Conducting business as usual wasn’t an option for the medical device industry in 2013. Healthcare reform and a challenging regulatory environment, coupled with the growing impact of globalization, consumerization, and mHealth, forced manufacturers to reevaluate their businesses in order to compete in a new era of healthcare. And while an ominous cloud of uncertainty hung over the medtech industry this year, one concept became crystal clear: Adapt or risk becoming obsolete.
The impetus for much of the medtech makeover this year, of course, was the Affordable Care Act (ACA). With its emphasis on value- or outcomes-based healthcare and reducing healthcare costs, Obamacare sent the medical device industry into a tailspin as companies grappled with the potential consequences of healthcare’s new world order.
And despite waging an all-out war on the ACA’s medical device excise tax, the industry felt the sting of defeat when it went into effect at the beginning of the year. Although several top medtech companies shuttered plants, moved operations offshore, and laid off workers in droves prior to 2013 in mere anticipation of the tax, additional casualties blamed, in part, on the levy surfaced throughout the year. The full impact of the medical device tax on R&D spending—and whether the tax really stifles innovation—remains to be seen, however.
The full impact of the ACA also remains to be seen, though it has already spurred dramatic change. Realizing that to thrive—or at least survive—under Obamacare, many medical device companies, including industry leader Medtronic, have embraced new business models that focus on owning a disease and delivering effective solutions across the continuum of care.
New entrants into the medical device sector further altered the landscape in 2013, reinforcing the notion that companies would need to reject the status quo to remain competitive. Companies such as Verizon and Samsung offered new opportunities as well as new competition in an evolving sector that was forced to acknowledge the rising influence of mHealth, wearables, big data, and health IT.
|Learn more about the impact of these trends at the "Maximizing eHealth and Consumerization" track at MD&M West on February 13.|
“New entrants into the market…are actively pursuing products and services that are disruptive to the industry’s traditional business model,” says James S. Varelis, principal at PwC pharmaceuticals and life sciences. “Medtech companies need to embrace innovation techniques we call ‘fast, frequent, frugal failure,’ while also making sure they protect their core business. That’s a tricky balancing act, one that requires an ambidextrous approach to driving the business.”
Some things didn’t change in 2013, however. Although FDA finally released long-awaited final guidances on unique device identification (UDI) and mobile medical apps, the agency and industry continued to be at odds. The threat of further reform to the 510(k) process, multiple adjustments to the clinical trial process, inconsistencies in guidance interpretation, and mounting requests for additional data have seemingly escalated the tension between the agency and industry, which has been exacerbated by FDA’s perceived unwillingness to collaborate.
“The industry faces enormous regulatory and institutional challenges going forward,” says Eliot Lazar, president of medical device consulting firm elCON Enterprises. “Our crystal balls are very hazy and the landscape is evolving very rapidly. ‘How will we get paid, and who will pay us?’ is the largest single question that we face, and the strategic decision makers are forced to modify metrics to mitigate risk.”
Luckily, it wasn’t all doom and gloom in 2013. For the first time in more than three years, the stent, ICD, and knee, hip, and spine markets performed better than expected, according to Glenn Novarro, managing director, medical supplies and devices, at RBC Capital Markets. Mind-boggling advances in 3-D printing took the world by storm, while FDA approval of Abbott’s MitraClip for mitral regurgitation and Medtronic’s MiniMed 530G first-generation artificial pancreas system signified exciting progress for novel technologies.
The past 12 months set the stage for a monumental transformation in the medtech industry. And while medtech faces many daunting obstacles in 2014, there are also a wealth of opportunities for the nimble companies whose new year’s resolutions include rethinking their businesses, focusing on patient outcomes, and truly innovating for the millions of new patients receiving healthcare under the ACA. Here’s to medtech in 2014, whatever it may bring.
|Hear futurists and experts opine about what may come in 2014 at the upcoming MD&M West conference and expo February 10-13.|