Three Key Forces Behind Startups and Investment in Medical Technology

We see three key forces underlying investment trends in medical technology:

  • The spectrum of competition has been broadened and sometimes isn’t even obvious.

Widely different technologies (as in treatment of coronary artery disease, see white paper) can address a clinical condition, with the solution to the problem being the focus of new investment.

New materials for devices, drug-device hybrids, biotech-driven solutions, and other innovations can create competition between very different technologies. As a result, the paradigms and truths that held true in the past, when devices only went head-to-head with devices, are no longer relevant, creating the need to better assess the competitive landscape.

Manufacturers must there develop good market awareness, as in being cognizant of all the potential source of competition, such as from companies in adjacent markets who might pivot and seize market share.

  • Money flows to niches in medtech where the demand for clinical utility is high.

The biggest forces driving medtech are increasing patient populations or the cost of managing them. Niches that address the challenges of an older population with unsolved painful and or costly conditions (orthopedics, chronic wounds, diabetes, bariatrics) have prominent cost targets that stimulate investment.

Patient demographics, healthcare cost/utility demands and other forces make some medtech niches very attractive, even if only as a result of technology migration (e.g., to growth geo markets).

  • Underserved patient populations command almost as much attention as the untapped patient populations.

There is much potential return on investment to be made in blockbuster treatments, but these can be financial sinkholes compared to less grandiose technology solutions. A motive force exists in medtech, centered around healthcare costs, that is relentlessly forcing medical technology innovators to find opportunity within existing markets, by eliminating cost (e.g., shifting care to outpatient as via minimally invasive technologies). Significant medical technology investment has already recognized the value in targeting conditions for which new technology, new clinical practices and/or simply new ways of thinking can improve the quality of life, patient costs or both.

Medtech investment is most serious when it is (1) in high dollar value, or (2) tied to the formation of companies. It reflects confidence in that sector to the degree set by the investment.

In the past five years, MedMarket Diligence has tracked the identification of over 600 companies in medtech. Below is the distribution of their focus across a large number of clinical and technology areas (multiple possible, as in “minimally invasive” and “orthomusculoskeletal”).

These companies have also been tracked through their specific investments (detailed historically at link).

Source: MedMarket Diligence, LLC; Medtech Startups Database.

Cardiology, orthopedics, and surgery are mainstay drivers of new technology development in medtech, as has been the push for minimally invasive therapies, but nanotechnology, interventional (e.g., transcatheter) technologies, biomaterials, wound management and other niches have a steady stream of new company formations.


See recent reports from MedMarket Diligence in the following clinical areas.

Technologies in Development at Medtech Startups, October 2015

In our flurry of activity in October, we overlooked summarizing the new medical technologies identified at startups and added to the Medtech Startups Database:

  • Neodymium vaginal dilator for treatment of pelvic pain.
  • Large bore, power injection vascular access
  • Surgical instruments for use in bariatrics.
  • Surgical oncology.
  • Spine surgical technology including expandable intervertebral cage.
  • Technologies to treat hearing loss.
  • Device to determine blood vessel size.
  • Cerebrospinal fluid shunt.
  • Focused ultrasonic surgical devices for hemostasis, cauterization, and ablation.
  • Collagen polymers to create 3D tissue systems for drug discovery, engineered tissue/organ, wound management, and 3D bioprinting.
  • Regenerative medicine to treat brain injury or damage.
  • Neuro-monitoring and neuro-critical care.
  • Orthomusculoskeletal implants.
  • Devices and methods for hip replacement
  • Intraoperative image system.
  • Exocentric medical device
  • Electro-hydraulic generated shockwave for cosmetic, medical applications.

For a historical listing of technologies at medtech startups, see link.

Technologies in Development at Medtech Startups, November 2015

Below is a list of the technologies under development at new medtech companies and recently added to the Medtech Startups Database.

  • Devices to assist pulmonary function.
  • Technologies to improve performance of orthopedic implantation.
  • Treatments for conditions associated with spinal cord injury and disease.
  • Technologies for the preservation and transport of organs and biologicals.
  • Interventional technologies for the treatment of neurovascular technologies.
  • Spinal fusion technologies
  • Orthopedic implants, including a prosthetic meniscus for placement in the knee joint.
  • Women’s health products including low risk device to measure cervical dilation.
  • Medical device to rapidly and accurately diagnose otitis media.
  • Bioabsorbable heart valve.
  • Electro-hydraulic generated shockwave for cosmetic, medical applications.

For a historical listing of technologies at medtech startups, see link.

 

White Paper: Lasers and electrosurgery sees sales grow by $96 million and $199 million respectively

Ablation is not a new technology, nor is it a recent addition to the tools available to clinicians (electrosurgery dates back a hundred years or more), but is still evolving in both the practice of medicine and surgery and the medtech industry. New technology developments, changes in clinical practice and growth and migration of the technologies globally are characteristics of ablation as a worldwide market with significant change and opportunity.

