Growth Opportunities in the
European Medical Devices Market and
Entry Modes in Medtech Manufacturing
18 March 2010
Agenda
� European Medical Device Market-Key Trends & Impact of Recession
� European Medical Device Market-Key Growth Opportunities
2
� Collaboration Opportunities for Asian/Singapore Companies
Shift in Focus for European Medical Devices: 2005-2015
Growing collaboration among the fields of information
technology, medical imaging, pharmaceuticals and
medical devices because such synergies could produce
therapies with unprecedented clinical benefits
4
Hospital basedHospital based
InterventionIntervention
Reduced Hospital Reduced Hospital
stay and increase stay and increase
in homecarein homecare
Holistic solutions: Holistic solutions:
Integrating pharma, diagnosticIntegrating pharma, diagnostic
& monitoring elements& monitoring elements
Was
2005Is
2010
Will be
2015
European Medical Device Market: Key Trends
Acute Care Vs. Planned Care: Fewer patients have been
scheduling screening and check-ups; less meetings with
dentists; preference for over the counter medication
compared to prescription medication
5
Lending crisis: There is a
significant rise in slowdown in
construction and cancelling of
orders that are not critically
required by hospitals. There is
also a trend of delaying
replacements of high-end
equipment due to budgetary
constraints
Pressure on Third-Party Payers: One of
the key sources of economic efficiency
within healthcare is that insurance
companies control the market pricing
and market access. Severe pressure on
firms that provide health insurance and
also reduces consumers' discretionary
spending for purely elective medical
care
Can the Market be Recession Proof in the Long-run?
Fears over the US slipping further
into recession with unpredictable
currency fluctuations could slow
down the European medical device
market
Impact of Recession on Impact of Recession on
European Medical European Medical
Tendency for capital expenditure
to be deferred. There is a trend of
delaying replacements due to
People are cutting back on care –
doctor’s visits, medications, elective
surgeries – amid the recession. 36%
of patients are postponing needed
care, while another 36% are skipping
tests, exams and other healthcare
services outright
6
There has been a 9% decline in the
total number of surgical& less
invasive cosmetic surgeries
performed in Europe compared to
2007
Devices MarketDevices Market
If the recession lasts more than a
year, there is the possibility of
governments, national and supra-
national, to take short-term cost
saving measures which will
actually cost patients and the
healthcare systems money in the
long run
delaying replacements due to
budgetary constraints
With the steady rise of unemployment and
with it their health insurance. This has and
will have a direct impact on medical device
companies, as non-emergent surgical
procedures and services are put off as long
as possible, thus limiting the usage of their
products.
Snapshot of Potential Opportunities – Europe, A Rapidly
Expanding Market
Dental Implants
Custom Procedure
TraysPain Management
DevicesProjected
Revenues In
High Revenues
8
Image Guided
Surgery
Advanced Wound
Management
Endoscopy
Obesity Surgery
Revenues In
2012
Low Revenues
Growth Rate (2008-2012)Low High
Expanding Cardiovascular and Orthopedics Applications
Change Market Status-Quo in 2012 (Europe)
Per Cent of Revenues by Segment, Europe (2008-2012)
15
20
25
30
35
2008 2012
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Others: Neurology, Hearing Aids, Endoscopes, Durable Medical Equipment, Dialysis, Biomaterials &
Haemostats, Disposable Surgical Supplies, Fitness Equipment, Cosmetic & Aesthetics and Dental Equipment.
The segment also includes some components of imaging and monitoring devices that fall into the grey area
between medical devices, medical imaging and patient monitoring.
