(Note: See the August 2016 Report #S290.)
Population differences represent a major difference between countries in the relative demand for medical products, but there remain many other differences in drivers and limiters of sales.
The markets for wound closure encompassing sutures & staples, vascular closure devices, surgical hemostats, surgical tapes, and surgical sealants & glues show distinct sensitivities country-by-country as a result of differences in:
- Practice patterns
- Cultural differences in perception of “wounds”
- Perception of new technology
For example, the two graphics below illustrate the wound closure markets in Germany and the United Kingdom. To have fully compared the markets in these two countries aside from differences in population, we might have presented per capita values in the sales, but even without doing so it is clear that relative sizes and growth rates in the two countries are sufficiently different to warrant attention in local efforts to market these products.
Source: “Worldwide Surgical Sealants, Glues, and Wound Closure Markets, 2013-2018”, Report #S192; published by MedMarket Diligence, LLC. (Note: This report has been superceded by the August 2016 Report #S290.)
The compound annual growth rate over a number of periods is the single growth rate that, if applied year-to-year, results in the absolute growth from the value in the first to the last period. It is a way to see the underlying overall growth from year to year that may be obscured by the high growth and low growth years.
Why can’t you take the average of each of the year-to-year growth rates? You can get this without even knowing the absolute numbers (e.g., sales in a given year). This will get you close to compound annual growth rate, but without connecting the growth rate to the actual absolute growth, the growth rate does not get properly weighted by the value of that growth. Compound growth rates must be calculated from the actual values, or they will not reflect the extent to which the growth from one year to the next is compounded by the actual values.
The compound growth rate reflects the singular growth rate which, if applied every year, will result in the growth from the first to the final year. The average growth rate will not do this. See the sample data below:
To the extent that there is uneven growth (in the example the growth rates that vary considerably from year-to-year), the average annual growth rate and the compound annual growth rate (CAGR) will differ. If there is even growth, as in the special case when the growth rate per year is exactly the same every year (say, 12.86%), then the CAGR will be exactly the same as the average growth rate.
Please note that the compound annual growth rate imputes but does not reveal the variation from year to year in growth rates, only the impact from the first to the last year in the forecast.
So, here is the actual calculation of compound annual growth from Year 1 (“y1”) to Year X (“yx”), where y1 is the first year and yx is the final year:
Let’s break it down: If you wanted to simply know the growth from y1 to yx (let’s say 2014 to 2024), then you simply take the sales in year x and divide it by the sales in year 1. That would be shown as (Salesy1/Salesyx)-1. So, if sales in year 1 are $108.1 and year x (in this case year 10) are $357.0, then the absolute growth from y1 to yx is (357.0/108.1)-1, or 2.3, written as a percent as 230%, meaning the value in yx is 2.3 times higher than the value in y1. To break down this absolute growth to the compounded growth, you raise the growth rate to the inverse of the number of years to be compounded, or the growth raised to the power of 1/10.
Again, the compound growth rate is the rate that, if applied each year in the forecast period, will reflect the value in the final year. As a test that this is indeed the actual compound growth rate (shown in green), we apply this growth rate of 12.69% each year and derive the same value in year 10 that was the result of all the variable growth.
If you instead applied the simple average growth rate of 12.86% year-to-year (calculated earlier), the result would be 362.6, which is 5.6 too high. It’s a rough estimate, but not really close enough when the numbers being calculated are in millions or billions.
References [ + ]
Since 2008, medtech has taken a lot of hits. Indeed, when the capital crunch hit, medtech was not viewed as the safest place for investment by a suddenly very risk averse world. Blue chip stock, high volume, low growth, STABLE markets became the norm for a lot of money. But, after a short while, it became apparent that medtech was hardly junk bonds or penny stock, especially considering the battle-hardened innovators of medtech who continued to seize on innovations that provided treatment where there once wasn’t, that accelerated healing, that measurably improved outcomes, that resulted in real cost savings to health systems and insurers, that, in other words, met DEMAND.
So, money came back to medtech. I tracked it then, and I track it now, month by month, funding by funding, company by company. Was it coming back in the pollyanna-esque windfalls of biotech and pharma? No, and I don’t think it ever has or ever will — nor should it. Biotech seems to perennially able to tap the “hope springs eternal” deep pockets of venture capital that can regularly draw individual fundings of $50 million, $75 million or $100 million. Pharmaceuticals don’t seem to go to the VC well as often, but when they do, their funding rounds are no less spectacular.
