As often as I gather data on medtech startups, I find myself frequently talking to eager entrepreneurs who are very enthusiastic about their technologies while confidentially bemoaning how hard it is to operate when they are pre-funded or otherwise bootstrapped.
I also frequently connect with academics, many working on their “thesis” and in dire need of market data but unable to afford the full list prices on our market and technology reports (which I find dubious unless their email address ends in “.edu”).
Therefore, it seemed appropriate that I find a way to satisfy these eager would-be or otherwise cash-strapped entrepreneurs with a means to get useful data to help guide their businesses and even, potentially, support their fundraising efforts. What I have come up with is a selection of our full scale, global, proprietary market reports and made them available at what I’ve termed the “market starter” price of $125 each. These reports are indeed the full reports (300 to 500 pages in length, typically market priced at $3,000 or higher), but they are two or more years old — still eminently relevant in the broad coverage of market size, growth and, in particular, forecasts.
Thus far the topics of these Market Starter reports are:
Tissue Engineering & Cell Therapy
These reports are listed with links to the full descriptions and tables of contents, at link.
The market for tissue engineering and cell therapy products is set to grow to nearly $32 billion by 2018. This figure includes bioengineered products that are themselves cells or are actively stimulating cell growth or regeneration, products that often represent a combination of biotechnology, medical device and pharmaceutical technologies. The largest segment in the overall market for regenerative medicine technologies and products comprises orthopedic applications. Other key sectors are cardiac and vascular disease, neurological diseases, diabetes, inflammatory diseases and dental decay and injury.
An overview (map) of the spectrum of clinical applications in tissue engineering and cell therapy is shown below:
Cell therapy is defined as a process whereby new cells are introduced into tissue as a method of treating disease; the process may or may not include gene therapy. Forms of cell therapy can include: transplantation of autologous (from the patient) or allogeneic (from a donor) stem cells , transplantation of mature, functional cells, application of modified human cells used to produce a needed substance, xenotransplantation of non-human cells used to produce a needed substance, and transplantation of transdifferentiated cells derived from the patient’s differentiated cells.
Once considered a segment of biomaterial technologies, tissue engineering has evolved into its own category and now comprises a combination of cells, engineering and suitable biochemical and physiochemical factors to improve or replace biological functions. These include ways to repair or replace human tissue with applications in nearly every medical specialty. Regenerative medicine is often synonymous with tissue engineering but usually focuses on the use of stem cells.
Tissue engineering and cell therapy may be considered comprised of bioengineered products that are themselves cells or are actively stimulating cell growth or regeneration. These often comprise a combination of biotechnology, medical device and pharmaceutical technologies.
Researchers have been examining tissue engineering and cell therapy for roughly 30 years. While some products in some specialties (such as wound care) have reached market, many others are still in research and development stages. In recent years, large pharmaceutical and medical device companies have provided funding for smaller biotech companies in the hopes that some of these products and therapies will achieve a highly profitable, commercial status. In addition, some companies have been acquired by larger medical device and pharmaceutical companies looking to bring these technologies under their corporate umbrellas. Many of the remaining smaller companies received millions of privately funded dollars per year in research and development. In many cases it takes at least ten years to bring a product to the point where human clinical trials may be conducted. Because of the large amounts of capital to achieve this, several companies have presented promising technologies only to close their doors and/or sell the technology to a larger company due to lack of funds.
The goal of stem cell research is to develop therapies to treat human disease through methods other than medication. Key aspects of this research are to examine basic mechanisms of the cell cycle (including the expression of genes during the formation of embryos) as well as specialization and differentiation into human tissue, how and when the differentiation takes place and how differentiated cells may be coaxed to differentiate into a specific type of cell. In the differentiation process, stem cells are signaled to become a specific, specialized type of cell when internal signals controlled by a cell’s genes are interspersed across long strands of DNA and carry coded instructions for all the structures and functions of a cell. In addition, cell differentiation may be caused externally by use of chemicals secreted by other cells, physical contact with neighboring cells and certain molecules in the microenvironment.
The end goal of stem cell research is to develop therapies that will allow the repair or reversal of diseases that previously were largely untreatable or incurable.. These therapies include treatment of neurological conditions such as Alzheimer’s and Parkinson’s, repair or replacement of damaged organs such as the heart or liver, the growth of implants from autologous cells, and even regeneration of lost digits or limbs.
