Medtech startup formations economically immune?

There is certainly the possibility (despite my doubts) that the current economic slowdown in global markets will have major effects on the medical technology industry. One simply cannot deny that there is simply less VC or other cash floating around that might be put to medtech investment. And maybe, as has occurred in the past (e.g., in the post dotcom bubble era), investment that does take place will move further downstream, away from the speculative risk of very early startups. In hindsight, it is easy to see such trends and developments.

But looking forward, it is difficult to see significantly diminished demand for the promise of medical technology development. Companies continue to be founded at a strikingly active pace.

The Medtech Startups Database, from MedMarket Diligence, has over the past half dozen years accumulated the data on nearly 900 new medtech companies under two years old — a remarkable pace of entrepreneurship.  In the very recent activity in company formation, here are a samping of the technologies these companies are pursuing:

  • Laser devices to “weld” biological tissues together for wound closures.
  • Drug-coated urinary and other catheters and stents that are designed to prevent or treat scar tissue.
  • Artificial heart technologies.
  • Heart pumps.
  • Compliant balloon technologies.
  • Device for mitral valve repair without need for sternotomy.
  • Pharmaceutical treatments for ischemia and vascular disease, focused on peripheral artery disease.
  • Non-polymeric drug eluting stent
  • Device technology in diabetes management.
  • Medical device inflatables, including devices for biological navigation such as in support of colonoscopy and other endoscopy.
  • Minimally-invasive products for motion-preserving spine surgery.
  • Minimally invasive treatment of vertebral compression fractures.
  • Minimally invasive treatments for removing varicose veins.
  • Drug-coated angioplasty for coronary and peripheral applications


Medtech Startups Database described here. See pending and recent MedMarket Diligence reports: Sealants, Glues Wound Closure (coming in December), Ablation Technologies,  and Spine Surgery.

Economy catches up with biotech investing (no surprise)

If you simply compare the average development times of pharmaceuticals, biotech and medical devices, you will see that medical devices demonstrate the shortest time from conception to market (or rejection). Devices, by virtue of providing, in many cases, a simple mechanical function — flatten atherosclerotic plaque against the lumen (angioplasty), keep it there (stents), close wounds (sutures, staples), reduce stomach size (lapband), etc. — have fewer inherent possible downstream complications compared to pharmaceuticals, with their more powerful chemical effects, or biotech products, with their more power biochemical, genetic or other effects. 

So, it is not surprising that when recession hits the economy, forcing a more shortened view of investment returns, medical devices garner a relative edge in investment.  Hence, it was not surprising to see this article:  Economy catches up with biotech investing today.

It is a double-edged sword, indeed, that devices are more “blunt” in their effects, with reduced likelihood of the scope and degree of downstream affects of biotech and pharmaceutical products.  Shorter development cycle equates with faster routes to market, not larger market opportunity or, in the case of patients, better long term outcomes.

Wound Management Market Segment Growth, 2008-2017

Excerpt from MedMarket Diligence report #S245, “Worldwide Wound Management, 2007-2016.”  See link for more information. Available for purchase online.

Wound Management Market Growth by Segments, 2007-2016Technologies developed and in use for the management of acute and chronic wounds have diversified from traditional dressings, bandages and wound closure techniques to include an increasing number of diverse technologies ranging from tissue engineering, growth factors, physical therapies (e.g., negative pressure) and others.Traditional dressings and bandages have evolved to contain more active elements contributing to wound healing, with products including films, hydrocolloids, foams, alginates, hydrogels, non-adherents and antimicrobials.  Wound closure is a specific area of intense development and market growth beyond traditional suturing and more recent stapling technologies and has seen proliferation and high market growth for surgical sealants, glues and hemostasis products.

