Why medical innovation is so hard

BIOMEDevice Boston conference will happen between April 13-14 and one of the speakers is Bill Betten, director of business solutions at Devicix (Eden Prairie, MN). He recently gave an interview for Qmed about the reasons why medical innovation is so hard to fullfil. “You build around what has been done before. When people hear that statement, they sometimes say things like: ‘what about the implantable pacemaker? Surely that was not incremental?’ But you could argue that the pacemaker certainly built on what came before,” says Betten.

Here are some reasons why leapfrog innovation rarely happens in the medical industry, according to him:

- Financial Constraints: makes it difficult for companies to create breakthrough products or create devices that are less expensive but functionally equivalent to older technology. Due to increasingly cost-conscious hospitals, companies are being forced to reduce costs of their products. “In the past, it was commonplace for device makers to charge substantially more money for new products that only had minor improvements over the previous-generation product. That isn’t the case anymore: many hospitals are now hesitant to invest in new devices that are not demonstrably better than established technologies.”

            Another important point is the vital role of medical device start-ups in developing revolutionary medical technology: one has to add the struggle they go through to obtain venture capital funding for their projects.

- Regulatory Challenges: in a highly regulated industry like the medical sector, product development costs can skyrocket. “Regulatory costs run in the tens of millions of dollars for most 510(k) products, according to a report on AdvaMed’s website. For PMA products, marketing a medical device in the United States can take close to $100 million on average.”

These obstacles are faced by medical start-ups all over the world and Biokyra is no exception. The Brazilian-based company is currently developing medical devices in the vascular area, going through regulatory processes and filing Brazilian and international patents.

Medtech Industry needs to build credibility with Hospitals

McKinsey & Co. released a new report, called "Improving healthcare while curbing cost: Med-tech companies offer a solution", showing that the medtech industry has to, not only build awareness of its products and solutions, but also build credibility among hospitals.

MDDI

The McKinsey survey 157-hospital executives in the U.S. and Europe, fewer than half ranked the clinical and technical expertise of large equipment manufacturers as "excellent." The result was even worse for makers of devices and consummables. Only 19% of hospital executives responded that large medtech makers' understanding of the hospital business was "excellent."

"With few exceptions, med-tech companies do not offer to share risk with their hospital customers," the report charges. "They focus on marketing the technical features of their products and price accordingly. Yet providers say they are more willing to work with med-tech partners if they know they share the risks as well as the benefits of the arrangement."

       The report suggests that there is a $44 billion opportunity in the U.S. if medtech companies work with hospitals and provide "beyond the product" solutions.  It also points out that executing contractual agreements where medtech companies share risk would help to build credibility.

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/

Increasing Healthcare Costs

According to L.E.K. Consulting, medical device companies are suffering from unprecedented pricing pressures. Recently, the consulting company published the results of a survey with American hospitals’ CEOs reporting that reducing costs is among their top five most pressing needs. Also, the purchasing process has become more complicated and all supplies and new technologies have to go through a value/cost analysis.

Despite cost pressure, most of the hospitals’ CEOs answered that they are interested in buying additional services from medtech companies, especially in clinical IT and analytics, operations management and efficiency, and education, training, and compliance. They want to see medtech firms prove that their solutions can improve the quality of patient care, lower hospitals’ overall costs, or increase the efficiency of their clinical staffs.

References: http://www.mddionline.com/blog/devicetalk/6-threats-and-opportunities-medtech-new-healthcare-paradigm