Growth Factors in Wound Management

Extensive research has demonstrated that wound fluid is rich in growth factors. Growth factors are naturally occurring proteins found primarily in platelets and macrophages. They are needed for normal wound healing to promote growth and migration of fibroblasts, endothelial cells and keratinocytes. The functions of growth factors include; attraction of cells to the wound site (chemotaxis), stimulation of cell division/ proliferation (mitogenic competence/progressive), differentiation of cells into specific phenotypes (transformation), and stimulation of cells to perform functions or secrete other growth factors. Growth factors bind to receptors on the cell surface where they activate cellular proliferation and/or differentiation. There are a number of growth factors which are involved in wound healing at different points in time. Many are quite versatile and capable of stimulating cellular division in different cell types; others are specific to a particular cell type.

Growth factors applied to wound management fall into the following categories:

 

Growth
Factor
SourcesEffects
Epidermal growth factor (EGF)Activated macrophages. Salivary glands. KeratinocytesKeratinocyte and fibroblast mitogen. Keratinocyte migration. Granulation tissue formation
Transforming growth factor-? (TGF-?)Activated macrophages. T-lymphocytes. KeratinocytesHepatocyte and epithelial cell proliferation. Expression of antimicrobial peptides. Expression of chemotactic cytokines
Hepatocyte growth factor (HGF)Mesenchymal cellsEpithelial and endothelial cell proliferation. Hepatocyte motility
Vascular endothelial growth factor (VEGF)Mesenchymal cellsVascular permeability. Endothelial cell proliferation
Platelet derived growth factor (PDGF)Platelets. Macrophages. Endothelial cells. Smooth muscle cells. KeratinocytesGranulocyte, macrophage, fibroblast and smooth muscle cell chemotaxis. Granulocyte, macrophage and fibroblast activation. Fibroblast, endothelial cell and smooth muscle cell proliferation. Matrix metalloproteinase, fibronectin and hyaluronan production. Angiogenesis. Wound remodeling. Integrin expression regulation
Fibroblast growth factor 1 and 2 (FGF-1, FGF2)Macrophages. Mast cells. T-lymphocytes. Endothelial cells. FibroblastsFibroblast chemotaxis. Fibroblast and keratinocyte proliferation. Keratinocyte migration. Angiogenesis. Wound contraction. Matrix (collagen fibers) deposition
Transforming growth factor-? (TGF-?)Platelets. T-lymphocytes. Macrophages. Endothelial cells. Keratinocytes. Smooth muscle cells. FibroblastsGranulocyte, macrophage, lymphocyte, fibroblast and smooth muscle cell chemotaxis. TIMP synthesis. Angiogenesis. Fibroplasia. Matrix metalloproteinase production inhibition. Keratinocyte proliferation
Keratinocyte growth factor (KGF)KeratinocytesKeratinocyte migration, proliferation and differentiation

Source: MedMarket Diligence, LLC; Report #S249

The emergence and rapid adoption of growth factors in wound management is testimony to the expectation that they will hasten wound healing and result in better outcomes, lowered cost or both. While the market for growth factors in wound management is largely represented by the U.S. market (as with most advanced medical technologies), economics, technology diffusion and other forces will lead to more rapid growth in the use of these products in Asia/Pacific (in particular, China will see strong growth, given that powerhouse country’s propensity to bypass progressive development in favor of very rapid adoption of new technologies).

Distribution of Wound Growth Factor Markets, 2013 & 2021

GF-pie-2013-2021

Source: MedMarket Diligence, LLC; Report #S249

A decade (and more) of medtech startups

For the past decade (actually, more like 12 years), we have been identifying and tracking medical technology startups. These are companies that we identified sometimes only a week or two after their company registrations were filed (and, invariably within the preceding two years) who started businesses to develop and commercialize a technology falling in the field of “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.

This a fairly broad definition, but we feel it is appropriate because it considers not only the nature of the technology itself but any de facto competition to that technology.

Let’s say you are a manufacturer of coronary stents. Is your competition only other manufacturers of coronary stents? How about angioplasty devices? How about drug-eluting balloon angioplasty? How about atherectomy? How about robotic, percutaneous or traditional coronary artery bypass grafts? And while we’re at it, how about a drug that reduces atherosclerotic plaque to a level obviating the need to even consider interventional cardiology or cardiovascular surgery (“Other than that, Mrs. Lincoln, how did you enjoy the play?”)?  Can you really ignore the big picture?

So, we pretty aggressively identified and categorized new medtech companies.  We do this because these companies are inherently of interest to any of our clients (small, medium or large), they reflect important medtech trends and developments and, eventually, these will be (or already are) our customers.

