At the keynote presentation held yesterday at the MEDevice Forum in San Diego, Vipul Sheth, vice president of quality for the coronary/peripheral business unit at Medtronic, touched on a number of themes that have been receiving a lot of attention from the industry lately. His remarks covered everything from the role of emerging markets to FDA’s renewed interest in enforcement (and sending out warning letters). Following are some of the points that stick out in my mind:
- India and China will be the future of the industry. The role Asia will have in the future is based on simple math: Compare the U.S., with its population of about 300 million people, with the roughly 2.5 billion people in India and China. There’s no question that there is much more opportunity in emerging markets.
- The United States is not the global innovation leader for medical technology for the simple fact that you can go elsewhere and find more drugs and more devices on the market than you can in the United States. Maybe the United States is the safest country for devices because the regulatory process is so thorough, but it can’t really be the most innovative with the current regulatory framework.
- More mobile-phone-based apps are coming. In some parts of the world, more people have access to cell phones than to physicians. Sheth said he wouldn’t be surprised if FDA eventually set up an office that specialized in mobile health apps.
- Before 2009, there was a pattern of declining resources and enforcement at FDA. That has now changed; there is a new emphasis on enforcement.
- As regulations change globally, regulatory affairs will be a hot field—even more so than it is now. New or updated regulations are being generated on an almost daily basis.
- To deal with these increased pressures, industry must maintain readiness for inspections and respond to FDA promptly.
- In addition, industry should carefully monitor FDA and other regulatory bodies to keep abreast of changes and adapt accordingly.
The big-picture topic covered in Sheth’s presentation was the post-market environment in medical devices. Below is a summary he sent me earlier:
- The healthcare reform debate has caused a lot of focus on the medical device industry.
- The scrutiny from Congress on FDA’s performance has itself come under scrutiny, due to high-profile quality and safety issues from China.
- There has been a lot of media attention that has raised awareness among users and consumers, which in turn causes more pressure on Congress and FDA to protect public health.
- The industry faces pricing pressures (due to the healthcare cost debate and other scrutiny). There is also the $20-billion device tax looming over the industry. This is causing industry to control costs, limit resources, and use outsourcing to reduce manufacturing costs. All of this cost pressure is causing quality issues and compliance issues.
- FDA has a new commissioner (appointed by President Obama). FDA is modernizing and implementing systems for better oversight and analysis of data trending.
- FDA has hired 700 new field inspectors. More inspections leads to more expectations from companies.
- Other developing countries are flexing their political clout. More countries are strengthening their regulatory systems.
- Companies are thinking about changing business models to prepare for the future.
Sheth also mentioned Medtronic’s new CEO, who has been getting a lot of attention lately in the press. As I read over a blog post we recently ran covering the new CEO, I came across the following quote from a reader, which dovetails nicely with the some of themes Sheth hit on in his talk:
The developed world has reached a saturation point in terms of what it can afford to spend on health care. Patent protection has enabled the industry to charge unsustainably high prices for branded products, which in turn has fostered expensive R&D, sales, and marketing industry models. Essentially, the companies have been able to prosper on the back of U.S. and other major developed markets. They will have to change this business model based on the dual fact that the developed markets will demand better ROI on the healthcare spend, and the developing markets are highly price sensitive. Companies in the healthcare industry will have to adopt a new economic and business model where the cost of bringing products to market are significantly reduced, profit margins and prices on products are brought down, and global access and sales are increased. Successful companies that start dialing these new realities into their business practices will be hugely successful.
All of this makes me wonder: Is there room for the United States to maintain its leadership position (measured in terms of volume, if not innovation) in the medical device industry, considering the burden being placed on it by factors ranging from the medical device tax to the surge in emerging markets?