The bone graft substitutes market, comprised of synthetic bone graft substitutes, demineralised bone matrices (DBMs), and bone morphogenic proteins (BMPs) is the subject of a report we have added from a well regarded U.K. based analyst, Dr. Nelesh Patel. The report details products, applications, companies and the associated markets in the U.S. and in major Western European countries. The report is described here.
In our December ’05 issue of MedMarkets, we addressed applications, products and companies developing nanotech and MEMs (microelectromechanical machines) in medicine. There we address applications and companies focused on nanomedicine developments in biosensors, pacemakers, implantable pumps, personalized medicine, drug delivery, cancer therapeutics and diagnostic systems.From a macro view, it is worthwhile to step back and look at the migration of nanotechnologies from the more purely materials science, in which nanoparticles or nanosurfaces are developed to provide properties intrinsic to such small scale, toward structurally engineered products at the nanoscale, including nano products that provide the more complex sensor-type performance or even beyond, with specialized structural and functional components.By comparison to a prior analysis that we provided on nanotech and MEMs, this developmental trend has become more pronounced, illustrating the growing sophistication of the science. In our current analysis, a limited, but fairly representative sample of companies suggests the following current distribution
of the essential functional characteristics provided by the nanotechnologies being developed, as measured by the simple frequency of companies:
- particle/surface: 64%
- analysis: 8%
- functional structure: 28%
By “particle/surface”, we mean products that are nanoparticle, nanoparticle coating or other products based simply on nanoscale materials.
By “analysis”, we mean products designed to reveal structure or function at the nanoscale level, rather than products that are themselves nanoscale or that provide analytical (e.g., sensor-based) functions at the nanoscale.
By “functional structure”, we mean those products that are themselves nanoscale in simple or complex structure (i.e., beyond surface coating) providing functional performance beyond nanoparticles as materials.
In this, we have seen, even in the past two years, an impressive increase in nanotechnologies in the functional structure category, the most advanced of nanotechnology development. Indeed, the predominant types of nanotech products, both in nanomedicine applications and in the broader applications, fall in the area of particle and/or surface-based nanotechnologies, in which there is little or no performance of nanotech beyond that provided materials science. In nanomedicine, this particle/surface category, even cursorily surveyed, stands at 64% of the nanotech companies. This is not to say that nanotech development necessarily has as its endpoint (in ultimate market potential) the development of complex nanostructures. Tremendous market potential may well reside in nanotech as surface coatings (let’s remember what coatings did to the stent market), whether for devices or for pharmaceuticals. Impirically, there are more challenges in the development and testing of complex nanostructures than in the development of nanosurfaces. But there may also be nanoscale applications of complex nanostructures that we have envisioned neither technologically nor from a market potential.If there is a take home message (sorry to have taken so long to get here), it is that the survival-conscious device manufacturer has recognized that nanotech is an area that it cannot afford to ignore. Over the next 1-2 years, witness the number of developmental, investment or other deals involving device companies and nanotech companies.
The need to keep innovation under wraps until it has been allowed to develop enough to maximize the value is driving more and more companies to eschew any kind of promotion until they are actively seeking investment to formally bring the technologies out into the open as part of market introduction.At least by our anecdotal evidence — in the number of companies who we identify (by corporate filing or otherwise) but who have successfully avoided disclosing the nature of their technology anywhere.
There is a change in the dynamics at work here. It is doubtful that it is a diminution of hubris among entrepreneurs that is undercutting self-promotion, since pride is the trait that sets them out on their own in the first place. It is instead the result of at least two forces: (1) tacit recognition that with funding comes insidious influence to be studiously avoided until absolutely unavoidable and (2) tacit recognition that the hunger is great enough for new technologies that the innovator can take greater risk in funding from the 3F’s before seeking formal investment at market introduction.Of course, we have ways of piercing the stealth veil, and we’re getting better at doing so.
St. Jude Medical is number 3 in the rhythm management market, behind Guidant (#2) and Medtronic (#1), so when either J&J or Boston Scientific lose out in the grab for Guidant as their new rhythm management acquisition, where are they going to look next? Itâ€™s not likely to be Medtronic, with a $70 billion market valuation.
What is St. Judeâ€™s stock price likely to do?
Following the surprising (but not shocking) offer yesterday by Boston Scientific to buy Guidant for $25B, upping the deal by $3.4B over J&Jâ€™s renegotiated deal, Guidant is agreeing to cooperate with Boston Scientificâ€™s review of Guidant as a precursor to finalizing the $25B offer. This could be viewed as Guidant simply going through the motions, but since J&J has indicated that it still sees $21.5B as â€œfull and fair valueâ€ for the deal (see NYT today) and J&J Chairman William J. Weldonâ€™s statement as such did not mention Guidant shareholders, itâ€™s a fair bet that in short order there will be a sweetener added to the deal, lest Guidant shareholders demand more.Even though the burden on Boston Scientific would be extreme, quadrupling its debt burden, the opportunity to jump into the $10 billion pacing/defib market would give it a boost it needs. Although Taxus has doubled the companyâ€™s earnings in each the last four quarters, the companyâ€™s stock price has slipped by 42% as investors have been itching for the company to come up with the next big thing after Taxus.Even without Guidant in the picture, I have every reason to believe Boston Scientific and J&J are both developing and looking for just such a thing.
