Fueling the Fire
What does it take to bring a safe, effective—not to mention financially successful—medical device to market? This question, directly and indirectly, is debated and explored in every issue of Medical Product Outsourcing. It can be difficult to find that winning formula (If it were easy, everyone would do it—right?), and as the medical device industry matures, the challenges seem to mount.
There’s more competition in sectors that used to be dominated by just a few players (the drug-coated stent market or spine in orthopedics, for example). Reimbursement also has become a significant barrier to market entry or to continued success with established product lines—just ask imaging device manufacturers or in-vitro diagnostics providers.
Recently, an executive with an in-vitro diagnostic company told me that as a result of reduced Medicare payments, his industry has been hurt by a slowdown in innovation, particularly from startup companies.
“The possibilities with diagnostics are endless—particularly to drive down healthcare costs—but new companies are bypassing getting into this business because of the reimbursement
challenges,” he said. “Patient care comes first, but you still have to get paid. There’s no incentive anymore. We could be missing out on a lot of new technology as a result.”
Tighter controls at the FDA, particularly in a post-heparin manufacturing environment, mean greater compliance and quality processes must be put in place and managed. On the product approval side, some FDA review processes are getting faster (see “Top of the News” on page 12), but on the flip side, the agency’s focus on post-market surveillance can mean an added level of complexity. The FDA may even begin requiring a greater number of 510(k) applications—the typical approval course for “me-too” medical devices—to have extensive clinical trial data. Clinical trials typically only are required for 10% of 510(k) submissions, according to the agency, but some consumer interest groups have been pushing for more rigorous milestones. All this means good things for patients, of course, but it’s yet one more variable in a very long list of to-dos that must be managed by device makers.
International and emerging markets are a blessing and a curse. They represent seas of untapped end users, boosting possible sources for revenue. But beyond selling abroad, there are logistical and supply chain challenges, as well as intellectual property and quality issues, that need to be addressed should a company choose to manufacture overseas. That said, many companies—startups in particular—based in the United States have decided to tackle gaining approval and selling in international markets first before tackling the process in the United States with the hope that the knowledge gained will make the process easier when they pursue commercialization here at home.
What’s the point? Certainly not merely to provide a laundry list of market barriers to entry, but to put the clinical and commercial successes (and some stumbles) of the firms in this year’s Top Companies report (on page 59) in context. As you read this year’s report (MPO’s sixth such compilation) you’ll note that all of these firms have dealt with the issues mentioned above and then some. Though it can be difficult to see the successes among news of recalls, lawsuits, investigations, buyouts, etc., ultimately there’s more good than bad to report.
And speaking of more good than bad, another factor in a firm’s success is where it chooses to manufacture. Here at home, the traditional medical device centers have been California, Massachusetts and Minnesota, but that’s changing. Other states have been getting into the life-sciences act and have seen the medical device light, luring companies with tax incentives, lower cost of living and a host of other inducements. In this month’s article “A Battle Royale,” Associate Editor Michael Barbella expertly and thoroughly examines traditional and emerging manufacturing locales and how economic development efforts by states and associations are making the decision to move, stay or set up shop an even more difficult one (turn to page 50 to learn more).
If you’ve been considering a move (or a reason to stay put) to help fuel your firm’s fire, this is just the information you’ve been waiting for.