Medtech excels at crafting plain and simple solutions to disease, suffering, high healthcare costs and clinical need. Not every solution is a blockbuster — in fact, there are more than a few 510(k) products that should probably just be called “me, too”, since they do not distinguish themselves independently, at least not from a clinical or technology standpoint. But medtech has proven its ability to keep pushing the treatment envelope by innovating a little further to gain a bit more edge on outcome or cost or both.
So, medtech regularly pulls in $5 million, $10 million, $25 million at at time — frequently less, but not infrequently more.
My Contrarian View. But let me highlight again that medtech is a moving target and not everyone is thinking apples to your oranges. What I consider medtech is, at its root, technologies that were traditionally represented as medical device treatments for disease and trauma. (And, yes, so I don’t have to answer this later on, by “medical device” I mean implants, instruments, instrumentation, even capital equipment.) But medtech is not only medical device, for it is also (at least by my authoritarian definition, since this is my blog, but it is read by many in this field), anything and everything (within reason) that is either adjunctive to medical devices like drug delivery, like biomaterial-based implants/grafts, drug/device hybrids, tissue engineering and cell therapy (this latter is perhaps at the fringe of medtech, bordering on pure biotech).
Where’s the boundary of medtech? In my mind, it is anything and everything that competes with markets that have in the past and are to some extent still served by medical devices, equipment and supplies. For the sake of repetition, this is the definition I have posted on the medtech fundings I report on month by month in this blog (and in the online spreadsheets linked here):
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.
So, on this more liberal definition of medtech (which some still feel is too restrictive), I can point to a steady stream of investments that has been on an upward trend for the last five years. If you disagree, feel free to come up with your own definition(s), but here is the five year trend of medtech investment:
Source: MedMarket Diligence, LLC
Looked at from a seasonal standpoint, this data is shown below:
Source: MedMarket Diligence, LLC
MedMarket Diligence has added three previously published, comprehensive analyses of medtech markets to its Reference Reports listings. The markets covered in the three reports are:
- Ophthalmology Diagnostics, Devices and Drugs (see link)
- Coronary Stents: Drug-Eluting, Bare, Bioresorbable and Others (see link)
- Tissue Engineering, Cell Therapy and Transplantation (see link)
Termed “Reference Reports”, these detailed studies were initially completed typically within the past five years. They now serve as exceptional references to those markets, since fundamental data about each of these markets has remained largely unchanged. Such data includes:
- Disease prevalence, incidence and trends (including credible forecasts to the present)
- Clinical practices and trends in the management of the disease(s)
- Industry structure including competitors (most still active today)
- Detailed appendices on procedure data, company directories, etc.
Arguably, a least one quarter of every NEW medtech report contains background data encompassing the data listed above. Therefore, the MedMarket Diligence reports have been priced in the single user editions at $950 each, which is roughly one quarter the price of a full report.
See links above for detailed report descriptions, tables of contents, lists of exhibits and ordering. If you have further questions, feel free to contact Patrick Driscoll at (949) 859-3401 or (toll free US) 1-866-820-1357.
See the comprehensive list of MedMarket Diligence reports at link.
Will Rogers said, “Even if you are on the right track, you’ll get run over if you just sit there.” The current challenge for medtech manufacturers is that, as a result of a wide range of forces, trends and developments, the train that threatens to run them over has gotten a whole lot faster. Below is a short list of perspectives that is needed by medtech manufacturers and their competitors in order to stay ahead of the train.
- Focus on your competitors’ solutions, not their products. Stent manufacturers (and this is just an example) are not competing only against stent manufacturers; they are also competing against drug-eluting balloon angioplasty, atherectomy, percutaneous myocardial revascularization, atherosclerotic plaque-reducing drugs, myocardial stem cell therapy and other device, drug, biotech and other options. The focus is on the disease and all the alternative ways to treat it (even preventing it). And it bears reminding that a duty of your market intelligence is to keep a watchful eye on the broadest possible definition of potential competitors — gene therapy, holistic medicine, eastern medicines.