The size of the worldwide wound management market is ultimately driven by the clinical need for advanced wound management products. That need is most clearly reflected in the prevalence of chronic wounds and burns. Current estimates put the total annual incidence of chronic wounds at almost 9 million worldwide, and there are 177 million cases of diabetes worldwide; 10-15% of diabetic patients will develop ulcers at some point. The market for products used in the management of venous stasis (as in chronic venous ulcers) is put at over $3 billion, while the decubitus ulcer (e.g., bedsores) market is in excess of $2 billion. Sales of products used to treat diabetic foot ulcers are estimated around $1.5 billion, and the market for burns dressings is approximately $60 million.

It should be noted that a large proportion of worldwide wound product sales are accounted for by traditional types of wound management products. An estimated two-thirds of the world’s physicians are not making routine use of advanced wound management products, with availability playing only a minor role in limiting their use. Conversely, while the U.S. healthcare market is characterized by an almost overindulgent attitude toward new technologies, U.S. physicians are much more conservative in their approach to advanced wound healing technologies than their European counterparts. For this reason, the European share of the advanced wound care market is significantly higher than the U.S. share.

Market Growth in Wound Management Product Segments
Until recently, the product categories with most growth potential were alginates and foams; both have substantial shares of the total market and both are set to increase their shares substantially between 2007 and 2016. Hydrocolloids had a considerable market share in 2007 but their star is in decline; it is anticipated that they will lose several percentage points in the market share table by 2016. (Segment growth in chart from MedMarket Diligence report #S245, “Worldwide Wound Management, 2007-2016,” publishing November 2007. See link for description, table of contents.)

The most significant market entrants are growth factors and, even more dramatically, physical therapies — specifically, negative pressure (also known as VAC therapy) devices. This market sector grew from a small base to gain $1.2 billion by 2007 and is set to capture an estimated 20% of the advanced woundcare market by 2016.

Films, antimicrobials and non-adherent dressings will maintain steady growth although their shares of a vigorously expanding market will decline.

(Report #S245, “Worldwide Wound Management” is available for purchase online.)

Medical Technology Market Analysis, MedMarkets (April 2008)

Below is the coverage in the April 2008 issue of MedMarkets.

Ablation:  An Energized Market

Demand for Hip and Knee Implants Expected to Increase

MedMarket Outlook: Beyond Technology Innovation: Current and Future Market Forces and Trends

Early Stage Companies: Evalve, ES Vascular, Cardiorobotics, TriVascular

Early Stage Company Financings: Alure Medical, Arbel Medical, Breathe Technologies, CoAxia, IDev Technologies, IlluminOss Medical, Lanx, Pathway Medical Technologies, Tryton Medical

Recent Medtech Startups

Biotechnology Update: Self-Assembling Nanofibers Show Promise for Spinal Cord Injury

Drivers: Sluggish Economy Slows Venture Capital Market

Leading Clinical Edge
Nanovalve Useful for Drug Delivery
Molecular Machine Serves as Remote Control
Progress Made on Biosensing Nanodevice
Mutant Proteins Stimulate Heart Cell Growth
Specialized MRI Identifies Brain Cancer Early
New Therapy for Pediatric Retinoblastoma
Eye Drops Monitor Brain Tissue Repair
Nanoengineered Gel for Spinal Cord Injury
Cell-Sorting System May Detect Cancer

FDA Approves OrNim’s Monitoring Device
Study Challenges Aspect Medical’s Device
Kinetic Concepts to Acquire LifeCell
Promising Results for Evalve’s MitraClip
U.S. Patient Receives CardioKinetix Heart Implant
Medtronic Improves Talent Stent Graft
FDA Reports Medtronic AneuRx Deaths
Medtronic CRT Clinical Trial Fails
Positive Results for Echo Therapeutics’ Symphony
Abbott’s Glucose Monitor Approved
Datascope to Sell Business to Mindray
Philips Completes Respironics Acquisition
ArthroCare’s Ablation Device Successful
Benefits from Genzyme’s Carticel Sustained
J&J Considers Design Changes for Charité
LifeNet Health Launches Cervical Implant
BioMimetic Refutes FDA Comments
AngioDynamics to Buy Diomed

Complete content available to subscribers only.  For coverage in all past issue of MedMarkets, see link.

