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Seven Predictions for the European Medtech Market

Karen Simpkins and Ricardo Vicente

The medical device market in Western Europe will remain constrained by weakness in the eurozone, which is struggling to recover momentum, therefore non eurozone markets will record higher 2014-2019 CAGRs, led by the UK. Western European markets will remain highly import dependent, in spite of increasing exports, but will lose market share in global trade, reflecting a shift in manufacturing to lower cost production bases in Eastern Europe and Asia.

Western European Markets Will Contract In 2015 Due To Strong Dollar

We do not anticipate any substantial GDP improvement in Western Europe in the short term. Real GDP growth in eurozone markets will average 1.6% between 2015 and 2019, while growth in non eurozone markets will be slightly higher at 1.8%, which will compare poorly with global economic growth of 3.1%. As a result, cost containment will remain high on the agenda in all Western European markets, with efficiency measures offsetting underlying growth drivers such as the ageing population, the rising incidence of chronic disease, the need to replace medical equipment and investment in new medical technologies.

We forecast that the Western European medical device market will record a 2014-2019 CAGR of 2.7% in US dollar terms, reaching USD101.3bn at manufacturers’ prices in 2019. CAGRs will range from 5.1% for the UK to just 0.8% for Italy. Western Europe will continue to underperform within the global medical device market, although we note that growth rates have started to converge, with many previously fast growing markets seeing their growth rates fall to single-digit figures, bringing the global rate down to under 5.0%.

Market performance will be particularly weak in 2015 due to the strong dollar, with contractions forecast in all Western European markets. Eurozone markets will record the most marked falls due to a 20% depreciation of the euro against the US dollar, which we anticipate will approach parity by the end of 2015. We expect most markets to return to low growth in 2016, with higher growth from 2017; exceptions include Spain and Italy, which will see a further decline in 2016 due to low economic growth, budgetary restrictions and limited investment in medical technology. Despite the relatively modest growth rate, Western Europe will continue to account for around a quarter of the global medical device market and regional per capita spending will remain more than double the global average, rising to USD260 by 2019. 

Western European Markets Will Lose Market Share In Global Trade

Western European medical device markets will remain highly import dependent. The market share for imported products will stay at 80% or higher, exceptions being Germany, France and the UK, where the share of imported products will remain at between 70% and 80% due to well developed domestic manufacturing bases. 

Medical device imports have grown at a 2009-2014 CAGR of 4.2% in US dollar terms, reaching USD90.4bn. Eurozone markets, which represent 80.1% of the regional imports, have recorded a higher CAGR of 4.6%, while non eurozone markets have registered a slower CAGR of 2.8%.  The higher growth for eurozone markets is partly explained by the high re-exporting activity taking place in Belgium and the Netherlands, and to a lesser extent in Ireland due to the activities of US multinationals. The lower CAGR for non eurozone markets reflects negative growth for Sweden due to the closure of St Jude Medical’s pacemaker manufacturing facility in Veddesta, which has significantly reduced both import and export activity. 

We anticipate that Western Europe will continue to account for around 40% of global medical device imports over the next five years, which is a market share similar to that recorded in 2014, but is lower that 45% registered in 2009. Germany, the Netherlands, Belgium, France and the UK will continue to be the leading importers. 

Medical device exports have grown at a slightly higher 2009-2014 CAGR of 5.4% in US dollar terms, amounting to USD112.7bn. CAGRs have ranged from 12.7% for Portugal to -4.0% for Sweden. Eurozone markets, which account for 80.1% of the regional exports, have recorded a higher CAGR of 6.1%, while non eurozone markets have registered a slower CAGR of 2.7%. This is due to the higher level of re-exporting activity in some eurozone markets and the collapse in pacemaker exports for Sweden. 

Germany, the Netherlands, Belgium, Switzerland and Ireland will remain the leading exporters, but the Western European share of global medical device exports will continue to decline steadily, down from 51.6% in 2014 and 54.4% in 2009, reflecting a shift in manufacturing to lower cost production bases in Eastern Europe and Asia, and the drive by many developing economies to reduce their import dependence. We note that Brazil, China, India, Malaysia, Russia and South Korea are among the countries to have launched ambitious investment programmes for their domestic medical device industries.

