With an ageing population and an increase in ‘lifestyle’ conditions, demand for healthcare has never been greater. What are the biggest health challenges and how can medical technology help to address them? On Target reports.
Last month, On Target
provided an overview of medical technology in Europe, outlining its most developed regions and the emerging markets where steady growth is being predicted. In a global environment plagued by fiscal turbulence, our article told a remarkably positive story: the medtech industry is in pretty good health.
According to analysts, the European medtech sector has been growing steadily and consistently for a number of years. With the medical device market in Western Europe forecast to grow by 40% inside the next five years and rapid acceleration predicted in Central and Eastern Europe, the prospects for the wider industry appear strong.
But what is driving this anticipated growth? This month, On Target
explores the health challenges facing the global community and looks at the therapeutic areas where medical technology really makes a difference.
Dial M for medtech
Consensus supports the recent claims by management consultants McKinsey that the industry is growing at a rate of 5–6% each year. John Wilkinson, former Director General of the ABHI and now Chief Executive of Europe’s trade association for medtech companies, Eucomed, believes the latest data is an accurate reflection of progress. “My instincts are that the level of growth has been pretty consistent over the last few years,” he told On Target
. “Of course, it’s very sector-specific: some mature sectors are growing more slowly than that, while some of the newer technologies are growing at a much more dynamic rate. So that headline figure covers a multitude of individual stories.”
Growth is, of course, directly linked to demand; and with an ageing population requiring greater healthcare provision and an increase in ‘lifestyle-related diseases’, demand is not going to drop any time soon. These societal challenges are reflected in the high-growth areas acknowledged by the industry. “Those markets showing the most rapid growth line up with the key healthcare challenges associated with ageing and ‘metabolic syndrome’ – which is basically obesity,” said John Wilkinson. “These are the key drivers of change in healthcare. Orthopaedic intervention for hip and knee problems is a key driver; and, increasingly, so is spinal intervention – due to both ageing and overweight in the population. The metabolic syndrome associated with a sedentary population is driving two further areas: diabetes care – it’s predicted that 7% of the population will be diabetic by 2020 – and cardiology.”
These headline conditions feature prominently in analysis, both retrospective and forward-looking, of medtech industry performance. Data from Credit Suisse First Boston, based on estimated revenues in 2004, show that alongside diagnostics, orthopaedic and cardiovascular therapies make the biggest contributions to the global medical technology industry. Back then, the medtech sector had an estimated value of $215 billion, with some of the most significant contributions to that figure being diagnostics ($25 billion), cardiovascular ($17 billion) and orthopaedics ($16 billion).
In the years since 2004, these common global healthcare challenges have remained – and diagnostics, cardiovascular devices and orthopaedic implants have continued to set the pace. In addition, developments in neurodevices and advanced technologies designed to bring healthcare closer to patients’ homes are also stimulating growth. This is particularly relevant in Europe, and is driving opportunities for medical device companies.
“There is going to be increasing growth in areas targeted at managing patients in their homes. Some of this is advanced technology – but a lot of it is fundamental technologies for fighting chronic conditions, adapted for the home and the community,” said John Wilkinson.
The usual suspects
These new technological advances relate primarily to the delivery of healthcare, and are driven by governmental objectives to move that delivery away from hospitals and into the community. However, the major clinical challenges for medical science have remained strikingly consistent. It’s worth looking in more detail at the three biggest therapy areas in the medtech sector to see how they align with today’s societal challenges.
The global market for in vitro diagnostics was valued in excess of $38 billion in 2007, and has been forecast to grow by 6.7% year on year until 2012. Growth is being propelled not only by the emergence of new technologies and increasing patient awareness, but also by an increase in the prevalence of several chronic and infectious diseases. Molecular diagnostics and point-of-care tests are also fuelling growth. Molecular diagnostics is the fastest-growing segment of the IVD market, and has been projected to enjoy compound annual growth (CAG) of 14% until 2010 from a base value of $2.6 billion in 2005. Likewise, point of care tests, which can be used at the patient’s bedside, in doctors’ surgeries and at home, now account for around a third of the global IVD market. This segment was valued at $12 billion in 2005, and analysts have predicted a CAG of 7.8% for it by 2010.
The pace of technological change in the IVD market is certainly enabling earlier and more accurate diagnoses of disease, improving clinical decisions and assisting more effective monitoring of treatment. However, as in the device market, the adoption of new IVD technology is being forced to overcome reimbursement and regulatory obstacles that can potentially slow progress and adversely affect health outcomes.
The impact of orthopaedic problems on the health of the global population, and thus on the global health economy, is huge. According to the Bone and Joint Decade (www.boneandjointdecade.org
), bone and joint diseases affect hundreds of millions of people over the world and are the leading cause of pain and disability. They account for half of all chronic conditions in people over the age of 50 in developed countries, a figure which is set to double by 2020. In addition, 10–15 million people (many of them young) are injured or disabled each year through road accidents. With the number of musculo-skeletal diseases set to rise sharply in the next decade, the impact on health economies around the globe will be significant. Currently, a fifth of all visits to outpatient clinics worldwide are for musculo-skeletal conditions.
