In a lot of ways, it felt like 2012 was the year of watchful waiting. Would the European economy tank. Would it bring down the US economy with it? Would Obamacare and the much-hated 2.3% medical device excise tax last through a Supreme Court hearing, and an election. Overall, things remained relatively status quo: Both the US and European economies avoided a full-scale meltdown, and Obamacare remained in place.
Nonetheless, a few things changed. Although still very important, the BRIC markets proved to be less of an economic growth engine compared to what a lot of people were expecting. New products were launched. New lawsuits were filed. New regulations were announced. And as usual, medtech has to adapt.
On February 6, MRG Vice-President Adrienne Lovink presented the top 10 trends and events that will influence global medtech markets in 2013. Below is a short summary of her presentation.
10. Renal denervation goes commercial
We mentioned renal denervation as an important trend last year, and it did not disappoint us. Clinical results continue to be positive, and more major manufacturers are jumping into this market. This year, the focus will become less on. Is renal denervation going to be big and more on.How will you differentiate yourself. Right now, the thought is that different brands are going to yield similar clinical outcomes. Will you differentiate yourself on price Ease-of-use Speed.
9. Companies find new applications for existing devices
A common complaint among medtech is long approval times in the US, which can add significantly to research and development costs. As a result, instead of developing entirely novel devices, many companies are seeking to expand the indications for their existing products. This includes renal denervation, which essentially uses existing ablation catheters. Another major example in this area is the variety of indications that pacemaker-like devices are being applied to, such as Parkinson's, Alzheimer's, heartburn, snoring, and urinary incontinence, among others. This is often referred to as neuromodulation.
8. Doctors adopt mobile medical applications
In today's society, everyone wants things done fast. In a way, this applies to health care; patients want their test results now. This has partially contributed to the rising adoption of mobile medical apps by doctors. For example, radiologists are starting to use iPads to read CT and MRI scans.
7. Merger and acquisition activity increases
Last year, we predicted that M&A activity would increase this year, and we were right. We can expect even more activity in this space this year, particularly as larger international firms move to acquire companies in growing markets such as China.
6. Interest in obesity treatments grows
We've all heard that obesity (especially in the US) is getting a little out of control. Obesity commonly leads to type II diabetes, a condition that's expensive for both patients and the health care system to manage. As a result, there has been increasing interest in treating diabetes through managing a patient's obesity. Although insurance coverage for bariatric surgery is not yet ideal, there are a number of new minimally invasive products in this market to watch, such as the EndoBarrier by GI Dynamics and the Abiliti device by IntraPace.
5. Appropriate patient selection gains momentum
Throughout 2012, increased scrutiny was brought on a variety of devices and procedures that are considered overused. Facilities are under more and more pressure to reserve procedures only for those patients that will benefit substantially from them. Some examples of products and procedures that have been hurt by this trend include coronary stents, ICDs, prostate cancer screening, and biologic meshes. In general, doctors have objected to this trend.
4. Patients drive innovation
Today's average patient is more wealthy and educated than those in the past. As a result, demand is increasing for products that patients perceive to be valuable even in cases where a regulatory body might not insure or recommend the product. As a result, companies will have to start considering the needs of patients and not just doctors when developing products.
3. Obamacare changes the playing field
Obamacare will influence medtech in four main ways. First and most obviously, the medical device excise tax began to be applied in 2013. Companies are claiming that the tax will cause many layoffs in the US and it's hard to argue with them given that so many people were laid off in 2012, with some companies blaming the tax. Second, Obamacare will result in expanded insurance coverage for Americans. This will certainly positively impact procedure volumes in some areas, such as preventative treatments. Third, accountable care organizations (ACOs) have begun to be established across the US, which might constrain product choices for providers BUT will also put more of an emphasis on early intervention. Fourth, cuts are going to be made to Medicare, which might cause physicians to prioritize using lower cost devices. The overall effect of Obamacare will vary depending on what market you compete in.
2. The focus shifts to emerging economies
We all know that the economic situation in the US and Europe hasn't been the greatest in 2012, and we're not expecting drastic improvements in 2013. As a result, more and more medtech companies are focusing their efforts on the BRIC countries, which have fast-growing economies. Economic growth was not, however, as high as originally predicted, and some companies are even now starting to cast around for the next big medtech markets. Keep your eye on South Korea, Turkey, Poland, and Mexico.
1. Health economic outcomes become increasingly important
As the US and European governments attempt to clamp down on health care spending, there is more of a focus on choosing products and procedures that balance cost and clinical outcomes most effectively. This means that some devices are gaining clinical approval, but are not actually being reimbursed if their superiority can't be conclusively proven. This is changing the way that companies conduct clinical trials cost-benefit analyses are becoming increasingly key as well as the way sales reps sell their devices they now have to reach payers by selling on the economics of a product, rather than physicians by selling on outcomes.
Overall, you might have noticed the same theme throughout: the US and European health care systems are attempting to control costs. At the same time, patients are demanding more from medical devices, and are actually becoming more able and willing to pay for what they perceive as valuable. In conclusion, this means that companies need to rethink their approach to innovation, as demonstrated in the image (the final slide in our presentation) shown below.