Global Medical Disposables Market to Reach $273 Billion

Expect 6.2% annual growth a year, according to a new report.

Disposable Medical DevicesQmed Staff

The global market for disposable medical products will reach $273 billion by 2020, according to a new report from the Freedonia Group (Cleveland), relayed by Qmed's fellow UBM media outlet Plastics Today. The growth represents a 6.3% annual increase.

The United States will stay the largest market, with growth driven by an emphasis on infection prevention. Healthcare-associated infections are a major problem in the U.S., with the Centers for Disease Control estimating that one in 25 hospital patients will suffer one. 

Growing demand for such disposable medical devices will in turn fuel a 5.3% a year increase in demand for the raw materials making up such devices, according to the report. 

Read the full Plastics Today story. 

Brush up on your medical device industry knowledge at BIOMEDevice San Jose, December 7-8, 2016.

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

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4. SafeHeal

    Arrow  backAdvaMed Medtech Innovators SafeHeal Colovac

SafeHeal Medical (Paris) has a remarkable innovation of their own, known as the Colovac. Colvac was designed to protect patients from digestive anastomosis by reducing anastomotic complications. The device aims to help enable patients to resume normal life after colorectal surgery without the need for an artificial anus or ostomy pouch.

Colovac is essentially a flexible bypass sheath that protects the anastomosis, isolating it from feces. The technology was designed to be anchored above the anastomosis using a seamless, minimally invasive vacuum-based mechanism. Once the anastomosis is healed, the Colovac device can be retrieved manually without the need for surgery. The device could have a significant impact, as it could prevent the need for surgical operations, reduce anastomosis complications, and eventually become the gold standard for anastomosis protection devices. 

Discover more innovative medical device companies >>

[Image courtesy of SafeHeal Medical]

3. Green Sun Medical

    Arrow  backAdvaMed Medtech Innovators Green Sun Medical

With new prosthetic technologies on the rise, Green Sun Medical (Fort Collins, CO) aims to make their mark with a new spinal brace system for patients suffering from adolescent idiopathic scoliosis. The condition causes an abnormal curvature of the spine that typically appears in late childhood, resulting in an elongated "S" or "C" shape in the spine.

Traditional static plastic braces have had limited therapeutic success, saving only one in three from scoliosis surgery. The group's new brace technology works to apply reduction forces dynamically, allowing the patient to generate the constant corrective forces necessary to reduce deformity, while still being able to move freely. Pressure sensors inside the brace can provide daily feedback in real time to ensure that the correct forces are being applied in the correct place--making this brace a revolutionary device that can help correct more cases of scoliosis without the need for surgery. 

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[Image courtesy of Green Sun Medical]

2. Catalia Health

    Arrow  backAdvaMed Medtech Innovators Catalia Health

Catalia Health is an intriguing new medical solutions company out of San Francisco committed to connecting patient care with the emerging capabilities of healthcare companies. Their new platform, the Mabu Healthcare Coach, seeks to combine human psychology with artificial intelligence to provide patient updates in real time.

The new platform was designed to learn about individual patient personalities, condition, and treatment information over time. Unlike other technologies, the Mabu Healthcare Coach continually works with patients on a day to day basis as a personal healthcare companion, engaging in conversations with the patient, gathering data, and managing their treatment at an unprecedented level. The platform was designed to gather information on medication dosage and timing, daily activities, nutrition, and other health information to create a personalized patient profile from data collected in real time. 

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[Image courtesy of Catalia Health]

1. Adient Medical

    Arrow  backAdvaMed Medtech Innovators Adient

Founded in 2012, Adient Medical (Pearland, TX) was created to provide new absorbable medical devices that can take the place of traditional implants that require surgery or other invasive procedures to be removed or replaced over time. The company has been working in collaboration with the University of Texas to develop a new absorbable vascular filter than can help prevent pulmonary embolisms.

The technology would become the world's first absorbable inferior vena cava filter, and could help prevent pulmonary embolisms, a condition that claims the lives of 100,000 to 300,000 patients in the U.S. each year. Traditional IVC filters are implanted to capture any blood clots that have broken loose from the legs and begin to make their way to the heart or lungs. This new technology could help prevent embolisms with minimal complications, and remove the need for costly removal procedures and related complications that can arise from traditional IVC filters. 

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[Image courtesy of Adient Medical]

4 Top Medtech Innovators

    AdvaMed Medtech Innovator

Find out the four companies honored as finalists in the global medtech innovation competition held by the trade association AdvaMed and virtual accelerator Medtech Innovator.

