Over the last few years, a slowdown in the growth rate of the US medtech industry has occurred while 2004 yielded a growth rate of more than 15%, 2010 showed a much more modest 3.5% expansion. It's easy to quickly blame this on the allegedly burdensome Food and Drug Administration (FDA) approval process or economic difficulties, but are there other factors at play here? A recent article suggests that the many mergers and acquisitions that happen every year in this industry could actually be the culprit or are at least contributing to the problem. As Paul Stein, a moderator for Medical Device and Diagnostic Industry (MD+DI), points out, how can there be money for innovation and growth if it's all being sunk in acquiring technologies that already exist? And mergers and acquisitions were still going strong in 2011, as we've commented here.

Given our fondness on commenting on FDA processes (there's just so much content!), you might guess that we're not going to leave the organization out of this discussion entirely. The same article mentioned above argues that uncertainty about process changes and long approval times might be hindering new businesses from launching new innovative medical devices in the US. Another article reinforces the fact that American Chief Executive Officers (CEOs) find the FDA thoroughly to blame for the slowdown; 8 in 10 biomedical company CEOs surveyed agreed or strongly agreed that the FDA processes were slowing the growth of their companies. We should also point out though that while FDA approval is obviously critical, the approval won't do much if Medicare denies the request for reimbursement on a new device, which is what happened to this company. So possibly Medicare is a bit to blame as well.

Similarly, the economy can't be taken out of the equation either this article discusses the slow rate of growth in health care spending in the US in 2010 as patients continued to delay expensive procedures in an uncertain financial climate. The effects of this definitely trickle back to medical device manufacturers in the form of lower unit sales and thus less capital for investing in research and development.

Given that none of these factors are showing any particularly promising changes in the near future, 2012 might not be looking so hot for medtech either.

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