Reporting this week from several sources referenced a report from PricewaterhouseCoopers, Moneytree, and BioEnterprise sounding an alarm for medical technology innovation, specifically that arising from the U.S. The report notes that innovation is slipping in the U.S. as a result in advantages overseas in investment, talent, regulation and other key drivers.
There are many things to consider in this.
First, I think this is largely true. But what tempers the alarm in this is that this report comes at a time when investment is at a two year low in the U.S. as a result of the credit crisis and the malaise of the global recession. What also tempers this is that the markets that are being considered for the potential in which products, even innovative ones, can be produced at a lower cost than in the U.S. Isn't this true of all markets? With the U.S. standard of living and its associated role in cost, it is hard for the U.S. to compete with the raw manufacturing capacity of few markets. Part of this therefore resembles nothing more than the usual migration of innovation from the U.S., where it often originates, to overseas markets, where economies are growing and where labor costs contribute to better margins.
Second, I think it is worth considering that change drives innovation as much as economic incentive and right now there is as much change in the U.S. market as anywhere globally. The economy is in a state of limbo, hovering above recession but by no means in any remarkable growth phase. The regulatory climate is in a state of flux, with the medical device approval process under intense scrutiny to justify the right balance of time to approval, safety and efficacy. Simultaneously, the payer system is under intense scrutiny and change (repeal?), demanding that every innovation justify itself in a marketplace with ever-shrinking funds to pay for them.
I anticipate that we are in for two years of continued flux as the U.S. and global economy rebounds. In that time, I also anticipate more and more demonstration from U.S. innovators, with some or many facilities overseas, that U.S. companies have the capacity and the ability to adapt to the changing demands for innovation.