Foreign Capital Investment in Healthcare: China, India and Brazil

A report by the World Health Organization (WHO) on healthcare financing systems for universal coverage of 2010 suggests discussing innovative ways to increase health investment funds at a global level.

As an example of change in the entire healthcare management system is China, which has pledged by 2020 to provide health services "safe, effective, convenient and affordable" to all urban and rural residents with "a medical clinic and a hospital in each region of the country". In addition to the US $ 124 billion initially invested to restructure out-dated services, the government authorized foreign capital investment across the Chinese healthcare market, including tax incentives in some cities.

India’s situation is similar to Brazilian’s reality: lack of healthcare professionals and poor infrastructure. In 2007, the strategy to raise more money, and restructure healthcare, has allowed foreign capital investment in hospitals, which brought benefits to the country, according to a report by Rupa Chanda, published by the World Health Organization.

Brazil has recently changed the law nº 8.080/1990 and now authorizes foreign capital investment in hospitals.

References: http://saudebusiness.com/noticias/investimento-de-capital-estrangeiro-ja-muda-a-realidade-de-china-e-india/

http://saudebusiness.com/noticias/capital-estrangeiro-em-hospitais-como-alternativa-para-as-instituicoes/

European Healthcare System: Changes for a Sustainable Future

Europe might need to rethink its healthcare system in order to put it back on a sustainable track. Not only the European industry is suffering from increased demand, as a result of its demographic trend (expanding elderly population), but also because government spendings are under pressure and there are ever fewer healthcare professionals.

According to MedTech Europe, the industry has developed a Contract for a Healthy Future, its five-year strategy, in which they commit themselves to adapt their “business model to deliver value-based innovations which will help steer European healthcare systems onto a sustainable path.” MedTech Europe and Boston Consulting Group have developed a report that “looks at how companies respond to the new market realities and where the industry stands in terms of making the necessary changes.” The report is called “Slow Burn – The Need to Transform the Medtech Model in Europe” Their website also features an Economist Report which shows how 5 European member states have already taken measures in order to keep their healthcare systems sustainable for the future.

More information on the MedTech Industry's 5-Year Strategy is available at www.reforminghealthcare.eu

References: http://www.medtecheurope.org/key-themes/industry-strategy

Crowdfunding: How to Raise Money Online

When it is time to raise capital, crowdfunding is not a usual way chosen by medtech companies. Especially because investors want to finance opportunities less risky which can bring faster return, like softwares, than some complex device that might take years to be approved by the FDA.

However, when a medtech company choses crowdfunding to raise money, it is important to know what can increase chances of success. GoGetFunding, a company that has helped people from all over the world to raise millions, names the best practices of raising money from online donors, for example, updating a company's Facebook status as daily marketing activity might ensure the crowdfunding. 

Some statistics are shown below:

 * Campaigns with day-to-day marketing plans raise 180% more;

 * Projects with an average word count of between 300 and 500 words raise the most money. Explain who, what and why;

 * Campaigns that have a personal video raise 105% more than those that don't. If a picture is worth a thousand words, than a video is worth a million.   

     Finally, GoGetFunding suggests 10 steps to use their statistics and raise money online:

1. Nurture relationships with your inner-circle of friends, family and extended networks,

       2. Evaluate how much you need to raise,

       3. Set a realistic deadline,

       4. Gather a small fundraising team,

       5. Have a marketing plan,

       6. Create an awesome, personal fundraising page,

       7. Launch!

       8. Reach out to your inner circle and then extended networks,

       9. Engage, update and thank,

       10. Success!

References:

http://www.mddionline.com/article/crowdfunding-best-practices-how-get-funded-

online-infographic 

MedTech at the 2014 World Cup

        On June 12, Brazil and Croatia match launched the beginning of the 2014 World Cup. At the opening ceremony, however, the healthcare industry was cheering for something else besides football. The first kick was given by a paralysed teenager. This remarkable feat was possible thanks to an exo-skeleton controlled by the teenager’s brain.

  "The Walk Again Project is headed by Duke University's Center for Neuroengineering in collaboration with the Technical University of Munich and a number of other universities and research groups worldwide. Together they are designing the exo-skeleton and a 3D printed helmet that contains a series of electrodes capable of capturing brain waves. This brain activity will then initiate the suit's movements.”

   During this year of 2014, medtech breakthroughs have been more connected to sport events. Aired at the 2014 Super Bowl, Microsoft commercial shows how technology in general, and medical technology specifically, has improved the lives of countless people around the world. Another amazing video of Duracell, an American football player tells the story of how, despite being deaf, he managed to become a professional NFL player.

