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.
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.
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.
The medical technology industry is characterized by its steady focus on finding and developing innovative solutions on the horizon that will meet the demands of clinicians and healthcare systems to more rapidly and effectively solve problems in the management of disease and trauma.
Given the state of the art in healthcare regarding the performance of current and potential medical technologies, there are a number of key opportunities in medtech that are driven by specific forces and are likely to be solved by one or more high value platform technologies. These opportunities, drivers and high value platforms are listed below.
The biggest opportunities in medtech:
Non-toxic, high strength closure and sealing of internal wounds (GI, pulmonary, cardio, etc.)
Closed-loop “artificial pancreas” comprising integrated glucometer and insulin pump
Versatile chronic wound management to accelerate healing of multiple chronic wound types
Non-invasive blood glucose testing (infrared, interstitial fluid or other approach)
Non-invasive large molecule drug delivery (transdermal, inhaled, encapsulated, etc.)
Interventional surgery (catheter or natural orifice) instrumentation
Infection control for nosocomial vectors
Organ replacement and transplant (preservation, bridge-to-transplant, etc.)
Untreated or underserved, growing patient population
Eliminating lost productivity
Less invasiveness for lower cost, faster healing
Point-of-care (home, physician office, bedside) diagnostics for comprehensive screening and detection
Increasing demands for devices to be specific, be clinically effective and have small or non-existent long-term footprint
High Value Platform Technologies
Materials technologies incorporating one or more features of biocompatibility, adaptation, cell migration, drug elution, resorption, excretion or other easy removal
Adult, embryonic and other pluripotent stem cells
Gene therapy emerging from recent innovations (e.g., type 1 diabetes)
Laparoscopic and natural orifice transluminal endoscopic surgery
Nanotechnology drug delivery, surface modification
Integration/fusion of information technologies with implants
We have identified these opportunities, drivers and platforms from research in a wide range of medtech markets, considering the state of the art in clinical practice, products/technologies on or nearing entry to the market, clinician and healthcare system perspectives, and the current/forecast sales data for products in surgery, cardiology, spine/orthopedics, cell/tissue therapy, obesity, wound management, others.