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Evolving Ophthalmology

In recent years, the eye-care market has evolved from one focused on the treatment of age-related vision disorders such as presbyopia, glaucoma, and various retinopathies to one that provides services to address more-cosmetic concerns, such as laser vision correction and the implantation of refractive intraocular lenses. In conjunction with this shift, the specialization of ophthalmologists has evolved.

Patrick Driscoll

September 1, 2007

9 Min Read
Evolving Ophthalmology

Surgical subspecialization has created a highly fragmented marketplace in which clinicians seek advanced training in cataract surgery, laser vision correction, and retinal surgery, as well as in pediatric and low-vision fields.

This article, based on market research by MedMarket Diligence LLC (Foothill Ranch, CA), explores these and other trends in the market for ophthalmic devices, as well as how such trends fit into the context of the broader eye-care market.1

The Eye-Care Market

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Photo by ISTOCK

Vision-care services are provided by both ophthalmologists and optometrists. Although these eye-care professionals have overlapping skills, they have an interdependent relationship. The ophthalmologist (eye surgeon) relies on the optometrist for patient referrals. Meanwhile, the optometrist relies on the surgeon for clinical services to treat a broad range of ocular conditions. Such treatments include relatively benign procedures, such as foreign body removal or the administration of therapeutic pharmaceuticals, as well as more-complex treatments, such as cataract or refractive surgery. The most serious treatments include corneal transplants or the management of retinal disorders such as macular degeneration.

The aging of a population with ready access to information has created a highly discerning market of presbyopes who demand better solutions to common vision problems that have been traditionally corrected with eyeglasses and contact lenses. Today's presbyopes are looking for enhanced treatments from their eye-care professionals—treatments that do not compromise near vision for far, or night vision for clarity. As a result, industry innovators continue to develop new approaches and improve existing approaches to vision care and vision diagnostics. The emerging technologies are aimed at improving conventional therapies—without extending recovery periods or compromising endpoints. The success that has been achieved to date has encouraged further innovation and has led to a frenetic pace of research and development, as well as significant acquisition activity within the sector.

The recent flurry of acquisition activity by Advanced Medical Optics Inc. (AMO; Santa Ana, CA)—which controls about 60% of the worldwide surgical instrument market for laser-assisted in-situ keratomileusis (LASIK) procedures—is particularly noteworthy. In January, AMO purchased WaveFront Sciences Inc. (Albuquerque, NM), a leading provider of proprietary wavefront diagnostic systems for refractive surgery and medical research. Then, in April, the company completed its $880 million acquisition of IntraLase Corp. (Irvine, CA), thereby adding the company's femtosecond laser to its arsenal of ophthalmic surgical devices and eye-care products. Use of IntraLase's femtosecond laser is increasingly seen as the standard of care in many ophthalmic surgery suites around the world.

In July, AMO entered a $4.3 billion bid to acquire Bausch & Lomb Inc. (Rochester, NY), which had recently agreed to a $3.67 billion buyout by private equity firm Warburg Pincus. AMO eventually withdrew its bid, citing unrealistic hurdles set by Bausch & Lomb. At press time, the acquisition by Warburg Pincus was still pending.

The Ophthalmic Device Market

Although a fair amount of consolidation has taken place among ophthalmology technology companies in the last half-decade, a number of entrepreneurial firms have surfaced with promising innovations that will keep the specialty vibrant with possibility. Consolidation in the ophthalmic device market includes acquisitions among some of the sector's largest firms. Meanwhile, early-stage developments are taking place behind the scenes at various venture capital–backed companies.

In addition to the large and the small, many of the midsized companies that support ophthalmologists continue to iterate and refine essential tools that will make surgical interventions faster, easier, more accurate, and more affordable.

The ophthalmic medical device sector can be organized into three major segments, which are as follows.

  • Diagnostics, which include handheld office-based diagnostic instruments.

  • Cataract surgery products, including intraocular lenses, viscoelastics, and phacoemulsification systems.

  • Refractive surgery products, including excimer and femtosecond lasers, microkeratomes, and usage-based procedure cards.

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Figure 1. Worldwide ophthalmic products market by segment, 2006. Source: MedMarket Diligence.
(click to enlarge)

In addition to devices, the ophthalmic market includes pharmaceuticals and eye-care products such as contact lenses and solutions (see Figure 1). Because eye-care products, many of which can be purchased from retail outlets and online distributors, comprise a broad, often commoditized category, they are not a focus of this article.

All segments included, the worldwide ophthalmic products market exceeds $22 billion and is growing at more than 10% per year. Not counting consumer eye-care products, the ophthalmic products market reached an estimated $17 billion in 2006.

The worldwide market for ophthalmic products, like most medical technologies, is concentrated in Western nations but does not correlate with the distribution of the burden of ocular diseases. Predictably, the distribution of healthcare dollars spent on ophthalmic products is concentrated largely in the United States and Western Europe (see Figure 2).