References: http://medtechviews.eu/article/value-medtech-world-cup-and-super-bowl

Reconsider Outsourcing Strategies in China

In the last couple of decades, China has attracted manufacturers from all over the world because of low labor costs and excellent export infrastructure. By outsourcing their production, China was a way to cut costs when producing big quantities. The medical device sector was no different than that.

However, this trend may be about to change. Chinese wages and the value of Chinese currency are rising. The government mandate to raise the minimum wage, so it could bring labor cost increases of 15–20% per year in Chinese factories. Meanwhile, freight and other costs associated with offshore manufacturing are continuing to rise. There are other risks when outsourcing in China, such as intellectual property protection and quality control.

So manufacturers are rethinking their strategies of outsourcing in China. Some US-based are returning their production back to the United States. This is particularly good when the product is meant for the American market. This reduces shipping costs and challenges, gives OEMs a higher quality control and allows them to take advantages of improving efficiencies in U.S.-based manufacturing.

References: http://www.mddionline.com/article/could-onshoring-be-next-medtech-outsourcing-trend

2014: A Good Year for the Medtech Sector

JPMorgan Chase Analyst Michael Weinstein believes that 2014 will be good to the medtech sector. This week, the JPMorgan analyst published a research where he says to expect the medtech sector to grow 4.2% this year, up 0.8% from 2013.

“We see growth broadly accelerating in 2014-2015 as an industry that bottomed in 2011-2012 sees the benefits of new products, new markets, and small to mid- sized M&A. This is particularly true in cardiovascular devices, where we see growth accelerating at all three large cap names and ample room for innovation in small-cap, emerging growth companies – both public and private.”

Michael Weinstein

References: http://www.mddionline.com/article/jpmorgan-chase-analyst-2014-will-be-strong-year-medtech

Brazilian Healthcare Industry: first semester of 2013

In the first semester of 2013, the Brazilian medical device sector increased 6,5% (compared to the same period of 2012). This is according to Abimed (Brazilian Association of High Technology Equipment, Products and Medical Supplies). This association represents 150 healthcare companies which are responsible for almost 60% of the Brazilian medical device sector.

According to the report, the sales were also increased by 8,6% and the sector was responsible for the creation of 3500 new jobs, both industrial and commercial sector. These numbers are way above national economy average.

The healthcare sector represents 0,6% of Brazil’s GDP, gathers 13 thousand companies responsible for 120 thousand jobs and its revenue was about US$ 9 billion in 2012.

References: http://www.abimed.org.br/notPadrao.aspx?idNoticia=110

Medtech Companies: Prepare for an Innovation Makeover

A report from PricewaterhouseCoopers’ (PwC) Health Research Institute concludes that Medtech companies must change the way they innovate. In a new economy that rewards better care, innovation is the key if they want to keep adding value to its customer.

The report indicates new alternatives for medtech companies to innovate and become more competitive, outside traditional research and development. The report also shows a survey made with medtech executives, with questions about their innovation activities. PwC analyst suggest a innovation makeover for medtech companies, because customers (either hospitals, accountable care organizations or individual customers) now demand more in financial, convenience and health terms.

“Medtech companies must focus more on service and business model innovations that meet new industry demands rather than on incremental product improvements.”

Besides, the report suggests three ways for medtech companies to innovate: operate as a “lean startup”, new innovation metrics and get closer to the patient.

References: http://www.mpo-mag.com/contents/view_breaking-news/2013-10-24/report-medtech-firms-must-change-approach-to-innovation/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%253A+MPOBreakingNews+%2528Medical+Product+Outsourcing+Breaking+News%2529

Emerging Markets: Brazil and the Medical Device Industry

Since the 2008 crisis that took place mainly in the United States and Europe, it’s been said a lot about the opportunities in emerging countries. But one shall be careful when analyzing these markets and try to evaluate its potential as objectively as possible.

        When it comes about Brazil and the medical device industry, some challenges one may face when trying to approach this market. Some of them are the bureaucracy, strong regulatory system added to long timelines and delays, high taxes and a structure that varies according to the product which makes hard to know in advance how much the price will be for the final customer.

        However, when you overcome the language and the cultural barriers, it is all worthwhile because Brazil is a huge market, with more than 190 million people, a large public healthcare system which represents 4.1% of its GDP, a US$4 billion in imports and US$700 million in exports of medical devices.

References: http://www.emdt.co.uk/article/medical-devices-brazil-oportunity?cid=nl.emdt03

Google will start a new company focused on healthcare and biotechnology

Calico will be a new company focused on “health and wellbeing, in particular the challenge of aging and associated diseases”, says the company CEO and co-founder Larry Page in a Google+ post. He goes on in a press statement arguing that, even though the healthcare sector is a lot different from what Google does today, he believes that his company can “improve millions of lives”.

