6 Market Forces Changing the Medical Device World
As a high school junior, I was shown the guts of an implantable defibrillator. That day, I quit my pursuit of a career in medicine to pursue one in medical device design. OK, so my life didn’t go quite that linearly, but many years later I continue to work on life-improving technologies from the consulting side of medical device design. This pursuit continues to be a great passion.
The medical device market is in the popular press spotlight these days. Actually, it’s more of a target. Netflix’s documentary The Bleeding Edge explored whether the 510(k) FDA clearance process allows manufacturers to bring risky devices to market and whether bad side effects are covered up through questionable reporting. John Oliver picked up a similar theme recently on his show “Last Week Tonight.” On a more positive note, a recent book by Eric Topol makes the case for big improvements in healthcare delivery and cost with the application of AI to treatment and diagnosis. So at this important moment in medtech history, let’s look at some of the market forces and trends shaping the med device industry. How will the big players react to these forces over the next decade?
Don’t fertilize eggs. Adopt toddlers.
R&D in large medical device companies is slowing. The big companies have realized that they don’t have the patience to grow ideas from eggs knowing that many of them will never see the light of day. These efforts are expensive, and since most of the big players are public, the demand for quarterly profits run counter to expensive and risky R&D work. As a result, many of these big players are essentially outsourcing their R&D to startups and smaller companies. Companies (through their venture arms) can make small investments in a bunch of startups and then follow them as they burn down risks, especially regulatory and technical challenges. They then pick the winners (adopt the toddlers), either licensing the technology or buying the company. The startups get quite a bit of value from these venture arms. They get access to experts in the field and to regulatory advice and help, and they can laser-focus on a problem to solve or a patient population to address.
Grassroots problem solving
Bigfoot Biomedical was founded by a father, Jeffrey Brewer, who wanted to hack his kid’s continuous glucose monitor and insulin pump to create a closed-loop delivery system sometimes called an artificial pancreas. From this personal hack and desire to solve a problem that needed solving, Bigfoot Biomedical was formed to dramatically disrupt the diabetes management space. I believe that we will see more successful startups disrupt bigger markets like diabetes management and cancer therapy. These companies are nimble, and the venture capital market is hungry. These disrupters may be the biggest risk to the established players. Beyond devising better therapies, startups aren’t afraid to cure diseases, and that’s the biggest disrupter of all.
Digital health takes over
Pure “digital health” companies are obviously making a splash on their own. But the best digital health solutions still require device innovation. The traditional medical device companies are falling behind in digital health. The big tech players like Apple, Google, and Amazon have a culture of speed and experimentation. Facebook’s mission to “go fast and break things” is antithetical to the medtech world, but it’s the way that such companies could make huge strides in digital health. On the flip side, the tech companies (minus Apple) are realizing how difficult it is to make a successful device. This is resulting in some cool partnerships like the Dexcom + Google continuous glucose monitor. It seems like these partnerships will be critical to fast progress in the convergence of devices and digital health.
Low taxes and lower speed
The Irish inversions and manufacturing investments that swept the medtech space over the last decade are becoming more entrenched in operations. Companies need to figure out how to work across time zones, cultures, and offices. We are curious if the impact on the bottom line and the stock price will be worth the loss of productivity and velocity that these arrangements could cause.
We love regulators
The focus on perceived failures of the 510(k) process may result in some changes, or it may just blow over. On the flipside, FDA has emphasized human factors testing to improve usability and reduce risk. In decades past, FDA and medical device manufacturers were adversaries. This recent human factors focus has resulted in a more-collaborative relationship between regulators and manufacturers. While there is always a risk of becoming too chummy, we feel that this collaborative environment is a great sign. Manufacturers will be more willing to engage early on with FDA, which should result in more substantive design improvements instead of simply focusing on the most-efficient documentation strategy. This should be a boon for patients and practitioners who end up working with and consuming more usable and safer devices.
Our engineers and designers love Medgadget, a site crawling with the latest technologies. Some of the stuff on Medgadget will change the industry, and some won’t make a blip. Just like in the tech world, the pace of medtech innovation is increasing. What was considered science fiction a decade ago is already making it into the mainstream. A few of the more interesting enabling technologies include AI, CRISPR, and 3D printing of biomaterials. These three technologies will push the possibilities of personalized and targeted medicine. It will be interesting to see how FDA and other regulatory bodies react to these one-off therapies and the processes that enable them.
Are devices getting better or scarier?
What will all of these market forces mean for the future of the medical device industry? As everyone says when they have no idea what the answer is, “great question.” It’s probably a good guess that since technology and venture capital are racing ahead of regulation we may see some dangerous stuff approved and in use. And a scary failure will probably result in an over-correction by regulators. But in the meantime, we will be in the middle of a step-change in the impact that medical devices have in our health and wellness.