.
  5. Technology for minimally invasive surgery.
  6. Microfluidics and MEMS.
  7. Non-invasive monitoring (continuous blood glucose monitoring)
  8. Biomaterials (including antimicrobial woundcare technologies and orthopedic materials).
  9. Bio-active implants such as neurostimulation devices.
  10. Telemedicine

Out of this, approximately two-fifths ($177.8 billion) of this market comes from technologies for medical diagnostics. Drug-delivery devices comprise approximately $110.8 billion of the total market. The study covers the healthcare market from March of 2009 to March of 2014.

The fastest-growing medical device fields include biomaterials, telemedicine technologies, MEMS, microfluidics, and mobility-aid technologies. Out of these, biomaterials have the strongest potential for growth due to their larger market share. As of 2009, the total value of the biomaterials market was $46.6 billion. By 2014, this market is forecasted to increase to $85.5 billion. In the biomaterials market, antimicrobial wound dressing is the fastest growing segment. In 2009, antimicrobial wound dressings had an estimated market cap of $330 million. By next year, this is predicted to grow to $780 million.

In the healthcare industry, IT integration of medical devices and imaging technologies has led to a significant growth as well.

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Analysis on Top 10 Device Areas in 2018, Market Share & Sales Growth (2012-18) Source: EvaluateMedTech™ (23 SEP 2013)
Analysis on Top 10 Device Areas in 2018, Market Share & Sales Growth (2012-18) Source: EvaluateMedTech™ (23 SEP 2013)

EvaluateMedTech™ World Preview 2013, 

Outlook to 2018 – Analysis Highlights

 

  • Worldwide medtech sales forecast to grow by 4.5% (CAGR 2012 to 2018), reaching $455bn by 2018
  • Medtech set to outperform the prescription drug market with a CAGR of 4.5% vs. 3.8% between 2012 and 2018 – but pharma forecast to catch up, with both industries estimated to grow by approximately 5% per year from 2015 to 2018 
  • Johnson & Johnson forecast to be the clear market leader in 2018 with medtech sales of $33.4bn 
  • ƒIn vitro diagnostics expected to be the world’s largest medtech segment in 2018, with sales of $58.8bn
  • ƒGlobal medtech R&D spend set to grow by 3.9% (CAGR) to $26.7bn in 2018
  • ƒSiemens predicted to be the top medtech R&D spender in 2018, with investment in new programmes forecast to reach $2bn, but Abbott’s spending is increasing fast following the AbbVie split
  • Number of 1st time PMAs decreases 5% to 41 in 2012; 510(k) clearances up 1% to 3,185
  • FDA approves 14 new PMAs in 2013 to end of August, representing a 42% decline compared with the same point last year
  • Roche maintains leading position within in vitro diagnostics with sales of $11.3bn in 2018, and market share of 19.3%
  • Medtronic maintains top spot in cardiology to 2018 with sales of $9.9bn and a 20% market share
  • Johnson & Johnson set to dominate the slow-growing orthopedics market with 2018 market share of 26.6% and sales of $10.6bn
  • M&A deal value falls by a startling 79% in H1 2013 vs. H1 2012 and deal count drops 15%
  • Total deal value of medtech venture financing falls 14% to $3.8bn in 2012 vs. 2011 

but expands 6% to $2.5bn in H1 2013 vs. H1 2012

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A Shortcut to Medical Device Reimbursement in Germany

 

A recent law offers medical device manufacturers a pathway for securing more-timely reimbursement for new medical diagnostic and treatment products used in physician offices.

Published: June 24, 2013

By: Amir Inbar, Mediclever Reimbursement Consultants, London

 

During the last seven years, we have provided consulting services to more than 100 different medical device startups. Some of them planned to obtain the CE mark for their product relatively quickly and launch it in Germany. The problem was getting those German Sickness Funds (payers) to provide reimbursement in a timely manner.

In a previous article, we discussed a possible reimbursement shortcut for medical devices used in a hospital inpatient setting. A relatively new option is available for securing interim reimbursement for devices that are used outside the hospital in a physician’s office.