0
5
10
15
Cardiovascular Orthopedic Woundcare Surgical Infusion Systems Opthalmic
Equipment
Respiratory and
Anaesthesia
Disinfection and
Sterilisation
Others
Cardiovascular Market: Hot Segments and Key Trends
Implantable CardiovascularDevices
Atherectomy andThrombectomy
Cardiac AblationVascular ClosureDevices
CardiologyCardiology
Cardiac ResynchronizationTherapy
Ventricular AssistDevice
Stents
IntravascularUltrasound
Pacemakers
� A majority of the revenues generated in the
cardiovascular industry comes from the sale of
ICD or pacemakers, and percutanteous
interventional products (angioplasty, stenting)
� Manufacturers and venture capital funding haveshifted their research expenditure and market focus
to minimally invasive devices, given the higher
price point and market potential
� Price sensitivity to device sales has been moresignificant for pacemakers than CRT or ICD
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Intra-aortic Balloon Pump
Angioplasty andAngiography
Device
InterventionalCardiology
devices, but will heighten in impact in other
segments as the industry continues to grow
� Stent technologies involve an infinite level of complexities; as a result the market is easier to penetrate for companies seekingmarket entry. Continuing controversy about increased rates of clotting over time with drug-eluting stents (DES) has led to greater
regulatory scrutiny and longer post marketing approval parameters. More cardiac surgeons are questioning the high use of DES
and are reverting to less-expensive bare-metal stents
� The other major segment, cardiac rhythm management systems, is growing as a result of positive clinical outcomes, improveddata management capabilities, and decreasing product failure rates
Cardiovascular Market: What to expect..
While the cardiovascular devices market
expects to be fairly stable and, for the most
part, unaffected by the recent economic crisis.
New technologies, and long-term gradual
expansion into under penetrated segments,
such as peripheral vascular disease, should
provide growth opportunities for product
developers
Decrease in
product sale
revenue
primarily due
Ageing populations
& higher
awareness of heart-
related health
conditions will
ensure market
growth
With more than
half a million
new CHF cases
being detected
every year, the
market is slated
to grow
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Relatively Recession Proof
primarily due
to dip in
foreign
exchange rate
Next-generation
of hybrid devices
expected to
expand device
applicability and
treatment
Developments in
imaging
technology boost
efficiency of
angioplasty
procedure,
Orthopedic and Prosthetic Devices Market: Hot Sectors
and Key Trends
Spinal Fusion Shoulder Prostheses
Motion Preservation Technology
Ankle ProsthesesOrthopedicsOrthopedics
Spinal Fixation
VertebroplastyKnee Replacement
Elbow Prostheses
Joint Reconstruction
� Technology is capable of significantly altering
product acceptance, implant pricing, reimbursement
rates, inpatient orthopedic utilization, and several other
factors that can directly or indirectly affect the joint
reconstruction market.
� Motion preservation technologies are expected torevolutionize the spinal surgery market. Being an
emerging segment, the future of this technology largely
depends on the short and long-term clinical efficiency.
■ The market for the uncommon joint such as elbow,
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Spinal OrthosesBone MorphogeneticProtiens
Orthopedic Bracesand Supports
■ The market for the uncommon joint such as elbow,
wrist, and digit replacement being younger than that
for hip and knee joint replacements presents
significant opportunity for growth within the joint
replacement market.
� Manufacturers are utilizing a major portion of their resources on developing better and cost-effective materials for implants.
� Treatment patterns are expected to be skewed toward minimally invasive procedures augmented by the use of enhancedfixation products, growth factor, and image guided surgery, all of which facilitated the treatment of complex fractures.
� Accelerated convergence between orthopedics and biology leads to advances in bioabsorbable structures. In addition, growthfactors routinely coat fixtures to help soft tissue and muscle healing. With advances in computing and data management, devices
entering the market can wirelessly transmit data on joint position and optimal functionality.
Orthopedic and Prosthetic Devices Market: What to
Expect..