New ablation technologies have arisen at different times over the past 50 years, accentuated by the emergence of sophisticated instrumentation and devices designed to very precisely apply their inherent energy toward specific clinical applications. This has been and will continue to be a pattern in the ablation market, as manufacturers develop new instruments and methods to refine the delivery of ablation toward specific clinical applications. Consequently, revenues will continue to shift from one modality to another in the pursuit of improved clinical outcomes.

Download a White Paper on tissue ablation at link.

See “The Future of Tissue Ablation Products to 2020″ at link.

Technologies Gaining Nearly $600M Fundings in Medtech for October 2015

Fundings for medical technology reached $594 million for the month of October 2015. These are the technologies gaining funding In October 2015:

  • Tissue engineering in blood vessels, including for acellular vessels use for vascular access in ESRD
  • Magnetically adjustable spinal bracing system
  • Technologies to reduce the risk of stroke in transcarotid artery revascularization
  • Technologies to treat hearing loss
  • Surgical adhesives and sealants
  • Drug-device for novel treatment of urologic diseases
  • Drug delivery device technology
  • Minimally invasive device for the treatment of acute decompensated heart failure
  • Diagnostics for acute kidney injury
  • Catheter-based, minimally invasive treatment of endovascular arteriovenous fistula
  • Minimally invasive, non-surgical technology for circulatory support
  • Endovascular aortic aneurysm repair
  • Non-invasive intracranial pressure measurement
  • Implantable pump technology for fluid management
  • Intraoperative imaging and navigation
  • Devices for dry eye, glaucoma, others.
  • Nonsurgical device for the treatment of chronic nasal obstruction
  • Focused ultrasonic surgical devices for hemostasis, cauterization, and ablation
  • Technology for drug delivery to brain
  • Technologies for robotically-assisted minimally invasive surgery
  • Catheter based therapeutic devices for the treatment of cerebral aneurysms
  • Neuromodulation technologies
  • Renal denervation
  • Device to provide rapid allergy relief and device to monitor neonatal end-tidal carbon monoxide

For details on these, including the companies and their funding amounts, see link.

Medtech Startups, 2010-2015

From 2010 to present (Oct 2015), as included in the Medtech Startups Database, MedMarket Diligence identified 442 new (under one year old) medical technology startups whose businesses encompass, alone or in combination, medical devices, diagnostics, biomaterials, and the subset of both biotech and pharma that is in direct competition with medical devices, including tissue engineering and cell therapy. Of these, 74% were founded in the U.S., 5% were founded in Israel, and the rest were founded in 18 other countries.

Companies in the database have been categorized by clinical and/or technology area of focus, with multiple categories possible (e.g., minimally invasive and orthomusculoskeletal and surgery). Below is the composition of the companies identified from Jan. 2010 to Oct. 2015.

Screen Shot 2015-10-06 at 4.50.10 PM

Source: Medtech Startups Database

Below is a graphic on the companies by country. The U.S. (not shown) led with 327 companies.

Screen Shot 2015-10-06 at 4.17.30 PM

Source: Medtech Startups Database

In the U.S., the breakdown by state, other than California and its 466 companies (excluded only to show states with significantly lower numbers), is as follows:

Screen Shot 2015-10-06 at 5.13.08 PM

Source: Medtech Startups Database

 

Where will medicine be in 2035?

(This question was originally posed to me on Quora.com. I initially answered this in mid 2014 and am revisiting and updating the answers now, in mid 2015.)

An important determinant of “where medicine will be” in 2035 is the set of dynamics and forces behind healthcare delivery systems, including primarily the payment method, especially regarding reimbursement. It is clear that some form of reform in healthcare will result in a consolidation of the infrastructure paying for and managing patient populations. The infrastructure is bloated and expensive, unnecessarily adding to costs that neither the federal government nor individuals can sustain. This is not to say that I predict movement to a single payer system — that is just one perceived solution to the problem. There are far too many costs in healthcare that offer no benefits in terms of quality; indeed, such costs are a true impediment to quality. Funds that go to infrastructure (insurance companies and other intermediaries) and the demands they put on healthcare delivery work directly against quality of care. So, whether it is Obamacare, a single payer system, state administered healthcare (exchanges) or some other as-yet-unidentified form, there will be change in how healthcare is delivered from a cost/management perspective.