See Reports from MedMarket Diligence.

“High Growth Medical Technologies” 2008

We have just updated our “High Growth Medical Technologies” white paper, as we expect to continually do in the immediate future, since the areas with growth keep changing, and new areas keep appearing.

As all white papers should be, it’s free.  Here’s the link so you can download it.

Drivers, Forces and New Thinking that Redefine Medtech Market Outlook

From the December 2007 edition of MedMarkets

Never before, or so it seems, have there been so many widely different dynamics in medical technology markets that determine whether a company will be successful, or if successful, to what degree. Science, its application in technology, and its commercialization in healthcare has traditionally been driven by a narrow scope on a limited number of specific functions provided by the product — the expanded coronary artery lumen, the successfully implanted artificial hip, the endoscope that delivers good images. However, as the famous Greek philosopher Heraclitus said, “You can never put your finger in the same river twice.” So, the target changes as businesses seek greater commercial success with products that deliver more functions better. Third party payers strain to ensure coverage even while premiums grow out of control, so they demand better, more cost effective performance from a longer term perspective. Enabling these perspectives, or even driving them, is technology development that increasingly redraws boundaries of what is possible. And the overarching force that accelerates change is globalization of markets. Here we consider in the space allotted just some of the specific drivers and forces that are redefining the medtech market outlook.

Redefining the product. Market opportunity and technology development operate hand-in-hand. In 2007, the development of products is limited in scope seemingly only by imagination, due to the spectrum of opportunities created by materials technology, information technology, product hybridization and others, enabling manufacturers to focus on the fullest possible achievement of clinical outcome delivered by their products. (We have frequently addressed this issue; the dissolution of boundaries between devices, drugs, pharmaceuticals.) Realizing this is necessary means realizing that a whole slew of other companies out there looking at that same clinical outcome, often from a very different perspective. Of course, this sometimes means being opportunistic to recent developments, such as in stent developers adapting development (or maybe just their marketing message) to address a sudden hot button issue like late stage thrombosis. As comfortable as it may be to lean on one’s existing technology platform, unless that platform is predetermined to anticipate the wide range of competition possible, manufacturers must think beyond the platform and focus on the clinical solution, redefining the product in all its forms to simply reach that solution more effectively.

Redefining the process. There is always another way to get the job done, the “job” being the development, regulatory approval, manufacturing, marketing, sales, and distribution of medical products. It is a safe bet to say that no manufacturer has optimized that entire process. And even if a manufacturer has done so, the process remains a moving target, with new options emerging on all fronts. New vendors appear, regional/national/international economics change, and technologies create new possibilities to get the “job” done. Every step of the process then demands regular scrutiny to adjust: what is the appropriate balance between in-house development versus acquired innovation, what are the current sensitivities of regulators as to specific demands for market approval, what new options exist for OEM and how do they measure against the costs, how have marketing channels changed to create opportunities and challenges in product/price/placement/position, what are specific healthcare systems’ new requirements for purchasing new technology, are products reaching the market through distribution channels that optimize the market penetration given associated delivery cost? These questions only scratch the surface.

Never taking an eye off of “cost”. In the most optimistic view, the issue of cost has to be view through the lens of opportunity. Cost must be considered from the most relevant perspective. Can you make the argument that this new device/product is more effective than competitive alternatives? Although you believe your product is not only competitive against similar technologies but is it also competitive against different technologies targeting the same patient population(s) — and do third party payers really see it this way? Can you make an effective case?

Competition is a chameleon. Be careful what you consider to be your competition, because accurate though you may be today, your competition could be entirely different tomorrow. Competition of course is any entity serving the need of your current/potential customers by any method and from any source. You know the companies with like technologies currently going head-to-head with you in the geographic markets in which you market/sell product, but are you considering the bigger picture of any potential alternative technology on the market or under development, currently active in your territories or looking at yours from across the border? The corollary to this is, of course, that one must also look aggressively at those new technologies that will open up patient populations to be served and also look back across those geographic boundaries to markets that are attractive enough, and/or with barriers low enough to make it worthwhile for one to compete there as well.

