It wasn’t even that long ago that the world of the MedTech market was relatively simple to read. Recognizable competitive challenges, evolutionary developments; a world that we were familiar with and were able to map the developments of for 5 years at a time -and when accepting a certain margin of uncertainty- possibly forecast even longer.
Now the changes are following each other head over heels, the future seems to change on a quarterly basis and if we are daring enough, we are willing to paint a market two years ahead from now, maybe three…….yet no more.
Not too long ago, developments in medicine in general, and Medtech in particular, had a tendency to be sequential, following an understanding of logic and predictability.
Nowadays the changes are simultaneous, initiated and driven further by the established decision makers, but also by the new powers to be. This is based on new product and market requirements, paired with the availability of new exciting technologies, against a background of the development of science that may put entire markets and market segments upside down. These multilateral changes may make current successful methods, diagnostics and therapies disappear entirely.
Current MedTech industry drivers and influencers
Let me mention 3 developments (that we are in the middle of) that are likely to influence the industry in the short and mid-term, and paint a future – a future not even that far away – that will change the industry dramatically.
Already behind us….? Or at least in the middle of
Physicians are no longer the key decision makers
The changes that we face on a daily basis and that have influenced resources, methods and organization are amply described. Purchasing is a different animal with different rules and regulations, as a result of larger purchasing agents serving more sizable and multiple customers. Without evidence-based medicine material, we are not able to go very far, or for very long.
- Organizational changes
- Change of positioning and marketing channels
- Educational efforts
Hospital priorities change under the influence of cost containment reforms and increasing volumes of patients
Healthcare is rapidly changing shape and form.
- The influence of payers (public and private) is facing the challenge to control the cost of diagnosis and treatment.
- Cure and care options are not developing fast enough, resulting in medical treatment (regardless of what calculation/financing model is being applied) being pushed into area’s and providers of lower cost; from physician to nurse practitioner, from hospital to special center or to family practitioner -or even better- to home-care and e-health.
- Organizational adaptation
Value-based medicine changes the portfolio of products and services offered
Products and services of a new breath are being developed, designed for consumer demand, able to serve the changing requirements of the market, its different location, different users (preferably the patient as user), possibly part of a network with extensive communication options.
- Really innovative technologies, products and service offerings
Manufacturers are expanding beyond the development and marketing of products. They are partnering with hospitals and provider organizations, or even with the payers behind that. Creativity is in action to improve outcomes, medically and economically.
- Message and Method
- Organizational changes
Manufacturers are gradually changing size and shape; organizing along the entire patient care-track, pathology-oriented, or getting a hold on segments of the market, a particular place and or position.
- Strategic re-direction
- Changing widening/deepening product offering
- Service offering
- New players join the game, focusing on the new priorities in healthcare provision.
So far, so good…..
Examples of really innovative technologies
In general, the changes are substantial but manageable for a large majority of manufacturers. The developments are still understandable, provided that there is an understanding of the underlying needs and desires of the healthcare providers and consumers, and especially of the payers.
The bigger challenges are coming from the type of developments that have changed the way that we are able to deal with healthcare issues. These constitute a number of more recent developments that are now at the edge of delivering results that may change the face of healthcare, especially in screening and in vitro diagnostic, and in the effectiveness of pharmacological treatment.
By 2025 [at the latest presumably], we’ll have sophisticated personalized medicine. Drugs in development are getting so targeted that they can bind to specific proteins and use antibodies to give precise and predictable mechanisms of action. Knowledge of specific gene mutations will be so much more advanced that we can treat those specific mutations. Examples of this include HER2 (breast cancer), BRAF V600 (melanoma), and ROS1 (lung cancer), among many others.
Kids born in 2025 will be tested at the DNA level, and not just once or twice, but continually, using nano-probes inserted in the body. In 2025, humans will have their DNA mapped at birth and checked annually to identify any changes that could point to the onset of autoimmune diseases.
Real-time diagnostics are expected be a focal point in the next few years. An example (though perhaps not the most substantial one) is the intelligent surgical knife (iKnife).
Dr. Zoltan Takats of Imperial College London designed this device by using an existing technology of applying an electrical current to heat tissue, in order to make incisions with a minimal loss of blood.
However, the iKnife takes it a step further and analyzes the vaporized smoke with a mass spectrometer to identify the chemicals in the biological sample. Accordingly, it can tell when the tissue is malignant in real-time. The iKnife can decrease the duration of the operation immensely, and is expected to be very well received amongst surgeons. An intriguing technology, to say the least.
One of the developments that is going to change many aspects of diagnostic and treatment techniques is presented by some of the leading institutes in this field. These are showing remarkable progress by taking the techniques to molecular level, talking in some cases about developing “lab on a chip” and “organ-on-a-chip”.
At Western New England University, they have created a nanotech-driven breathalyzer prototype that can identify levels of acetone in the breath. Acetone is believed to correlate directly to levels of glucose in the blood. If this technology were to achieve commercialization, it could potentially make the need for finger-prick–based testing of blood sugar obsolete. Acetone is considered an easy parameter.
The University of Twente (the Netherlands) is now able to detect the presence of indicators for lung-cancer and breast-cancer through what is referred to as “The Nose”. The ultimate objective of the research is the development of an inexpensive mobile simple tool that would allow mass screening and a much earlier detection of diseases, especially in the area of oncology. The early detection would allow faster intervention and therefore a substantial improvement of outcome; a massive reduction of healthcare cost.
With such nano-technological tools, research institutes are also able to identify the effect of e.g. chemotherapy on the patient, saving both time and (very!) substantial amounts of money.
The in vitro diagnostics (IVD) market is estimated around €65 billion, referring to the value of supplies, reagents and equipment. From the perspective of the healthcare payers, the cost of IVD includes the personnel and other costs, estimated at an additional €20-23 billion worldwide. There is reason to assume that the developments on the basis of science, such as nanotechnology, will take a sizable chunk out of that revenue potential. Assumptions that this chunk will consist of 20-30% mid-term seem defendable.
Smaller adaptations of the diagnostics technology, like micro sampling, on line diagnostics, and other improvements, may reduce the remaining business with another 10%.
These issues will require much more than an extra effort in competitive product development, and we will see the industry buying into those development, rapidly and massively. The question is, how to protect the current business and get into position for a change in the world of diagnostics and therapeutics, that we have never seen before?
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About Helgert Van Raamt
Helgert van Raamt has 35 years of experience in running and setting up companies, big and small, in EMEA (and beyond). After his senior marketing positions with Organon Teknika and Abbott Labs and four years in Venture Capital as an investment manager for US, UK and NL based funds, he joined Nellcor Europe in 1989 and has lead this company through two consecutive M&A’s (Puritan Bennett and Mallinckrodt). The acquisition by Mallinckrodt for 2.7 Billion made Nellcor the most successful Medic venture after the Second World War. He left to set up the International Operation of Aspect Medical Systems and brought that to success. In three years it reached a revenue level of $10 million and was profitable two months after the start of the operation. Since then (2003) he has successfully advised numerous companies about setting up internationally or cleaning up an existing international operation, both independently and as a partner for TforG Group.