Kristopher Sturgis

An absorbable vascular filter, AI-supported patient updates, a dynamic spinal brace system, and hope for normal life after colorectal surgery are among the products that rocketed four companies into the Medtech Innovator Finals, to be held October 19 in Minneapolis at the AdvaMed 2016 conference.

The four companies will have the opportunity to show off their innovations at a conference with over 2500 attendees including venture capitalists, major business executives, and other industry giants--with the winner capturing $250,000 in cash prizes.

The contest is the result of a partnership between AdvaMed and MedTech Innovator, a global innovation competition and accelerator.

With the conference just around the corner, we thought we'd examine the four finalists, and explore what makes them stand out. 

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Find out more about medical device innovation at BIOMEDevice San Jose, December 7-8, 2016. 

Kristopher Sturgis is a contributor to Qmed.

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[Image courtesy of AdvaMed]

Did EpiPen Maker Fudge Profit Numbers?

Mylan's profits for the drug delivery device were 60% higher than what the company's CEO told Congress, according to The Wall Street Journal.

Nancy Crotti

EpiPenMylan N.V. earned about 60% more on its EpiPen two-pack than the figure given to Congress last week, according to a document filed with the Securities and Exchange Commission.

The Wall Street Journal pointed out the discrepancy between the $100-per-pack profit figure that Mylan CEO Heather Bresch gave the House Government Oversight Committee and the actual profit of $166. The difference came from the 37.5% U.S. corporate tax rate that Mylan's SEC filing claimed it paid on each pack, which lists for $608. That tax rate was five times more than Mylan paid last year, the Journal noted.

Pharmaceutical giant Mylan is seeking to appease customers and politicians angry over it continually hiking the price of its combo drug and device used to treat severe allergic reactions. I

Mylan claimed that the Journal's story was misleading, and provided the following statement: "Tax is typically included in a standard profitability analysis and the information provided to Congress has made clear that tax was part of the EpiPen Auto-Injector profitability analysis. In fact, Mylan has provided Congress with a detailed analysis of EpiPen Auto-Injector profitability. It also is important to note that use of a statutory tax rate for the jurisdiction being analyzed (in this instance, the U.S.) is standard. Just as we did not use a blended global tax rate, we also did not allocate corporate expenses associated with running the business, which would have further reduced its profitability. We believe it is most appropriate, and conservative, to focus entirely on EpiPen Auto-Injector specific costs and associated taxes."

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An analyst told the Journal that the 37.5% tax rate "has nothing to do with reality." Ryan Baum of SSR Health LLC, a healthcare investment research firm in Stamford, Conn., said Mylan actually paid an overall tax rate of 7.4% last year, and "a negative effective tax rate in the U.S. due to a negative provision for deferred taxes," the newspaper noted.

Sanford C. Bernstein analyst Ronny Gal told the Journal that the 37.5% figure would have been correct "if EpiPen was its own company." But Mylan's efforts at tax reduction have produced a much lower rate, Gal said.

Mylan increased the price of a set of two EpiPens from around $100 a few years ago to closer to $600, for no apparent reason. Last year, the company moved its headquarters from Canonsburg, PA, to the Netherlands for tax purposes, although it still manages its affairs from Pennsylvania.

"We didn't believe Mylan's numbers last week during their CEO's testimony, and we don't believe them this week either, which is why we gave them 10 days from the date of our hearing to produce their internal files," said U.S. Rep. Elijah Cummings of Maryland, the ranking Democrat on the House Oversight Committee. "They have until this Friday to give Congress the underlying documents we asked for back in August so we can finally determine the company's actual profits in each year for the last decade."

Nancy Crotti is a contributor to Qmed.

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[Image courtesy of Mylan]

Boston Sci Making $210 Million Acquisition

Buying EndoChoice Holdings will allow Boston Sci to expand its successful endoscopy business.

Chris Newmarker

EndoChoice FUSE System
EndoChoice's Full Spectrum Endoscopy (FUSE) colonoscope (Image courtesy of EndoChoice)

Boston Scientific said Tuesday that it will launch a tender offer of $8 per share--a roughly $210 million purchase--EndoChoice Holdings.

Based near Atlanta, EndoChoice is a $75 million a year business with products including endoscopic imaging systems, devices, and infection control products. It will join Boston Sci's existing endoscopy business.

"The addition of EndoChoice products and services to our portfolio supports our strategy to provide  comprehensive solutions to gastroenterology caregivers and the patients they serve," Art Butcher, senior vice president and president of Boston Scientific's endoscopy business, said in a news release.