The regional balance of trade deficit fell to USD22.3bn in 2014. France, Spain, Italy and the UK have a high balance of trade deficit in the medical device sector, surpassing over USD2.0bn. Considering its market size, Spain’s deficit, although it has been contained during the past five years, is too high. Norway and Portugal have smaller deficits, which are relative to their market size. The remaining markets have trade surpluses, led by Germany, Ireland, Switzerland and the Netherlands. Low corporate taxes, strong manufacturing capabilities and regional distribution centres have driven their export strength. 

Germany Will Remain Most Attractive Eurozone Market
Within the eurozone, Germany will remain the most attractive medical device market, accounting for around 30% of Western European consumption. The German market will be the only eurozone market to outperform the region. The strength of the German market lies in its well developed healthcare system and the commitment to maintain a high quality service despite pressures on costs. At the end of 2014, the Federal cabinet approved a law to implement changes to the statutory health insurance system guaranteeing easy access to high quality medical care and to address the problem of doctor shortages in rural areas by encouraging innovative forms of healthcare delivery. A new statutory framework to implement reform of the hospital sector, which is scheduled to take effect on January 1 2016, will tackle the problem of chronic hospital underinvestment. Importantly, agreement has now been reached between the federal government and federal states on setting up a EUR500mn (USD602mn) hospital restructuring fund. Nevertheless, profit margins continue to be hit by sustained downward pressure on prices, particularly from co-operative purchasing and tenders.

France Will Implement Additional Efficiency Measures
France will also see above average growth for the eurozone, although growth rates will be more modest compared to Germany. Weak economic growth over the past three years has put further pressure on the healthcare system, which remains in deficit, and this is likely to give further impetus to efforts to improve efficiency. Having implemented measures to curtail spending on reimbursable devices in the ambulatory sector, the authorities have started to pay much greater attention to spending in the hospital sector. Phase 4 of the PHARE hospital responsible purchasing programme was launched in September 2014. The first three phases of the programme have identified potential savings of EUR2.2bn (USD2.7bn), of which EUR400mn (USD482mn) relates to medical devices. In addition, the operating environment for medical device companies is set to become even more challenging following the announcement of a further reduction in the targets for health insurance spending growth over the next three years, which will entail additional efficiency measures. However, we believe that the bulk of the government's cost containment programme will continue to hit pharmaceutical companies harder than medical device companies, which will benefit from measures to support public hospital investment and expand ambulatory care, particularly ambulatory surgery and telemedicine, which should offer opportunities for manufacturers of minimally invasive devices and remote monitoring products. 

Southern European Markets Will Have Weakest Performance
We expect a much weaker performance from other markets in the eurozone, particularly in Southern Europe, with Italy, Spain and Portugal set to continue as the slowest growing markets. Despite some improvement, late payments by the public sector to the medical device industry remain a problem in these markets. In Spain, market growth will also be constrained by budgetary pressures and cost-containment measures in the National Health System (SNS - Sistema Nacional de Salud); patchy health investment resulting in regional inequalities; controlled introduction of new medical equipment in spite of increasingly obsolete equipment; and increased taxation on medical devices, effective in 2015. In Italy, while there have been efforts to reduce hospital debt in recent years, financial constraints in the National Health Service (SSN - Servizio Sanitario Nazionale) will continue to hamper market growth. We expect that medical device spending will be squeezed by significant reductions in health service funding under legislation passed in July 2015. Industry association Assiobiomedica has expressed concerns that hospitals will not have the resources to invest in innovative technologies and will be forced to buy low-quality or outdated medical equipment. 

