Tools of the Trade: What is the future of the Medical Device/Equipment Industry?

Bucking overall world business trends, the medical device industry continues to realize steady growth but not without challenges. Estimates are that sales in the worldwide market cleared $335 billion last year. The publishers of PM360 asked several industry thought leaders to offer their opinions on the state of the medical device industry.

Bruce Lehman
President & CEO
LehmanMillet
Boston, MA
www.lehmanmillet.com

Once considered primarily a diagnostic contributor or
surgical intervener of last resort, but now spurred on by the confluence of biology and physics, chemistry and
engineering, nanotechnology and information technology, the medical device industry is enabling inventors and
innovators to combine drugs and devices, pair diagnostics and therapeutics, leverage the richness of information and technology innovation to change the way we think about treating chronic conditions, worn out physiology and even our investment portfolios.

The industry is robust, fascinating, complex and fast-moving. Its output is touching us all, and may, despite America’s seeming love-affair with pills, ultimately provide us with revolutionary keys to our future well being.
Have we tired, yet, of hearing about the “graying of the population” and the impact that will have on healthcare, and our healthcare practices? I have not. I’ll turn 60 this year. So when I read that a 2006 U.S. Census report states that 13,000 Americans will turn 60 years of age every day for the next 20 years, I think of the impact that innovation in medical devices will have for all of us aging baby boomers.

Drug eluting stents, hip and knee replacement options and vision preservation will see ever-increasing competition, which will make marketing a critical factor in the success of the leaders. In addition to marketing to the healthcare professional, the demand for and utilization of appropriate patient education will grow as well.,
What about the current economic conditions and financial markets? What impact will this have on a market segment that prides itself on replacing its own products with new ones every few years? Innovation takes money. It will become—it already has become—increasingly more difficult in the near term to raise money.

But the economic environment does not change the need for new products, or the growth expectations of the market’s players: acquisition of early stage companies sooner will become more commonplace; innovation will become more of the domain of the major players who, influenced by their need to protect their franchise positions and meet the growth expectations of a demanding investor community, will increase the intensity of their focus on: strategic portfolio management.

What about the Internet? We continue to see the rise in the power of information availability and sharing of knowledge before our very eyes. From being aware of choices for a particular intervention to options for addressing chronic conditions, the volume of the consumer's voice in treatment choices will continue to go up. Medical devices can only benefit.

With hospitals focused on higher bed turns and less invasive options, and physician office visits on the rise, we can expect to see increased demand for all minimally invasive surgical technologies, particularly those done in out-patient settings. And although we are seeing the vanity-category, aesthetics, slump a bit for the first time in years, innovation in the segment remains strong, and the best of products and procedures will benefit from tighter promotional and product approval regulations. The same will also hold true in other patient-driven specialized markets such as diabetes, oncology and obesity.

With the inauguration of President Barack Obama, there is more support than ever for medical technology and improvements to the healthcare system. His commitment to have national electronic medical record in place within the next five years can only continue to expand the awareness of and demand for alternatives that reduce our dependency on chronic management of a condition and extend our lives and quality lifestyles.
And in spite of the tightening federal and state regulations on promotion medical devices are typically ‘show-me’ products; purchase decisions are made based on data, to be sure, but equally on the user experience. This is not a category that has ever depended on old-line brand reminders. It does depend on education, and that is a strategy that fits well
within the changing guidelines.

Bottom Line?
If you are looking for a fast-paced, ever-changing, fascinating healthcare play, and one in which you have the opportunity to see a broad view of the confluence of science and
medicine, healthcare delivery and regulation, the medical device industry is the place to be.

Joseph E. Kuchta
President/CEO
G & A Healthcare Communication
Chicago, IL
jkuchta@goble

I believe the future looks smaller, slimmer and smarter for this very broad category. While traditionally and mistakenly perceived as large, unexciting, cumbersome pieces of equipment stationed within hospitals or clinical settings, the device world has shown some very specific and significant promise that it will shape much of how we all will actively live with the diseases and conditions in the future.

Case in point: insulin delivery. The “devices” that have been used successfully to inject insulin in both long-acting and bolus situations are becoming sleeker and much less intrusive into a person's lifestyle than even before.

Delivery pumps continue to shrink in size. Repeated, painful injections are now being replaced by smaller, attachable delivery systems that take much of the physical labor out of the equation. Tubes, wires, and surgical ports are being minimized, if not eliminated.

Much like the devices already used for cardiac monitoring and rhythm management [pacemakers, defibrillators and the like], blood glucose monitoring is being automatically carried out by some of these same delivery devices, wirelessly transporting critical diagnostic information to a nearby “brain.” There are even plans for a disposable insulin delivery “patches,” a physical mechanism that is simply peeled away at the end of every day and discarded by the person living with diabetes.
On a broader scale, many of these same delivery systems are being studied as innovative methods of delivering many types of therapeutic agents. Whether one would consider them devices or equipment, there are now more applicators, patches and other injectable methods of delivery than ever before.

Consider that pain relief, smoking cessation, estrogen therapy, even relief for post-chemo nausea and vomiting are now achievable through “device” delivery systems that no longer require ingesting the product.
Even within the traditional equipment space-the hospital-the devices and equipment being utilized every day are following the same trend of being smaller, smarter, and more portable than ever before. Over a decade ago, ambulatory IV pumps and Patient Controlled Analgesia revolutionized how therapies were infused in the hospital setting.