Below is a table detailing the clinical and technology focus (multiple categories may apply to individual companies) in the Medtech Startups Database:

Clinical/Technology Focus#Companies
Ablation33
Arrhythmia27
Biomaterials101
Biotechnology72
Blood, organ, tissue68
Cardio diagnostics44
Cardio therapeutics233
Critical care, patient monitoring14
Dental/oral surgery7
Diabetes46
Diagnostics76
Drug delivery57
Drug discovery15
Diagnostic imaging56
Gastrointestinal49
Interventional radiology, vascular surgery108
Minimally invasive176
Nanomedicine48
Neurology, neurosurgery69
Obesity25
Ob/gyn19
Oncology80
Ophthalmology41
Ortho-musculoskeletal222
Patient monitoring38
Pediatric11
Pharmaceutical34
Pulmonary31
Spine121
Stem cell33
Surgery343
Tissue engineering28
Urogenital53
Wound care80
Other75

Source: MedMarket Diligence, LLC

Is your business in medical devices — or medtech? (there’s a difference)

In 1900, if you manufactured buggy whips, did you see yourself in the buggy whip industry — or the transportation industry?

I am not a big believer in conventional wisdom. Yes, of course, conventional wisdom does get things right sometimes, but the problem with conventional wisdom is that (here’s the problem) it is sometimes failingly conventional. That means it tends to be stuck with entrenched definitions and ways of looking at the world that tend to miss the fact that the world is not a statue that can be admired from different angles, but a moving, dynamic, fluid object that can only be understood from a moving perspective.

So, conventional wisdom has it that investment in medical technology is down. I don’t buy it.  I have seen the emergence of so many new medtech companies, even since the Great Recession of 2008 (see link). I have witnessed hundreds of millions of dollars flow into medtech — early-, mid-, late-stage and the occasional IPO — and I have tracked those dollars. Below is the month-by-month tally of medtech investment from 2009 through 2013:

funding-thru-May-2013

Source: Compiled by MedMarket Diligence, LLC (data at link)

Here’s what I will buy:

  • Investors are increasingly inclined to delay investments in later-stage medtech as a hedge against risk. They want to see highly promising clinical results and strong indicators that the FDA will reach decision to approve before they lay their money down.
  • Early-stage medtech companies are now less likely to derive funding from outside investment than they are from outright acquisition. Face it, new technologies are risky and costs of development to get through the R&D and regulatory minefield are high. At the same time, big medtech companies don’t have great incentive to carry expensive R&D activity on the books when they can alternatively bide their time watching young medtechs until the time is right to buy them up along with their fervent entrepreneurs committed to commercial success of their new widget.
  • Yesterday’s medtech is not today’s medtech (see link). Devices no longer compete against other, similar devices alone. They compete against any and all therapeutic alternatives to achieve the same desired clinical outcome.  Therefore, if you are analyzing medtech, you can’t just consider coronary stents and angioplasty in their varied embodiments. You have to also consider their competitors (and isn’t a medtech competitor also a medtech?) to be any and all therapeutic options targeting that same endpoint.  Hence, you have to look at Esperion Therapeutics for their cholesterol lowering drugs (BTW, Esperion just filed for IPO, so count that in, too).

The forces and developments that dictate success and failure evolve as new technologies and new operating practices, with new variables are injected into the equation.

I am therefore left with the old business school adage about the buggy whip manufacturers I alluded to earlier. What is your industry? Horse motivation, or transportation?

Growth of established and advanced wound closure products globally

Sutures and staples are fairly low tech methods to close wounds.  Sutures in one form or another (mostly sheep intestines) have been in use for hundreds of years and staples have been in practice since the early 1900s. At the other end of the extreme are high strength medical adhesives or surgical glues, which are still largely in their infancy.

But the impact of these products in the market for wound closure varies by country and the local nature of medical practice, the impact of culture on the management of wounds, the economic climate and a large number of other factors.

Below is illustrated, for comparison, the compound annual growth rate in sales of sutures/staples versus high strength adhesives/glues.  What is clear is that the more rapid growth of high strength adhesives reflects the fact that their potential is a long way from being fully penetrated.  What is not as clear from growth rates is the relative size of the markets — or the absolute sales volume associated with the growth rates given.  Sutures and staples still represent an enormous ($5.5 billion) global market while high strength glues are less than a quarter of this.

CAGRs-sealants-high-strength

Source: MedMarket Diligence, LLC; Report #S190.