UK Market Will See Fastest Growth Boosted By Real Terms Spending Increase
The fastest growing medical device markets will be outside the eurozone, with the UK the star performer. We expect this market to see annual growth rates in sterling terms of between 3.3% and 4.0% over the next five years, with higher growth in US dollar terms from 2016. The Conservative government elected in May 2015 has promised a minimum real terms increase in National Health Service (NHS) funding in England over the next five years to meet the needs of the Five Year Forward Review drawn up in 2014 by NHS England, which identified the need for an extra GBP30bn (USD45.5bn) a year in funding by the end of the decade. Around GBP22bn (USD33.3bn) of this target will come from efficiency savings including GP practices offering some hospital services, such as minor surgeries or scans. In FY 2015-16, NHS England plans to make available an extra GBP2.0bn (USD3.0bn) for frontline services, helping to kick start the investment needed to create new care models and further invest in primary care. The devolved administrations in Scotland, Wales and Northern Ireland will also receive extra funding. Despite the increase in funding, cost containment reminds high on the agenda, although this is presenting new opportunities with the NHS keen to adopt new technologies that maximise stretched resources. Under the latest proposal, NHS staff will able to remotely monitor patients with long term health conditions through high-tech clothing and wearable gadgets linked to medical records. Health experts believe that the digital revolution will free up resources and save the NHS up to GBP5bn (USD7.9bn) over the next decade. The aim is to have doctors and nurses able to access the latest lifesaving data across England for primary, urgent and emergency care services by 2018 and for all other NHS funded services to be accessible by 2020.

Health Service Reforms Will Drive Above Average Growth For Norway
Norway is another medical device market that will see above average growth. The 2014-2019 CAGR in local currency terms is one of the highest in the region at 5.3%, which translates into a US dollar CAGR of 3.9%. Norway already has a high-quality healthcare system with high levels of health expenditure but the underdeveloped private sector has been a constraining factor. The conservative-led coalition government has drawn up a development programme that promises greater patient choice, reduced waiting times and faster medical care. The reforms are expected to open the way for regional health authorities to be allowed to conduct more purchasing from private companies through tenders. Public hospitals will also have increased freedom to treat more patients.

Karen Simpkins is a Medical Device Market Analyst for BMI Research. Ricardo Vicente is Head of Medical Device Markets, BMI Research

Preparing for the Next-Generation of Healthcare Monitoring

AirStrip made waves earlier this month when it debuted its Apple Watch-compatible fetal monitoring technology. But in the words of the company's CEO Alan Portela: "This is not about an app. This is the next generation of monitoring."

Brian Buntz

The developed world is facing a potential healthcare time bomb. While most of the world is already struggling with a shortage of caregivers, the numbers of patients with chronic diseases is quickly rising, while the pressure to keep healthcare costs down is growing ever greater. In the United States alone, there could be a physician shortage on the order of 46,000 and 90,000, according to the Association of American Medical Colleges. And the Bureau of Labor Statistics estimates that 1.3 million new paid caregivers, including home healthcare workers and nurse aids, will be required within the next decade.

But the next generation of patient monitoring technology could profoundly help address these challenges, if one follows the vision of AirStrip's CEO Alan Portela.

The company recently received a flood of attention after the company's founder Cameron Powell, MD showed off the company's Apple Watch app, which can monitor an expectant mother and her fetus remotely. The company says that its technology can be used for remote monitoring of chronic diseases, too, such as heart disease, diabetes, as well as conditions like COPD.

The company has long pointed the promise of what it calls "virtualizing" physicians, giving them access to vital sign waveforms and obstetrics data on smartphones. In 2009, it became one of the first companies to have an FDA-certified app in the Apple App Store. In this period, the company worked to mobilize medical device data typically gathered in a hospital, and give doctors access remotely on their smartphone or tablet.

But now the company is touting patient-facing monitoring technologies as well, enabling, say, a woman with a high-risk pregnancy to send near-real time data to her doctor. "Imagine the case of an expectant mother who is having her first pregnancy. All of the sudden she feels her baby is not moving and would like to get checked," Portela says. "She could call her doctor, nurse practitioner, or case manager, and connect to her fetal monitor. She can then do a nonstress test and immediately send data to the cloud, enabling a doctor to see it in near real time." From there, a doctor could either tell the patient that everything is OK or that she should come in for an in-person check up. "In the past, getting this kind of information could take hours or even a full day," Portela says.

That same kind of functionality will come to other treatment as well, Portela hints, pointing out that heart disease and diabetes monitoring would be natural candidates for such a patient self-monitoring approach.