Vision Diagnostics

Diagnostic instrumentation is an important part of the eye-care professional's clinical armamentarium. Vision diagnostics are used not only to identify diseases and conditions of the cornea and macula, but also to derive vision-correction therapy. Diagnostic tools are generally considered capital equipment purchases, and replacement is driven by either growth within the eye-care professional specialty or advances in technology. Thus, diagnostics is perhaps the slowest-growth segment of the ophthalmic industry.

The trend in diagnostic instrumentation is to combine diagnostic tests to facilitate clinical assessment and to integrate diagnostic findings—where appropriate—with therapeutic instrumentation. Such is the case with custom LASIK, in which second-order aberrations are evaluated and used to determine a suitable treatment plan, which is then executed with a therapeutic excimer laser system.

Cataract Surgery

Although the management of cataract patients has changed little, there have been significant developments in intraocular lens implant technologies. Historically, when cataracts were removed and replaced, intraocular lenses gave clear vision at a particular focal point with a need for corrective lenses to account for presbyopia. Today's lenses are more sophisticated and offer more options to the patient and to the surgeon; they are even able to correct presbyopia.

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Figure 2. Ophthalmic product revenues by region, 2006. Source: MedMarket Diligence.
(click to enlarge)

Advances in intraocular lenses have made it possible for phakic intraocular lenses to compete at some level with refractive surgery. Further advances in materials and implant technologies are making it possible to achieve clear vision at multiple focal points with multifocal and accommodating lenses. Innovations in this segment have created significant opportunities for new entrants and have begun to challenge long-time market leaders in intraocular lenses.

About one-third of practicing ophthalmologists perform cataract surgery, making it the most commonly performed ophthalmic surgical procedure in the world. And until recently, the placement of intraocular lenses was a well-defined surgical technique that began with removing the patient's clouded native lens and ended with the insertion of a synthetic lens to restore vision. Remaining visual aberrations were corrected with eyeglasses or contact lenses, and follow-on care was principally the domain of the optometrist.

With the advent of refractive surgery and phakic intraocular lenses, however, there are more options than ever before for treating vision disorders after cataract surgery. Today, residual vision aberrations can be managed with traditional eyewear or lenses, or refractive surgery. The availability of new therapies has the potential to redefine how optometrists think about partnerships with ophthalmologists and to critically evaluate the kind of services that they make available to their patients.

Refractive Surgery

Laser vision correction continues to evolve, giving surgeons more choices in the management of each patient's individual needs. Not only have lasers become more accurate, but they now also enable customization, as in custom LASIK. Further, the lines have begun to blur between laser vision correction and corrective lens implants. These dynamic treatments for vision correction have created a deep pool of options from which the patient and surgeon can choose. However, manufacturers of advanced vision correction technologies are challenged to ensure that patients' choices are not constrained by the depth of their eye-care professionals' awareness.

Although advances in laser vision correction continue to offer improved vision to patients, the adoption of the technology continues to be affected by economic considerations. These procedures are expensive and not typically covered by insurance plans. The total dollars spent globally on refractive surgery—including manufacturers' revenues and fees for physician and facility services—are upwards of $4 billion annually. In international markets, this poses a particularly daunting set of challenges to healthcare providers, as most capital equipment manufacturers that provide laser vision correction systems have developed a market model in which they charge a per-procedure fee for the use of the laser.

The Ophthalmology Pharmaceutical Market

If there is one thing that can be said about all ophthalmology pharmaceutical products, it is that the demographics for growth are strong and the demand for effective products to treat and manage ocular pathologies such as glaucoma, diseases of the cornea, and retinal disorders such as macular degeneration will be unrelenting.

Glaucoma treatments have historically been the largest segment of the ophthalmic pharmaceutical sector, representing about 40% of revenues worldwide. With recent advances in treatments for back-of-eye diseases, however, new products to treat wet age-related macular degeneration (AMD) will assume dominance in the sector over the next few years, with products like Macugen and Lucentis leading the pack (see sidebar). Considerable attention will also be given to new device technologies that aim to treat AMD, as well as combination therapies that improve outcomes by coupling pharmaceutical products with device innovations.

Because of favorable demographics, pharmaceuticals for glaucoma will continue to experience strong growth through new products and increasing pressure from generics, particularly in international markets. Perhaps more than any other ocular condition, however, treatments for glaucoma will stir a debate surrounding the preferred and most effective methods of treatment, pitting pharmaceuticals against devices in pursuit of the best solution for a specific patient.

Conclusion

Although devices still constitute a minority of total worldwide ophthalmic product revenues, many segments show significant promise, particularly in areas where new technologies may ease the economic pressures on an overburdened healthcare system. For the foreseeable future, the eye-care market will continue to support a healthy mix of both device and pharmaceutical therapies, as well as combination products that blur the line between the two industries.

Reference

1. Products, Technologies, Markets, and Opportunities in Ophthalmology Surgical, Device, and Drug Markets Worldwide, 2007. (Foothill Ranch, CA: MedMarket Diligence, 2006).

Patrick Driscoll is founder and president of MedMarket Diligence LLC (Foothill Ranch, CA), a source of market intelligence and insights in the medical technology industry.

Copyright ©2007 MX

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