Do not limit your potential. Once a manufacturer decides the product and market opportunity that will be pursued, it becomes a sort of self-imposed limit. We frequently witness innovative medtech startups who dare to assume that they need not limit their market introduction to the U.S. or Europe, or that even though they have only a handful of employees, they are capable of competing with multi-nationals who who have million- or billion-dollar budgets. To assume any limitation is to make it real, so one best make the biggest reasonable assumptions about market potential.

We must admit that this view of the medtech market outlook can be accused of being myopic, since it only considers a limited number of possibilities in the list of possible market drivers, and only briefly touches on them. Competing in medical technology markets these days can be an overwhelming proposition because all of the possibilities must be explicitly considered or they will be implicitly made so. The most compelling advice to be offered is that the successors in medtech markets rarely view these market drivers as daunting challenges, but instead view them as invigorating opportunities.

New report from MedMarket Diligence:  Worldwide Wound Management 2007

MedMarket Outlook: High Growth Medical Technologies

(From the September 2007 issue of MedMarkets)

Drawing upon the clinical and technology sectors we have addressed in MedMarkets and the Market and Technology Reports of MedMarket Diligence, we have previously identified a number of areas where we see substantial growth in medical technology markets. In our white paper, High Growth Medical Technologies, we note those areas we consider high growth due to their “likely success in clearing technology hurdles, the size of their respective current/potential caseloads or target markets and their reasonably short (<5 year) timeline to achieve considerable realization in measurable (or even sizeable) commercial terms.” We highlight them here and note additional areas worthwhile to watch.

Nanotech and MEMS. Applications of [tag]nanotech[/tag] in medical/healthcare are incredibly diverse, from device coatings to complex drug delivery, sensors and other diagnostics. Applications are seemingly limited only by imagination: drug delivery, gold nanoshells for heat-killing cancer cells, diagnostics, nanobatteries for artificial retinas, nanosensors for pathogens, etc. [tag]MEMS[/tag] (microelectromechanical systems) applications include implantable pumps, hearing aids, defibrillators, lab-on-a-chip and other biomedical research.

Drug Device Hybrids. Drug-coated stents are only the most obvious. Demarcations between drugs, devices, biotech and biopharm have become almost arbitrary as the products are now more often defined by their functions than their composition, pitting widely different technologies against each other or combining them into products that are far more than the sum of their parts. These include bioresorbables, drug coatings for biocompatibility, [tag]drug delivery[/tag], tissue ingrowth and myriad other possibilities.

Atherosclerotic plaque reversing drugs. Take an established, invasive device market, or markets ([tag]angioplasty[/tag], [tag]stent[/tag]ing, coronary artery bypass technologies. etc.) and penetrate it with a drug — the word “growth” would be inadequate in describing the potential.

Rational therapeutics. Both drugs and device markets, of virtually all types, are at best symptomatic, arguably with high efficacy, but symptomatic nonetheless. Any clinical intervention, however, that directly addresses the root cause of disease or at least moves further upstream in the pathogenic pathway (e.g., insulin for diabetes is a far better clinical solution than dialysis for end stage renal disease), will have substantially more potential. Pharmaceutical development in general, and biotechnology in even more specific terms, recognizes the value in this. However, many a venture capital dollar has been spent overestimating this value while underestimating the technical challenge.

RFID — Radiofrequency Identification. The integration of information technologies with medical devices is inevitable, given the value of information that can be exploited by identification of devices using [tag]RFID[/tag], from ensuring surgical instrument count in the OR, identifying implants in patients, tracking product inventories, etc.

Infection control. The global population and its increasing capacity to migrate brings pathogens from, and to, all corners of the globe. The overuse of antibiotics has stimulated a startling number of drug resistant bacteria. Nosocomial infections represent a huge cost in healthcare systems. These reasons are enough to point to the huge potential for products in infection control.

