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Market Report: Medical Device Market Stays Steady in 2012

With an estimated $110 billion in sales in 2011, the U.S. medical device market is the world's largest, according to Per capita expenditure stands at $339, third-highest in the world. Seven out of the world's top-10 device manufacturers are headquartered in the United States. Leading clusters are located in California, Minnesota, Massachusetts, Pennsylvania, North Carolina, and Washington, D.C./Maryland. Venture capital firms often prowl these well-established centers looking for the newest breakthroughs.

April 2012
MIT professors have developed the first wirelessly controlled microchip that 
can be implanted into a patient to deliver drugs in accordance with a 
prescribed regimen.
MIT professors have developed the first wirelessly controlled microchip that can be implanted into a patient to deliver drugs in accordance with a prescribed regimen.
However, these long-revered medical-device communities face increased competition from emerging clusters in "new" states like Indiana, Georgia, Ohio, Texas, Michigan, and Colorado that are recruiting medical device companies to their cities with top research infrastructure and other incentives.

The Denver region, for example, has become the sixth-largest medical device sector in the country - its work force grew by about 8 percent from 2005 to 2010. The Denver cluster is winning international acclaim for its synergy, research, and collaborative nature. Most recently GE Global Research and Boulder-based InDevR, a biotechnology company, have joined forces to receive a $5.8 million Defense Advanced Research Projects Agency (DARPA) grant to develop a breakthrough medical device that can diagnose the flu and other infectious diseases at the point of care, allowing quicker responses for both individual treatment and mitigation of pandemic outbreaks.

"Our partnership offers a powerful combination of InDevR's strengths in virus identification and instrument development with GE's global leadership in healthcare products and technologies," says Kathy L. Rowlen, InDevR's CEO and chief science officer. "The DARPA contract will support innovative research to improve flu diagnosis and also create high-paying technology jobs."

Cleveland is another city that's developing a high-quality medical-device industry. Many of the country's top medical device manufacturers maintain operations in the Cleveland area, including Johnson & Johnson, GE Healthcare, Philips Medical Systems, and Steris. Part of the region's appeal is the existing manufacturing infrastructure, well-trained work force, and renowned medical research institutes such as the Cleveland Clinic's Lerner Research Institute and the Global Cardiovascular Innovation Center. These impressive assets continue to attract new players. Most recently, a Belgian clinical research organization (CRO) that focuses on cardiovascular medical devices announced it would build its U.S. headquarters in Cleveland.

"As a startup CRO in the U.S., this is the best place for us to build up relationships with other startups and established companies," says Dimitri Buytaert, president of Genae Americas. "Being such a niche player, it's important for us to be here because there is so much innovation going on."

Leading-Edge Research
Medical device manufacturers continue to utilize advanced materials and technologies to produce smaller and more complex devices to meet the demands of their clients. One of the greatest needs is for real-time transmission of patient-related medical data, which involves advanced electronics and software design.

According to Bernhard Kappe, CEO of Pathfinder Software in Chicago, about 75 percent of all innovation in the medical device field is related to software, especially wireless capability (real-time applications). Advances in wireless medical-device technologies will result in a variety of future applications, including interoperability with other systems like electronic medical records and laboratory information systems.

"Improving patient experience and outcomes before and after they are in a clinical environment are big areas of interest for hospital systems and clinicians," says Kappe. "Not only does mobile provide lots of opportunities to communicate, educate, and inform, it can also influence behaviors like compliance and forming good habits."

Medical device manufacturers work with firms like Pathfinder Software to create proprietary software or even acquire companies directly. For example, in March 2012 Boston Scientific acquired Cameron Health, the manufacturer of a wireless defibrillator. Boston Scientific will pay $150 million up front and possibly $150 million more upon FDA approval of the device, plus up to $1 billion in potential milestone payments during the six years following FDA approval.

In another wireless development, MIT professors and scientists from MicroCHIPS Inc. have invented a microchip that delivers daily doses of medication that are normally given by injection. The core technology for this device is a programmable, wirelessly controlled microchip implanted in the body.

"Compliance is very important in a lot of drug regimens and it can be very difficult to get patients to accept a drug regimen where they have to give themselves injections," says Michael Cima, one of the MIT researchers. "This avoids the compliance issue completely, and points to a future where you have fully automated drug regimens."

Regulatory Challenges
Three years ago the FDA enacted tougher measures to reduce the potential conflicts of interest for medical device experts advising the U.S. Food and Drug Administration (FDA). This resulted in the expected consequences: from 2007 to 2010 the average time to approve a medical device application increased 43 percent and the average time to obtain a pre-market approval (PMA) application increased 75 percent. Other negative side effects were reduced venture capital, slow discovery and commercialization rates, and more research and development moving offshore.

An October 2011 survey by the Medical Device Manufacturing Association (MDMA) showed that almost two thirds of life sciences investors were reluctant to invest in the industry because of regulatory challenges; about 40 percent of respondents also indicated they were investing less in U.S. medical devices and investing more in European start-ups.

To reverse these trends, the FDA and the medical device industry established a new Medical Device User Fee Agreement in February 2012. The agreement is expected to improve FDA performance and create a more transparent and predictable approval process. It provides the FDA with $595 million in funds over five years, which will allow the FDA to hire and train additional reviewers and reduce the ratio of managers to reviewers. The ultimate result will be faster speed to market for new devices, putting more products in the development pipeline and making the U.S. more competitive with the European market.

"The new user fee agreement puts in place a framework that will benefit FDA and industry, but most importantly patients by accelerating the development and approval of safe and effective treatments and diagnostics," says Stephen J. Ubl, president and CEO of the Advanced Medical Technology Association. "The improvements in the agreement provide FDA and medical technology companies the tools needed to improve the efficiency and consistency of the review process."

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