Prescription for Change: Medical Devices Increasingly Replace Drugs
May 30, 2012
Drug use could soon be tapering off in the healthcare industry as medical devices increasingly replace pharmaceutical therapies to treat a variety of conditions. But what kinds of opportunities lie ahead for medical device makers, and what does this emerging trend mean for Big Pharma?
A blog post over at the Wall Street Journal earlier this week, written by Gregory J. Millman of Dow Jones Banking Intelligence, took an interesting look at a rising trend in which medical devices are replacing the use of traditional drug therapies in certain applications and how it's changing the life sciences sector. In particular, the post highlights two venture capital firms, Morganthaler Ventures and Advanced Technology Ventures, that are specifically seeking out medical device investment opportunities that have the potential to supplant drug use.
For example, the companies invested back in 2003 in Ardian Inc., which developed a minimally invasive method for performing renal denervation (RDN) to control hypertension that offers the added benefit of demonstrated success of RDN on patients resistant to drug therapy. Ardian was eventually acquired by Medtronic.
The lucrative potential of these drug-replacing medical devices can be understandably alluring for venture capital firms. But while this focused investing strategy is interesting on its own merit, there's also a hook to expand exit possibilities: These innovative medical devices not only attract medtech power players, they are also beginning to attract pharmaceutical companies. "One of the last three bidders [on Ardian] was a large pharmaceutical company without any medical device presence," Hank Plain, partner, Morgenthaler Ventures, told the WSJ. "Because the therapy had the potential to replace drugs, pharmaceutical companies bid."
That's a fascinating development. We've seen the early signals of this drug-to-device shift at the American College of Cardiology's scientific meeting last year, for instance, at which drugs took a noticeable backseat to discussion of innovative minimally invasive procedures and medical device advertising dominated the scene. Furthermore, the promise of medical devices to treat Alzheimer's patients has generated excitement and hope for the devastating disease.
But this is certainly an interesting twist to the medical device story as pharmaceutical companies adapt to survive when new blockbuster drugs are elusive. So, will pharmaceutical companies with no existing medical device ties take the plunge into the market? Or is this a rare occurrence? While the future of innovative, drug-replacing medical devices is exciting and bursting with opportunities, the trend could seemingly also serve to spur more competitors to enter the market. It will be interesting to see how this trend truly unfolds.
What do you think about this emerging trend? Let us know in the comments section below. Also, catch up on this drug-device trend in MPMN's archives, "Are Medical Devices the New Drugs?" and "Could Light-Based Alzheimer's Devices Be 'The Next Big Thing?'" --Shana Leonard
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