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Trilogy Tidings October 2008
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Has the medical device industry reached a plateau? Some think so. Not me. Rumors of its demise have been greatly exaggerated.
I address this issue by way of reference to a recent article, then discuss two strategies for circumventing some of the important challenges faced by medical device makers today. Your ideas along these lines are solicited so I can share them with all. Finally, I offer a simple tool for covering all the bases in recognizing and communicating the benefits offered by your new medical product.
Regards,
Joe
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| Challenges in the Medical Device Industry
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I was interested in a recent article in The Scientist (one of my favorite publications) authored by Alla Katsnelson entitled "Biotech's Hidden Stepsister". See http://www.the-scientist.com/article/print/55047/ (free registration required). First of all, I recoiled at that title. Medical devices are certainly not "hidden". And the "stepsister" characterization is more than a little condescending, as the medical device industry has been around much longer and measures up pretty well on several economic indicators cited in the article:
- Total market capitalization: Medtech $240 billion; Biotech $365 billion
- VC investment: Medtech $4.1 billion; Biopharma $5.2 billion
- Private companies receiving VC money: Medtech 707; Biopharma 808
Those initial impressions aside, the article is pretty good. It nicely lays out some of the significant challenges facing the medical device industry today, challenges that have emerged and grown in recent years:
- The time and money required to bring a breakthrough device to market in the U.S. have, on average, doubled over the last decade to 5-9 years and $70-100 million.
- Medical devices are getting increasingly complex (think combination devices), and FDA requirements are becoming more stringent as a result.
- Healthcare costs are growing at an alarming rate, so ensuring that new devices will be fairly reimbursed is becoming increasingly difficult.
- Proposed changes to the U.S. patent system dealing with obviousness and amendment limitations could complicate and lengthen IP initiatives.
Now, the good news is that over the last half decade VC money into devices has been flowing nicely, perhaps as a consequence of biotech's and pharma's pipeline woes. Nevertheless, the economic squeeze on new ventures is on. IPOs are all but out of the question today. The big buyout firms and industry leaders have become risk-averse. So young companies have to stay afloat longer on their own until their products are fully commercialized.
The shifting sands of the regulatory minefield can be a real "gotcha". Katsnelson cites the example of Acorn Cardiovascular, which experienced the raising of the regulatory bar after completion of a 300-patient randomized trial of its mesh heart restraint to treat congestive heart failure, and the device is still not approved four years after their initial trial began. (I had the pleasure of moderating a cardiologist panel to assist a potential corporate investor in assessing this unique technology; the world-class cardiologists in attendance essentially designed that trial. So much for regulatory predictability!)
Thoughts to share? |