It’s not surprising, therefore, that the orthopaedic sector is a major market for the medtech industry. In 2005, worldwide sales of orthopaedic products reached $25.9 billion. By 2010, analysts predict that the sector will top $44 billion in global revenues. The orthopaedic product sector is divided into a variety of segments: reconstructive devices and joint replacements, spinal implants and instrumentation, fracture repair and orthobiologics. In recent years, the spinal sector has proved the most dynamic, with growth in the early 2000s of almost 30%. While this has slowed since, it remains a growth area. Reconstructive and joint replacement devices have also slowed – and while they still lead the way in orthopaedic sales, knee and hip replacements no longer command premium prices. The small bone market has emerged in recent years as a new growth area for joint replacement technologies.
In 2007, the European market for orthopaedic devices was valued at around $3 billion. Leading players in the market include Smith & Nephew, DePuy (J&J), Stryker, Zimmer, Biomet and Synthes.
The global cost of cardiovascular disease (CVD) is vast. In the US alone, heart disease and stroke are estimated to have cost $448.5 billion in 2008 (according to the American Heart Association and the National Heart, Lung, and Blood Institute). Likewise, CVD is the main cause of death in the European Union, killing over 2 million people each year and costing the EU economy over €192 billion annually. According to the World Health Organisation (WHO):
• More people die worldwide each year from CVD than from any other cause (see table opposite).
• An estimated 17.5 million people died from CVD in 2005, representing 30% of all global deaths. Of these deaths, an estimated 7.6 million were due to coronary heart disease and 5.7 million were due to stroke.
• In 2015, almost 20 million people will die from CVD – mainly from heart disease and stroke, which are projected to remain the leading causes of death.
The global market for cardiovascular devices is tipped for strong growth in the next five years. This is, of course, in keeping with the demands of an ageing population and a sustained rise in obesity. The latter has not only helped to cement CVD as the leading global killer, but has also led to diabetes becoming almost a global epidemic. WHO predicts that within the next ten years, diabetes deaths will increase worldwide by more than 50%.
The cardiovascular device market is expected to reach $40.46 billion by 2011 in North America alone. One of the most significant innovations in this market has been the development of the drug-eluting stent, a market-leading device in angioplasty procedures. The European drug-eluting stent market has been forecast to reach $4.5 billion by 2009, up from $1.6 billion in 2001 (source: Eucomed). Other cardiovascular solutions provided by the medtech industry include cardiac rhythm management, heart valves, cardiac surgery systems, minimally-invasive image-guided technologies, interventional neurovascular technologies and heart assist devices.
The leading players in the cardiovascular device market include Cordis (J&J), Medtronic, Boston Scientific, Guidant, St Jude Medical, Abbot, Sorin, Conor Medsystems and Biotronik.
Paying the price
Clearly, the medical technology industry has a well-deserved reputation for providing innovative solutions to health challenges across the world. However, in an era where the escalating population is placing increased pressure on global health economies, the speed of innovation may be thwarted by the age-old question: who pays the price?
Health economics, as well as the current market economics created by the liquidity crisis, will play a major role in the evolution of medtech. “Cost pressures may force the way the industry goes, but there’s plenty of scope for the industry to contribute in terms of productivity and better patient outcomes,” said John Wilkinson. “There is a huge amount of innovation going on in Europe. The medtech industry relies on clinicians, scientists and engineers – they are the creative engine of the industry. The industry channels that innovation into products that can be used in the clinical environment. We see no decline in the innovation potential in Europe, but we do see some short-term clouds on the horizon in terms of who is funding that innovation.”
The precise impact of the current financial crisis on the medtech sector is difficult to predict, but there will be an impact. In all probability, this will have a greater effect on early-stage companies looking for funding than on established players in the market. For the medtech industry as a whole, John Wilkinson feels, the opportunities will still be out there:
“I think the opportunity for industry is its increasing ability to radically restructure the way we do healthcare. There are industrial parallels for this. The business of delivering healthcare is overwhelmingly people-driven, and some of these innovations allow you to change the sites and the human resource demands of treating patients. Minimally-invasive surgery is clearly a major driver for reducing hospital stays by facilitating day-case surgery. Telemedicine enables patients to be monitored and managed in their homes rather than in a high-cost environment.
“So really the main opportunity for the medtech industry, and a message that the industry often struggles to get across, is the fact that we can profoundly change healthcare delivery and what it costs. If you draw the trend lines for demand for doctors and nurses and so on, you can see that we are going to need to use technology as a key enabler – otherwise, we’re going to run out of people.”Next month, On Target will take a closer look at regulatory issues affecting the medtech sector and explore HTAs in Europe.