The recession has caused many to think
twice about getting medical care, including
orthopedic surgery. Surgical volumes have
not change yet but the numbers are going to
be definitely down by the end of 2009
Benefits of hip and
knee surgery are
indisputable for
patients suffering
Demand for
procedures to slow
by about 3% due to
the general
economic
downturn
Sales reports in
recent quarters
show slowed
growth in large-
joint
reconstruction
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Orthopedics feels the pinch
patients suffering
from osteoarthritis
Almost 6% of
Europeans prefer
deferring minor
surgery and 5
percent who put
off major surgeryWorld’s top hip
and knee implant
makers feel the
squeeze. Zimmer
reported a 5% and
9% drop in sales
respectively
Cosmetic Surgery and Lifestyle Products: Hot Sectors
and Key Trends
Aesthetic Hair Removal Lasers
Rhynoplasty
Cardiac AblationBotoxCosmeticCosmeticSurgery &Surgery &LifestyleLifestyleProductsProducts
Vascular and Pigmented Lesion Treatment Laser
Skin Resurfacing LasersLiposuction andBody Contouring
Obesity SurgeryDevices
Chemical Peeling
� HA-based dermal fillers are promising as they havegreater longevity of usually six to nine months, and
sometimes up to a year
� The aesthetic laser has increased awareness
among the people regarding the technology available
that can help them improve their appearance by taking
care of the unwanted hair, skin blemishes, and acne.
� Europe is currently the second largest market forcosmetic procedures after the United States
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Hyaluronic Acid (HA)-Based Dermal Filler
Breast Enhancement
Body Contouring
Collagen-Based Dermal Fillers
� Spain leads the field within Europe and is rankednumber five in the world in terms of demand for
cosmetic procedures. The United Kingdom, though,
does not have many cosmetic procedures done.
However, as the cost of each procedure is high, it has
become a cash-rich market
� With increasing market demand, economies of scale have made surgery more affordable in certain parts of Europe, like Spain,Italy, and Germany. Cut price surgeries are more in common in these regions. Most private clinics have also come up with loan
and credit facilities which ease out the burden on the patient
� The development of the advanced visualization system allows practitioners to view the layers beneath the skin and provideeffective treatment solutions
Weakening Economy Take a Swipe at European Vanity
Although recession would have to be
severe before European would forgo
cosmetic procedures, especially the less
expensive ones, there are still some signs
of distress
2% drop in
Rhinoplasty
Plastic
surgery is
down by 9%Major cut
back breast
implants. 6%
drop in 2008
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Vanity’s Downturn
Rhinoplasty
procedures
3% drop in
sales of botox in
2008
Dermal fillers
fell 4% compared
to 2007
Homecare and Non-Hospital Devices: Hot Sectors and
Key Trends
Mechanical Ventilation Devices
Under pads
NebulisersPenile DripCollectors
Homecare Homecare & &
NonNon--HospitalHospitalDevicesDevices
Oxygen Therapy Equipment
Continuous Positive Airway Presser
Nutrition Therapy
Disposable Pads
Adult Briefs � Across Europe, there is a move towards centralisedcare, as consolidation of hospitals is seen, reducing
the number of hospitals, beds, and facilities. There is
also unstable staffing levels and low retention rate for
nurses. These factors combined create the ideal
conditions for driving homecare and non-hospital care
� Patients are more receptive to using homecare andnon-hospital devices if they have built-in monitoring
capabilities. Acceptance is also increased by ensuring
that the devices do no impinge on normal day-to-day
life
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Bi-level Positive Airway Pressure
Infusion Pumps
Airway Presser
IV Therapy
life
� With around 18.0 per cent of the population over theage of 65, Europe has the highest elderly population in
the world.
� Widespread introduction of Diagnostic Related Group (DRG) reimbursement system across Europe has resulted in reducedrevenues from in-patient treatment. Hospitals are no longer reimbursed, based on length of hospital stay, however, they are paid a
flat rate fee depending on the disease. This has encouraged hospitals to seek the most cost-effective, resource-efficient methods for
providing continued treatment and care for patients. Homecare and non-hospital managed therapies do not have the same
infrastructure and capital costs associated with in-patient treatments.
Homecare and Non-Hospital Devices Soar!
