U.S. Healthcare Reforms Could Impact Domestic Pacemaker Sales

November 30, 2011

3 Min Read
U.S. Healthcare Reforms Could Impact Domestic Pacemaker Sales

Increasing incidences of arrhythmia and heart failure will contribute to a predicted growth of the global pacemaker and cardiac resynchronization therapy pacemakers (CRT-P) market from $4.5 billion in 2010 to $5.3 billion by 2017, according to a recent report by industry analysis firm GlobalData. The report, "Pacemakers and Cardiac Resynchronization Therapy Pacemakers (CRT-P): Global Pipeline Analysis, Competitive Landscape, and Market Forecast to 2017," cites advancements in pacemaker technology and growth in emerging markets as key market drivers, but cautions that looming healthcare reform could impact domestic sales.

pacemakerWith a compound annual growth rate (CAGR) of 2.5% forecasted, the pacemaker and CRT-P market is composed of dual-chamber, single-chamber, and CRT pacemakers. Despite their higher price tags, dual-chamber pacemakers accounted for 70% of the market's global revenue in 2010 because of their demonstrated efficacy compared with single-chamber devices. However, single-chamber pacemakers comprised a fair 26% of the market, which is largely attributed to their lower cost and related use in developing areas such as China, India, and Brazil.

Dominating the global pacemaker market in 2010 was Medtronic, boasting 40% of the global market share, according to the report. St. Jude Medical, Biotronik, Boston Scientific, and Sorin Group were identified as major players as well. Most of these companies' pacemaker revenues in 2010 came from the United States and Europe, but that could soon change, the report speculates. "Device consumption rates in these countries have decreased due to effects of the global recession and pacemakers reaching their peak sales. This has resulted in companies shifting their focus towards emerging markets, which is expected to provide the next impetus for growth."

Companies are also looking to emerging markets for pacemaker growth as the United States readies for controversial healthcare reform policies, including the much-contested 2.3% excise tax on domestic sales of medical devices. Furthermore, an increased emphasis on value-based payment programs through Medicare and comparative effectiveness research could impede pacemaker growth in the United States, the report states. "Procurement through Group Purchasing Organizations will help hospitals to negotiate higher discounts from medical device manufacturers but is not expected to increase procedure volumes in a market where sales are already at peak levels. As a result, the profit margins of pacemaker and CRT-P manufacturers will be adversely affected because of such purchase models, resulting in reduced revenues and increased competitive pressure pricing."

Likewise, comparative effectiveness research (CER) may prompt pacemaker manufacturers to increase spending on studies and clinical trials in order to prove that their products are more effective than those of competitors. "This will, in turn, increase overall product cost and affect market revenues by driving up the price of product and lowering the demand," the report says. "CER may also result in a decline in the price of a product, which has been found to be less effective by the government authorized research body, Center for Comparative Effectiveness Research, affecting the manufacturer's revenue and product portfolio. This is also expected to change the product development strategy of device manufacturers with more emphasis on proving superiority in terms of safety, efficacy, and effectiveness, increasing timeline and development costs."

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