Google hasn’t released any specific plans or projects yet, but to keep the shareholders from worrying, Page says that these investments are very small in comparison to Google’s core business. This is Google’s second effort in the healthcare and biotechnology industry. Google Health was an attempt to store patient medical records online and it was abandoned because of privacy concerns. Besides, app developers in Google were also focused on others projects like Google Glass.

References: http://www.mddionline.com/article/google-calico-wants-you-live-forever

Global Cardiovascular Medical Devices Market by 2015

A report made by Research and Markets suggests that the global cardiovascular medical devices market will worth $65.6 billion by 2015. The report covers the years between 2009 and 2015 and it expects that the market of these devices will have grown at the compound annual growth rate of 9,8%.

When talking about regional markets, it indicates that North America will have the biggest share of the market at 40%, followed by Europe with a share at 30%. Asia-Pacific will be fastest growing region with a growth rate of 11,6% (comparing to the global growth rate of 9,8%), the market is expected to worth $17.9 billion by 2017.

Finally, Research and Markets divides the cardiovascular medical devices market in segments and for each one, the company indicates the CAGR (compound annual growth rate) and market values. For example, it expects that the Cardiac Rythm Management Devices will worth $22.3 billion at a rate of 9.9% by 2017, followed by Interventional Cardiac Devices that will worth $12.3 billion at a rate of 11.6%.

References: http://www.mddionline.com/article/global-cardiac-medical-devices-market-be-worth-656b-2015

Brazilian Healthcare Market 2012: a retrospective

    As an innovative industry, the Brazilian healthcare industry exports to more than 180 countries and generates around 100 thousand jobs in the national territory. The sector is considered an important component in the Brazilian economy. And so, it is important to analyze its updated market numbers.

   ABIMO is the Brazilian Healthcare, Medical and Dental Equipment Industry Association. It releases healthcare market numbers every year. One can access some of the 2012 statistics in ABIMO’s official webpage. There are information about the healthcare national production value, productivity, investment, international trade, national production and demand, Brazilian taxes, etc. Some indicators draw more attention than others. The “healthcare national production value” is one of them, as it reached almost R$5 billion (more than US$2.17 billion) last year. “Investments” is as well an important indicator and it represented more than R$300 million (more than US$130 million) in 2012.

    Unfortunately, the Brazilian healthcare industry must be careful about the numbers of international trade (imports surpassed exports) and the national production only represents 38,9% of the national demand.

References: http://www.abimo.org.br/modules/content/content.php?page=dados-economicos

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

Healthcare Industry Continues to Impress

Startups of the healthcare sector in USA attracted $1.81 billion from venture capitalists in the second quarter of 2013. Medical device startups represented 38% of the deals and 35% of the dollars invested. This according to the Q2 Venture Capital Activity Report issued by CB Insights, a venture capital database.

Although money invested by venture capitalists into startups declined 14% when compared to the same period last year, the number of deals remained the same. Total investments represented 24% increase over the first quarter when the money invested reached $1.47 billion.

California was the investments main destination (43% of the $1.81 billion invested in the sector and 41% of the deals), followed by Massachusetts (20% of the money invested in the sector and 15% of the number of deals).

The healthcare IPO (Initial Public Offer) market also impressed: 11 of the 22 IPOs in the second quarter of 2013 were of healthcare companies.

References:http://www.mddionline.com/article/q2-venture-capital-investments-early-stage-healthcare-companies-reach-five-quarter-high

Brazilian Medical Device Sector: national supply, imports and investments

Since the domestic supply of medical devices in Brazil is not able to fulfill the Brazilian increasing demand, imports continue to be an important resource. In 2012, the country imported approximately $4 billion in medical equipment and it can hit $9 billion over the next 2 years.

To prevent Brazil from becoming too dependent on imported medical device products, the Brazilian government is trying to change this scenario. Public and private investment in healthcare research may reach $7 billion over the next four years (almost 0,30% of the GDP). These assets come from the National Bank of Economic Development (BNDES), Brazilian Innovation Agency (FINEP), National Health Ministry, Science and Technology Ministry and Pharmaceutics’ Labs. The research agenda is guided by the needs of the Brazilian Healthcare Public System (SUS).

References: http://www.qmed.com/news/brazilian-medical-device-imports-hit-9-billion-2018?cid=nl_qmed_daily

http://www.anpei.org.br/imprensa/noticias/pesquisa-em-saude-tera-investimento-de-r-13-bilhoes-em-quatro-anos/

Medical Device Industry Growth in Latin America and Brazil

Since every crisis might be seen as an opportunity, strategic measures must be taken in these days. Emerging markets can be considered as a strategic target market to escape from the international crisis. One region that is getting international medical device investors is Latin America.