Obesity Drugs. Effective drugs to treat [tag]obesity[/tag], and preempt all the downstream healthcare complications of obesity, represent potential recognized by a growing number of pharmaceutical companies, even in spite of the recent failure of Accomplia (rimonabant) by Pfizer. High volume caseload with high healthcare costs are strong drivers in support of continued obesity drug development.

To these high growth areas previously identified, we add a number of additional ones, due to the emerging potential seen as high volume potential is matched with achievements in technology development:

Apoptosis. “Programmed cell death” is a normal part of an organism’s life cycle, encompassing necessary functions of cellular differentiation, but also orepresents an area of tremendous study for its potential in areas as diverse as cancer therapeutics and other disease treatments due to the normal or even dysfunctional role it plays in those diseases.

Gene-driven drug development. The mapping of the human genome was a major stumbling block for the development of gene-based medicine, but it is not the only hurdle. The complex interactions of the human genome as it operates in molecular biology, resulting in either healthy or pathogenic tissue systems, are a gargantuan puzzle more complex than the genome mapping goal itself. However, we predict that the progress made in understanding the genetic basis of disease will yield dramatic successes in the development of drugs created based on this knowledge or, in the least, screened against genetic profiles that will dictate the likely success of pharmaceutical candidates.

Neuromodulation. In the September issue of MedMarkets, we highlight some of the developments in [tag]neuromodulation[/tag] and [tag]neurostimulation[/tag]. While applications are diverse, the apparent commercial successes in this field have been limited, but certainly significant to have been noticed (or created) by companies like Medtronic. The human nervous system has an architecture and function that make it innately less amenable to yielding its secrets than are other organ systems, yet advances in implantable devices have converged with the huge unmet need of chronic pain management to create enormous opportunity in the market.

As we have noted previously, the potential markets for advanced medical technologies appear to be limited only by imagination. Manufacturers have demonstrated time and again their ability to create product types, product combinations, applications and all their various customized variations in order to capitalize on the convergence of technical achievement and umet market demand.

The (Medtech) World is Getting Smaller

It has already been said that medical technology is getting complicated. Now it’s time to point out that the world is getting strikingly small(er).

Even the youngest startup has to consider market opportunity on a global scale. So a little medtech startup with not much more than a patent (and sometimes not even that) and with a staff you can count with one hand, is highly likely to be considering their moves based on global markets. The opportunities are all too apparent and tangible.

A caseload of 100,000 U.S. patients annually as prospects for a new device can be reasonably attractive if the device offers a measurable clinical advantage over alternative approaches  — approaches that may include a device, a drug, a hybrid of both or just a lifestyle change — and if that advantage is tangible and can be sold as such. But if the real potential market is any healthcare system sophisticated enough to use the device, willing and prepared to pay for the device and one reachable by distribution systems, then that U.S. caseload can actually represent a minor share of the total. The “rule of thumb” is that for most medical device markets, the U.S. represents roughly 50% of the world market, and while clearly the U.S. healthcare system is ready, willing and able to pay for medical technology that sometimes shows only marginal clinical advantage, that remaining 50% is comprised of an awful lot of Westernized, democractic, and capitalistic geographies, with sophisticated distribution systems, well established reimbursement schemes and, not least of which, painfully favorable currency exchange rates against the dollar. Combine this with increasingly sophisticated manufacturing and design companies capable of producing prototypes, CRO’s capable of generating clinical data, and tax structures, work forces and economies globally just begging for outsourcing opportunity and it seems a rather foolish notion to limit market consideration to the U.S., does it not?

Then there is that other earth-shrinking force, information technology. Time was when my business’s worldwide focus meant a rather heavy FedEx bill to deliver reports to Europe, Japan, China, Australia, Korea and the Middle East, but thankfully, the idea of the “paperless” world is getting more and more real, since now the vast majority of business reports are ordered and delivered electronically within 30 minutes from start to finish. It’s only the deliberative dialogue that takes longer as clients decide on the relevance of report content and that process takes place largely electronically, of course.

