Thursday, August 01, 2013 1:17 PM
2013 Global Medical Devices Outlook
New study from Frost & Sullivan identifies top three industry predictions as a cost-containment environment which will likely accelerate cost-cutting measures from companies; Patient influence in treatment selection; and emerging market needs which will drive M&A and product development decisions.
The year 2012 was a year of transition for the medical devices industry as a number of macroeconomic and regulatory events came to a head. The year 2013 seems to be the beginning of a new era in the marketplace that is more sensitive to the value of care. This was the conclusion of a recent industry study by market research and analysis firm Frost & Sullivan.
Historically, the market needle was tied nearly exclusively to the launch of new and groundbreaking products that could advance current treatment paradigms. While the opportunities for those sorts of developments still exist, the threshold has shifted for what constitutes an advancement in the market is willing to justify increased spending for. Due to continued pricing pressure, profitability will depend on more sophisticated market strategy related maneuverings to position product offerings for value-conscious consumers, the report describes.
Three Big Predictions for 2013 have been identified: A hyper-pressurized, cost-containment environment which will likely accelerate cost-cutting measures from companies adjusting to the realities of the new marketplace; Patient influence in treatment selection is magnified due to increasing access to information and greater shifts in financial burden; and emerging market needs which are expected to drive decision making for companies regarding mergers and acquisition (M&A) strategy and product development.
The report identifies top five growth sectors as:
- Structural Heart: New technologies, including transcatheter valves and congestive heart failure products, are poised to expand access of care to high-risk patients, who otherwise had no options.
- Robotic Assistance: Higher levels of specialty training, coupled with newer and more advanced solutions, are expected to bolster growth in robot-assisted technologies for surgery and treatment planning.
- Infection Control Tools: The attention paid to hospital acquired infections (HAI) and associated costs continues to intensify the market appetite for new tools and systems for reducing occurrences.
- Home Care: Wellness initiatives, remote monitoring tools, and a push to extend care outside of hospital walls are spurring rapid advancement in novel medical products that can be used in home care settings.
- Neuro-devices: Significant expansion of interventional and implantable medical devices to treat brain disorders is expected as new technologies are able to advance care beyond current standards.
The report lists that top five technology trends will include interoperability; devices capable of highly specialized multi-functional devices, big data, low-cost alternates and nanotechnology.
Five companies are to be watched in 2013 according to the report. These are:
- Johnson & Johnson: Major restructuring of the company in 2012 introduced a new CEO and the consolidation of multiple device franchises into three units. Aggressive portfolio management is expected in 2013 as it sheds sluggish businesses and enters into new markets via acquisitions.
- Medtronic: Medtronic's 2012 Kanghui acquisition exemplifies the emphasis of emerging markets in the company's long term vision. In the US, expected 2013 approvals for transcatheter and renal denervation technologies would provide access to two hot-growth treatments.
- Stryker: In early 2013, Stryker announced acquisition of a Chinese orthopedic implant developer. Value-based devices and access to emerging markets are increasingly driving industry M&A activity. Stryker is also expected to make a play in robot assisted surgery as well.
- Covidien: Covidien has been steadily building its portfolio of products via acquisitions to transition from commoditized markets to those with significant growth potential. Now that it has established a presence, the company is expected to be much more aggressive in capturing share.
- St. Jude Medical: While St. Jude Medical faces weakening sales for its core markets of pacemakers, ICDs, and artificial heart valves, it is well-positioned in the hot-growth markets of transcatheter valves, fractional flow reserve (FFR) testing, cardiac ablation, neuromodulation, and renal denervation.