Ultimately, Portela says that he envisions a robust system were tremendous amounts of healthcare data is securely sent to the cloud, where it would be scoured by clinical algorithms to help identify the highest-risk patients. "You could identify a handful of patients out of thousands that you should be concerned about. You could detect potential adverse events and use mobile technology to communicate with them and set up visits with them," Portela says.

Talking to Portela, one gets the impression that the technology to offer this kind of functionality isn't all that far off. The real challenge, however, will be setting up the infrastructure for it and making sure that the requisite standards to allow it will be in place. Already though, there are glimmers of hope from the likes of bodies such as the Center for Medical Interoperability, which are already working on that front.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8, 2015.

Brian Buntz is the editor-in-chief of Qmed. Follow him on Twitter at @brian_buntz.

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How Makers Could Change the (Medtech) World

Medical device innovation is being democratized--at least for a handful of applications including prosthetics and diabetes monitoring technology.

Brian Buntz

Robohand
Liam, then five years old, shows off his Robohand.

Slowly but surely, the so-called Maker Movement is beginning to have an influence on the medical device sector, bringing a dramatically different approach to product development to the industry and turning people with no experience developing medical devices into healthcare technology tinkerers.

Consider the case of the Robohand, a prosthetic hand developed by the Australian woodworker Richard van As, who lost four fingers in an accident in 2011. Working together with the U.S.-based special-effects designer Ivan Owen, the two created the low-cost Robohand using a MakerBot Replicator 2 desktop 3-D printer.

While traditional upper-body prosthetics can range in price from $3000 to $30,000, a mid-range desktop 3-D printer can be had for less than $3000. The Robohand itself costs approximately $150 to construct when factoring in all mechanical costs.

But the Robohand is not an isolated example. Its creators uploaded the design for the device into Thingiverse.com, enabling anyone in the world with an Internet access to access plans for the device, enabling them to modify the design or to use it as a starting point for a new design.

"There are now hundreds of different prosthetics available on Thingiverse for free to download for anyone," says Johan-Till Broer, public relations manager at Makerbot (New York City).

The website boasts that it has helped distribute at least one 3-D printed hand in 40 countries across the world.  

"This is a game changer in the space for people who can't afford traditional expensive prosthetics," Boer says. "And parents with children needing prosthetic hands can now print out a series of custom devices for their children as they grow."

"And it's not just prosthetics--it is really across the board," Broer says. "Surgeons are printing out models of organs. Then you have really innovative experimental use cases as well. At the Feinstein Institute in New York, they used the Replicator 2x--an experimental 3-D printer with two heads, to print out scaffolding for a trachea repair. One head printed a PLA scaffolding while the other was a modified print head to print living cells."

Broer points to another interesting use case covered in Make magazine: A man name Michael Balzer sought to help his wife, Pamela Shavaun Scott, after she was diagnosed with a 3-cm brain tumor. He used her MRI files to print out a model of her skull and then mailed it to her surgeon, who was able to successfully do so using a less-invasive procedure than was typically used for this type of tumor.

3-D printing is a promising technology for healthcare industries that are not well served by traditional market dynamics, says Sefi Attias, the CTO of Tikkun Olam Makers. Normal market forces are not geared to serve most people with disabilities, for instance. "When companies do create products for these people, they are often expensive and thus not accessible to a lot of people. We see projects that make senses as an Open Source project but not a traditional product because no business model exists for them yet," Attias says.

Examples of such DIY medical-related projects are beginning to appear in the software world as well. One of the most prominent is the Nightscout continuous glucose monitor in the cloud. The open source technology relays real-time access to a Dexcom G4 continuous glucose monitor from computers, smartphones and tablets, and the Pebble smartwatch, enabling trusted friends and family to help keep any eye on continuous glucose data. While Dexom itself is working to bring similar features to the market, as a WSJ piece explained last year, the Nightscout credo, or rather, hashtag, proclaims "#WeAreNotWaiting" for such functionality. Still, the developers of the Nightscout are working with both Dexcom and FDA with the hope they will get the agency's stamp of approval to commercialize it in the United States.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8, 2015.

Brian Buntz is the editor-in-chief of Qmed. Follow him on Twitter at @brian_buntz.

