07.24.12
Report Outlines Medtech Globalization Trends;OEMs Want More Supplier Transparency
Axendia Inc., an analyst and strategic advisory firm for the life sciences and healthcare markets, has released a report on globalization in the medical device industry. Titled, “Walking the Global Tightrope: Balancing the Risks and Rewards of Med Tech Globalization,” the report surveyed 125 industry executives from 89 companies in 16 countries worldwide.
One of the most pertinent pieces of information that emerged from the report is that 88 percent of respondents expect increased sales in emerging markets in the next three years, and 69 percent anticipate growth in developed markets as well. This is expected to occur despite increasing negative pressure on sales, such as taxes and economic uncertainty.
“[Medtech executives] are really seeing tremendous opportunities in the emerging markets,” Axendia founder and President Daniel Matlis told Medical Product Outsourcing. “The drivers behind that are very similar to what other industries are seeing. There is a growing middle class that is able to participate in the healthcare system outside of the broad, state-funded systems through private insurance or out-of-pocket expenses.”
It makes sense that the growing middle class with income to spare would be interested in innovative life-saving or life-sustaining devices and technologies. The report shows that companies are using an approach called the “top of the pyramid” strategy to reach portions of the market that can afford new technologies, and then moving to the “platform approach,” which takes its cue from the automotive industry. Medical device companies offer a “continuum of products based on a single platform designed to meet various healthcare delivery models, levels of sophistication, customer needs and market cost constraints,” according to the report. Basically, similar to the way in which an auto maker will use one powertrain platform and build vehicles with different price points around it, so will medical device makers build their technologies at different tiers around a single platform to reach different levels of a market, the report explains.
There’s a major problem with emerging markets, though—their regulatory landscapes. Why does it always seem so difficult to navigate the sea of regulations and requirements in newer markets?
“I think the challenge is two fold,” Matlis said. “One, we are dealing with emerging regulatory frameworks. Then the flip side of that challenge is that in many cases, the brand owners, or the company looking to market the devices, don’t fully understand the regulatory requirements in-country up front. And they sometimes may make assumptions on what’s required based on what their previous experience has been, whether in the United States or Europe or one of the countries they’ve done work with. So the challenge—or opportunity—there is ensuring that brand owners fully understand what the regulatory framework is ahead of time.”
Once brand owners (who Matlis notes used to be called manufacturers until outsourcing became ubiquitous) understand and anticipate the regulatory framework, the challenge then becomes managing through the regulatory framework. It’s not the country that poses obstacles to transparent management, but the “grid of regulations and the lack of harmonization,” claimed Matlis.
International harmonization is the objective of the Global Harmonization Task Force (GHTF), founded in 1992 to “bring together experienced regulators and industry members on a regular basis to discuss ways in which medical device regulatory practices within their jurisdictions could be harmonized.” Musing on change and what that means, Matlis discussed the GHTF’s dissolution after 20 years.
“It’s going to be ending soon, and there’s a new organization, the International Medical Device Regulators Forum, that’s going to take its place. We’re still a work in progress. So the challenge is: How do the industry and regulators harmonize global regulatory requirements? There’s a lot of work going on in that area. But also—how do we make sure it’s not a cold war-type arms race where regulators are trying to outdo each other?”
That is indeed the question, and competition (the bad kind) is something medtech companies are concerned about, particularly from local partners such as raw material suppliers, distributors, manufacturers, etc. At this year’s annual meeting of the Medical Device Manufacturers Association in Washington, D.C., Amy Hariani, director and legal counsel for the U.S.-India Business Council, said local partners—while vital to introducing outsiders to the local market space—may become a problem in the future. “Get a lawyer,” she advised. Matlis agreed.
“Executives are concerned, especially in emerging economies, with their current suppliers becoming their future competitors,” he said. “We’ve seen that in other industries.”
Most notably, when specifically asked what “keeps them up at night,” 49 percent of the respondents to Axendia’s report said protecting intellectual property. This was the third top concern—the issue proving the most anxiety was product quality (60 percent) followed by maintaining consistent quality standards across internal and external sites (59 percent).
Matlis stressed the importance of finding a “true” partner, rather than simply a “good” partner. True partners, he said, are vital to maintaining quality in an unfamiliar and distant market.
