It's the time of year when you can't help but look back and take stock of all that has happened over the past 12 months. For these nine medtech players, the rear view is rosy indeed. Here's a look at the people, companies, and concepts that came out on top in 2017.
Abbott CEO Miles White
Abbott had a lot riding on the second-half of the year, as a lot of the company’s financial projections for 2017 were based on anticipated third- and fourth-quarter regulatory approvals and subsequent product launches.
“I don’t generally like to be backend loaded because it feels like a lot of risks that everything has to go right,” Abbott CEO Miles White admitted during the company’s third-quarter earnings call.
But in this case, everything did go right, and the company received every forecasted approval within about 30 days of when it was anticipated. That not only contributed to Abbott’s worldwide medical device sales growth of 5.6% (compared to the company’s third-quarter 2016 sales), but it also sets the company up for a strong start to 2018.
MD+DIrecently named Abbott as the 2017 Medtech Company of the Year. Much of Abbott’s success this year is credited to White’s leadership of the multinational healthcare company, which employees 94,000 people worldwide.
White has been with Abbott since 1984, was elected to the company’s board of directors in 1998, and became CEO and chairman of the board in 1999.
Outside of Abbott, White serves on several corporate boards and business organizations, including Caterpillar, McDonald’s, the U.S.-China Business Council, and Northwestern University in Evanston, IL.
[Image courtesy of ABBOTT]
Affordable Care Act
Last year the Patient Protection and Affordable Care Act (ACA) made our list of medtech industry losers thanks to the election of President Donald J. Trump, who vowed to repeal the healthcare reform legislation enacted by his predecessor as soon as he was inaugurated. But nearly a year into Trump’s first presidential term, Obamacare is still hanging on, having survived several Republican-led efforts to repeal the law in 2017.
The ACA, however, is far from out of the woods. The Trump administration cut in half the open enrollment period during which people can purchase insurance plans offered through the Obamacare exchanges and slashed funding for programs to promote open enrollment by 90%. Although enrollment through Healthcare.gov for 2018 was up over prior years initially, the final tally is expected to fall millions short compared with last year.
And while Congressional Republicans were unable to repeal the law outright, that doesn’t mean they’re content to leave Obamacare alone. A tax bill expected to be passed before Christmas includes a provision to repeal the ACA mandate that all Americans purchase health insurance or pay a penalty. Many predict such a move would cause premiums to rise and jeopardize the already-stressed Obamacare marketplace. The end of 2017 is likely to see the ACA battered but not broken, although it’s unclear what 2018 will bring for former President Barack Obama’s most significant legislative achievement.
[Image courtesy of GDJ/PIXABAY.COM]
Early-Stage Medtech Companies
It’s not easy being a startup, especially in the medtech space, where regulatory uncertainty abounds, time to market lags, and funding can be hard to come by. Following the Great Recession, venture capitalists shied away from investing in early-stage medtech startups in favor of surer bets in other industries. But this year we’ve seen signs of light at the end of the tunnel.
For the year ending in June 2017, early-stage venture capital (VC) investment in medtech startups neared $4 billion—a significant increase over the record $2.2 billion that went to early-stage medtech companies a year before, according to Ernst & Young’s 2017 Pulse of the Industry report. Although the number of deals declined, early-stage companies captured the majority of total VC funding for the first time in 10 years.
Another bright spot has been investment from corporate venture capitalists, which climbed 105% over the prior year, to $2.2 billion, for the year ended June 2017, according to E&Y.
[Image courtesy of TUMISU/PIXABAY.COM]
Under Commissioner Scott Gotlieb, FDA is seeking to be innovative, yet efficient, in its role in bringing medical devices to market. Such a mission may have roots in The 21st Century Cures Act, but having Gotlieb at the agency’s helm could hasten the pace of innovation. Could it also reduce the regulatory burden?
Gotlieb recently blogged about modernizing standards, increasing its use of electronic submissions, and doing away with outdated rules. “We also are working to ensure efficiency of existing regulations—a key focus of the Unified Agenda—by making sure that our standards are clearly defined, that they advance our public health goals and help promote the protection of consumers, and achieve these goals in an efficient way that does not place unnecessary burdens on those we regulate,” he wrote.
FDA’s increasing comfort with digital technology is another win. Gottlieb announced that the agency’s Medical Innovation Access Plan included a new component focused on digital health innovation, the Pre-Cert for Software Pilot Program. “This new program embraces the principle that digital health technologies can have significant benefits to patients’ lives and to our healthcare system by facilitating prevention, treatment, and diagnosis; and by helping consumers manage chronic conditions outside of traditional healthcare settings,” he wrote. He later pointed out plans to provide details and timelines for how the agency “will establish clear and consistent expectations for the products FDA regulates.”
CDRH’s 2016-2017 Strategic Priorities have also focused on efficiency and real-world input. The goals include establishing a National Evaluation System for medical devices, partnering with patients, and promoting a culture of quality and organizational excellence. To support patient outreach, “CDRH will establish a foundation to facilitate the development of more patient-friendly information, promote more patient-centric clinical trials, advance benefit-risk assessments that are informed by patient perspectives, promote the use of patient-reported outcome data, and foster access to new devices that meet patients’ needs.”
CDRH exceeded its 2016 goal to include a public summary of available and relevant patient perspective data in 50% of PMA (premarket approval), de novo, and HDE (humanitarian device exemption) decisions. And in 2017 CDRH implemented a measure to increase the number of patient perspective studies (e.g., evaluating patient-reported outcomes (PRO) or patient preferences (PPI)) used in support of premarket and postmarket regulatory decisions.
