2010 at a glance

The Great Recession affected all sectors, including healthcare. Within the medical device market, the recession forced an overall decline in patient volumes and investment spending and capital expenditures. Looming healthcare reform – with often-uncertain outcomes – only added to the general sense of uncertainty in the sector. However, when looking back at the 2000-2009 decade, there was certainly good news: a general upswing in distribution, major advancements in technology, and a dramatic increase in positive patient outcomes.

Growth will continue in the cardio, surgery, wound care and orthopedics markets. The cardio market has been slumping but should see a boost in 2010 and beyond due to the stabilization of the DES and ICD sectors, and growth in AFib and heart valve markets. As for surgery, the transition to MIS will likely lead to cannibalization of certain market segments. Patient demographic trends and improved image guidance, robotics and minimally invasive endoscopic tools should support moderate growth.

The wound care market is one that is mature and stable. Pricing pressures due to reprocessing, GPOs, reimbursement, and destocking have all restrained the market. New preventative technologies that reduce risk of adverse events represent targeted segments for growth. This segment could also receive a boost from comparative effectiveness research (CER).

In the orthopedics market, despite slowed growth from double-digit rates due to factors including patient volumes, regulatory scrutiny and pricing pressures, new product developments that improve patient comfort, surgical procedure times and patient demographics should fuel continued growth.

Frost & Sullivan also looks at market drivers and restraints from 2010-2019. Market drivers include continued transition to minimally invasive technologies; expansion of insurance coverage; development of patient safety technologies; increased treatments that move out of traditional care settings; pay for performance; CER; and expansion of new patient segments. Market restraints include cap ex spending; inventory management; healthcare reform taxes and cuts; regulatory control; pricing pressures; reimbursement declines; and the cost of raw materials and manufacturing.

Technologies such as nanotechnology, artificial intelligence, antimicrobial materials, telemedicine, tissue engineering, bioadsorbable/bioerodible, and structural materials will show impact on the next generation of medical devices.

The medical device companies have always operated in a volatile legislative environment, and therefore are prepared for whatever Capitol Hill hands them. New laws or rulings may momentarily grab attention, but despite seeming uncertainty, device developers continue to be focused on product distribution.

As for business models, the healthcare industry continually seeks new endusers (patients). Several device companies, when developing new products, often begin with the need – not the technology – hoping that a product will be quickly embraced by the masses. The industry is constantly looking beyond its core customer base, and so moving forward, expect to see a larger reliance on social networks and online communities as a way for device companies to exchange ideas and receive feedback – and engage potential new endusers.

Frost & Sullivan
Mountainview, CA
frost.com