The three keys to maintaining quality, according to Matlis, are:
Axendia Inc., an analyst and strategic advisory firm for the life sciences and healthcare markets, has released a report on globalization in the medical device industry. Titled, “Walking the Global Tightrope: Balancing the Risks and Rewards of Med Tech Globalization,” the report surveyed 125 industry executives from 89 companies in 16 countries worldwide.
One of the most pertinent pieces of information that emerged from the report is that 88 percent of respondents expect increased sales in emerging markets in the next three years, and 69 percent anticipate growth in developed markets as well. This is expected to occur despite increasing negative pressure on sales, such as taxes and economic uncertainty.
“[Medtech executives] are really seeing tremendous opportunities in the emerging markets,” Axendia founder and President Daniel Matlis told Medical Product Outsourcing. “The drivers behind that are very similar to what other industries are seeing. There is a growing middle class that is able to participate in the healthcare system outside of the broad, state-funded systems through private insurance or out-of-pocket expenses.”
It makes sense that the growing middle class with income to spare would be interested in innovative life-saving or life-sustaining devices and technologies. The report shows that companies are using an approach called the “top of the pyramid” strategy to reach portions of the market that can afford new technologies, and then moving to the “platform approach,” which takes its cue from the automotive industry. Medical device companies offer a “continuum of products based on a single platform designed to meet various healthcare delivery models, levels of sophistication, customer needs and market cost constraints,” according to the report. Basically, similar to the way in which an auto maker will use one powertrain platform and build vehicles with different price points around it, so will medical device makers build their technologies at different tiers around a single platform to reach different levels of a market, the report explains.
There’s a major problem with emerging markets, though—their regulatory landscapes. Why does it always seem so difficult to navigate the sea of regulations and requirements in newer markets?
“I think the challenge is two fold,” Matlis said. “One, we are dealing with emerging regulatory frameworks. Then the flip side of that challenge is that in many cases, the brand owners, or the company looking to market the devices, don’t fully understand the regulatory requirements in-country up front. And they sometimes may make assumptions on what’s required based on what their previous experience has been, whether in the United States or Europe or one of the countries they’ve done work with. So the challenge—or opportunity—there is ensuring that brand owners fully understand what the regulatory framework is ahead of time.”
Once brand owners (who Matlis notes used to be called manufacturers until outsourcing became ubiquitous) understand and anticipate the regulatory framework, the challenge then becomes managing through the regulatory framework. It’s not the country that poses obstacles to transparent management, but the “grid of regulations and the lack of harmonization,” claimed Matlis.
International harmonization is the objective of the Global Harmonization Task Force (GHTF), founded in 1992 to “bring together experienced regulators and industry members on a regular basis to discuss ways in which medical device regulatory practices within their jurisdictions could be harmonized.” Musing on change and what that means, Matlis discussed the GHTF’s dissolution after 20 years.
“It’s going to be ending soon, and there’s a new organization, the International Medical Device Regulators Forum, that’s going to take its place. We’re still a work in progress. So the challenge is: How do the industry and regulators harmonize global regulatory requirements? There’s a lot of work going on in that area. But also—how do we make sure it’s not a cold war-type arms race where regulators are trying to outdo each other?”
That is indeed the question, and competition (the bad kind) is something medtech companies are concerned about, particularly from local partners such as raw material suppliers, distributors, manufacturers, etc. At this year’s annual meeting of the Medical Device Manufacturers Association in Washington, D.C., Amy Hariani, director and legal counsel for the U.S.-India Business Council, said local partners—while vital to introducing outsiders to the local market space—may become a problem in the future. “Get a lawyer,” she advised. Matlis agreed.
“Executives are concerned, especially in emerging economies, with their current suppliers becoming their future competitors,” he said. “We’ve seen that in other industries.”
Most notably, when specifically asked what “keeps them up at night,” 49 percent of the respondents to Axendia’s report said protecting intellectual property. This was the third top concern—the issue proving the most anxiety was product quality (60 percent) followed by maintaining consistent quality standards across internal and external sites (59 percent).
Matlis stressed the importance of finding a “true” partner, rather than simply a “good” partner. True partners, he said, are vital to maintaining quality in an unfamiliar and distant market.
The three keys to maintaining quality, according to Matlis, are:
- Better control over governments, risk management, and compliance;
- Enhanced visibility; and
- Collaboration.
