Medtech’s Strength Evident in Patent Scorecard

In the medical device industry, intellectual property is the essential foundation on which innovation is built. Thus, it's not surprising that the industry ranks high when its patenting trends are compared with those of other industries.

For the past 30 years, intellectual property (IP) research and advisory services firm ipIQ (Chicago) has tracked corporate innovation across multiple industries by analyzing the strength, breadth, and quality of patents and patent portfolios. To do this, ipIQ uses a proprietary indicator set comprised of the following measures.

• Technology strength, which reflects overall innovation quality and breadth.

• Current impact index (CII), which measures the impact of a company's patents on the latest technological developments within a given industry.

• Science linkage, which describes the nearness of a company's technology to cutting-edge science and academic research.

• Technology cycle time, which indicates the speed at which a company turns proprietary research and innovation into intellectual property.

• Patent count, which indicates the number of U.S. patents awarded to the company during the calendar year.

Based on these measures, ipIQ publishes an annual report called the Patent Scorecard, which ranks 15 patenting industries. In the 2006 scorecard, the medical device industry delivers an impressive overall performance.

“Two key ipIQ patent indicators, science linkage and CII, demonstrate the importance of strong IP to the medical device industry,” says Scott Kratzer, vice president of advisory services for ipIQ. “Medtech ranks third in science linkage and fourth in CII.

“In fact, two leading medtech companies earned industry-crushing patent quality scores in ipIQ's rankings,” Kratzer adds. “Masimo earned a CII score of 1422 in 2005—literally unheard of in our 30-plus years of analyzing patents—and ArthroCare garnered a science linkage score of 19.71 for last year. Essentially, these scores indicate that Masimo is having a tremendous impact on innovation in the medtech industry and that ArthroCare is leveraging the latest in scientific research in its patenting activity.”

Looking at averages across 15 industries, the medtech industry is one of only four industries to claim top-five rankings in two or more of the patent indicator categories. The consumer electronics, semiconductor, and telecommunications industries achieve similar top-five ratings. Although not positioned as highly in technology strength and technology cycle time as other industries, medtech has a clear leadership in its CII score (see Table I).

The medical device industry also stands out as a consistently high-quality performer among industries directly related to medicine and human health. In three of the key indicators of patent quality, it surpasses both the biotechnology and pharmaceutical industries. The medical device industry follows closely on the heels of these industries in the case of science linkage, an indicator in which the three industries hold the top spots (see Table II).

The high quality of patents emerging from the medical device industry is perhaps most evident when looking at CII scores, in which the industry is a full 9 and 11 positions ahead of biotech and pharmaceuticals, respectively. The average CII score within the medical device industry is nearly three times that of both biotech and pharma. This may denote a greater degree of interdependence in innovation within the medical device area, contributing to its collective technology strength compared with other health-related industries.

Beyond comparing the patenting strength of industries relative to one another, the scorecard identifies the top 10 companies in each industry based on their technology strength, as well as the significant movers of the year. In evaluating scorecard data, ipIQ analysts take into consideration the latest mergers and acquisitions (M&A) activity within the industry.

“When you use the industry rankings in the medtech industry to better understand recent M&A activity such as the Boston Scientific versus Johnson & Johnson battle for Guidant, it appears that the stronger company in terms of CII won the battle,” Kratzer says. “And Boston Scientific may get even stronger with the addition of Guidant's IP.”

To read more about the medtech industry's current intellectual property leaders as well as manufacturers that are on the move, look for Kratzer's article, “Medtech's Patent Strongholds,” in the September/October issue of MX: Business Strategies for Medical Technology Executives. More information about the Patent Scorecard and additional data from this year's report can be found at www.ipiq.com.

© 2006 Canon Communications LLC

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