The problem

According to German law, innovative procedures and devices used in a physician office setting are not reimbursed, unless they have been officially approved following a positive determination by the federal joint committee (G-BA).

Unfortunately, the G-BA does not issue a positive determination before the procedure or device has been thoroughly tested and widely used in Germany and the manufacturer has amassed rigorous data demonstrating its value. Obviously, prior to obtaining reimbursement it would be very difficult to reach this threshold, creating a classic catch-22 situation.

The solution

According to the recently enacted law for the Restructuring of the Statutory Health Insurance (GKV-Versorgungsstrukturgesetz), instead of denying reimbursement for procedures or devices that do not yet fulfill all of the conditions required to meet the threshold, the G-BA can now decide to provide funding for a “controlled study.” Within the timeframe of the controlled study, the manufacturer may be able to reach the aforementioned threshold.

Funding for a controlled study may be granted for new medical diagnostic and treatment methods that have the potential to improve upon existing methods.

The proposed process is currently under review by the German Ministry of Health and the effective date for the programme will be finalised once it has been published in the Federal Gazette.

The process

A manufacturer of a medical device used in a new medical diagnostic or treatment procedure may apply for a controlled study from the G-BA.

The application includes the following six sections:

  • Section I – Administrative Information: name and address of applicant and contact person.
  • Section II – Summary: description of the suggested new medical diagnostic or treatment method, relevant indications, target population, anticipated distribution in the German market and expected benefits.
  • Section III – Information on the Medical Product: product description and technical instructions, comparable products, regulatory status and available clinical data.
  • Section IV – Potential: the application should demonstrate by means of “meaningful documents,” such as published randomised controlled studies, the potential of the new medical diagnostic or treatment method as an alternative to existing methods.
  • Section V – Key Elements of Proposed Study: This optional section describes the type of suggested study, relevant population, required sample size, appropriate comparative intervention, endpoints, duration and estimated costs.
  • Section VI – Sponsorship and Completeness of Application: the application itself is free of charge; however, in this section the applicant also signs a letter of intent indicating a willingness to assume a fair share of the costs, such as the overhead associated with the controlled study. The Sickness Funds pay for the provision of the medical procedure.

The process also allows the applicant to submit a written request to the G-BA for a fee-based, nonbinding consultation to provide guidance on the preparation of an appropriate application. The guidance should be provided within eight weeks from submission and costs between €500 and €10,000, depending on its complexity.

The information provided during the consultation is confidential.

Initial assessment

Within three months of submitting an application, the G-BA has to decide whether a controlled study would be appropriate and notify the applicant accordingly.

An approval at this stage typically would require evidence demonstrating the potential of the new medical diagnostic or treatment procedure to improve upon currently available methods. For example, it may reduce costs, be less invasive, have fewer potential side effects or eliminate other disadvantages of existing devices. In addition, it should be made clear to the G-BA that the proposed controlled study can generate needed evidence for integration of the new medical diagnostic or treatment procedure into the healthcare system.

Study plan

For the scientific monitoring and evaluation of the controlled study, the G-BA may commission an independent academic institute. The institute will be responsible for designing the controlled study, which may also include required quality criteria.

After the estimated overhead costs of running the controlled study have been assessed, the applicant will need to submit a declaration of financial support and assume the obligation to conclude a funding agreement between the applicant, the G-BA and the involved scientific institute. This agreement, signed prior to initiation of the study, will describe who pays for what, how much and when.

Special discounts, which can amount to as much as 70% of the overall costs, may be granted to small and medium-size businesses (based on annual turnover and number of employees) and for new medical diagnostic or treatment procedures aimed at diagnosing or treating rare diseases.

Re-assessment

Following a successful controlled study, the G-BA may decide to provide reimbursement for the new medical diagnostic or treatment method. The average duration of the administrative process is estimated at 29 months (excluding the time required for the controlled study). This may appear to be lengthy; however, it allows the company to validate its technology and provide evidence to show that it is using external resources. The generated evidence may also be used when approaching markets outside of Germany.

