Technologies at Medtech Startups, December/January

Below is a list of the medical technologies under development at startups identified in December 2014 and January 2015 and included in the Medtech Startups Database:

  • Device to enable office-based placement of tympanostomy tubes.
  • Surgical wound closure device technology
  • Pelvic neuromodulation for urinary incontinence, fecal incontinence, chronic pelvic pain, others.
  • Device designed to treat blood plasma to improve its ability to remove lipids from atherosclerotic plaque.
  • Regenerative medicine
  • Patient-specific surgical instruments for treatment of joint injuries.
  • Surgical sensors/probes, including gamma probe for use during radiosurgically-guided procedures.
  • Biodegradable medical implants.
  • Novel device to monitor inflammation of the gastrointestinal tract.
  • Surgical instrumentation including surgical perforation guide.
  • Technology for improved treatment of atrial fibrillation.

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

Surgical Sealants and Glues Sales Growth

Aside from demonstrating clinical utility in wound sealing and closure on their own, sealants and glues are emerging as important adjunctive tools for sealing staple and suture lines, and some of these products also are being employed as general hemostatic agents to control bleeding in the surgical field. Manufacturers have also developed surgical sealants and glues that are designed for specific procedures – particularly those in which staples and sutures are difficult to employ or where additional reinforcement of the internal suture/staple line provides an important safety advantage.

Sales of surgical sealants and glues have become as common in some surgical procedures as sutures and staples in well developed markets (U.S., Europe and Japan), but their use continues to expand in both stand alone and adjunctive use with other wound closure. Emerging markets, especially in Asia will drive nearly double these growth rates. All told, the global surgical sealants and glues market will eclipse $2 billion by 2018 on compound annual growth of 9.4%.

Screen Shot 2015-01-27 at 2.45.11 PMSource: MedMarket Diligence, LLC; Report #S192.

 

New Medical Technologies at Startups, September 2014

Below is a list of new technologies under development at medtech startups recently identified and included in the Medtech Startups Database:

  • Robotics for ophthalmic surgery.
  • Dynamic force generation for bone repair.
  • Neursurgical brain simulation system.
  • Orthopedic technologies including pedicle screw that does not require a guide wire.
  • Synthetic bone graft materials.
  • Minimally invasive mitral valve replacement.

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

Sealants, Glues, Hemostats, Anti-Adhesion: An Evolved Market

In a forthcoming report on advanced technologies associated with the acute phase of wound management — specifically, hemostasis, closure and sealing — MedMarket Diligence will be revealing the state of the art and the industry for fibrin and other surgical sealants; cyanoacrylate and other synthetic and naturally-occurring high strength glues; a wide range of products providing hemostasis; products that prevent the formation of post-surgical adhesions; and the increasingly varied types of physical wound closure, including sutures, staples, clips, tapes, and other mechanical wound closure types.

Our analysis in 2012 illustrated the scope and depth to which these advanced wound closure products had penetrated the realm of many areas of clinical practice that, up to a scan decade ago, had been dominated for a millennia by simple physical methods to manage acute wounds — sutures and tapes. Below is an illustration of the size and growth in e sales of these products, showing that the advanced products are being adopted at accelerated rates, yet a sizable volume of wound closure remains in the hands of very traditional closure (sutures/staples).

Size and Growth of Surgical Securement Product Segments Worldwide 2010-2019

Source: “Worldwide Surgical Sealants, Glues, Wound Closure and Anti-Adhesion Markets, 2008-2015.”  Published by MedMarket Diligence, LLC. See updated Report S192.

Of course, the field of sutures and staples is not exactly stagnant, devoid of innovation. Sutures, staples and clips innovation have been driven by the commensurate innovation in surgical technique. Traditional surgery via laparotomy has long since been revolutionized by laparoscopy, and endoscopic procedures in general have become the standard for minimizing surgical trauma and faster recovery. The endoscopic format has demanded new suturing and stapling technologies, and industry stalwarts like Ethicon, Covidien and others have been happy to provide the solutions.  And even more recently, natural orifice transluminal endoscopic surgery (NOTES) procedures are pushing the minimally invasive principle to a greater extreme.

The Staying Power of Spine Surgery Markets

While medtech over the past five years has seen continued pressure on prices, increased oversight on physician-manufacturer relationships, reduced med/surg procedure volumes, continued regulatory challenges and the real or perceived negative impacts of the Affordable Care Act, the business of spine surgical technologies remains one of the most steadfast oases of innovation and price stability.

The continued growth of spine surgery owes itself to a number of key drivers:

  • The ageing population worldwide
  • Increasing incidence of obesity
  • A growing middle class in developing countries, with the ability to pay out of pocket for spine surgery
  • Improving worldwide economy
  • Technological device enhancements, leading to improved surgical results
  • Developments in minimally invasive spine surgery (MISS) devices driving a strong increase in MISS, with its numerous advantages
  • In the US, improvements in reimbursement as clinical trials demonstrate the efficacy of treatments using the devices
  • US healthcare reform leading to medical insurance coverage for more people, allowing those suffering from intractable back pain to receive surgical treatment

(The last, of course, is debatable, since medical device manufacturers are not yet convinced that a 3.2% excise tax is supported by the anticipated boost in patient population. The jury is still out on this and, in any case, prospects for the 3.2% tax being repealed are slim, despite repeated efforts.)