Homecare and non-hospital devices market
will continue to grow as patients’ will opt for
homecare over hospital visits
Smaller
companies may
have trouble
Increasing
demand for
personalized
care coupled
with cost
efficiency
Increased
possible patient
base with a rise
in the aging
population
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Preference over traditional care
have trouble
surviving during
recession
DRG
Reimbursement
across Europe
causing
reduced revenues
from In-patient
treatments
Advances in
technology making
monitoring patients
remotely much
easier
The European Market is Changing
Current Situation in U.K.
• Quality & service-related press focus
• PatientPatientPatientPatient “right to choose” in draft NHS
charter
19
charter
• NHS quality charter
• Quality accounts need to be published
� Quality Challenge
What do European Medical Device Manufacturers Look For?
OutsourcingOEMs are more focus on marketing and distribution functions, whereas
R&D and manufacturing activities are gradually outsourced to EMS
(Electronic Manufacturer Service) providers.
OEMs are looking to forge partnerships with small agile companies/
manufacturers who offer niche services. Total solution provider is
preferred only in cases of large scale green field ventures.
OEM Expectations
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Advancement in technology will be surrounding 4 key areas:
specifications (better features), miniaturization (size reduction and
portability), reliability and power sources (for portable devices).
Manufacturers have more collaborations with various institutions to
leverage on their R&D capabilities and intelligence. Win-win situation can
be achieved as the institutions can gain financial supports.
Technology
Collaboration
Specific Opportunities in Technology Transfer
Transformation Transformation
Zero Defect Reliability
- Device failure � death to
patient
- Failure Mode and Effects
Analysis (FMEA)
- Flexible circuits > rigid
circuits
- Process validatio and
control
Enhanced Performance and Feature
- Better specifications
- Networking ability: LAN
- Wireless solution: Bluetooth, Wifi
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Transformation Transformation of Medtech of Medtech DeviceDevice
Miniaturization
- Pacemaker: size of pack of
cards � size of stopwatch
- Printed circuits � denser
and thinner.
- Infusion pump: single chip,
micro-fluidic pumps?
Improved Power Sources
- Rechargeable battery in
neurostimulator extends its
lifespan by 10 years.
- Biothermal battery – using body
heat to create a low current
source of power.
- Nuclear microbatteries is in
development.
Long Term Collaboration Opportunities
Nanotechnology
Molecular and Gene-
based Diagnostics
Information
Technology
Diagnosis- Early detection
- Reduce false diagnosis
Treatment- Improved treatment:
�� AffordabilityAffordability
�� AIO device AIO device –– one device, one device,
multiple testsmultiple tests
�� Easy to useEasy to use
�� Long term monitoringLong term monitoring
�� Cater to specialized Cater to specialized
needsneeds
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Artificial Organs
Tissue Engineering
Advancement in Advancement in
TechnologyTechnology
Translation Translation into Clinical into Clinical ApplicationsApplications
higher efficacy, target
specific.
- Non-invasive
- More treatment options
needsneeds
�� Self testingSelf testing
�� More options availableMore options available
Benefits to Benefits to
the Patientsthe Patients
Micro-array lab-on-a-chip
products are improving point-of-
care diagnostics. A micro-array
lab-on-a-chip is an array matrix
that lets doctors instantaneously
analyze fluids, cells, and even
DNA structure right in the office.
Pacemakers today take
advantage of sophisticated
microprocessor technology to
monitor, analyze and control
cardiac rhythm.
Some Success Stories: Products being Jointly Developed
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Automatic External Defibrillator
is a small, portable device that
analyzes the heart's rhythm and
prompts the user to deliver a
defibrillation shock if it determines
one is needed.
State-of-the-art hearing aids
incorporate the latest in DSP
(digital signal processing)
technology together with low-
power analog amplification.
Your Contact For More Information
Nitin Naik
Vice President-Healthcare, APAC
Tel :68900978
Email : [email protected]
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www.frost.com