Beyond the chicken-and-egg dilemma

This recent change in the G-BA’s ability to perform more studies, instead of rejecting an application for reimbursement, especially for treatments or diagnostics used in a physician office setting, is good news for the medical technology industry. By providing a solution to the proverbial chicken-and-egg conundrum with which so many companies struggle, Germany has positioned itself as one of the world’s most—if not the most—innovative healthcare markets.

 

 

June 19,  2013,

Not a so bright future for everybody :

A grim future may await the medical device market, according to Seeking Alpha. If medical device makers fail to adapt to cost pressures and a strict regulatory environment, they could see hampered growth well into the future.

Over the past year, several high-profile medical device failures have led to growing oversight from FDA. Because of this, medical device manufacturers are now required to submit additional data prior to device approval. The increased costs associated with regulatory hurdles could stymie future growth in the medical device market.

In addition to the 2.3% medical device tax, which applies to top-line revenue, Group Purchasing Organizations (GPOs) could impact revenues at many medical device companies. Since GPOs have significant purchasing power, they can negotiate significantly lower rates for many goods and services, often to the detriment of a medical device company. For example, government-run Medicare and Medicaid programs often provide medical device reimbursement that is significantly below private insurance and cash rates. Since millions of people are enrolled in these taxpayer-subsidized program, these government behemoths can leverage their size to negotiate low reimbursement rates. With more hospitals joining GPOs, this threat could continue to grow in the future.

While these issues could challenge medical device companies in the future, several factors could push the market in favor of medical device companies. For example, an aging population can increase the target market for manufacturers of insulin pumps, cardiac devices, wheelchairs, hip implants and more. In addition, the Affordable Care Act’s individual mandate could increase the number of people on health insurance plans. This could widen the market for some medical devices.

Some companies may weather these challenges. With strong sales and a high market cap, Smith & Nephews has room to grow in the coming years. However, some medtech giants like Boston Scientific could face problems in the future. Faced with a low cash return on invested capital, the company has underperformed in comparison with many of its peers. However, U.K.-based Smith & Nephews, the fourth-largest orthopedic implant supplier in the world, could hold significant potential in the future, according to Seeking Alpha.

2013, February

It’s an illustration of the rapid pace at which the world moves these days that a forecast of the growth rate of western Europe’s medical technology market drafted in May 2012 will have to be revised . . . downward, as it happens. Speaking to a full house at the Breakfast Briefing hosted by European Medical Device Technology at MEDTEC Europe on 27 February, Jamie Davies of Business Monitor International conceded that the forecast, which projected a CAGR of around 5.2% through 2016 was “on the optimistic side” from today’s vantage point. While the market is not collapsing, Davies stressed, western Europe is headed for stagnation and, in some cases, contraction. As always, there are regional differences and nuances to consider.

Germany is an “economic outperformer in Europe,” he noted, reaping the rewards of a steady drip of healthcare reforms over the past 20 years. Its enviable status as en export powerhouse also drives the medtech sector.

Switzerland is an outlier when it comes to spending on high-quality, high price devices, Davies noted. It also spends some 450 euros pre capita on healthcare, more than twice Germany’s per capita outlays.

The picture is not as bright in southern Europe, where payment delays are lengthening in Italy while the number of hospital beds in Spain remains largely unchanged since 2002, going against a trend in other European countries, where fewer hospital stays are a sign of economic health (and patient quality of life).

The economic doldroms have taken root in France, as well, where the “government has put the brakes on healthcare expenditures.”

Although healthcare budgets, which have been historically sheltered, are now feeling the pinch in a sluggish economy, governments do realise they can’t cut too much as it will have a knock-on effect on the larger economic picture, noted Davies. And it doesn’t play well with the electorate, either.

MEDTEC Europe runs through 28 February at Messe Stuttgart in Stuttgart, Germany.

Source medetchinsider

 

Medtech Market to Achieve Global Sales of $440 Billion by 2018

 

LONDON and BOSTON, October 2, 2012  -- EvaluatePharma® the premier source for life science sector analysis and consensus forecasts, today released its EvaluateMedTech™ World Preview 2018 report at the AdvaMed 2012 conference taking place in Boston, October 1-3. EvaluateMedTech™ World Preview 2018 provides top insights and analysis from the world's financial markets to forecast the expected performance of the Medical Device and Diagnostic industry between now and 2018.