- Be careful where you draw the line on your product’s features. There are many choices to be made in designing and engineering a medical product. The more you build into the product (being resorbable, being intelligent, having biocompatibility coating, having embedded drug(s), etc.), the more benefits you can potentially claim, but the more arduous the engineering, testing and regulatory approval will be. The traditional advantage medical devices have over drugs has been that devices are “inert”, accomplishing their therapeutic endpoint without the large scale side effects possible with systemically active drugs. The more devices are imbued with drugs, made of resorbable material or have any kind of interactive capability with the tissue around them, the more likely will be occurrence of adverse effects.
- Directly or indirectly, your product must be viewed as lowering healthcare cost. In real terms, a product that demonstrably lowers costs compared to alternatives has a decided advantage. However, your product has only to give the appearance of saving money, or at least clearly suggests that it will not raise healthcare costs. Directly, if you can point to units per patient and average selling price and you can point to explicit cost saving compared to currently used products, you’ve gained an advantage. Short of that, you can gain advantage if you can make a defensible cast that your product leads to indirect cost savings such as in less trauma, less collateral damage, faster healing times and similar.
- “Zero invasiveness” is the target. Expect increasing numbers of percutaneous and “natural orifice” procedures at the expense of not only open surgical procedures but also laparoscopic procedures. Too many surgical and interventional formats, and support systems for them, have been developed that signal the end of the need for invasive procedures. And whether the procedure is done laparoscopically, endoscopically, percutaneously, or even radiosurgically, the need to cut, resect/excise or otherwise physically alter anatomy or morphology to address pathology will be obviated by, and be less attractive than, effective non-surgical/non-interventional approaches.
- “Personalized medicine” may be largely theoretical, or at least largely unrealized, BUT the potential to be able to predetermine when therapies will or will not work is too significant in its implications to ignore. (Looking at this another way, I recently spoke with a pharmaceutical colleague who noted that blood markers in patients with a particular condition could help them screen out 97% of the diagnosed patients for whom their therapy would be ineffective. Their conclusion was not that the drug was 97% ineffective but that, for 3% of the diagnosed population, the drug would be highly effective and therefore highly profitable.)
- The pace of change is accelerating. Developments in material sciences, the growth in applied understanding of basic life sciences, the emergence of “paradigm-shifting” industries like stem cell and tissue regeneration, the rewards being reaped by genome sequencing, the integration of advanced information technologies in drug discovery, simulated device prototype testing and other advances are dramatically shortening the gap between idea and market introduction, reducing product life cycles (accelerating obsolescence) and increasing the intensity of competition for all manufacturers.
The advice for any medtech manufacturer — or, for that matter, any manufacturer of a product competing against a “medtech” product — is that they must continually address the view of their competitive landscape to recognize and be prepared to respond to real and perceived competition, trends, forces and opportunities.
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:
|Epidermal growth factor (EGF)||Activated macrophages. Salivary glands. Keratinocytes||Keratinocyte and fibroblast mitogen. Keratinocyte migration. Granulation tissue formation|
|Transforming growth factor-? (TGF-?)||Activated macrophages. T-lymphocytes. Keratinocytes||Hepatocyte and epithelial cell proliferation. Expression of antimicrobial peptides. Expression of chemotactic cytokines|
|Hepatocyte growth factor (HGF)||Mesenchymal cells||Epithelial and endothelial cell proliferation. Hepatocyte motility|
|Vascular endothelial growth factor (VEGF)||Mesenchymal cells||Vascular permeability. Endothelial cell proliferation|
|Platelet derived growth factor (PDGF)||Platelets. Macrophages. Endothelial cells. Smooth muscle cells. Keratinocytes||Granulocyte, 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. Fibroblasts||Fibroblast 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. Fibroblasts||Granulocyte, macrophage, lymphocyte, fibroblast and smooth muscle cell chemotaxis. TIMP synthesis. Angiogenesis. Fibroplasia. Matrix metalloproteinase production inhibition. Keratinocyte proliferation|
|Keratinocyte growth factor (KGF)||Keratinocytes||Keratinocyte 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
Source: MedMarket Diligence, LLC; Report #S249
MedMarket Diligence’s global market Report #S190 on the range of products involved in wound securement encompasses surgical sealants, high-strength medical adhesives, sutures/staples/clips, hemostatic agents and products to prevent post-surgical adhesion.
