A Role Model for the Medical Device Industry

Germany has more to proud of than the World Cup championship. While the European Union is suffering from an economic crisis, Germany has maintained a growing healthcare industry, showing impressive strength in all areas ranging from R&D and medtech startups to regulation and market growth.

The medical device sector is the largest employer in Germany, according to BVmed 2011/2012 industry report. With 5.4 million employees, almost one in seven jobs in Germany can be found in the healthcare industry. Germany represents 14.6% of medical device global share (second only to the United States) and exports 65% of medical technologies made in the country. To fight against the effects of an ageing population, Germany has implemented a series of major healthcare reforms over the past 20 years.

It seems like the medical device industry has a lot to learn from Europe’s strongest country.

References: http://www.mddionline.com/blog/devicetalk/whats-germany-better-soccer-medtech-140714

http://www.mddionline.com/article/what-germany%E2%80%99s-secret-how-world-can-learn-thriving-medtech-industry

http://www.emdt.co.uk/article/western-europe%E2%80%99s-medical-device-market-under-increasing-pressure

Medical Device Firms and Its Challenges

As the medical device industry faces some significant market threats these days, like slow-growing market and strong regulatory system, it became necessary to be vigilant for signs and understand when changes are needed. Executives should pay attention to at least four signs that indicate that their companies need to adapt. Frost & Sullivan's Venkat Rajan, principal analyst, who leads the firm's analysis of the medical device sector, discusses what those are.

The first sign is “Utter Lack of Product Differentiation” which means that customers see medical device products as commodities and it leads to customers’ indifference to the product. The second sign is “Profit Model Under Pressure”, this means that the profit margin declines year by year and to assure its market presence companies are facing significant internal cost-cutting. The third sign is “Market Disruptors on the Horizon”, this sign has to do with fast technology development which means that a product becomes obsolete quickly and, sometimes, its substitute proves to be better, faster and cheaper. Finally, the fourth sign is “Internal Infrastructure Deteriorating”, this means that the company’s workforce usually is slow to adapt or innovate and its strategy normally is focused on maintaining its market presence instead of expansion.

References: http://www.mddionline.com/article/four-signs-medtech-firm-needs-reinvent-its-business-model

Obtaining Funds in the Medical Device Industry

           As the supply of venture dollars is rapidly shrinking, the task of seeking funds is becoming even more difficult. More importantly than seeking, is the effort of being able to obtain the fund. The annual IBF MedTech Investing Conference, that took place in Minneapolis last week, provided some tips on how to fulfill this task.

         These tips to obtain fund in the medical device industry can be simplified in three C’s: cost, clinical outcomes and CMS (Centers for Medicare and Medicaid Services - reimbursement). Cost is referred to if the new technology/product can remove expenses from the system. The second C, clinical outcomes, is referred to if patients are doing better with the new technology. Investors want to see clinical evidence and proof that the new product is superior than the treatments already available on the market. And finally, the third C, CMS, is about reimbursement. Investors want to know if the Centers of Medicaid and Medicare will cover the procedure. It is common sense that there is a special highlight for cost, though.

         Despite of being challenging, companies that can demonstrate their command of the three C’s are more likely to obtain funds.

References: http://www.mddionline.com/article/three-cs-can-get-your-next-venture-funded

Does Medical Device industry need start-ups to continue the innovation process?

Big companies seek innovation and efficiency to meet the market demands that is always running in a high competitiveness environment, meanwhile the start-ups with good ideas and solutions need to ensure economic survival to bring their products to market.

In a global scenario, and with specific knowledge of the brazilian market, brazilians start-ups gain notoriety not only due to challenges such as risk taking in business, but also by bringing to market the benefits of their innovative ideas. This business model has drawn attention of big companies.

Start-ups do not have the strong, hard and slow structures a big company has. The creative environment and people who can generate new ideas make possible to make mistakes and try again fast and agile.

Typically, start-ups must focus on one idea at a time; however, if that first idea is not as disruptive as first hoped, the end of that idea could also be the end of the company. Those that do survive often form the backbone of larger corporations’next-generation offerings, through acquisition or licensing.

Despite the crucial role that start-ups play in the medical technology industry, the current economic climate cannot be overlooked. Continuing the trend of previous years, in the USA in 2011 we have seen a decline in early stage investment in medical technology start-ups. The investment that has been made has focused on start-ups whose technologies are perceived to have a simpler regulatory pathway to market. The most complex regulatory pathways are often associated with complex technology areas (for example, in vivo imaging and surgical implants) and one could argue that it is these areas that most need disruptive technologies.

For their part, the more progressive medical corporations continue to recognize the importance of these smaller companies (approximately 73% of the United States’ 5300 medical device companies had a head-count of less than 20 in 2007) and many are taking a more collaborative approach to fostering new technologies. Rather than buying an idea outright before significant development has occurred, they are working with start-ups to bring products closer to market through equity or resource investment.

That could be also a great way and opportunity to develop the domestic brazilian medical device industry, that it, working with start-ups to bring products closer to market through equity or resource investment.

To read more about it, please, visit: http://medtechinsider.com/archives/26930