"We expect the acquisition to expand our leadership into new categories in the endoscopy market, and to drive strong, continued growth of our endoscopy business," Butcher said.

Endoscopy has been a solid performer for Boston Scientific's business. The endoscopy business brought in $755 million in sales during the first half of 2016, an 11% increase from a year before. Overall Boston Sci sales were up 13% year-over-year, to $4.09 billion, during the same period.

The EndoChoice purchase is expected to close during the final three months of 2016, pending customary closing conditions. Boston Sci says it plans to "evaluate strategic options," corporate speak for seeking a potential sale, of EndoChoice's Full Spectrum Endoscopy (FUSE) colonoscope, which enables doctors to better visualize colonoscopies.

Find out about the latest medical device innovations at BIOMEDevice San Jose, December 7-8, 2016.

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

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Boston Scientific Boosts Endoscopy Business with Buy

Boston Scientific Boosts Endoscopy Business with Buy

On Tuesday, Boston Scientific announced it is acquiring Georgia-based EndoChoice Holdings for approximately $210 million. The move is expected to bolster the company's high-growth endoscopy business and industry experts are giving the transaction a thumbs up.

EndoChoice is focused on gastrointestinal devices, imaging, and services. Its products include forceps, probes, retrieval devices, and needles. Its diagnostics business includes H. pylori and colorectal cancer screening tests, while its infection control portfolio includes scope reprocessing products, brushes, gowns, and other accessories used for endoscopy procedures.  

"The addition of EndoChoice products and services to our portfolio supports our strategy to provide  comprehensive solutions to gastroenterology caregivers and the patients they serve," said Art Butcher, Boston Scientific senior vice president and president of endoscopy, in a press release. "We expect the acquisition to expand our leadership into new categories in the endoscopy market, and to drive strong, continued growth of our endoscopy business."

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Boston Scientific reported 11% year-over-year growth for its endoscopy business in the second quarter. Michael Mahoney, chairman, president and CEO, explained on the earnings call that this strong growth is due to a combination of new products and a strong market with fewer competitors. "[Endo is] really an incredibly high-performing business and it has been for a number of year. And they really have just continued to grow and expand," Mahoney said, according to a Seeking Alpha transcript of the earnings call. He added, "We're intentionally focusing on investing greater in faster growth markets and faster growth businesses."

The transaction is expected to close in the fourth quarter and be breakeven in 2017 and accretive afterward on an adjusted earnings per share basis. According to the company release, Boston Scientific is deciding on strategic options for EndoChoice's Full Spectrum Endoscopy (FUSE) colonoscope.

Wells Fargo senior analyst Larry Biegelsen wrote in a September 27 research note, "The move to acquire EndoChoice should help strengthen BSX's presence in the ASC (ambulatory surgery center) portion of the market as BSX's current endoscopy portfolio is more focused within the hospital segment."

Joanne Wuensch, BMO Capital Markets analyst, wrote in a research note, "To us, this transaction makes sense, and continues the tuck-in variety that has bolstered BSX's franchise."

Indeed, Boston Scientific has not gone the way of the mega-merger, as other major medtech companies like Medtronic and St. Jude have done. Instead, the company has quietly added to its areas of strong growth, including with its July acquisition of Cosman Medical, an addition to its neuromodulation business.

This is in line with a Frost & Sullivan analyst's take on Boston Scientific's potential strategy. Venkat Rajan, industry manager for medical devices and global director of research at Frost & Sullivan, told MD+DI back in May, "This is highly speculative but I think the way Boston Scientific could go about M&A is that instead of a big fish, you might see a lot of small to mid-sized transactions that may in aggregate approach those large-deal dollar sizes. So when everybody is zigging it makes more sense to zag."

[Image courtesy of STOCKIMAGES/FREEDIGITALPHOTOS.NET]

Orthopedics: A Bright Spot for Value-Based Care

MD+DI Staff

On April 1, 2016, value-based care in the United States went from being an option to a requirement--at least for around 800 hospitals near 67 urban centers around the country. That's when CMS's Comprehensive Care for Joint Replacement (CJR) model officially went into effect, giving those hospitals bundled payments for episodes of care around lower extremity joint replacements. The aim is simple: provide better, more efficient care for patients undergoing hip and knee replacements, the most common inpatient surgeries paid for through Medicare and for which the program shelled out more than $7 billion in hospital costs alone in 2014.

Learn more about how to approach value-based care with a case study session titled "Design Strategies for Surviving Value-Based Care: The Creation of Signature Solutions" at MD&M West in Anaheim, Feb. 7-9.