The medical technology market is forecasted to grow at 4.4 percent per year between 2011 and 2018, to reach $440 billion, according to the EvaluateMedTech™ World Preview 2018. This growth will outpace the global prescription drug market, which is expected to grow 2.5 percent per year between 2011 and 2018.

The in vitro diagnostics sector is expected to be the world's largest medtech segment in 2018, with sales of $54.5 billion, beating cardiology and diagnostic imaging to the top spot. The fastest growing segment among the top device sectors is neurology, which is set to grow at 6.1 percent per year to $7.3 billion. Orthopedics is forecast to be the slowest growing segment, expanding 3.1 percent per year between 2011 and 2018.

"The medtech sector is diverse but tends to have clearer value propositions than the pharmaceutical sector when it comes to convincing payers to part with their cash," said Anthony Raeside, head of research, EvaluatePharma®. "Medtech will continue to benefit from emerging market investments that are lifting standards of care, while cost conscious developed markets will continue to invest in more efficient machines, systems and procedures, which offer less hospital time and better patient outcomes."

In addition to assessing the overall growth of the medtech market, EvaluateMedTech™ World Preview 2018 also looks at key growth areas, performance of market leaders by segments and the performance of marketed and pipeline products by segments.

When it comes to global medtech sales, Johnson & Johnson will hold the top spot as the number one medtech company in 2018, with forecasted global medtech sales of $37.8 billion representing an 8.6 percent global market share. The company will also remain the top medtech R&D spender in 2018, with R&D expenditure forecast to reach $2.1 billion.

Roche looks to be the clear market leader within the in vitro diagnostics sector in 2018 with sales of $9.9 billion and an 18 percent market share.

Medtronic will remain the number one cardiology company with global sales of $10.4 billion in 2018 and a market share of 21 percent.

Johnson and Johnson's acquisition of Synthes in June 2012 will allow the company to command a 30 percent market share of the Orthopedics market by 2018.

Medtech M&A deal value slumped 46 percent in the first half of 2012 compared to the first half of 2011. However, investors see potential within the medtech market as the total deal value of medtech venture financing increased by 9 percent to $1.9 billion in the first half of 2012.

The number of first time Premarket Approval Applications (PMAs) increased 95 percent to 43 in 2011; 510-K approvals were up 10 percent to 3,145. There have been 24 first time PMA approvals thus far in 2012.

 

The global market for medical equipment and supplies as defined in this report is valued at US$307.7 billion in 2012, equal to just under US$50 per capita. Several years of rapid growth came to a halt amid the economic downturn towards the end of 2008 and into 2009. Many countries experienced a slowdown in the market in 2009, with especially poor performance in the USA and Europe. Much of the world has seen a swift return to growth in 2010 and 2011, however, with the major exception of the Eurozone, which continues to perform relatively poorly.

The CAGR for the 2007-2011 period was 7.9%, although this masks the major reduction in growth which occurred in 2009 and 2010. Market growth resumed in 2011, although it will not be quite as rapid as before the economic downturn. It is projected that the total market will rise to US$434.4 billion by 2017, equal to just under US$67 per capita and a CAGR for the 2012-17 period of 7.1%. Some of the best prospects for growth will be in the developing markets of Asia, Latin America and Central/Eastern Europe, while traditional Western markets represent more steady performers.

The orthopaedic and prosthetic sector is projected to be the fastest-growing area of the market to 2017, rising by a CAGR of 8%. This will take the sector from its current US$34.7 billion in 2012 to US$51.1 billion by 2017, driven by the uptake of expensive new products in developed markets, and extension in availability of related treatments in developing countries. 

