Medical Devices Year in Review 2013
Where to begin? 2013 in one word—I think you’ve heard this one before—change.
As with all change, there were some immediate winners and losers, while in most cases, it is too early to tell what companies and what products will be the winners in the future.
I think we can look at the Patient Protection and Affordable Care Act (PPACA)—or Obamacare—as certainly the most talked about topic in 2013 that affects our medical device market. In addition to the implementation of 2.3% tax on all devices sold in the USA, we saw major issues with the launch of the online insurance portals for consumers.
In focusing on some of the highs of 2013, I would be remiss if we didn’t talk about the fantastic innovation stories from 2013 that continue to push the boundaries of what we thought was even possible just five years ago. From the bionic eye and award winning technology from Second Sight, to the advancements in phase change materials that allow us to ship living organs (picture a beating heart) around the globe to waiting transplant patients. We have seen many products become smaller with the rise of more micro and nano applications as our ability to process and manufacture smaller and smaller components continues.
Other procedures that normally required major incisions and patient trauma along with extended hospital stays are steadily being replaced by MIS (minimally invasive surgical) operations. Neurological science is finding more and more connections in our brain that affect other health conditions with the revolution of innovation in this area in its infancy.
Using the latest MIS catheter technology surgeons can now replace a failing a heart valve with only a small incision while using the femoral artery to deliver the valve to the heart. This procedure—which was at one time a chest splitting, open heart surgery that caused major trauma and blood loss along with extended hospital stays and recovery times—is now being replaced by this MIS procedure requiring only a two- or three-day hospital stay. Indeed, it is slowly becoming a “routine” procedure in some cardiac centres.
There is not one medical device market, from ophthalmology to orthopaedics and from IVD to cardiology and neurology, that has not seen some level of advancements. Progress continued in bioabsorbables and implantable materials, as more new products came to market in 2013.
Talking about 2013 would also not be complete if we did not mention the advancements in tele-health, tele-medicine, mobile health and consumer health. The convergence of the software / app world with the medical device community is blurring the lines of what even constitutes a medical device these days. The iPhone and other smartphones can perform diagnostics procedures (such as sleep studies, skin or melanoma diagnostics and blood pressure monitoring to name just a few) while also tracking physical activity and caloric intake along with other vital signs. Healthcare reform in whatever from it eventually takes in the USA and globally will certainly involve consumers being more involved in the spending of their healthcare dollars. At 18% of GDP in the USA, the current rise of healthcare has no choice but to slow down. The USA is currently spending at almost twice (% GDP) than any other nation.
Medical device manufacturing and contract manufacturing saw glimpses of “re-shoring’ or “near-shoring” of production back to the USA or Mexico (or other North America locations). The output of the outsourcing and contract manufacturing sectors saw robust growth with no immediate signs of slowing down as OEMs looked to leverage their internal resources and partner with outsource providers where it made logistical and economic sense. One additional strategy continuing to emerge in 2013 was device OEMs building or acquiring design and manufacturing centres in or very near to the emerging and new markets they want to serve. Progressive and forward thinking OEMs realise that a new breed of products or completely different products, therapies and cost structures will drive growth in emerging and faster growth markets. While some recent estimates have revised downward some projections, all estimates point to the BRIC nations as the fastest growth sectors over the next decade and beyond.
In closing and looking back, while 2013 was filled with some uncertainty and headwinds in our industry I believe there remains a robust pipeline of innovation that will shape our industry in 2014 and beyond. Technology and the convergence of technology with devices, along with therapies and novel / innovative models of delivering healthcare will be the new normal as cost control is no longer an option but a must. Incremental improvements in products will continue to be replaced with disruptive and novel approaches that increase efficacy of outcomes while reducing costs. With that said, I will leave you with this statistic. In 2012, medical devices in the USA made up roughly 4% of our entire US$2.6 trillion dollar total healthcare spend. I think it should be clear to everyone that the value our society receives from medical devices is undisputable.
Let’s get ready for 2014, I believe it’s an exciting time for practioners, patients and all of us involved in any facet of the healthcare puzzle to be a part of such a vibrant and rapidly changing medical device industry and healthcare community that is making a positive impact in the quality of people’s lives around the globe.
About the author:
Mark has over 20 years of senior level experience in leading and assisting organisations in the manufacturing of medical devices and the medical plastics and injection moulding industry. As President of Bonifacio Consulting Services, Mark brings thorough technical knowledge and business leadership experience in global medical device manufacturing, engineering, operational, and financial strategies to early stage, middle market, and Fortune 500 firms. Mark has worked extensively with medical device firms in the USA, Mexico and China. Prior to starting his consulting firm, Mr Bonifacio was co-founder of medical contract manufacturer, APEC (1997) in Baldwin Park, CA (now Helix Medical) and has held various operational, engineering, and business development roles during his career. Mark holds a BS in Plastics Engineering from University of Lowell (now UMASS Lowell), sits on various advisory boards, and remains active with the UMass M2D2 programme and many other local medical device networking, non-profit and professional organisations. Mr Bonifacio also serves as Chair of the Medical Plastics Board of Directors with the (SPE), Society of Plastics Engineers. Mr Bonifacio has direct working experience in North America, Mexico, China, and Europe. Working on various acquisitions, startups, and outsourcing initiatives. Mr Bonifacio is an active public speaker and has published many papers on innovative device manufacturing and outsourcing. Mark currently resides in Natick, MA, USA, with his wife Patricia and three boys.