The potential impact of emerging products in this area is driven by not only caseload but by the nature of the clinical “need”, ranging from a product being critical to provide treatment for a particular indication to a need that may only be represented in perceived benefits.
We have quantified the current and future market for products in surgical wound closure, hemostasis, anti-adhesion and related applications by detailing the products on the market and under development and assessed their current and forecast utilization based on the net result of clinical need drivers and the competitive landscape into which these products may find adoption.
For the sake of characterizing the nature of the need behind possible future product adoption, we have quantified the caseload, by clinical area, relative to a spectrum of needs levels from “important and enabling” to “aesthetic and perceived benefits”.
Category I: Important and Enabling
Important to prevent excessive bleeding and transfusion, to ensure safe procedure, and to avoid mortality and to avoid complications associated with excessive bleeding and loss of blood.
Category II: Improved Clinical Outcome
Reduces morbidity due to improved procedure, reduced surgery time, and prevention of complications such as fibrosis, post-surgical adhesion formation, and infection (includes adjunct to minimally invasive surgery).
Category III: Cost-Effective and Time-Saving
Immediate reduction in surgical treatment time and follow-up treatments.
Category IV: Aesthetic and Perceived Benefits
Selection is driven by aesthetic and perceived benefits, resulting in one product being favored over a number of medically equivalent treatments.
On this basis, see the graphic representation below, which illustrates that the majority of demand for these products arises from the fact that they improve the clinical outcome for patients. Another key element of this is that the primary clinical areas of application contributing to demand for these products is in cardiovascular, general surgery, neurology and digestive specialties. Note, please the categories of I-IV refer to the categories described above.
Source: MedMarket Diligence, LLC; Report #S190.
As further indication of the value of these products is the fact that the category exhibiting the lowest level of demand is for products that offer only aesthetic or perceived benefits.
[exp date=”28/02/13″]Until February, 28, 2013, save 50% on two of our newest reports. Purchase Report #S249, “Worldwide Wound Management Market” online and, at checkout, enter the coupon code 1361569182 to apply the discount. Or purchase Report #S190 “Worldwide Surgical Sealants, Glues, Wound Closure and Anti-Adhesion” online and, at checkout, enter the coupon code 1361569280 to apply the discount.[/exp]
Medtech Trends map.
We are working on a long range view of medical technology developments. Since one tool to conceptualize ideas with priorities, subsets and linkages is “mind mapping”, we have used mindmapping software to construct a map of medtech trends involving the main elements of current trends, future trends and drivers.
The map is illustrated below in a Flash version. You may resize (zoom in/out) of the map and otherwise navigate it via the controls below right (and just above the map on the right). You may also move about the map it in all directions by clicking on the map and moving it in the desired direction with your mouse/touchpad.
Elements of the map that contain embedded notes with additional information show a text box icon on the side, so that if you move your cursor over it, the text will display.
We welcome your feedback.
Much of technology development over the course of the medtech industry’s history has been of the “product line extension” variety in which incremental improvements are made in devices and their composite materials in order to refine or otherwise increase their performance. Periodically, development has taken larger, more sudden leaps when re-examination of the fundamentals underlying medical technology generated new concepts that precipitated wholly new technologies. For example, surgery took a sudden leap forward in the late ’80s and ’90s when a recognition took place that (1) open abdominal surgery has inherent disadvantages stemming from trauma, risk of infection and other adversities and (2) endoscopic technology merely lacked the surgical instrumentation and design of a procedural format (e.g., via the use of insufflation) necessary to convert laparotomy to laparoscopy. The recognition that new technology obviated the need for trauma of laparotomy coincided with the obsolescence of virtually hundreds of years of traditional surgery. This development was only possible due to the emergence of a brand new paradigm called laparoscopic surgery, in which a host of abdominal procedures could be performed that avoid the trauma inherent in open abdominal surgery.
(And now, another leap is taking place by replacing laparoscopy with NOTES procedures in access is provided by existing orifices rather than any kind of incision or surgically-created port.)