Matlis recalled working for Johnson & Johnson, when solving an issue was as simple as walking down to the shop floor or, if necessary, flying to a manufacturing facility. Later, he implemented systems to provide visibility across the organization.
“It has become very difficult to achieve that real-time and on-demand visibility that so many brand owners are looking for. And they see that as significant risk,” he explained. “For example, when we’re talking about perceived risk associated with suppliers, 68 percent of respondents say that they see a moderate to high risk because of their current visibility into critical suppliers. And we’re talking about critical suppliers. Almost seven out of 10 are concerned about that, so obviously that’s a big issue.” Ninety percent of the report’s respondents said they would like to see real-time and on-demand data from their tier-one suppliers.
According to Matlis, he and the authors of the report hope to “provide actionable advice to enable the medtech product ecosystem to capitalize on the benefits of globalization while controlling or mitigating the risks.”
New Medtronic Stent Selected by FDA for New Accelerated Review Program
The U.S. Food and Drug Administration (FDA) has selected a stent graft being developed by Medtronic Inc. for an early feasibility pilot program that allows for “early clinical evaluation to provide proof of principle and initial clinical safety data.”
The in-the-works Valiant Mona LSA system is one of nine devices selected for the program. It is designed to repair a descending thoracic aortic aneurysm (TAA) encroaching on the left subclavian artery (LSA). It’s an updated version of the FDA-approved Valiant Captivia thoracic stent graft, a minimally invasive device that treats aneurysms, penetrating ulcers and related conditions of the descending thoracic aorta.
TAAs are dangerous bulges in the aorta, the body’s main artery, near its point of origin in the heart. Left untreated, the bulges can rupture, killing those suffering from the condition. A thoracic stent graft is a
tubular medical device that a physician delivers through a pre-loaded catheter inserted in the patient’s femoral artery. Once deployed, the stent graft conforms to the wall of the aorta, the body’s main
artery, creating a new path for blood flow that reduces pressure on the aneurysm and the risk of rupture.
“Endovascular repair of thoracic aortic aneurysms involving branch vessels represents a clinical and technological challenge that Medtronic is committed to solving for the benefit of physicians and patients alike,” said Tony Semedo, vice president and general manager of the company’s Endovascular Therapies business. “In fact, about 40 percent of these cases involve coverage of the LSA—and, therefore, often require surgical bypass to preserve blood flow to the posterior brain and left arm.”
Semedo explained that the Valiant Mona LSA could possibly eliminate the need for LSA bypass procedures. He said the company is pleased the device was selected for the FDA’s early
feasibility pilot program, which “demonstrates the agency’s understanding of the need for collaborative innovation.”
The FDA’s early feasibility program was introduced last year to encourage innovative devices. According to the guidance document, an early feasibility study is a limited clinical investigation of a device early in development, typically before the device design has been finalized, for a specific indication (e.g., innovative device for a new or established intended use, marketed device for a novel clinical application). It may be used to evaluate the device design concept with respect to basic safety and device functionality in a small number of subjects (generally fewer than 10) when such
information cannot readily be provided through additional nonclinical assessments or appropriate nonclinical tests. Data from early feasibility studies may guide device modifications.
The Valiant Mona Lisa LSA system fills the need for repairing TAAs in patients whose aneurysms are inaccessible by traditional methods. According to the Society for Vascular Surgery (SVS), an
estimated 40 percent of patients with descending thoracic aneurysms have insufficient seal zones for endovascular repair. The seal zone is the circumferential length of healthy aorta required to secure the placement of the stent graft across the aneurysm. Published reports show a higher rate of stroke and mortality associated with coverage of the LSA. Based on these reported adverse events, the SVS has recommended routine pre-operative re-vascularization to perfuse the LSA in patients who need elective endovascular repair where achievement of an adequate seal requires coverage of the LSA.
St. Jude Medical Fights Accusations of Further Lead Failures
In an issue that continues to haunt the company after months, St. Jude Medical has been fighting to maintain its reputation as a provider of reliable and safe medical devices in the face of the failure of its Riata implantable cardioverter defibrillator (ICD) lead wires. The lead wires were found to be the cause of 20 deaths by externalizing from their insulation. The wires were taken off the market in December 2010.