Previously, Medicare spending for episodes of care surrounding these procedures varied widely depending on location, often driven up by complications such as infections or implant failures that landed patients back in the hospital. In an attempt to minimize those costly readmissions, the CJR model encourages hospitals to better coordinate with physicians and post-acute care centers by holding them responsible for the entire episode of care, beginning when the patient is admitted to the hospital and ending 90 days after their discharge. Hospitals required to participate in the program must hit cost and quality targets for these episodes. Those that meet or beat those targets may be rewarded with additional payment, while those that don't could be forced to repay some of the Medicare funds they received.  

Rather than abandon their customers to deal with bundled payments on their own, orthopedics companies are offering up solutions to help providers make the most of them. Implant makers today are rolling out tools to engage patients and crunch data, offering services to help healthcare facilities streamline and improve care, and launching products intended to cut cost out of the system.

Adding Value with Pre- and Post-Op Platforms

Improving patient care is a central tenet of CJR, so it was fitting that less than a month after the model went into effect, Stryker announced a new tool to engage and educate patients undergoing joint replacement procedures. Launched by the Kalamazoo, MI-based company's Stryker Performance Solutions (SPS) business unit, the web-based JointCOACH platform helps patients prepare before the operation with reminders about required tests and fasting, educates them about the procedure and hospital discharge process, and provides recovery support, including videos of rehabilitation exercises. Patients also provide information about their home environment, a step that allows the hospital to determine the best postoperative recovery path for each person.

SPS vice president Brian McCrone described the tool as a good resource for hospitals to proactively stay connected with their joint replacement patients. Since CJR now shifts the responsibility for post-acute care costs squarely onto hospitals' shoulders, regular follow-up with patients is a must. Patients using JointCOACH are asked regularly how they are doing after the operation and care coordinators are alerted to any negative responses. That should allow hospitals to catch many potential complications early and hopefully reduce hospital readmissions.

JointCOACH has already been implemented in 30 hospitals, and patients have been game to try it. 

"We're really excited about the engagement around it," McCrone said. "At the individual hospitals, we're seeing anywhere from 85-92% of patients feel prepared going through this program. Enrollment is about 70-90% into the program, depending on the hospital."

SPS is trying to get enrollment as close to 100% as possible, and as the program gains steam, the company plans to evaluate potential ways to improve it. It could look into, for example whether patients are receiving the right content in the right way and whether the tool is driving lower costs for customers.

In addition to JointCOACH, SPS is also arming its customers with data analysis tools to help them improve care and cut costs associated with hip and knee replacement procedures. In July, the company announced Episode Performance Manager, an expansion of its digital platform, to give hospitals actionable data reports pulled from analysis of CMS's raw claims data.

"We realized that [customers] aren't prepared to manage the risks associated with this change or how they're going to manage getting the data and doing something with it," McCrone said. "We created this to try to simplify their life and help them be prepared to navigate the change."

The Episode Performance Manager platform gives hospitals the data on episode costs that they need without requiring them to wade through the raw data from Medicare. The goal is to give the facilities enough insight into the factors behind their current care quality and episode costs to enable action and improvement.

"Data is only as good as what you do with it," McCrone said. "We're going to help [hospitals] look at data in a way they never really thought to look at the data. Then we're also going to develop a plan with them to use the data to impact their care pathway to allow them to be successful."

The SPS team walks customers through the large amount of data available to them. First up, hospitals might look at their current episode cost versus the target price that has been determined by CMS. Hospitals can see what percentage of total episode cost is spent on post-acute care (a key focus area for reducing costs), what percentage of patients are discharged to their homes or home healthcare settings, and the readmission rate. These metrics are compared with the hospital's baseline data and can be viewed as a trend line, too. 

Such metrics can be useful in a number of ways, including motivating physicians by showing them their stats versus their colleagues' stats.

"Surgeons are extremely competitive people," said SPS program manager Jordan McInerney. "The best way to drive change is to line them up beside each other. We're just trying to facilitate the sharing of best practices."

The Episode Performance Manager also enables hospitals to track where their joint replacement patients go for recovery after the procedure and evaluate cost and quality data on each facility. Based on that information, physicians might change where they send their patients upon discharge, or the hospital could work with facilities to reduce large discrepancies in care costs. 

McCrone and McInerney emphasized that the Episode Performance Manager platform is scalable and will be able to expand as needed to meet any new bundled payment requirements.

Like Stryker, Zimmer Biomet is combining clinical services and technologies to help customers tackle the new business models expected in a value-based care environment.