Some of those same revolutionary technologies have now found their way to different points of care: more accessible satellite treatment centers, even in the home. This will continue as the trend towards out-of-institution care rapidly accelerates. It can be seen with pain management, even in-home dialysis. As the devices and equipment continue to streamline the ease of care, adoption by the clinical community [and the payers!] seems to fall right in line.

While the future of the pharma industry seems somewhat less bright as far as technological advancements and blockbusters in the pipelines, the manner in which some of our most critical therapies are delivered and their effects monitored paint a much more promising and productive future for the device and equipment providers. It could very well be that the future blockbusters in medicine and care come from this world.

Alan Topin
Topin & Associates, Inc.
President
Chicago, IL
www.topin.com

There is no doubt that the medical device industry, like pharma, will be facing a number of challenges in the year ahead-notably tighter budgets, reimbursement limitations and stricter regulation. But, the recipe for success remains the same: demonstrate value, invest in innovation, and maximize communication opportunities.

A closer look at current market conditions reveals some very real challenges facing medical device manufacturers. Hospitals, especially, are strapped for cash. Purchases of big-ticket items may be postponed and budgets for consumable items will be closely examined and questioned.

To succeed in 2009, device makers must be able to demonstrate value and savings for their buyers. Devices and equipment that reduce direct or indirect costs have a story to tell and will get the attention of department managers and "C suite" decision-makers. We can also expect a continuing focus on developing devices that help capture future savings through prevention and early treatment.

Another factor impacting the industry in 2009 will be changes in federal regulation. A recent report from the Government Accountability Office found that dozens of high-risk medical devices went to market without undergoing, what they now consider, a careful review. The prospect of longer waits for FDA approvals and more stringent clinical oversight will lead many manufacturers to reconsider their pipeline of products in development and reexamine their timetables for introduction.

Smaller, more nimble companies will have an even larger opportunity to seize market share if they're willing to take risks to innovate. The challenge will be finding the marketing muscle to bring their new products to market. It's a dynamic that could lead to a further increase in the number of joint ventures and/or acquisitions between small innovators and industry giants.

Lastly, new and more flexible channels of communication will play a larger role in helping manufacturers impact the behavioral and procedural changes that come with new devices. Healthcare professionals are inherently resistant to change. However, the rapid growth of digital communication offers brands new channels to educate customers, build communities of users, and engage thought leaders as part of a campaign to change behavior.

The challenges facing the industry in the short-term are not foreign. The basic keys to success are the same now as they have been in times of relative prosperity. Companies that don’t embrace innovation, communication, and value will find the repercussions much more severe. Those that do will weather the uncertainty of 2009 and emerge stronger in the years to come.

Yale Graves
Vice President of Marketing
Aesculap Inc.
Center Valley, PA
yale.graves@aesculap.com
I see great opportunity in the near term for medical device business success. Not across the board, though, as many balance sheets or recalcitrant managers and leaders will be unable to survive or understand and adapt to the changes coming our way. Upstream and Downstream marketing efforts need to change in that if your upstream efforts do not include a make or buy decision process, you should find a way to do so, now.

Many newly launched or imminent to launch technologies are running short on capital and have prices without the inflationary values of yesterday. Prices are sliding and you may find your organization is able to enter that new market, or bring in that new technology in a fraction of the time and cost vs. your current plan for organic development which was based on yesterday's prices.

Downstream marketing efforts of products launched before mid-2008 will need to review their business plans not only from a product positioning perspective but through all aspects of the P&L. Many changes are coming together with significant impact in a single calendar year. Tools used to gain mindshare, to communicate a message are changing with new regulations, guidelines, and opinions.

Training modalities, guidelines and rules for our products are changing the roles of everyone involved. Economic conditions are driving deep enough to challenge cultural value decisions, corporate and government policies and day to day choices of our customers. End product users are showing signs of becoming somewhat in alignment with the financial concerns of the healthcare institution in both For Profit and Not For Profit organizations.

More attention is being paid to the short- and possibly mid-term economic and environmental impact of their choices. More metrics are being used by our customers to make decisions as they try to adapt to the new environment they are functioning within. In the past, customers often gave heavy weight to one or two metrics such as ease of use, safety, data availability or other as the drivers. Customers are being forced to give a much higher weight and visibility to the many economic and environmental metrics.

Regulations appear to be changing as well, as government attempts to address our weaknesses and augment our collective strengths to improve the results of such a large allocation of GDP (~15%) and per capita spending (~$6,000) as reported by the World Health Organization. At the end of the day though, if you have not already begun surveying your existing and potential customers as to their opinions of your existing and soon to be launched products you need to do so now. It takes time to survey, collate, analyze, and write your recommendations.

Depending on the size of your division and organization it may take even longer to lobby for support and implement the changes. By then your product line’s health may be beyond recovery and that is when the tough decisions truly begin. Our customers are searching for solutions and will be looking to embrace those with a message and capability that resonates with their opinions. Great opportunity exists within chaos and change. Be resilient, be bold, embrace the change and drive to success.