By Lorraine Ruff and David Gabrilska,
Partners
Milestones, the critical thinking company
Seattle, WA
Baby boomers are having as significant an impact on the development of medical technologies as they are in drug development. "Boomers are vitally concerned with keeping their bodies fun to live in for as long as possible and they're backing up their preferences with solid buying power," observed Elizabeth "Bess" Weatherman, managing director, E.M. Warburg, Pincus & Co.
Their expectations have created huge demand for innovative technologies that address medical needs: hearing, seeing, fit bodies, sexual function, or insomnia. Americans will price shop for just about everything. But when it comes to healthcare everybody wants the best and they are not willing to settle for "just good enough." They are demonstrating that they want function restored and in some cases they’re willing to pay for it as evidenced by their willingness to pay thousands of dollars for visual enhancement procedures where, thus far, there is no reimbursement.
"Going forward, medical technology development will focus on technologies that address quality of life," said Weatherman. "Currently approximately 70-to-80 percent of the [medical technology] design talent is focused on addressing life threatening needs. In the next few years, I believe the momentum will shift to quality of life and meeting consumer demand. Moreover, we're getting to cost effective solutions that marry technologies with drugs," she said.
But for boomer it’s not all about access to technology. According to Thomas J. Fogarty, MD, Stanford professor and founder and senior partner at Three Arch Ventures, "medical practice is a service business whose primary objective is the prevention, maintenance and repair of customer problems - 'customer' defined as patient."
" There are physicians that may resist this notion because it’s not glamorous enough," Foharty observed. "I believe the medical industrial complex has lost sight of this, and it's too bad, because if we thought this way again, we'd bring greater value to the patient and to ourselves," he said. "All this technology is being introduced to physicians, a very conservative crowd, who have been trained to stick with what works. At the same time, physicians are responsible for reducing health care costs by eliminating redundancies and by incorporating new technologies and drug modalities into their practices. In reality, we contract with more than the patient…health care systems and payers. This split has fundamentally changed the way we practice medicine," Fogarty said.
During the next five years, the panelists predicted that market-savvy medical technologies developers will focus increasing attention, with commensurate revenues and profits lines, on prolonging quality of life among boomers. "Americans want to be able to continue walking, running, and climbing," Weatherman said. That means maintenance of healthy hearts or fixing broken ones.
Areas of innovation to watch include cardiology and cardiac rhythm management. Companies in this sector have a combined market cap of $70 billion and annual sales of $8.7 billion. One of the hottest sectors is interventional cardiology, specifically restenosis, and the resolution of totally occluded arteries through de-bulking.
Jay Watkins, vice president, Guidant Corporation, said that the challenge that lies ahead is to fully understand consumer needs, many of which are unmet, and recognize opportunities created when medical technologies developers "draft" off the work of other industries.
"For instance, the capacitors coming out of flash cameras have utility in medical technologies, a good example of complement development streams," he said. "Much of the advancement in medical technologies comes from small companies, while refinements or improved second generation products are introduced by larger, more established companies," he said. "One of the most significant opportunities in the medical technologies field is the combination of devices and therapeutics, thus creating a new treatment framework. That’s essentially what a pacemaker is: a medical device with therapeutic use," he said.
The panelists concurred that investor confidence in the medical technologies sector is generally positive, with a bit of consolidation going on, but all agreed that the sector has solid potential.
The sector is not without its challenges, such as reimbursement, including how professional caregivers are reimbursed for their role in the integration of medical technologies into treatment modalities.