The Warsaw, IN, company's new Signature Solutions offering with combine Zimmer Biomet's consulting services with clinical services and technologies--some the company already has and some that will be added through acquisitions and partnerships, according to a press release.

"Signature Solutions will encapsulate our exclusive and extensive knowledge of the new healthcare landscape into the first end-to-end suite of clinical services, technologies, and proprietary analytical tools, which are designed to work seamlessly with the institutions' existing infrastructure to improve quality outcomes, provide more efficient care, and increase provider throughput," David Dvorak, Zimmer Biomet president and CEO, said in the release.

Signature Solutions will include interactive tools to engage and educate patients on procedures, treatments, and rehabilitation; a platform for hospitals to gather and analyze patient-reported outcomes data; and consulting, digital health software, and personalized medical devices. All of these elements are anticipated to improve patient outcomes, facilitate reimbursement, and make the entire process more efficient.

The program will be available to some U.S. academic centers this year, followed by a wider launch in 2017.

Eyeing Intra-Operative Costs

While Stryker and Zimmer Biomet have focused on value-added tools and services intended to cut costs associated with joint replacement procedures in the post-operative environment, London-based Smith & Nephew is taking a different tack.

"We're focused on the post-surgical piece, but we're also focused on the intra-operative piece, with our lower-cost business model," chief commercial officer Michael Frazzette said during the company's second-quarter earnings call this past July, according to a Seeking Alpha transcript.

In August 2014, Smith & Nephew announced its Syncera program, through which two older generations of the company's hips and knees are sold at a cheaper price and surgeries using those devices are performed without the presence of a manufacturer's rep in the operating room. The program also leverages software to improve operating room efficiency.

Syncera has generated a "huge amount" of interest among healthcare providers, Frazzette said, and CJR has only intensified discussions around what the company could do to help providers improve care while keeping costs in check. That lead Smith & Nephew to add another element to the Syncera program in the first quarter of 2016, just before CJR went into effect: bundled offerings that combine its joint offerings with its PICO single-use negative pressure wound therapy device and ACTICOAT wound dressings.

". . . [W]hen used post-surgically, we essentially guarantee against a surgical site infection over the 90-day episode," Frazzette said. "And to put that into context, surgical site infections account for about an additional incremental $50,000 cost per episode, relative to readmission rates."

So far, he said, the bundle has been "gaining pretty good traction."

Prior to CJR's implementation, some experts, including analysts at Standard and Poor's, speculated that one result of bundled payments would an increase pricing pressure on hip and knee implants themselves. Frazzette and other orthopedic company executives have said that's not happening yet, but if the strategy of a newcomer to the market proves fruitful, that could change.

When CJR went into effect, Medtronic didn't even have hip or knee replacement lines, but as a pioneer of value-based care, the Ireland-based device maker, it seems, couldn't bear to be left out of the fun.   

At the company's June 6 analyst day, executives revealed that Medtronic had purchased Minneapolis-based Responsive Orthopedics, which has an FDA-cleared total knee replacement product expected to launch during the first half of 2017 and is developing a total hip product that's still awaiting the agency's greenlight.  

"We don't consider these to be value products at all," Geoffrey Martha, president of Medtronic's Restorative Therapies Group, said, according to the Minneapolis Star Tribune. "These are premium products, just priced differently, priced lower. The same team that has designed many of the knees and hips that are out there in the market today sold by the big players designed these ones. So there is no impairment on the quality from our perspective."

But buyers of these hips and knees won't get quite the variety that they would if they went to the likes of Stryker or Zimmer. 

"We don't have 47 sizes and colors," Martha said. "We got the main sizes we think you need and instrument sets that are streamlined.

The hip and the knee business is just part of the value-based products and services that Medtronic is developing to address the bundled care environment in orthopedics that include working collaboratively with physicians and make money through shared savings. 

While it remains to be seen which approach to helping providers tackle CJR will be successful, what is certain is that value-based care is not going away. In 2014, around 20% of Medicare payments were tied to quality metrics. This year, that number grew 10%, and by 2018 the U.S. Department of Health and Human Services (HHS) is tasked with moving half of all Medicare payments away from a fee-for-service model.

This past July, HHS proposed new rules to expand CJR to include surgical procedures to repair hip and femur fractures and create a new bundled payment model for cardiac care. As value-based care becomes the norm across the industry, expect to see more sectors follow ortho's lead.

This article combined reporting from MD+DI's managing editor Marie Thibault, editor-in-chief Jamie Hartford, and former senior editor Arundhati Parmar. Reach us at mddi@ubm.com.

[image courtesy of PRAISAENG/FREEDIGITALPHOTOS.NET]