In a developing human embryo, a specific layer of cells normally become precursor cells to cells found only in the central nervous system or the digestive system or the skin, depending on the cell layer and the elements of the embryo that direct cell differentiation. Once differentiated, many of these cells can only become one kind of cell. However, researchers have discovered that adult body cells exist that are either stem cells or can be coaxed to become stem cells that have the ability to become virtually any type of human cell, thus paving the way to engineer adult stem cell that can bring about repair or regeneration of tissues or the reversal of previously incurable diseases.
Another unique characteristic of stem cells is that they are capable of self-division and self-renewal over long periods of time. Unlike muscle, blood or nerve cells, stem cells can proliferate many times. When exposed to ideal conditions in the laboratory, a relatively small sample of stem cells can eventually yield millions of cells.
There are five primary types of stem cells: totipotent early embryonic cells (which can differentiate into any kind of human cell); pluripotent blastocyst embryonic stem cells, which are found in an embryo seven days after fertilization and can become almost any kind of cell in the body; fetal stem cells, which appear after the eighth week of development; multipotent umbilical cord stem cells, which can only differentiate into a limited number of cell types; and unspecialized adult stem cells, which exist in already developed tissue (commonly nerves, blood, skin, bone and muscle) of any person after birth.
Tissue engineering and cellular therapy products take years of research and many millions of dollars (averaging about $300 million, according to some reports) before they make it over the hurdles of clinical trials and into actual market launch. More than one small biotech company has burned through its money too quickly and been unable to attract enough investment to keep the doors open. The large pharmaceutical and medical device companies are watching development carefully, and have frequently made deals or entered into alliances with the biotechs, but they have learned to be cautious about footing the bill for development of a product that, in the end, may never sell.
For many of the products in development, product launch is likely to occur within five years. Exceptions include skin and certain bone and cartilage products, which are already on the market. Other products are likely to appear on the European market before launch in the United States, due to the presence of (so far) less stringent product review and approval laws in the European Union.
Even when the products are launched, take-up will be far from 100% of all patients with that particular condition. Initially, tissue engineering and cell therapy products will go to patients suffering from cancers and other life-threatening conditions, who, for example, are unable to wait any longer for a donor organ. Patients who seem to be near the end of their natural lives likely will not receive these treatments. Insurance coverage will certainly play a key role as well in the decision about who receives which treatments and when. But most importantly, physicians will be selecting who among their patients will be treated; the physicians learn about the treatments by using them, by observing the patient’s reactions, and by discussing their experiences with colleagues. In other words, the application of tissue engineering and cellular therapy will progress in a manner similar to the introduction of any new technology: through generally conservative usage by skilled, highly trained physicians dedicated to providing their patients with the best possible treatment without causing them additional harm.
Drawing on specific examples of medical device, biotech, biohybrid, biomaterial and a wide range of other technologies I see at companies of all sizes, shapes and stages, I started an exercise to look at the “competitive advantage” sought by innovators pursuing new products in the big arena of medtech markets. Very clearly, there are companies I consider to fall in the “me, too” category, also known as 510(k), and there are companies whose products are much more PMA in that they are novel and unique, requiring more extensive data to demonstrate a heretofore undemonstrated capability. I was encouraged as I looked across the types of technologies and their target applications, since a great majority have been developed and are targeted at setting themselves apart in a market in which there is intense scrutiny on cost, which shows the resilience of innovators to rise to the challenge. At the same time, I continue to see a disappointing number of products that reflect an all too common view that being at least as good as anything on the market is adequate to succeed (hint: it isn’t).
This got me thinking about how innovators, consciously or not, are compelled to consider what their real competitive advantage is in medtech as they pursue product and market development in 2014. This resulted in me distilling the common themes underlying new product development as pursued by the established and emerging companies I am tracking.
A key consideration is that market aware innovators recognize that their products are going to enter, in most cases, an existing market, which compels them to seek to develop their product from a relative standpoint, meaning its value is going to be judged relative to what is available, if there is any.
Below are many of the common themes I see underlying the activities of medtech development. Again, note that, while there may be some absolutes (as in “cure”), most of the products’ performances are considered relative to existing products on the market. Combining multiple advantages is increasingly common, too, such as making a procedure less invasive and less costly, or simplifying the surgical procedure and reducing complications.
Allows treatment of patients who otherwise die with the available treatment limited to delaying death or ameliorating the suffering.
