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.
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.