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These 5 Medtech CEOs Are the Most Underpaid

These 5 Medtech CEOs Are the Most UnderpaidChris NewmarkerSeptember 22, 2015Stryker CEO Kevin Lobo’s total compensation was 14th among top executives at 18 of the largest medical device companies publicly traded in the United States. But Stryker comes in fifth for company performance, according to a Qmed analysis of SEC filings.In other words, Stryker and its shareholders got a bargain when it comes to how Lobo was compensated.Here at Qmed, we delved into corporate SEC filings to figure out which CEOs arguably get paid less and more than they should, comparing their pay to their companies' financial performance.We ranked overall compensation for CEOs at 18 of the largest medical device companies publicly traded in the U.S. We then compared the compensation rank with a company performance ranking based on four factors: revenue growth, five-year stock performance compared to the S&P 500, earnings growth, and total revenue (as a control for size).Here are the five CEOs whose compensation ranking was much lower than the company performance ranking:Continue>>Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7–8. Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker. Brian Buntz is the editor-in-chief of MPMN and Qmed. Follow him on Twitter at @brian_buntz.Like what you're reading? Subscribe to our daily e-newsletter.

These 5 Medtech CEOs Are the Most Underpaid

Chris Newmarker

September 22, 2015

Stryker CEO Kevin Lobo’s total compensation was 14th among top executives at 18 of the largest medical device companies publicly traded in the United States. But Stryker comes in fifth for company performance, according to a Qmed analysis of SEC filings.

In other words, Stryker and its shareholders got a bargain when it comes to how Lobo was compensated.

Here at Qmed, we delved into corporate SEC filings to figure out which CEOs arguably get paid less and more than they should, comparing their pay to their companies' financial performance.

We ranked overall compensation for CEOs at 18 of the largest medical device companies publicly traded in the U.S. We then compared the compensation rank with a company performance ranking based on four factors: revenue growth, five-year stock performance compared to the S&P 500, earnings growth, and total revenue (as a control for size).

Here are the five CEOs whose compensation ranking was much lower than the company performance ranking:

Continue>>

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7–8.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarkerBrian Buntz is the editor-in-chief of MPMN and Qmed. Follow him on Twitter at @brian_buntz.

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Convicted Murderer Drops Suit Against Boston Sci

Ramona Winebarger, who had been convicted of murdering her first husband in 1995, has given up her legal fight against Boston Scientific. The medical device company had planned to enter the murder conviction into evidence in the trial, arguing that it hurts Winebarger's argument that the company's pelvic mesh affected her mental health.

Qmed Staff

Ramona Winebarger, who had sued Boston Scientific in a pelvic mesh case, has dropped her 2013 claims against the company after it became apparent that her 1995 murder of her first husband, Harmon Dennis Young, would be made part of the case.

Winebarger, who pleaded guilty to killing her first husband two decades ago and served eight years of jail time, had wanted to exclude that information from the trial stating that it was not relevant to her claims and would create a "side show trial."

Winebarger had claimed that she experienced mental anguish related to the 2010 implantation of the Uphold pelvic mesh device.

Boston Scientific's attorney Leslie C. Packer of Ellis & Winters LLP, however, had contended in court documents that Winebarger's medical records reveal that she had a "long history of anxiety, depression, and flashbacks unrelated to her 2010 surgery," which "is necessarily intertwined with her criminal record."

Judge Richard Voorhees of the U.S. District Court for Western North Carolina apparently was swayed by the Boston Scientific attorneys' arguments regarding the bearing that Winebarger's criminal record and mental health had on her claims.

In addition, Vorhees had rejected the Winebarger's attempt to quash a subpoena related to her employment history at the McLeod Addictive Disease Center.

Winebarger's case had been integrated into a multidistrict litigation case involving 72,000 total cases, of which roughly 16,000 were related to Boston Scientific's vaginal mesh products.

Her 2013 claims against Boston Scientific had included negligence, strict liability for design defect, manufacturing defect, failure to warn, and fraudulent concealment. She also had requested punitive damages against the company. Winebarger had brought a claim, too, for loss of consortium.

Jury selection for the case had been scheduled to begin on October 5, 2015.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8.

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Former St. Jude VP Turns Himself In over Theft Charges

Bryan Szweda is out on $100,000 bail. 