Cures the disease
Restores normal biologic function
Entirely eliminates the need for surgery
Eliminates need for reoperation to treat residual disease or address procedure failure rate
Increases the survival rate as bridge-to, or elimination of need for, organ transplant
Dramatically increases the specificity and intensity of treatment, especially for cancer, minimizing the impact to healthy tissue
Restores anatomic structural and functional integrity
Eliminates complications, side effects
Simplifies the procedure to reduce OR time
Shortens recovery time
Eliminates immunogenicity through highly efficient autologous cell technology
Reduces the invasiveness of the procedure by requiring fewer or smaller incisions via laparoscopy, transcatheter procedure, natural orifice endoscopy or completely externally (e.g., gamma knife)
Allows the treatment to be moved from acute care to an outpatient or office-based setting
Reduces cost by using a simpler device that can be manufactured less expensively, is less likely to break and require replacement or consolidates multiple treatment steps
Lowers the learning curve for physicians to adopt
Eliminates the need for later device removal; the product is absorbed or dissolved
This is a cursory view. As I review literally hundreds of medtech companies over the past decade, I can see a large number of common themes, but the ones above represent the bulk of them.
While it may seem trite, it is actually coincidental that the forces underlying most of the advantages are represented by a focus on one or more of these four C’s:
If your efforts are in medtech and don’t touch on one or more of these themes, you have to ask yourself what your chances are of succeeding, even if you product is approved, even if your product gains reimbursement, even if a healthcare delivery system opts to contract to buy your product.
The sources on which these conclusions are drawn are advantages that are stated or implied by companies in the descriptions of their focus and the technologies they have under development or on the market, or the descriptions of patents, patent applications and other sources. This includes companies at all stages but, of course, earlier stage companies tend to have a focus on advantage that is more pronounced, at least in their intentions. Very early companies are therefore a particular interest of mine and I have been compiling data on startups for years and maintaining an active Medtech Startups Database (described at link).
The market for tissue engineering and cell therapy products is set to grow from a respectable $8.3 billion in 2010 to nearly $32 billion by 2018. This figure includes bioengineered products that are themselves cells or are actively stimulating cell growth or regeneration, products that often represent a combination of biotechnology, medical device and pharmaceutical technologies. The largest segment in the overall market for regenerative medicine technologies and products comprises orthopedic applications. Other key sectors are cardiac and vascular disease, neurological diseases, diabetes, inflammatory diseases and dental decay and injury.
Factors that are expected to influence this market and its explosive growth include political forces, government funding, clinical trial results, industry investments (or lack thereof), and an increasing awareness among both physicians and the general public of the accessibility of cell therapies for medical applications. Changes in the U.S. government’s federal funding of embryonic stem cell research has given a potentially critical mass of researchers increased access to additional lines of embryonic stem cells. This is expected to result in an increase in the number of research projects being conducted and thus possibly hasten the commercialization of certain products.
Another factor that has influenced the advancement of regenerative technologies is found in China, where the Chinese government has encouraged and sponsored cutting-edge (and some have complained ethically questionable) research. While China’s Ministry of Health has since (in May 2009) established a policy requiring proof of safety and efficacy studies for all gene and stem cell therapies, the fact remains that this research in China has spurred the advancement of (or at least awareness of) newer applications and capabilities of gene and stem cell therapy in medicine.
Meanwhile, stricter regulations in other areas of Asia (particularly Japan) will serve to temper the overall growth of commercialized tissue and cell therapy–based products in that region. Nonetheless, the growth rate in the Asia/Pacific region is expected to be a very robust 20% annually.
MedMarket Diligence’s Report #S520 remains the most comprehensive and credible study of the current and project market for products and technologies in cell therapy and tissue engineering.
Tissue engineering and cell therapy comprise a market for regenerative products that has been growing and will continue to grow at over 20% annually through 2018. This market spans many specialties, the biggest of which is therapies for degenerative and traumatic orthopedic and spine applications. Other disorders that will benefit from cell therapies include cardiac and vascular disease, a wide range of neurological disorders, diabetes, inflammatory diseases, and dental decay and/or injury. Key factors expected to influence the market for regenerative medicine are continued political actions, government funding, clinical trials results, industry investments, and an increasing awareness among both physicians and the general public of the accessibility of cell therapies for medical applications.