Incremental improvements continue to enable manufacturers to sustain market shares and price premiums, but the nature of economic forces demanding better outcomes for every dollar spent and the proliferation of opportunities arising from technology advances on multiple fronts (with those fronts often combining synergistically) are precipitating leaps in medtech development beyond incremental improvement.
Below is illustrated an overall outline and map of the developments and drivers we see in medtech.
[freemind file=”http://blog.mediligence.com/wp-content/uploads/2013/02/MedtechTrends2.mm” /]
Source: MedMarket Diligence, LLC
In general terms, the process of clinically evaluating new medical approaches proceeds through several phases from off-label usage to “General Approval” and then on to approval of many incremental product adaptations. Initially, physicians often begin to use technologies from other industries in improvisation mode (“off-label”) because approved alternatives do not exist. An example of this is the off-label use in the United States throughout the 1980s and early 1990s of fibrin sealants imported individually by surgeons for use in their own practices. For instance, surgeons might clip pieces of a solid sealant, mix these with saline and use the off-label mixture as a way to prevent adhesions.
Often the next stage is the clinical development of new technologies for specific critical diseases for which there is no alternative. An example is the approval of fibrin sealant in the United States for use on neonates during surgery. Another example is the orphan approval for use of cyanoacrylate adhesive for specific neurological avascular necroses.
One way that regulatory authorities may limit the early use of products is to restrict insurance claims to those precise indications shown in clinical trials to have benefit. Companies are only allowed to promote and describe the use of products for these indications. Slowly, these fields of use, and claims, are broadened through extensive clinical trials and gradual reporting of off-label clinical use in peer-reviewed articles. General approval usually follows considerable volume use of the product and the passing of a number of years of safe use without Medical Device Reports (MDR). Companies may eventually apply for approval to market the product for additional indications.
Sutures and staples have been around for many years, and are at a mature stage in the product life cycle. The materials are well established and cover most of the spectrum of clinical need for suturing. However, a great number of procedure-enhancing devices have been developed in the last several years, particularly as minimally invasive surgery and robotics have created a need for new instrumentation to secure tissue. Good examples of this are the development of stapling devices for pneumostasis and securement devices for arthroscopy.
Commercial forms of pooled human fibrin have been used clinically outside of the United States for many years, for reasons of preventing infection; however these products did not reach this stage of clinical evaluation in the United States for many years. In 1996, the FDA approved the clinical investigation of fibrin sealants and a number of trials commenced. These resulted in a cascade of approvals for specific indications and claims, and considerable off-label use and clinical evaluation. Fibrin sealants have been employed and reported to prevent bleeding in many types of procedures including cardiovascular (e.g., restiotomy), neurological (e.g., craniotomy), orthopedic (e.g., knee replacement), spinal (e.g., vertebral fusion), cosmetic (e.g., breast augmentation) and digestive (e.g., closure of temporary colostomy).
Alternatives to fibrin sealant have been developed and launched with specific claims and targeting precise indications. Cyanoacrylates have been employed as external suture replacements since 1997 in the United States. These materials started life as off-label sports injury products; they were approved with limited claims, which were then expanded to include “reduced injection risk,” and general use of these products for topical application is well established; reports from major suppliers suggest that at least 30% of the accident and emergency opportunity for treating lacerations in the United States is penetrated by cyanoacrylate glue products.
Variables Associated With Clinical Evaluation of Closure and Securement and Related Products
|Variable||Rapid Evaluation||Delayed Evaluation|
|Expense||Low cost if short follow-up, (e.g., cuts and grazes) and low-cost procedure||High cost if long-term follow-up required, (e.g., ligament repair) and high cost procedure|
|Follow-up period||Some procedures require short follow-up periods (e.g., hemostasis endpoints and use of cyanoacrylate on cuts)||Some procedures require at least two years follow-up (e.g., musculoskeletal sports injuries)|
|Surgical setting||Community care (lacerations)||Theater (surgery)|
|Doctor's surgery (accidents)||Critical care (e.g., burns)|
|Technology||Some devices and developments have predicate devices which allow more rapid approval. Autologous products are also relatively quick to develop||New biologicals, complex mixtures of biomaterials, and new chemical entities require extensive validation and testing|
|Device for delivery||Can accelerate clinical approval and improve clinical efficacy||Can complicate clinical development if both device and product are new|
Source: MedMarket Diligence, LLC; Report #S190.