Consequently, the worldwide aggregate spine surgery market has a 2012 to 2020 compound growth rate of 7.7%, with individual segments within it growing at a low of 2.3% to a high of 35.0%.

It is also worth noting that we have identified seven (7) new medtech startups (McGinley Orthopaedic Innovations, KB Medical, Trice Orthopedics, Tyber Medical, Direct Spinal Therapeutics, NLT Spine, Osseus Fusion Systems) in spine surgery that have been founded in the past three years alone.

Below is illustrated the spine surgery markets in the Americas and Europe for 2012-2020.

Screen Shot 2014-05-28 at 10.33.52 AMScreen Shot 2014-05-28 at 10.34.10 AM

Source: MedMarket Diligence, LLC; Report #M520, “Worldwide Spine Surgery: Products, Technologies, Markets and Opportunities 2010-2020″.

Growth versus volume in medtech

One of the more interesting aspects of well-established markets that have significant volume in medical technology product sales is that the revenue and the caseload are sufficient to drive fairly a continuous range of technologies that will meet patient demand. As a result, there tends to be a continuum between high-volume, low-growth and low-volume high-growth. This significance should be apparent to active or potential market participants.

This continuum can be represented in two noteworthy ways, each of which illustrates the inverse relationship between the size of a market segment and its growth. For example, one of the most well established medtech markets is traditional bandages and dressings in wound management. These are simple to manufacturer, applicable to a wide range of wound types, require little clinician knowledge to use and, therefore, widely used throughout the world. They represent very large volume, in the $billions worldwide. At the other end of this spectrum are emerging technologies such as the use of growth factors in wound management. They have a large, as yet untapped potential, so their anticipated growth is high, while their current volume still remains very low, at least by comparison to traditional wound dressings.

Here is how these two technologies appear at the ends of the spectrum in wound management, between which are large numbers of different wound management technologies.
20140523-114241-42161375.jpg
Source: MedMarket Diligence, LLC; Report #S249.

The second way this can be represented is the relative share of the market represented by each as they change over time given their differing sales growth rates. Below is an illustration of the net change in share of the total market for wound management products by each product type. Again, there is a noticeable continuum.

20140523-114506-42306054.jpg

Source: MedMarket Diligence, LLC; Report #S249.

The amount of medtech funded is often less than half the story

In tracking venture capital or other money flowing into “medtech”, I am frequently struck by how often the numbers that are presented as evidence tell only part of the picture, like one of the several blindfolded men touching different parts of an elephant tasked with identifying what it is they are touching.

Recent results from Pricewaterhouse Coopers on Q1 2014 venture capital paints a picture illustrating an 11% increase from Q1 2013 to Q2 2014 in total funding for “medical device” companies, with a drop in the number of deals, from 29 to 25.

There are two problems with this, the first being that the fundings data so presented is only looking at “medical device” companies, the second being that we have no evidence on the number of companies seeking funding in either year.

First, talking about medical devices in 2014 is a lot like talking about horses in 1910.  Neither one tells the whole story of the markets in which they very clearly compete. Second, while the amount of money actually funded by VC in 2014 versus 2013 is obviously important (especially to the recipients), the number and size of the deals rejected in both years is also rather important as well (especially to the non-recipients).

So, what should be presented differently? Well, tracking the “medical device” industry is just not relevant anymore (I’ve already argued this ad nauseum), since medical devices don’t just compete with medical devices anymore — for clinical applications or venture funding. In my opinion, the tracking of funding should first look at funding in, say, coronary artery disease treatment (i.e., “disease state”), then consider the share of that funding that is going toward this or that therapeutic option. As for the amount funded, would it not be meaningful to all involved to track the amount of actual versus proposed funding, especially if the proposed funding was limited to actual deals that were ultimately accepted or rejected?

Below is the amount of funding in “medtech”* by month from January 1, 2009, to May 21, 2014, presented both as an annual overlay to reflect seasonality and as a continuum, with a linear trendline.

Screen Shot 2014-05-21 at 1.02.36 PM

 

 

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Source: MedMarket Diligence, LLC

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*What is “medtech”?: We view medical technology (medtech) as principally medical devices and equipment, but also all technologies that are directly competitive with or complementary to technologies represented by therapeutic or diagnostic medical devices/equipment.

Note: Historic coverage of “medtech” has been limited to medical devices, supplies and equipment. We feel that such a limited definition poorly reflects the true nature of the markets that once were limited to such products. In reality, assessing the markets and competition for medical devices by ONLY considering other medical devices would result in gross underestimations of both competition and market potential. Moreover, this is reflected in both the nature of medical devices, which may be hybrid device/bio/pharm products or products that may not be “devices” at all, especially in the typical definitions defined by material type and function, but that compete head-on with devices.