Bryan Szweda St. Jude
Bryan Szweda (Image via LinkedIn)

Chris Newmarker 

A former St. Jude Medical vice president--accused of stealing nearly $142,000 via falsified expense reports and his corporate credit card--has traveled back to Minnesota and surrendered to authorities in Ramsey County. 

Bryan Szweda had moved to California to work for Irvine, CA-based Edwards Lifesciences after St. Jude (Little Canada, MN) let him go a year ago, according to prosecutors. Szweda turned himself in to the Ramsey County Sheriff's Office on Wednesday night, and was released the next day after posting $100,000 bail during his arraignment, Sgt. John Eastham of the Ramsey County Sheriff's Office tells Qmed.

Szweda has been charged in Ramsey County District Court in Minnesota with five counts of theft by swindle, along with an additional felony charge of theft of trade secrets. If convicted on all counts, Szweda faces up to 70 years in prison and $200,000 in fines.

Szweda is scheduled to next appear before the court October 14, said Ramsey County Attorney's Office spokesman Dennis Gerhardstein

Szweda and the lawyer who represented him on Thursday did not immediately respond to requests for comment.

St. Jude Medical hired Szweda in 2009 as a senior director of operations for tissue valves--unaware of "bad purchases" he supposedly made while previously working at Boston Scientific, according to the criminal complaint. In 2013, the company promoted Szweda to vice president of operations of its worldwide structural heart devices manufacturing business.

The thefts at St. Jude allegedly took place from March 2012 to July 2014, two months before St. Jude let Szweda go, according to the criminal complaint. He stole more than $10,000 via his corporate credit card and submitted or approved falsified expense reports worth nearly $130,000.

Szweda's thefts, according to the complaint, helped pay for everything from NBA tickets to multiple strip club visits. 

Around Sept. 8, 2014, the day St. Jude Medical placed Szweda on administrative leave, Szweda allegedly copied more than 4600 work files to the hard drive of his work computer, and later to two other devices. St. Jude's "highly sensitive" 2014-2018 Strategic Plan was among the files, according to the criminal complain, which also mentioned marketing plans, new medical device technology concepts, production costs, sales numbers, and goals.

St. Jude Medical fired Szweda on Sept. 10, 2014, according to the complaint.

Learn more about cutting-edge medical devices at MD&M Philadelphia, October 7-8.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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Meet the Tesla of the Medtech World

Meet the Tesla of the Medtech World

The tiny ingestible sensors are the digital engine that will drive the humble white pill to deliver better care and better medication adherence leveraging mobile and cloud technology.

Arundhati Parmar

It's not everyday that a digital health company compares itself to the most valuable car company in the world.

But then, Proteus Digital Health is not exactly your run-of-the-mill operation. In 2012, the Redwood City, California startup received a 510(k) clearance for a miniature ingestible sensor which communicates with a wearable patch, and leverages mobile and cloud technology to let physicians monitor patients on drugs remotely, while helping patients to remember to take medications though an app that also helps to access patient data easily on mobile devices.

Now the company is ready for prime time.

On Sept. 10, FDA accepted a New Drug Application for what the company and its pharma partner Otsuka Pharmaceutical is billing as the first Digital Medicine - it integrates Proteus's FDA-cleared ingestible sensor right into the drug instead of requiring patients to swallow the sensor alongside their regular medication.

If approved, the new drug will digitize Otsuka's blockbuster mental health drug Abilify, which earlier this year went off patent. With this drug-device combo product Proteus hopes to be the first company to answer that intractable question that has befuddled physicians for ages: Are patients taking their medications and if so is it working?

In a recent interview, Proteus Digital Health's CEO, Andrew Thompson, described this capability of digitizing the humble oral medication and its potential to boost medication adherence, as akin to how Tesla is shaking up the auto industry.  

Tesla is a company that is showing the world what cars with electric drivetrains look like and their only partners are Mercedes and BMW, two of the most well-known car companies. They are now valued at more than GM and Ford combined. And the reason is because everyone thinks that Tesla is going to be the biggest car company in the world. It’s because everyone now believes that every car company in the world at the some point is going to want an electric drivetrain for their cars and they are going to get it from Tesla.