Recently, a question arose about the company’s Durata leads, which were accused of fraying. An unidentified doctor reported a case to the U.S. Food and Drug Administration (FDA) in May, but reportedly did not inform St. Jude he or she was doing so. Because the report was anonymous yet quite detailed, Goldman Sacks Analyst David Roman questioned its authenticity at the time.
St. Jude has, nonetheless, managed to assuage fears for now that this will be a repeat of the Riata saga. The company has announced that the frayed wires were caused by external abrasion rather than an internal wiring problem. According to the company, the Durata leads were damaged by the patient’s calcified heart valve. This condition commonly occurs in patients with heart disease. The Durata leads are insulated by polyurethane—which St. Jude has pointed out several times in the last several months—while the Riata leads were insulated by a silicone that tended to break down.
St. Jude released a statement explaining that the FDA allowed the company to travel to the Florida hospital where the Durata lead was explanted in order to examine the cause. According to the company, one of its “senior engineers” travelled to the hospital to investigate:
“Through our investigation, we have identified that the patient had an additional defibrillation lead that had been capped (and was no longer being used). In the fluoroscopic images, the two leads cross in the region mentioned in the filed MAUDE [Manufacturer and User Facility Device Experience Database] report. Based upon physical examination, our analysis indicates the damage to the Durata lead is consistent with external abrasion from contact with a calcified, or hardened, heart valve or possibly from lead-to-lead contact. External abrasion is a known cause of failure across all cardiac leads in the industry, which is different from the inside-out abrasion seen with externalized conductors observed in some Riata leads.”
MAUDE is an FDA database where adverse events related to medical devices are aggregated. It was used in the March study on Riata leads published by Heart Rhythm Journal (HRJ). Conducted by Robert G. Hauser, M.D., St. Jude has asked for its retraction, but HRJ has refused.
MiCardia Announces New Funding, Spins Off Company
Irvine, Calif.-based MiCardia Corp. has completed an internal round of funding, which will funnel $4.4 million into the cardiac device company for the rest of this year and in 2013. MiCardia intends to use the funding for the expanded commercialization of its enCorSQ mitral valve repair system in Europe and in select countries worldwide.
The news broke in tandem with an announcement that MiCardia also will spin off its transcatheter technology business into a new company called ValCare Inc., backed by Israel-based investment firm Accelmed Medical Partners LP.
Accelmed will invest $8 million to further advance the technology. EnCorSQ is an annuloplasty device indicated for the treatment of mitral regurgitation (MR) with features that enable the physician to adjust the device after initial implantation without further surgery. This late adjustment capability, according to the company, corrects recurrent mitral valve regurgitation that results from the progressive nature of the underlying cardiovascular disease.
MR occurs when the heart’s mitral valve does not close properly resulting in an inadequate blood flow to the body. It is the abnormal leaking of blood from the left ventricle, through the mitral valve, and back into the left atrium when the left ventricle contracts. Both the American Heart Association and the American College of Cardiology recommend open-heart surgery to repair or replace the mitral valve for patients who suffer from moderate to severe MR.
“Late adjustment, which can be achieved weeks to months post implantation without the need for a repeat high risk surgical procedure, has the capability to expand the market for mitral valve
repair,” explained MiCardia CEO Don Rohrbaugh. In the European Union, approximately 20,000 mitral valve repair procedures are performed annually. Up to 30 percent of those patients may experience recurrence of mitral valve regurgitation depending upon the etiology of the disease. The enCorSQ mitral valve repair system is the only device available that can correct recurrent regurgitation
without further surgical procedures, the company claims.
Meanwhile, ValCare is readying itself for takeoff. The nascent device firm’s transcatheter mitral valve repair system uses interventional cardiology methods to implant a mitral annuloplasty device. Mitral annuloplasty devices are used in the treatment of moderate to severe mitral valve regurgitation. Nearly 4 million people in the United States suffer with moderate to severe mitral regurgitation and the total U.S. market for treatment of MR is estimated to be $3.5 billion. This non-surgical catheter delivered system preserves the “gold standard” of mitral repair and is hoped by the company to be a new effective means for treatment of a substantial number of these patients while lowering the risks of the traditional open-heart treatment.
“To date, laboratory and pre-clinical tests have demonstrated feasibility of the designs and initial patent applications,” said Valcare CEO Sam Shaolian. “The next phase is to complete the development and validate the device in pre-clinical studies in the near term.”