From the clinical practice and technology side, there will be enormous changes to healthcare. Here are examples of what I see from tracking trends in clinical practice and medical technology development:

  • Cancer 5 year survival rates will, for many cancers, be well over 90%. Cancer will largely be transformed in most cases to chronic disease that can be effectively managed by surgery, immunology, chemotherapy and other interventions.
    [View Aug. 2015: Cancer has been a tenacious foe, and remains one we will be fighting for a long time, but the fight will have changed from virtually incapacitating the patient to following protocols that keep cancer in check, if not cure/prevent it.]
  • Diabetes Type 1 (juvenile onset) will be managed in most patients by an “artificial pancreas”, a closed loop glucometer and insulin pump that will self-regulate blood glucose levels. OR, stem cell or other cell therapies may well achieve success in restoring normal insulin production and glucose metabolism in Type 1 patients. The odds are better that a practical, affordable artificial pancreas will developed than stem or other cell therapy, but both technologies are moving aggressively and will gain dramatic successes within 20 years.
    [View Aug. 2015: Developments in the field of the “artificial pancreas” have recently gathered considerable pace, such that, by 2035, type 1 blood glucose management may be no more onerous than a house thermostat due to the sophistication and ease-of-use made possible with the closed loop, biofeedback capabilities of the integrated glucometer, insulin pump and the algorithms that drive it, but that will not be the end of the development of better options for type 1 diabetics. Cell therapy for type 1 diabetes, which may be readily achieved by one or more of a wide variety of cellular approaches and product forms (including cell/device hybrids) may well have progressed by 2035 to become another viable alternative for type 1 diabetics. See pending report.]
  • Diabetes Type 2 (adult onset) will be a significant problem governed by different dynamics than Type 1. A large body of evidence will exist that shows dramatically reduced incidence of Type 2 associated with obesity management (gastric bypass, satiety drugs, etc.) that will mitigate the growing prevalence of Type 2, but research into pharmacologic or other therapies may at best achieve only modest advances. The problem will reside in the complexity of different Type 2 manifestation, the late onset of the condition in patients who are resistant to the necessary changes in lifestyle and the global epidemic that will challenge dissemination of new technologies and clinical practices to third world populations.
    [View Aug. 2015: Despite increasing levels of attention being raised to the burden of type 2 worldwide, including all its sequellae (vascular, retinal, kidney and other diseases), the pace of growth globally in type 2 is still such that it will represent a problem and target for pharma, biotech, medical device, and other disciplines. See pending report.]
  • Cell therapy and tissue engineering will offer an enormous number of solutions for conditions currently treated inadequately, if at all. Below is an illustration of the range of applications currently available or in development, a list that will expand (along with successes in each) over the next 20 years.

    [View Aug. 2015: Cell therapy will have deeply penetrated virtually every medical specialty by 2035. Most advanced will be those that target less complex tissues: bone, muscle, skin, and select internal organ tissues (e.g., bioengineered bladder, others). However, development will have also followed the money. Currently, development and use of conventional technologies in areas like cardiology, vascular, and neurology entails high expenditure that creates enormous investment incentive that will drive steady development of cell therapy and tissue engineering over the next 20 years, with the goal of better, long-term and/or less costly solutions. See Smithers Apex report.]
  • Gene therapy will be an option for a majority of genetically-based diseases (especially inherited diseases) and will offer clinical options for non-inherited conditions. Advances in the analysis of inheritance and expression of genes will also enable advanced interventions to either ameliorate or actually preempt the onset of genetic disease.
    [View Aug. 2015: It’s a double-edged sword with the human genome. As the human blueprint, It is the potential mother lode for the future of medicine, but it remains a complex set of plans to elucidate and exploit for the development of therapies. While genetically-based diseases may readily be addressed by gene therapies in 2035, the host of other diseases that do not have obvious genetic components will resist giving up easy gene therapy solutions. Then again, within 20 years a number of reasonable advances in understanding and intervention could open the gate to widespread “gene therapy” (in some sense) for a breadth of diseases and conditions.]
  • Drug development will be dramatically more sophisticated, reducing the development time and cost while resulting in drugs that are far more clinically effective (and less prone to side effects). This arises from drug candidates being evaluated via distributed processing systems (or quantum computer systems) that can predict efficacy and side effect without need of expensive and exhaustive animal or human testing.
    [View Aug. 2015: The development of effective drugs will have been accelerated by both modeling systems and increases in our understanding of disease and trauma. It may not as readily follow that the costs will be reduced, something that may only happen as a result of policy decisions.]
  • Most surgical procedures will achieve the ability to be virtually non-invasive. Natural orifice transluminal endoscopic surgery (NOTES) will enable highly sophisticated surgery without ever making an abdominal or other (external) incision. Technologies like “gamma knife” and similar will have the ability to destroy tumors or ablate pathological tissue via completely external, energy-based systems.
    [View Aug. 2015: By 2035, technologies such as these will have measurably reduced inpatient stays, on a per capita basis, since a significant reason for overnight stays is the trauma requiring recovery, and eliminating trauma is a major goal and advantage of the NOTES technology platform. A wide range of other technologies (e.g., “gamma knife”) across multiple categories (device, biotech, pharma) will also have emerged and succeeded in the market by producing therapeutic benefit without collateral damage.]
  • Information technology will radically improve patient management. Very sophisticated electronic patient records will dramatically improve patient care via reduction of contraindications, predictive systems to proactively manage disease and disease risk, and greatly improve the decision-making of physicians tasked with diagnosing and treating patients.
    [View Aug. 2015: There are few technical hurdles to the advancement of information technology in medicine, but even in 2035, infotech is very likely to still be facing real hurdles in its use as a result of the reluctance in healthcare to give up legacy systems and the inertia against change, despite the benefits.]
  • Systems biology will underlie the biology of most future medical advances in the next 20 years. Systems biology is a discipline focused on an integrated understanding of cell biology, physiology, genetics, chemistry, and a wide range of other individual medical and scientific disciplines. It represents an implicit recognition of an organism as an embodiment of multiple, interdependent organ systems and its processes, such that both pathology and wellness are understood from the perspective of the sum total of both the problem and the impact of possible solutions.
    [View Aug. 2015: This orientation will be intrinsic to the development of medical technologies, and will increasingly be represented by clinical trials that throw a much wider and longer-term net around relevant data, staff expertise encompassing more medical/scientific disciplines, and unforeseen solutions that present themselves as a result of this approach.]