Proteus is showing the world what drugs with a digital drivetrain look like. Our early partners are two of the most prestigious drug companies in the world - Novartis and Otsuka - and together they are showing the world what drugs with digital drivetrains look like and our job is here to have everyone figure out that eventually a lot of drug companies will want drugs with a digital drive train and we will be the company that delivers that technology.

Otsuka Pharmaceutical is one such drugmaker betting on a digital future for medicines. The Japanese company also invested an undisclosed sum in Proteus. 

In an interview, Robert McQuade, the company's executive vice president and chief strategy officer, said that physicians would welcome the knowledge of whether patients are taking their pills regularly especially when treating patients with serious mental disorders.

"When a drug for a serious mental illness doesn't work, you don't know why it doesn't work," McQuade said. "Does it not work because the drug doesn't work or does it not work because in the real world the patient didn’t take it? Now with this technology we will be able to answer that question and therefore give patients better care."

This knowledge can also help physicians to change dosage or medications entirely whereas these decisions were prevously being made blind, Thompson pointed out.

However boosting medication adherence can't simply be achieved by digitizing pills and integrating a sensor into the manufacturing process of a drug company like Otsuka. To patients, it still looks like the pill and they are not going to rush to take it per physician's directions if they haven't been doing the same for their regular medications.

To boost adherence, the right patient engagement tools need to be created.

And that is what McQuade and Thompson believe the Proteus platform offers through leveraging mobile and consumer technology. The patient facing app helps patients to keep track of their medications, steps, activity, rest and heart rate. Patients can also set medication reminders to help manage drug regimens. With the patient's consent, caregivers can know if their loved ones actually took the pill as was required and can nudge them to in case they forgot.

"The digital [aspects] are the  raison d'etre for this product," McQuade declared. "On any given day for a caregiver reminding somebody to take their medicine that they forgot is a simple thing to do. For a healthcare provider, they may look at a pattern of discontinuation and then contact the patient [to say] 'Why aren't you taking this product?'"

Thompson described this social aspect and remote monitoring capability of the product as the digital patient engagement buttons that companies like Proteus can push to boost medication adherence.

"So we got a very simple solution where patients and family members really like that it helps them to do a job that they are already trying to do which is make good health choices," he says. "It’s really important to understand that we are making use of very simple universal principles about human behavior."

McQuade couldn't say how much would be added to the cost of making the Abilify drug in this new digital paradigm, saying it is too premature to speculate on cost. How the product would be reimbursed is also a question to be answered although Thompson sees a very clear value proposition for payers.

"It’s important because nonaherence to medical therapy rights now costs the U.S. medical system $300 to $500 billion a year in costs associated with unnecessary interventions and procedures because patients don’t use their drugs," Thompson said.

While medication adherence is hard to measure in a clinical trial — by its very nature clinical trials require regular visits with doctors who stress taking pills that can artificially boost adherence than in the normal, routine of everyday life — Proteus' system has shown improved outcomes.

Thompson pointed to studies where patients with uncontrolled hypertension on more than two drugs for six months who were regarded as not responsive to therapy showed remarkable results when put on Proteus' therapy. About 40% of those patients were shown to have better control of their disease.

"Most people would assume that it is an adherence effect but it certainly is a very powerful outcomes effect," Thompson said.

McQuade is looking to bring this level of results to patients on Abilify. That can happen if FDA, who he described as very engaged and excited by this approach, approves the new drug application.

That is expected to occur in April. 

"This is the first product that will actually be able to tell physicians whether the patient has been adherent or not," MCQuade said. "For physicians that’s just an enormous benefit."

Arundhati Parmar is senior editor at MD+DI. Reach her at arundhati.parmar@ubm.com and on Twitter @aparmarbb 

Hear from Jacques Ginestet, Head of Wearables Development with Proteus Digital Health, at the MD&M Florida Conference, Nov. 19 at the Orange County Convention Center in Orlando.