Worldwide markets MedMarket Diligence have covered recently:

Obesity (final edits in process)
Surgical Sealants
Orthopedic Biomaterials
Wound Management

Tags: medtech

Medical technology definitions and markets get blurry

Time was when a device was a device, a drug was a drug and biotech was . . . well, still in R&D.  When is a device a device? When is a duck a duck?  If it walks like a duck, sounds like a duck and looks like a duck, it’s a duck — or is it? You have to make certain that you carefully define your assumption of what defines a "duck" versus what is like a duck in appearance or what has duck-like qualities or what has aquatic grazing tendencies similar to ducks but in fact is a quite unrelated waterfowl.

Over the recent past (say, five years), the steady rate of development to make products do more, perform at higher standards, and to play more roles in achieving a more aggressive goal in clinical outcomes is seriously complicating any effort to categorize a technology into such previously neat niches. And it isn’t just at these higher levels of definition (of course, devices like stents are coated to impede restenosis, others in tissue engineering are made of materials designed to stimulate cellular in-growth and then just dissolve); it’s the subtle distinctions between otherwise similar products that make some issues more blurry. Issues like trying to assess market potential. So, when is a fibrin sealant a glue and when is it a hemostatic agent? When does a device compete with a similarly designed device and when does it in fact compete with a lifestyle change? It’s not simple enough anymore to be able to distinguish equipment from reusables. We no have to be able to separately measure usage of disposables, reusables and (I abhor this term) reposables. Perhaps most importantly, at least in the eyes of the weary medtech manufactuters, is the idea that competition has long since been changed from being defined as those products performing a similar, albeit narrowly-defined function, like when the angioplasty manufacturer could reasonable consider his/her competitors to be all other manufacturers of devices that produce catheter-based recanalization of the atherosclerotic lumen. Oh, woe the angioplasty manufacturer who does not now also consider atherectomy, transmyocardial laser revascularization, bare metal stents, drug-eluting stents, traditional/open, MIDCAB (and similar) or and even percutaneous coronary artery bypass graft, let alone the classes of drugs and other non-device approaches to produce non-surgical reversal of atherosclerosis. But any analysis of an established market and/or technology sector (see MedMarket Diligence Reports), must find a way to wrap up the data and weigh it in specific "market segment" bundles. As carefully as any such effort is handled, with assumptions laid out carefully, rarely is it any guarantee (trust us on this score) that all clients will see any particular market the same way, and they will be all too ready to challenge the notion of a hemostat, calling it instead a sealant, or a glue or some other moiety of their choosing, or insisting that a <5% market share does not make a company a "minor" player. To argue this is, of course, their perogative. So, bear with those like us when, however tedious it may seem, we methodically define a duck in excruciatingly explicit term so we can ensure that we gotten all "ducks" in a row and counted.

See a selection of our reports here.


Tags: medtech, device, implant, biotech, drug.


Bone and Other Allografts Worldwide

Worldwide Allograft MarketAllografts are the main “traditional” orthopaedic biomaterials. This market segment includes bone allografts (fresh, or freeze-dried bone; also demineralized bone) and soft-tissue allografts, including cartilage, tendons and meniscus.

The global market for all allografts was $1.5 billion in 2006, with bone allografts contributing half of that, soft-tissue allografts $500 million, and demineralized bone the remaining $250 million. The ligament and cartilage segments are expected to double from 2006 to 2011, and there will be even greater growth in the meniscus segment, but relatively slow growth in bone allografts. The reason for the anticipated surge in soft-tissue allografts is the increasing demand for repair procedures related to growth in more active lifestyles among affluent younger people. Bone allografts, by contrast, face increasing competition from synthetic bone substitutes and there is a continuing shortage of donor material.

(From “Emerging Trends, Technologies and Opportunities in the Markets for Orthopedic Biomaterials, Worldwide,” Report #G625.  Published December 2006.  See link.)

Tags: medtech, orthopedic, biomaterial, allograft