[Image courtesy of KENARY820/Shutterstock]
Intuitive Surgical’s Da Vinci X
Intuitive Surgical has been the dominant name in surgical robotics since it pioneered the field nearly 20 years ago with the launch of its da Vinci system, but last year brought the expiration of some of the company’s earliest patents and a surge of new competitors. Intuitive didn’t become the top dog in surgical robotics by resting on its laurels, though, and it has met the new wave of competition head on—most notably in 2017 with the launch of its da Vinci X this past spring.
The new system, which received the CE Mark in April and won FDA clearance in May, takes aim at the much-maligned high cost of robotic surgery. The da Vinci X offers some of the features as the company’s most advanced system—the da Vinci Xi system, cleared by FDA in 2014—but at a lower cost (around EUR530K less, according to one report). It also gives customers the opportunity to upgrade the system, making it a good entry point for those on the fence about adopting robotic surgery.
[Image courtesy of INTUITIVE SURGICAL]
Mako Triathlon Total Knee System
Stryker finally released its highly anticipated Triathlon Total Knee System for use with its Mako robot in March. FDA approved the technology in August 2015, but the company said it wanted to launch the product at a measured pace in an effort to maximize its chance of success.
Stryker is in the process of hiring additional Mako specialists to ensure that surgeons and operating room staff are properly trained on the new system before they begin using it in the OR.
While this has created a backlog for the company, it said more than 400 surgeons had been trained on the new application as of July 31, and more than 5,000 total knee surgeries had been performed on Mako since the full commercial launch.
In October, FDA cleared the system for cementless total knee arthroplasty, a type of procedure that has been making a comeback.
[Image courtesy of STRYKER]
Patients and Medtech Companies Marketing in Europe
Europe’s new medical device regulations (MDRs) were published in May 2017, and the resulting three-year transition period is transforming the regulatory landscape. Medical device manufacturers understandably have a lot of questions and may face some challenges, but experts do see benefits for both patients and industry.
Michael Drues, Ph.D., president of Vascular Sciences, spoke about the new MDRs in the three-part series Webcast The ‘New’ EU Medical Device Regulations: A Game Changer for European Medical Device Companies? During part one, Drues said that the goal of the new MDRs is to increase patient safety without inhibiting innovation. His cospeaker Tony Parise, product strategist-life sciences for EtQ, pointed out the MDRs’ harmonization with other international regulations. He called such harmonization “a move in the right direction that helps across the board from patient and customers and suppliers as well as manufacturing.”
TÜV SÜD points to the impact of MDR’s rigorous post-market oversight. “The MDR will grant Notified Bodies increased post-market surveillance authority. Unannounced audits, along with product sample checks and product testing will strengthen the EU’s enforcement regime and help to reduce risks from unsafe devices,” the company wrote on its website.
Even packaging is expected to promote safety. Thierry Wagner, DuPont’s regulatory affairs director for Europe, Middle East, and Africa, explained in the whitepaper Europe’s Emerging Medical Device Regulations and Their Impact on Packaging Decisions that “the requirements to eliminate or to reduce as far as possible the risk of infection have become more explicit by requesting designs that prevent microbial contamination of the device and reduce microbial exposure during use. One area that will get clearly more attention is aseptic presentation. And the package is to be designed so that sterile packaging integrity is clearly evident to the final user.”
[Image courtesy of ELVIRA KONEVA/SHUTTERSTOCK]
Senhance Surgical Robotic System
FDA clearance of the Senhance Surgical Robotic System from Morrisville, NC-based TransEnterix was considered a major milestone this year for the field of abdominal surgical robotics, as it represented the first new market entrant into the field since 2000. The Senhance now competes directly against market leader Intuitive Surgical, and other companies approaching the space.
Two key differentiating characteristics of the system are the force feedback, which helps the surgeon “feel” the stiffness of tissue being grasped by the robotic arm, and eye-tracking, which helps control the movement of the surgical tools based on where the surgeon is looking.
CEO Todd Pope said the Senhance System represents a new choice in robotic surgery that will enhance the user’s senses, control, and comfort, while minimizing the invasiveness of surgery, and maximizing value for the hospital.
The Senhance uses an open architecture strategy, meaning hospitals and surgeons can use existing technology that they’ve already invested in, rather than having to buy special equipment to adopt the system.
“Hospitals have an ecosystem that they’ve already developed. Senhance tries to work within that ecosystem,” Pope told MD+DI in October.
The new robotic system also uses fully reusable instruments, which is expected to greatly reduce the per-procedure cost compared to robotic surgery with existing platforms on the market. That’s a big deal, as cost has long been a barrier to the adoption of robotic surgery.
[Image courtesy of TRANSENTERIX]
U.S. Medtech Market Leaders
Big medtech companies in the United States had a banner year in 2016, with both revenue and market capitalization climbing 9% for pure-play commercial leaders, according to Ernst & Young’s (E&Y) 2017 Pulse of the Industry report. U.S. market leaders also upped R&D spending by 10% and grew their workforce by around 6% over the prior year. All that seems to have set the industry’s giants up for even more success in 2017.
Valuations for U.S. public medtech companies with market capitalizations exceeding $1 billion jumped 22% in just the first half of this year, according to E&Y. When you consider the five-year landscape, the top 10 U.S. medtech companies by market capitalization have added $223 billion in shareholder value. Especially impressive has been the market cap growth for companies like Illumina, which has seen a compound annual growth rate (CAGR) of 38%; Boston scientific, whose market cap shot up by a CAGR of 36%; and Thermo Fisher Scientific, whose market cap increased by a CAGR of 29% from mid-2012 to mid-2017, according to the Pulse of the Industry report.
Driving much of that growth has been mergers and acquisitions, which continue to hum along.