Because of cost advantages, suppliers and medical OEMs are entering Latin America. The region expects a growth by double digits in the coming years. Today, the Latin America medical device market is worth U$10.5 billion and it is expected to reach US$20 billion by 2015. The exports of Costa Rica’s medical device represented 11.8% of its total exports of good. The government of Peru invested U$333 million to improve public healthcare. In 2011, Colombia imported U$799.3 million in medical equipment and supplies.

As for Brazil, the largest market in Latin America, the exports of medical device reached US$555.1 million in 2011. The growing of middle-income families and aging population makes Brazil a special target. Despite of the expected growth in the medical device industry, high import prices and a bifurcated public/private system could impede a higher expansion.

References: http://www.mddionline.com/article/latin-americas-medtech-market-growing-double-digits-infographic

http://www.mddionline.com/article/brazil%E2%80%99s-growing-economy-fuels-vascular-delivery-device-sales-despite-market-limiters

Medtech Global Market 2011-2018

As the world lives a crisis season, economic and financial advice has become one of the most important analysis. Result Healthcare intends to guide healthcare companies providing these kind of advice and one of these attempts is the “What’s hot and key trends in Medtech in 2013[1]”.

The report indicates a growth in the medtech global market at 4.4% until 2018. It also predicts that the pharmaceutical sector will grow at only 2.5% and the in vitro diagnostics will be largest medtech segment, with some important sub-segment areas as robotic-assisted surgery and mobile health.

Some of the main conclusions of this report can be seen in the tables below:

So, one can say that there are reasons for medtech companies to be optimistic about the future.

References: http://medicaldesign.com/business/medtech-be-440b-market-2018-says-report

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[1]  To check on the report, go to http://www.resultshealthcare.com/media/105652/medtech_2013.pdf

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

Meanwhile in the Brazilian Medical Device Industry

     Since Brazil has become one of the main destinies of many sectors worldwide, either because of its market size or its rising middle class, constantly monitoring what is happening inside its borders has become a routine task for foreign investors. The medical device industry is no exception, especially with such complex/bureaucratic regulatory system.

        However, this seems to be heading to a more harmonized system. A new Brazilian Good Manufacturing Practice (BGMP), RDC 16/2013, has gone into effect in the country. It means that two different BGMP resolutions (RDC 59/2000 for medical devices and Ordinance 686/1998 for in vitro diagnostic (IVD) devices) have been replaced by the new single one. The sector now only have one requirement to meet, hence, the BGMP has become less complicated. Companies now have 180 days to update their quality system and make it meet RDC 16/2013.    
       

        Another fact that has happened to the Brazilian medical device industry, and deserves both national and  foreign attention: in the end of last month (March, 2013) the Brazilian Medical Device Industry Association (ABIMO) has claimed, in Congress, the approval of a law that ensure tax isonomy between brazilian and imported products. Today, public and philanthropic hospitals have tax immunity when purchasing imported medical device.

“We do not want differential treatment. We are competitive. We export to more than 180 countries. Abimo’s proposal is simple: ensure tax immunity for all purchase orders made by institutions linked to SUS (Brazilian public healtcare system).”

Paulo Henrique Fraccaro, Abimo’s President            

        These two initiatives seem to be an effort to boost the national industry and make it more competitive. 

References: 

http://www.emergogroup.com/blog/2013/04/brazil-gmp-requirements-streamlined?utm_source=RADAR&utm_medium=newsletter&utm_content=Americas&utm_campaign=4April2013

http://www.valor.com.br/politica/3058980/industria-de-equipamentos-medicos-quer-isonomia-com-importados

Senate Votes to Repeal New Medical Device Tax

The Affordable Care Act, signed into law back in 2010, includes a 2,3% that will be charged on the total revenue of a medical device company, regardless of whether the company generates profit or not. It was meant to start this year and due to the polemic that it has raised among the medical device industry and in Congress, a repeal amendment was proposed.

On Thursday, March 21^st, the US Senate voted a 79-20 tally to repeal the medical device tax. The voting was bipartisan; it included 33 democrats against the tax. The amendment proposed is called Medical Device Access and Innovation Protection Act, introduced by both a Republican and Democrat Senators. The reasons for such a support to the amendment are due to a concern of losses in profits, job creation and R&D investments. The opponents to the repeal claim that the new tax will raise a $30 billion in 10 years and it will be funding the Affordable Care Act.

References: http://www.mddionline.com/article/medical-device-tax-jeopardy-after-senate-votes-repeal