The complete picture — growth and current revenues — is represented in the sales by country, which (for the sake of this snapshot) is illustrated below in summary by geographic region.

regional-sealant-sales-2012

Source: MedMarket Diligence, LLC; Report #S190.


“Surgical Sealants, Glues, Sutures, Other Wound Closure and Anti-Adhesion, Worldwide Markets, 2012-2017″, Report #S190 from MedMarket Diligence, details the current and forecast market by country for the range of products in wound closure and related wound applications including tapes, sutures/staples/mechanical closure, hemostats, fibrin sealants/glues and high-strength medical adhesives and anti-adhesion products.

Medical technology being redefined by forces, innovation

One of the significant challenges in current markets for medical technology is the evolving definitions that dictate the nature of the competitive landscape. The unrelenting economic forces underpinning medtech — to drive down the cost of healthcare — have forced manufacturers to respond to competition that is broader, more aggressive and centered considerably less on “features” than on “benefits”, with benefits under intense scrutiny. Healthcare systems have limited the number of contracted vendors and the lower prices have reduced manufacturers’ margins, which has shaken out those unable to compete on cost and resulted in a market increasingly characterized by a much smaller number of competitors who must compete against all therapeutic alternatives, regardless of the nature of the technology approach.

In a very real sense, medical technology has in fact enabled these forces as manufacturers have responded to the market forces by developing products that compete, cost effectively, on a broader therapeutic scale. Innovators have been steadily stretching the boundaries of possibility through advanced materials technologies development (polymers, hybrids and embedded drugs, nanomaterial and other coatings, etc.). Researchers in basic and applied sciences are combining understanding from multiple disciplines impacting medtech performance — the benefits of understanding in cell biology, molecular biology, biochemistry, chemistry, flow dynamics, computer science, statistics, physics, and others are increasing the performance in vivo of new medical technologies.

As a result, the nature of medical technology has changed, particularly relative to competition. Below is a THEN and NOW view of medical technology.

medtech-defs1

Source: MedMarket Diligence, LLC

 

Growth in posterior pedicle screw fusion systems in spine surgery

Posterior pedicle screw fusion systems are used extensively in spine surgery; eight or more screws may be used in a single procedure.

The posterior pedicle screw fusion system will continue to be used in spine surgery for the foreseeable future. Industry managers believe that, even as new treatments come on to the market, spinal fusion will continue to be the gold standard treatment for degenerative disc disease unresponsive to conservative measures.

The global market for posterior pedicle screw fusion systems was nearly $3 billion 2012, and is forecast to reach a value of almost $6 billion by 2020. The average selling price (ASP) is expected to drop over this period, due largely to strong competition and the sheer number of companies manufacturing and selling these devices.

pedicle-screw

Source: MedMarket Diligence, LLC: Report #M520.

A variable number of pedicles screws are used in each procedure but this number on average will remain the same through 2020.  Consequently, with prices being squeezed, unit growth will outpace dollar volume sales growth.

The global leader for posterior pedicle screw fusion systems is Zimmer, followed by Medtronic, with the two companies controlling almost 75% of the market. There are many smaller companies in this market, and all of these are targeting the same customers, creating intense pricing pressure for devices that are generally ‘me-too’ and leading to consolidation as manufacturers hit their lowest limits on cost.

 

Trend and distribution in clinical/technology focus of medtech startups

MedMarket Diligence has been tracking the formation of medtech startups for over a dozen years. For the sake of definition (since not everyone has the same view of “medtech” or “startup”), we view “medtech startups” as: Medtech companies are those principally developing and/or marketing 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. Startups are companies typically founded within the two preceding years and often much sooner (months or weeks preceding).

Below is illustrated the clinical/technology distribution of medtech startups identified by MedMarket Diligence and included in the Medtech Startups Database:

startups-summary-may-2013

Note: Medtech startups may be categorized multiple ways (e.g., surgery and minimally invasive and spine).

Source: Medtech Startups Database.

The number of companies identified over time is illustrated below, with detail on the clinical and technology categories of each, with the overall shape of the curve reflecting both our ramp-up in the process of identifying companies and the rate of companies being formed (note, given the number of categories tracked, it is best to simply observe the overall distribution rather than the detail on specific categories, and for this reason the above graph shows the numbers by descending order of categories):

startups-summary-category-year-may-2013

Note: Medtech startups may be categorized multiple ways (e.g., surgery and minimally invasive and spine).

Source: Medtech Startups Database.

The decline in numbers of startups subsequent to 2007 reflects the global recession and its harsh impact on the availability of capital to support new company formation.