The current high rate of growth in cell therapy and tissue engineering product sales is due to the confluence of multiple market drivers:
Advances in basic science revealing the nature of cell growth, differentiation and proliferation
Advances by industry to manipulate and determine cell growth toward specific therapeutic solutions
Low barrier to entry for competitors in the market
Broad range of applications of cell/tissue advances to many different specialties with modest adaptation needed
Strong venture funding
The dominant clinical area driving cell therapy and tissue engineering product sales is orthopedics and musculoskeletal, wherein bone grafts and bone graft substitutes are well-established. Below is the projected balance of cell therapy and tissue engineering product revenues by clinical area through 2018.
While orthopedics, musculoskeletal and spine applications will remain a huge share of this market, more growth is coming from cell/tissue products in most other areas, which have only recently (within the last five years) begun to establish themselves.
Manufacturers of wound care products, from traditional dressings and bandages to growth factors and bioengineered skin, see variable sales growth driven by different levels of new product adoption, variations in clinical practices, and other technology, reimbursement, regulatory, economic and other forces that vary by geography across the globe. The balance of sales across multiple wound care product types can be radically different from country to country and region to region.
Emerging from the 2013 analysis (Report #S249) by MedMarket Diligence are the current and forecast wound care product sales resulting from the net effect, region by region, of these multiple forces. Below is illustrated the high growth country/product segments in wound management, reflecting the rapid adoption of new technologies such as growth factors and bioengineered skin, as well as older products such as alginates that are gaining sales in rapidly developing economies.
Source: MedMarket Diligence, LLC; Report #S249, “Wound Management, Worldwide Market and Forecast to 2021: Established and Emerging Products, Technologies and Markets in the Americas, Europe, Asia/Pacific and Rest of World.”
At the other end of the extreme are those very well established products growing at less than anemic rates in countries where the economy is not as robust and/or where the growth has been superseded by sales of more novel products. Conventional dressings and bandages offer considerably less demand than do growth factors, bioengineered skin and skin substitutes and similar new products.
Of course, growth of sales in wound management products (and any product) is defined as the percentage change in sales volume over time. Smaller markets (typically soon after they have formed as a result of their initial commercialization) tend to grow on a percentage basis much faster. Indeed, a $1 dollar sale in year 1 followed by a $2 sale in year 2 represents a 100% growth rate, while a $1 increase in sales from year 1 to year 2 for a $100 million market represents virtually zero growth. Conversely, a 1% increase in a $1.75 billion market is a $17.5 million increase. This is indeed obvious, but must be kept in mind when considering the growth rates discussed above.
The global wound care market is expected to always be represented by sizeable share of basic products in wound dressings and bandages, which for the majority of wound types have clearly proven to be cost effective in producing acceptable time-to-healing and other clinical outcomes. However, advanced wound products to address complex wound types – many of which may simply evolve from otherwise simple wounds that have been neglected – are increasingly demonstrating their potential for accelerating the pace and therefore reducing the cost of wound healing.
But factors other than cost-consciousness are driving the advanced wound care market. Patients’ desire for less scarring, as well as an increased awareness of infection issues, drive the development of advanced dressings and biomaterials that reduce bacteria and heal wounds faster. An aging world population and lifestyle changes that contribute to disease frequency also factor into the market’s continued growth.
Still, there are some market restraints, primarily the high cost of new technologies, which therefore must demonstrate better outcomes and/or lower long-term costs. Development of substitute products threatens existing product categories, while a lack of sufficient clinical and economic evidence backing new technology hinders growth and acceptance of some more advanced wound management technologies. Improved wound prevention and a lack of regulation on tissue engineering in the EU are also expected to withhold the development of new technologies.
A high number of manufacturers competing for market share have also driven down prices. In 2009, the top wound care companies included Johnson and Johnson, Kinetic Concepts Inc. (KCI), Hill-Rom and Smith & Nephew. These four companies were responsible for 60 percent of total market revenue in 2009. However, mergers, acquisitions and sales of intellectual property can rapidly change the market share picture. In June 2009, Hill-Rom sold its intellectual property relating to negative pressure wound therapy to KCI. By end 2012, about 56% of the wound care market was held by Johnson and Johnson, 3M, Smith & Nephew, and Systagenix.
Below is illustrated the global market for traditional and advanced products in wound management, with the compound growth rate in sales of individual product types ranging from a low of under 3% to a high of 19% through the forecast period (i.e., to 2021).
Source: MedMarket Diligence, LLC; Report #S249, “Wound Management, Worldwide Market and Forecast to 2021: Established and Emerging Products, Technologies and Markets in the Americas, Europe, Asia/Pacific and Rest of World”.