10 Medtech Recalls that Shocked the Industry—Nephros Water Filtration

10 Medtech Recalls that Shocked the Industry—Nephros Water Filtration

Nephros Water Filtration

In October 2013, a recall of the Nephros SafeSpout, SafeShower HH, and SafeShower FH was announced. According to the FDA recall release, the filtration systems, used on sink faucets and shower heads, could expose users to bacterial contamination if the filter or sealing compond breaks.

There was one death and one infection reported to be potentially associated with the recall.

             

Continue on to "10 Medical Device Crimes that Led to Jail Time "

[Image courtesy of GUALBERTO107/FREEDIGITALPHOTOS.NET ]  

Diabetes Device Wins Judges Over in 2015 Dare-to-Dream Medtech Design Challenge

Diabetes Device Wins Judges Over in 2015 Dare-to-Dream Medtech Design Challenge

A miniature diabetes device that helps to measure glucose continuously through tears while reporting results to a person's smartphone has won the 2015 Dare-to-Dream Medtech Design Challenge.

The BlinkBit is a biosensor plug that is placed in the tear duct of one eyelid and is powered by scavenged energy from body heat, local electromagnetic radiation, and ambient light.

The submission came from Robin Felder who believes that this device would be helpful to diabetes patients who also have dry eye syndrome.

"It's an interesting concept - reminds me of the research funded by Google looking at contact lenses that would continuously monitor glucose," said Dr. Stephanie Kreml, principal at Popper & Co., and a member of MD+DI's editorial advisory board. "It would need to make sure that flow of tears is not obstructed completely and the device makes use of emerging technologies enabling IoT & leverages established ophthalmologist skillset for placing tear duct plugs."

Another judge also drew upon Felder's contention that BlinkBit would work better than Google's smart contact lens, which needed to be inserted and removed. 

"BlinkBit might be a better packaging option than a contact lens, especially for kids as it is more robustly in the eye than a lens," said Bill Evans, founder and president of design firm Bridge Design, recently acquired by Ximedica.

Another judge also commented on the target market of BlinkBit.

"Continuous glucose monitoring is a key tool in the fight against diabetes, a major epidemic of our times," said Kadir Kadhiresan," principal in venture investments at Johnson & Johnson Development Corp.

While BlinkBit won the top honor and the $500 award, two others fought it out closely to claim the first and second runners-up awards. They were Wickit, a disposable device meant to counter ventilator-associated pneumonia submitted by Natalie Stottler; and Tethys, a parenteral infusion system that is small and sans an IV pole, submitted by Matthew Morris.

"Ventilator-associated pneumonia is a costly drain on the healthcare system," said Emilly Gilles, technology development manager at Mayo Clinic Ventures. "The Wickit design serves to both prevent infection and provide data analytics that may be helpful in further reducing hospital infection rates. This device has the potential to provide an affordable solution to reducing infections and allow staff to treat the condition for which the patient was hospitalized."

Remarking on Tethys, Kreml noted the device has a "very small design & battery operated and would be useful in limited resource settings."

Stotler and Morris will receive $250 and $100 for their efforts.

Meanwhile, readers of MD+DI have also chimed in. After more than 28,000 votes cast, the winner is Paul Ho for his pTAV device, a percutaneous temporary aortic valve for patients who are suffering from acute aortic regurgitation. Ho will receive a certificate from MD+DI.

 Arundhati Parmar is senior editor at MD+DI. Reach her at arundhati.parmar@ubm.com and on Twitter @aparmarbb 

To learn more about medical devices and trends in the marketplace, attend the two-day MD&M Minneapolis conference, Nov. 4 and 5 at the Minneapolis Convention Center. 

10 Medtech Recalls that Shocked the Industry—INRatio2 PT/INR Professional Test Strips

10 Medtech Recalls that Shocked the Industry—INRatio2 PT/INR Professional Test Strips

INRatio2 PT/INR Professional Test Strips

In April 2014, Alere recalled its INRatio2 PT/INR Professional Test Strips because patients reported conflicting results between the INR measurements from the INRatio2 PT/INR Professional Test Strip and a measurement from a central laboratory. These test strips are used with a monitoring system to measure the international normalized ratio (INR) levels of patients on warfarin blood thinner.

According to the FDA recall release, Alere received reports of six injuries and three deaths from bleeding.

             

[Image courtesy of ALERE]