I think we can all agree that as we come out of a rough 2011 for medtech, a number of questions are weighing on everyone's minds for 2012. How will fears of a second recession and growing problems in the troubled European economies affect medtech. What new emerging technologies have great potential and will be able to help combat the slump in other areas? How have negative press and complaints about regulatory processes affected the medtech market outlook for this year? On January 31, MRG COO Ken McLaren answered these questions with his presentation on the top 10 trends that medtech companies should look out for in 2012.
10. High-profile negative aesthetic press 2012 impact?
The global aesthetic markets attracted a fair amount of negative press throughout 2011, from the PIP breast implant scandal all the way to unlicensed doctors injecting women with non-approved materials (in one case, a combination of cement, super glue, and tire sealant!) in order to shape breasts and buttocks. Look out for more people calling for stricter regulation and better postmarket surveillance in the aesthetic industry in 2012.
9. Health care goes digital: electronic medical records
Electronic medical records (EMRs) are becoming increasingly popular across the US because they improve quality of care, streamline workflow, and reduce long-term costs. The government has also attempted to encourage the shift toward EMRs with the meaningful use program; however, this program has been met with significant confusion and it has not turned out to be the incentive that policymakers originally hoped for. Nonetheless, the US market for EMRs will reach a value of approximately $8.3 billion by 2016.
8. Medtech goes mobile: medical apps
An increasing number of health care-related apps such as those able to monitor blood glucose levels in diabetics are being developed worldwide. In addition to those for patient use, an increasing number of physicians are also interested in using apps; according to MRG's sister company Manhattan Research, approximately 40% of health professionals use health/medical apps on their smartphones/personal digital assistants. The smartphone application-based mobile health market reached a value of nearly $720 million in 2011.
7. Medtech M&A activity heats up
A number of big mergers and acquisitions occurred in 2011, with the most notable being the acquisition of Synthes by Johnson & Johnson for nearly $22 billion the third-largest medtech deal ever. Another interesting one was the acquisition of Astra Tech (formerly a division of pharma giant AstraZeneca) by DENTSPLY. Because both companies can already count themselves among the top five global dental implant market leaders, the combined company could pose a serious threat to the other big names in dental namely Straumann, Nobel Biocare, and BIOMET 3i. We cover the mergers and acquisitions of 2011 in more detail here.
6. US innovation crisis saga continues
As we've discussed previously (here and here), many industry players have been vocal about the existence of an innovation crisis in the US; they argue that the high cost of running comparative effectiveness trials, the medical device excise tax set to roll out in 2013, and the long Food and Drug Administration (FDA) approval times have reduced the profitability of bringing a new product to market. Additionally, the focus on M&A has meant that a lot of money has been poured into buying technologies that already exist rather than developing new ones. Although not everyone agrees that there is a crisis, the FDA has acknowledged its part in this issue and has vowed to improve the processes that bring innovative medical devices to market.
5. Emerging markets continue to grow and become a strategic focus
As growth in the US and European markets stagnates, many companies are looking for growth in other countries. The BRIC countries particularly China are very attractive because of their high year-on-year gross domestic product growth relative to the rest of the world, their exploding middle class population, and health care infrastructure improvements. As an example of just how important these markets are, the BRIC interventional cardiology device market will exceed the value of the US interventional cardiology device market by 2015.
4. Customer economics
Customer economics are being particularly emphasized in the US, where comparative effectiveness programs are being implemented as part of the health care reform. This is resulting in a large number of clinical trials to prove the superiority and cost-effectiveness of various products and brands over one another. Companies have recognized this shift and have started to incorporate the importance of customer economic value into their vision statements and mottos. Some examples where comparative effectiveness research has had an effect so far can be found here, and we can expect the launch of many more head-to-head trials throughout 2012.
3. European crises and the impact of pending austerity measures
We've all heard about the economic difficulties in Europe, including unsustainable debt levels, high unemployment, and high government bond yields. These difficulties have been particularly evident in Italy, Spain, Portugal, Ireland, and Greece, although the problems in these countries continue to threaten the economic stability of the rest of Europe as well as many other global markets. Economic difficulties are further exacerbated by rising health care costs across the world, particularly in the US. As a result, a number of austerity measures and health care reforms are being implemented in an effort to reduce costs expect procedure volumes and medtech sales to be negatively impacted through 2012. We examine some changes in the European health care systems here.
2. Transcatheter aortic valve replacement devices take off
TAVR, a minimally invasive method of treating aortic valve disease, represents one of the most significant growth opportunities in medtech. Although TAVR devices have been available in Europe since 2007, in the US, the first TAVR device. Edwards Lifesciences SAPIEN only just received FDA approval in the second half of 2011. By 2015, the combined US and European TAVR device market will reach a value of approximately $1.1 billion.
1. Renal denervation: the next blockbuster device
Topping off the list is renal denervation, a very new treatment for hypertension that involves ablating the renal nerves. Although still in the very early stages of development, initial results with Medtronic's Symplicity Catheter System (currently available in Europe and Australia) have been very positive. MRG's conservative assumptions estimate an impressive global market potential of approximately $1 to $5 billion, although this number has the potential to be way higher if more positive long-term clinical data are released.