Innovation on Everyone’s Mind

In our last issue in this column, I addressed the fear that some in the U.S. medical device industry have that we may not be poised to compete globally as we once were. The United States has dominated this market for so long that any sense we may have lost our edge indeed is frightening. It seems that this topic of “innovation in danger” is on everyone’s mind.

A recent report from PricewaterhouseCoopers LLP called “Medical Technology Innovation Scorecard: The race for global leadership” tackles just that topic. First, the good news: According to the report, the United States still leads the world in medical technology innovation. Now the not-so-good news: Emerging markets such as Brazil, China and India are running a close second, and one day could usurp the top spot from America.

The 49-page study claims the nation has lost significant ground in the last five years to emerging markets that increasingly are luring both “innovation resources” and activities overseas.

Still, the United States is not expected to relinquish its leadership role anytime soon. The report states that decades of innovation dominance will help the nation lead the world in medical technology for the foreseeable future. But emerging markets are not to be discounted: They are developing Lean, frugal and reverse innovation that eventually could help them bypass developed nations and provide more inventive healthcare.

While there is anecdotal evidence to suggest that the United States is losing ground as the world’s medtech innovation leader, the report analyzed five specific factors that contribute to medical technology innovation and quantified them using 86 different metrics to evaluate each nation’s capability to promote the factors that advance innovation. The report evaluated nine nations—Brazil, China, France, Germany, India, Israel, Japan, the United Kingdom and the United States. Besides providing a current view of innovative capacity and capability, the past five years were examined to gain a historical perspective and speculate on the outlook for medtech innovation leadership during the next decade.

Among the conclusions:

• The United States currently ranks 7.1 on a scale of one to nine (with nine being the highest score) as a global leader of medtech innovation. While it still is significantly higher than other countries included in the Scorecard, America’s rank fell slightly from 7.4 in 2005.

• The scores of other developed nations (France, Germany, Japan and the United Kingdom) range between 4.8 and 5.4. Among the developed countries included in the study, Germany and the United Kingdom show the strongest support for innovation. Japan has the least support.

• Despite its size, Israel ranks near the level of European nations, an indication of its ability to foster innovation.

• Emerging markets lag behind developed ones. China, with its powerful economic growth engine, is ranked 3.4. India and Brazil each scored 2.7.

The United States isn’t the only developed nation expected to lose ground in medtech innovation over the next decade, however. Declines also were predicted for France, Germany, Israel, Japan and the United Kingdom. Brazil, China and India, on the other hand, are expected to experience gains, with China outpacing other countries to reach near-parity with European nations by 2020.

The “innovation ecosystem”is moving offshore as the nature of medical technology innovation evolves. Some of this transformation is being driven by changes in the United States, such as more expensive, less-predictable regulatory approvals from the U.S. Food and Drug Administration, an increased focus on value and cost-effective solutions in healthcare and increasingly international investments in research and development. Other dynamics are the result of changes abroad, including factors as diverse as investment in local academic medical centers; investment in research programs; the return of foreign-educated scientists and doctors to their homelands; advancement of mobile health technologies that expands access to care; and a focus on the frugal innovation necessary to deliver faster, better, cheaper and more effective healthcare solutions in these markets, the report noted.

As a result, medtech firms increasingly are looking outside the United States for clinical data, new-product registration and revenue. Medical technology innovators already are going to market first in Europe and, by 2020, likely will move into emerging countries before entering the United States.

Perhaps more so than any other moment in medtech’s history in the United States, have so many factors and stakeholders had the power to make or break the viability and dominance of ourindustry in the long term. Do you know what your role is?

For more on the report, visit www.pwc.com/us/en/health-industries/health-research-institute/innovation-scorecard.