ValCare will remain based in Irvine alongside its parent company.
“It has become very difficult to achieve that real-time and on-demand visibility that so many brand owners are looking for. And they see that as significant risk,” he explained. “For example, when we’re talking about perceived risk associated with suppliers, 68 percent of respondents say that they see a moderate to high risk because of their current visibility into critical suppliers. And we’re talking about critical suppliers. Almost seven out of 10 are concerned about that, so obviously that’s a big issue.” Ninety percent of the report’s respondents said they would like to see real-time and on-demand data from their tier-one suppliers.
According to Matlis, he and the authors of the report hope to “provide actionable advice to enable the medtech product ecosystem to capitalize on the benefits of globalization while controlling or mitigating the risks.”
New Medtronic Stent Selected by FDA for New Accelerated Review Program
The U.S. Food and Drug Administration (FDA) has selected a stent graft being developed by Medtronic Inc. for an early feasibility pilot program that allows for “early clinical evaluation to provide proof of principle and initial clinical safety data.”
The in-the-works Valiant Mona LSA system is one of nine devices selected for the program. It is designed to repair a descending thoracic aortic aneurysm (TAA) encroaching on the left subclavian artery (LSA). It’s an updated version of the FDA-approved Valiant Captivia thoracic stent graft, a minimally invasive device that treats aneurysms, penetrating ulcers and related conditions of the descending thoracic aorta.
TAAs are dangerous bulges in the aorta, the body’s main artery, near its point of origin in the heart. Left untreated, the bulges can rupture, killing those suffering from the condition. A thoracic stent graft is a
tubular medical device that a physician delivers through a pre-loaded catheter inserted in the patient’s femoral artery. Once deployed, the stent graft conforms to the wall of the aorta, the body’s main
artery, creating a new path for blood flow that reduces pressure on the aneurysm and the risk of rupture.
“Endovascular repair of thoracic aortic aneurysms involving branch vessels represents a clinical and technological challenge that Medtronic is committed to solving for the benefit of physicians and patients alike,” said Tony Semedo, vice president and general manager of the company’s Endovascular Therapies business. “In fact, about 40 percent of these cases involve coverage of the LSA—and, therefore, often require surgical bypass to preserve blood flow to the posterior brain and left arm.”
Semedo explained that the Valiant Mona LSA could possibly eliminate the need for LSA bypass procedures. He said the company is pleased the device was selected for the FDA’s early
feasibility pilot program, which “demonstrates the agency’s understanding of the need for collaborative innovation.”
The FDA’s early feasibility program was introduced last year to encourage innovative devices. According to the guidance document, an early feasibility study is a limited clinical investigation of a device early in development, typically before the device design has been finalized, for a specific indication (e.g., innovative device for a new or established intended use, marketed device for a novel clinical application). It may be used to evaluate the device design concept with respect to basic safety and device functionality in a small number of subjects (generally fewer than 10) when such
information cannot readily be provided through additional nonclinical assessments or appropriate nonclinical tests. Data from early feasibility studies may guide device modifications.
The Valiant Mona Lisa LSA system fills the need for repairing TAAs in patients whose aneurysms are inaccessible by traditional methods. According to the Society for Vascular Surgery (SVS), an
estimated 40 percent of patients with descending thoracic aneurysms have insufficient seal zones for endovascular repair. The seal zone is the circumferential length of healthy aorta required to secure the placement of the stent graft across the aneurysm. Published reports show a higher rate of stroke and mortality associated with coverage of the LSA. Based on these reported adverse events, the SVS has recommended routine pre-operative re-vascularization to perfuse the LSA in patients who need elective endovascular repair where achievement of an adequate seal requires coverage of the LSA.
St. Jude Medical Fights Accusations of Further Lead Failures
In an issue that continues to haunt the company after months, St. Jude Medical has been fighting to maintain its reputation as a provider of reliable and safe medical devices in the face of the failure of its Riata implantable cardioverter defibrillator (ICD) lead wires. The lead wires were found to be the cause of 20 deaths by externalizing from their insulation. The wires were taken off the market in December 2010.
Recently, a question arose about the company’s Durata leads, which were accused of fraying. An unidentified doctor reported a case to the U.S. Food and Drug Administration (FDA) in May, but reportedly did not inform St. Jude he or she was doing so. Because the report was anonymous yet quite detailed, Goldman Sacks Analyst David Roman questioned its authenticity at the time.
