The Medical Device Industry's "New Normal"

In its annual "Pulse of the Industry" report released last month, Ernst & Young focused on the idea of "the new normal" as it applies to the medical device industry's situation in the current volatile economic climate. And while the 60-page report delves into such lightning-rod topics as the device tax, the difficult regulatory environment, and comparative effectiveness, a simple, chart-based spread labeled "The new normal: innovation at risk?" may just have the most profound impact by plainly illustrating several troublesome industry trends and supplying the eyebrow-raising stats to back them up.

Consisting of multiple small charts, this section of the report merely lays out the jarring facts side by side. The number of PMA approvals, for example, dropped from 39 in 2006 to 20 in 2010 while the average PMA approval time jumped from 15.5 months between 2003 and 2007 to 27.1 months in 2010. Likewise, the number of 510(k) approvals decreased from 3200 in 2006 to 2778 in 2010 while approval times lengthened from 3.1 months from 2003 to 2007 to 4.5 months in 2010. In line with this trend, the number of devices receiving FDA investigational device exemptions after first review have steadily declined from 76% in 2006 to 56% in 2009 and finally to 32% in 2010.

Essentially, fewer products are making it to market than they used to--and with longer lag times to boot. But of even greater concern, perhaps, is that the number of Class I product recalls have skyrocketed from 65 in 2006 to a whopping 426 in 2010, according to the Ernst & Young report. Furthermore, the number of warning letters issued by CDRH climbed from 154 in 2006 to 204 in 2010.

While these trends are not necessarily new or surprising, the hard numbers supporting them really drive home the magnitude of the medical device industry's situation. Characterized by fewer products, longer review times, more recalls, pricing pressures, and reduced funding, the medtech industry's "new normal" presents a host of challenges that likely have companies looking back with nostalgia on the "old normal." --Shana Leonard