The breadth and depth of advances in medicine over the next 20 years will be extraordinary, since many doors have been recently opened as a result of advances in genetics, cell biology, materials science, systems biology and others — with the collective advances further stimulating both learning and new product development. 

Growth of Ablation Technologies, Applications, Worldwide

The growth in sales of a medical technology is dictated by a unique combination of a specific technology in a specific clinical application in a specific geographic market.

In the Smithers Apex report, The Future of Tissue Ablation Products to 2020, the markets for the different ablation technology types were assessed per application in each of the major world geographies. See the groupings, below:

Ablation Types and Clinical Applications:

  • Electrosurgical/radiofrequency
    • Cardiac
    • Surgical
  • Microwave
    • Oncologic
    • Urologic
  • Laser
    • Aesthetic
    • Ophthalmic
    • Surgical
  • External Beam Radiation Therapy (EBRT)
    • LINAC Systems
    • Cobalt-60
  • Cryoablation
    • Cardiac & Vascular
    • Oncologic Surgery
    • GYN Surgery
    • Dermal/Cutaneous Surgical
  • Ultrasound
    • Ophthalmic (Cataract) Surgical
    • Multipurpose Surgical
    • Urologic Surgical
    • Multipurpose High Intensity Focused Ultrasound (HIFU)

Geographic Areas:

  • United States & Other Americas
  • Largest Western & European States
  • Major Asian States
  • Rest of World

The Smithers Apex report contains the detailed assessment of ablation technology sales in each combination of technology, geography and clinical application. Below is illustrated graphically, sorted by compound annual growth rate in sales, each of the combinations.

Growth of Ablation Technologies by Clinical Application and Geography, 2014-2020

image001

Source: Smithers Apex

 

Ablation technologies to reach $16.8 billion

In 2013, energy-based tissue ablation tools and techniques were used in hundreds of millions of procedures required, generating an estimated $12.4 billion in cumulative global sales. These total sales are projected to register a healthy growth over the forecast to the year 2020, reaching $16.8 billion by that time.

A new report published by Smithers Apex covers the global market for energy-based tissue ablation products. See link.

New technologies at Medtech Startups, November 2014

Below is a list of the technologies under development at companies recently identified and included in the Medtech Startups Database.

  • Handheld ultrasound, MRI imaging device.
  • Needle-free injection drug delivery.
  • Lenses designed to correct imbalance between eyes and brain that cause certain migraines.
  • Continuous blood glucose monitoring in diabetes.
  • Customized prosthetic aortic valve.
  • Cystoscope-implanted, stent-like device to treat urinary obstruction associated with benign prostatic hypertrophy.
  • Endovascular treatment for abdominal aortic aneurysm.
  • Respiratory therapy device based on “high frequency chest wall oscillation” for treatment of COPD, other respiratory disorders.
  • Treatment of arrhythmia.
  • Medical device commercialization company active in cardiovascular care, tissue ablation, medical infusions, hand surgery and laparoscopic surgery.
  • Surgical visualization systems.
  • Arthroscopic bone tunneler and other orthopedic surgical instrumentation.
  • Brain stimulation to treat multiple disorders.

See link for a month-by-month listing of the technologies at companies in the Medtech Startups Database.