Espicom 2012 

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Leading Global Medical Device Companies - 2007

Company/(Ticker Symbol) Country of Origin 2007 Revenues ($ billions) 2006 Revenues ($ billions) %Change
1. Johnson & Johnson (JNJ) U.S. $21.7 $20.3 +7%
2. GE Healthcare (GE) U.S. $17.0 $16.6 +3%
3. Siemens Medical Solutions (SI) Germany $14.4 $11.6 +24%
4. Medtronic (MDT) U.S. $12.9 $12.1 +7%
5. Baxter International (BAX) U.S. $11.3 $10.4 +9%
6. Covidien (COV)* U.S. $10.0 $9.5 +6%
7. Philips Medical Systems (PHG) Netherlands $8.9 $8.9 -
8. Boston Scientific (BSX) U.S. $8.4 $7.8 +7%
9. Roche (ROG.VX) Switzerland $8.0 $7.2 +11%
10. Becton Dickinson (BDX) U.S. $6.5 $5.8 +12%
11. Abbott Labs (ABT) U.S. $6.3 $5.2 +21%
12. Stryker (SYK) U.S. $6.0 $5.1 +17%
13. Cardinal Health (CAH) U.S. $5.0 $4.2 +19%
14. Olympus (TSE: 7733) Japan $4.2 $3.8 +11%
15. 3M Healthcare (MMM) U.S. $4.0 $3.8 <1%>
16. Zimmer Holdings (ZMH) U.S. $3.9 $3.5 +12%
17. St. Jude Medical (STJ) U.S. $3.8 $3.3 +14%
18. Smith & Nephew (SNN) U.K. $3.4 $2.8 +14%
19. Beckman Coulter (BEC) U.S. $2.8 $2.5 +9%
20. Synthes (SYVE:VX) Switzerland $2.8 $2.4 +15%
21. Terumo Medical (TSE:4543) Japan $2.6 $2.3 +12%
22. Fresenius Medical Care (FMS) Germany $2.5 $2.1 +18%
23. Alcon (ACL) U.S. $2.5 $2.2 +14%
24. Carestream Health (OCX) Canada $2.5 $2.5 -
25. C.R. Bard (BCR) U.S. $2.2 $2.0 +11%
TOTAL.   $173.5 $158.1 +10



Source: MX: Business Strategies for Medical Technology Executives, May/June 2008 edition

*Formerly TYCO Healthcare

Fast track for medical devices

The medical device market is about 50 percent of the world pharmaceutical market in terms of relative size, but is also growing faster than its drug counterpart. It is dominated by U.S. companies (16 of the 25 companies are U.S.- based) with 72 percent of the revenue. MX estimates that the medical device market will reach sales of $336 billion in 2008. Assuming similar growth to that of 2007, this means that the market last was in excess of $300 billion.

According to MX, although the top 25 companies represent the lion's share of sales (almost 60 percent), there are an estimated 20,000 medical devices companies around the world. Only one company showed a decline (however slight) in growth, and two companies had flat sales. The remaining 22 companies all posted positive growth with 15 companies showing double-digit growth. Not mentioned, but with substantial sales and growth, are companies likeToshiba Medical SystemsHitachi Medical Systems, and Gambro.

The medical device industry faces a number of challenges in addition to the technology convergence factor mentioned earlier. In general, this industry is at lower risk than its pharmaceutical/biotech drug counterpart for a couple of reasons:

• Shorter product development times (about 33 to 50 percent of drug development time).

• Less regulatory (Food and Drug Administration) approval risk.

Additional factors favoring the growth of this industry include the greater physician need for better and more precise diagnostics and imaging to guide them on patient disease status and proper disease management, whether surgical or pharmaceutical (or both). 

The industry has responded with better products and technology. The growth of the biomarker industry segment of diagnostics and imaging has been a testament to the FDA's interest in this technology for enhanced disease status prediction. 

The convergence of the medical device and drug industry has been positive in terms of development of improved products: drug-eluding stents and glucose monitoring systems incorporated into insulin pumps, etc. 

Growth inhibitors

Challenges to further growth include:

• Reimbursement difficulties (obtaining new codes from the U.S. government and healthcare system) and delays.

• FDA's lack of clarity on biomarker approval guidelines (particularly where now predicate diagnostic might exist).

• Larger clinical trials (meaning more patients, more expense, and longer times to run these trials) for Pre-Marketing Approval (PMA), and De Novo 510k approvals.

• Longer patent review and approval times.

• Utilization of new technologies and materials being developed from stem cells and nanotechnology that might replace the conventional materials used in orthopedic and cardiovascular devices.