St. Jude has, nonetheless, managed to assuage fears for now that this will be a repeat of the Riata saga. The company has announced that the frayed wires were caused by external abrasion rather than an internal wiring problem. According to the company, the Durata leads were damaged by the patient’s calcified heart valve. This condition commonly occurs in patients with heart disease. The Durata leads are insulated by polyurethane—which St. Jude has pointed out several times in the last several months—while the Riata leads were insulated by a silicone that tended to break down.
St. Jude released a statement explaining that the FDA allowed the company to travel to the Florida hospital where the Durata lead was explanted in order to examine the cause. According to the company, one of its “senior engineers” travelled to the hospital to investigate:
“Through our investigation, we have identified that the patient had an additional defibrillation lead that had been capped (and was no longer being used). In the fluoroscopic images, the two leads cross in the region mentioned in the filed MAUDE [Manufacturer and User Facility Device Experience Database] report. Based upon physical examination, our analysis indicates the damage to the Durata lead is consistent with external abrasion from contact with a calcified, or hardened, heart valve or possibly from lead-to-lead contact. External abrasion is a known cause of failure across all cardiac leads in the industry, which is different from the inside-out abrasion seen with externalized conductors observed in some Riata leads.”
MAUDE is an FDA database where adverse events related to medical devices are aggregated. It was used in the March study on Riata leads published by Heart Rhythm Journal (HRJ). Conducted by Robert G. Hauser, M.D., St. Jude has asked for its retraction, but HRJ has refused.
MiCardia Announces New Funding, Spins Off Company
Irvine, Calif.-based MiCardia Corp. has completed an internal round of funding, which will funnel $4.4 million into the cardiac device company for the rest of this year and in 2013. MiCardia intends to use the funding for the expanded commercialization of its enCorSQ mitral valve repair system in Europe and in select countries worldwide.
The news broke in tandem with an announcement that MiCardia also will spin off its transcatheter technology business into a new company called ValCare Inc., backed by Israel-based investment firm Accelmed Medical Partners LP.
Accelmed will invest $8 million to further advance the technology. EnCorSQ is an annuloplasty device indicated for the treatment of mitral regurgitation (MR) with features that enable the physician to adjust the device after initial implantation without further surgery. This late adjustment capability, according to the company, corrects recurrent mitral valve regurgitation that results from the progressive nature of the underlying cardiovascular disease.
MR occurs when the heart’s mitral valve does not close properly resulting in an inadequate blood flow to the body. It is the abnormal leaking of blood from the left ventricle, through the mitral valve, and back into the left atrium when the left ventricle contracts. Both the American Heart Association and the American College of Cardiology recommend open-heart surgery to repair or replace the mitral valve for patients who suffer from moderate to severe MR.
“Late adjustment, which can be achieved weeks to months post implantation without the need for a repeat high risk surgical procedure, has the capability to expand the market for mitral valve
repair,” explained MiCardia CEO Don Rohrbaugh. In the European Union, approximately 20,000 mitral valve repair procedures are performed annually. Up to 30 percent of those patients may experience recurrence of mitral valve regurgitation depending upon the etiology of the disease. The enCorSQ mitral valve repair system is the only device available that can correct recurrent regurgitation
without further surgical procedures, the company claims.
Meanwhile, ValCare is readying itself for takeoff. The nascent device firm’s transcatheter mitral valve repair system uses interventional cardiology methods to implant a mitral annuloplasty device. Mitral annuloplasty devices are used in the treatment of moderate to severe mitral valve regurgitation. Nearly 4 million people in the United States suffer with moderate to severe mitral regurgitation and the total U.S. market for treatment of MR is estimated to be $3.5 billion. This non-surgical catheter delivered system preserves the “gold standard” of mitral repair and is hoped by the company to be a new effective means for treatment of a substantial number of these patients while lowering the risks of the traditional open-heart treatment.
“To date, laboratory and pre-clinical tests have demonstrated feasibility of the designs and initial patent applications,” said Valcare CEO Sam Shaolian. “The next phase is to complete the development and validate the device in pre-clinical studies in the near term.”
ValCare will remain based in Irvine alongside its parent company.