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Ready to flourish

The emergence of medtech brings a seed of hope to healthcare

Young flowersWhile drug makers are rapidly adapting to meet the tough times ahead, another part of the UK healthcare market is burgeoning and is expected to grow at an above average rate for at least the next five years. This 'part' of the industry is medical devices, diagnostics and technology.

The British market for medical devices is one of the world's largest, valued at £5.09bn ($9.9bn) in 2008. It is comparable in size to the market in France, which along with Germany, make up the top three markets in Europe.

The latest instalment in a new report from Espicon Business Intelligence (Q1 2008 Medical Device Market: UK Outlook) estimates real expansion in the sector of 8.9 per cent annually until 2013 ñ or approximately £540m per year in growth. The UK medtech representative body, the Association of British Healthcare Industries (ABHI), estimates that the world market will be worth £240bn by 2015.

Similar to their pharmaceutical cousins, medical device firms produce life-saving products paid for by governments and insurers. To some extent, however, segments of the medtech sector enjoy shorter approval processes, less competition from generics and they do not have to struggle with the demise of their blockbuster earning potential. These factors heighten the sector's prospects for growth overall.

At present, much of the growth in the UK medtech market is import-driven, a dynamic that has held for more than half a decade. Imports currently account for approximately 88 per cent of the market, and since 2002, their value has risen by more than 94 per cent. There are myriad small medtech manufacturers in the UK, but many are under-capitalised in a domestic market that is underdeveloped. The top-100 medtech companies globally (in terms of revenue) count just four home-grown UK firms in their number.

There are nearly 10 million people aged 65 and over in the UK, ie the baby boomers, who are starting to suffer with osteoporosis, creaking joints etc. Most of these focus on medical supplies and orthopaedic appliances. Medical technology is, of course, vastly broader than this indication and, indeed, for this demographic. While joint replacement sales and spinal products are expected to grow rapidly, according to Espicon's latest forecast wound care/tissue repair agents too have huge potential.

Theranostics is also a key area where pharma and medtech fuse to form what some high-level commentators have termed the future of healthcare. A universal definition of theranostics is still being whittled, but, in essence, it is the use of 'companion diagnostics' or other technologies designed to identify patients in which pharma's products will be most effective.

As medicines become more specialised and high value, appropriate cohort selection will be crucial in order to generate data for regulatory/marketing approval, as well as health technology assessment. As these data will be scrutinised in some depth, interest in proteomics, genomics and other molecular diagnostic fields is expected to escalate rapidly. Firms will need to build clinical effectiveness and cost value cases for the targeted medicines of the future or, in some cases, the present.

Cutting-edge diagnostics can provide a means to develop and support appropriate ethical, value and scientific arguments for new therapies and pharma companies with interest-accruing accounts, aspirations to diversify and/or for whom biotech deals or M&A strategies have not provided the hoped-for benefits. A well-timed investment in UK medtech might pay dividends.

Only a few weeks ago, shares in medtech companies were reported in the Financial Times' Lex column as having 'outperformed [markets] by nearly five per cent' already this year. 'Device sellers are expensive, trading on 30 times historical earnings, double the average for markets globally,' it read - 'but they may just be worth it.'

UK medtech marketing
Marketing medtech products can be seen as no less or more challenging than marketing medicines, though it probably requires a different perspective. Decisions about which devices to buy and use often pivot on the input from targeted, secondary care medics and other such keenly focused healthcare professionals. There is also an expanding array of highly innovative and/or first-in-class products coming to market.

Over the pond, it was announced last month that the Medicare system will provide reimbursement for one of the most exciting medical technologies to be developed in living history - fully artificial, replacement hearts.

According to US authorities, the quality and quantity of data is now such that the decision can be supported to fund the supply, as well as implantation, of mechanical hearts in terminally ill patients with cardiac failure, albeit in a controlled FDA-approved trial setting.

Lifetime costs per beneficiary are anticipated to reach $1m, yet the federal government has said it will cover this. It has taken many years of unremitting development, but these types of technologies are now reaching the market place and, it seems, receiving a warm welcome from the payors.

Communications agencies that know the medtech sector say that far from being a poor cousin to pharma, medtech marketing requires diligent, co-operative and cutting-edge activities.

In promotional terms, the work is often more complex than pharma because the audience - nurses, in many cases - acts far more like a consumer market than a professional market. Decisions are made on feelings rather than features and it can be very much a case of brand building in its purest form, notes Stephen Page, managing director of Medibrand.

In many ways, there are more layers to the marketing process in medtech than pharma and the more specialised the audience, the greater the challenge. For example, until recently people in the burns sector did not consider it their business to know how wound care products perform - these are highbrow audiences, which only respond to subtle, long-term campaigns. Medical evidence is critical because they are sensitive to products that enhance or damage their reputations, he adds.

Some might feel the NHS is plagued by bureaucracy that would draw tears from members of a European legislative taskforce. However, the effects of pressure to treat more people better, while making savings to the bottom line can be seen, and in this light, the NHS frequently takes all the help it can get.

Quite often, rapid uptake of a complex device will depend on the skill and experience of the clinician and, accordingly, the device business is geared to significant educational investment and training of new operators, explains Steve Terry, managing director of Medical Device Communications Ltd (MDC), a new part of the Adventis Group.

These programmes are often led by key opinion leaders and can be crucial in the successful launch and roll out of a new device. Manufacturers will often employ their own dedicated clinical staff to ensure the device is used appropriately and fully supported, however the management and dissemination of influence from KOLs often determines the speed of market penetration.

Having launched MDC in April 2008, Terry and his co-founders believe the time is right for marketing groups such as Adventis to reach out to medtech. Medtech markets are growing by 7-12 per cent each year and it is quite astonishing to think that there are only a handful of dedicated medical device marketing services companies in the US - and not much else serving the rest of the world.

New initiatives
There are clear reasons behind what appears to be the emergence of medtech: significant, new and first-in-class products are reaching the market; payers are opening their eyes wider to the clinical and cost benefits of early diagnosis; pharma companies are seeking synergistic (possibly theranostic-based) tie-ups with medtech manufacturers and the global and domestic markets are growing healthily. 

With the prospect of communicating to an increasingly informed public, 'customer' is a key watchword for medtech. 

In the next 10-15 years - though it's already started - consumers will become increasingly expert and demanding, looking for technology assessment of medtech as they might for a washing machine in Which?, says Trevor Lewis, principal consultant at the Medical Device Consultancy, specialising in business development, regulatory affairs and marketing.

In the US, the FDA already provides information on new devices directly to patients and consumers via its website. There is talk of making this kind of information available in Europe, but no-one really knows what it's going to look like yet, or how it's going to happen - but it is the future.

MDC's Terry says that even though patients generally have little influence over the choice of Class III (ie life-saving) devices, There is a trend in making the public more aware of new technologies. Patients can change their treatment outcomes and even impact their potential longevity by researching their diseases and demanding the most modern treatments.

Terry believes that as companies look for ways to increase deployment in similar technology areas, they may seek the means to inform patients more directly of the inherent benefits, increasing the likelihood that patients will demand these technologies from their healthcare organisations.

The Author
Rob Skelding
is a freelance pharmaceutical journalist

9th June 2008

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