Boston Scientificâ€™s offer of a $3.4B premium to buy Guidant over J&Jâ€™s offer was initially rebuffed today by Guidant, who signalled that it was opting to stick with the newly reworked $21B+ deal with J&J. Boston Scientific clearly recognized the market value of picking up Guidant (at J&Jâ€™s expense), even with the stent divestitures that would have been mandated. Guidant shareholders will vote on the deal in 1Q 2006.(It appears likely, however, that Guidant may well consider the Boston Scientific offer. An additional $3.4 billion should more than cover the legal costs of getting out of the J&J deal (!).)
Boston Scientific and J&J remain in a pitched battle over share in the drug eluting stents sector, which will be joined in the next 1-2 years by not only Guidant, but Medtronic, Abbott and a healthy list of others.
We report in the November issue of MedMarkets on trials, products and competitor activity at this year’s TCT meeting. A great deal of the drug-eluting stent data from the trials demonstrates no appreciable difference between J&J’s Cypher and Boston Scientific’s TAXUS stents. There are differences in efficacy, some very supportable in the trial data, but there are also differneces essentially in marketing. Boston Scientific has taken the aggressive share-protection step of coming up with its “Taxus Stent Assurance Program” (from our November issue):
In an unusual moveâ€”and after a recent decline in market share due to a perception that Cypher has a safer profileâ€”Boston Scientific offered a guarantee in the form of its â€œTAXUS Stent Assurance Program.â€ If any patient receiving a TAXUS Express2 stent requires reintervention due to in-stent restenosis during calendar year 2006, the company will provide a replacement stent at no charge.
We also cover embolic protection, a big market that has been developing for some time, and may soon be growing at a much faster clip.
Healthcare product (medical device and biotech) investment, like all investment in the past four years, has been pinched, but not so much as one might believe. The total investment has been relatively stable, and in fact has increased recently in the both the aggregate and for medical devices specifically. What is more the case with investment in the post-9/11 and post dotcom era is the conservative shift in that investment, notably a shift in investment from earlier or expansion stage of company development to later stage investments. Weâ€™ve talked about this before. (Perhaps the most telling aspect over the past four years has been that MedMarket Diligence experienced a big increase in information purchased from the investment community, apparently no longer satisfied solely with their own research.) The conservative shift is waning, however. Weâ€™ve read the tea leaves and see signs (numbers of deals, size of the deals, and numbers of startups forming) that opportunity-hungry investors are ready to take more chances.Expect the following to happen in 2006 â€“ barring any unforeseen global event (letâ€™s be safe, but letâ€™s also live our lives!). Aggregate investment in healthcare products will take a healthy jump, with a measurably bigger share going to medical devices, and investment will shift back upstream in the development cycle. Many more deals, at bigger average investments (i.e., $10 million each).
Iâ€™ve often been asked what makes a good author of the reports we publish. My answer comes as the result of the truth having been pounded into me repeatedly over the past 20 years (I have lots of scar tissue).The ideal author has:
- 10-20 years in the industry about which they will write
- Experience in that industry in senior management or VP/Director level roles in marketing/sales or business development
- Diligence research capabilities to ensure that 99% of the market is considered, not 80% or 70%
- Demonstrable analytical skills to prioritize the relevance of data (i.e., wade skillfully through the BS), identify important trends (besides the â€œaging populationâ€), reveal opportunities (I have to force even the best to do this), and otherwise give insightful conclusions.
- Good-to-excellent writing skills. It doesnâ€™t matter if they can research among the best if they canâ€™t put it in words. I can and will edit extensively to bring out the best, but the content has to be good enough to start with so that Iâ€™m not writing reports for authors.
- Acceptable computer skills. Itâ€™s maddening to have an author who has skills 1-5 above, but doesnâ€™t know how to back up his/her files, doesnâ€™t run anti-virus software or is running Windows 95.
- Je ne sais quoi: At some point during my initial interview with an author, I can identify whether the author has that certain â€œsomethingâ€ that I want or has that certain â€œsomethingâ€ that I know will prohibit them from doing a good report. My instincts have proven themselves in the long run.
This is a REAL challenge. If I am going to publish studies that will command the prices they do, itâ€™s imperative that the authors fit the bill. If I have to compromise on any of these, I know I will pay for it (one way or another) in the long run. I have therefore learned to take it on the chin and decline prospective authors when the truth is plain to me. Examples of who doesnâ€™t fit this bill:
- Anyone who says, â€œIâ€™ve always wanted to write. I think it will be fun.â€ Youâ€™d be surprised how often this comes up.
- Almost anyone with the letters PhD behind their name. Donâ€™t get me wrong, Iâ€™ve had a couple great PhD authors, but among the worst prospects were those with this degree. The failing is simply the tendency toward ivory tower thinking and the lack of direct industry experience or relevant analytical skills in business.
- Anyone who says, â€œNow where do I get the market data to do this report?â€
- Technical writers (convinced though they may be about how well qualified they are)
- Medical marketing brochure writers (certain they may be that brochure experience = report authoring skill)
- Anyone who has written for specific other report publishers —- [censured by lawyer].
I could go on, but itâ€™s too exasperating to think how often I have to say no.
A glimpse of newer technologies in diabetes management (from http://mediligence.com/rpt-d500.htm).
- Pancreas transplants
- Islet cell transplants
- Stem cell developments
- Antibody treatment
- Genetic approaches (genetic testing, SiRNA)
- Novel drugs (DDP-IV Inhibitors, NN-14, Rimonabant)
- Continuous glucose monitoring (electroenzymatic sensor, optical sensor, carbon nanotube sensor)