If recent industry-sponsored studies–no matter how poorly designed–are to be believed, the U.S. Food and Drug Administration will pretty much regulate the medical device industry into oblivion.
Yet, whatever concerns people have about the FDA, real and imagined, people still are solidly bullish about the global prospects of the medical device and diagnostics industry.
A new survey of 125 medtech executives found that 91 percent of them expected an increase in the compound annual growth rate in the next three years. The survey responses represented 89 companies in 16 countries.
“What did surprise us was the bullishness of the industry,” said Daniel Matlis, president of Axendia, a life sciences consulting firm that conducted the survey. “And, yes, the industry has always been very positive and very forward looking and thinking, but in the current economic environment with some of the pressures that the industry is experiencing, we assumed that level of bullishness would be tempered, but it wasn’t.”
A solid 69 percent of respondents believe that product sales in developed economies like the U.S. and China will increase, with 88 percent saying that they see the same for the emerging economies of Brazil, India, Russia, Mexico and others. Only 3 percent said they expect sales would decrease in developed economies in the next three years.
But most interestingly, the survey sponsored by companies that serve the medtech sector — IT services company iGate, manufacturing services software company Camstar Systems Inc. and PricewaterhouseCoopers — found that dominance of developed nations was fading not because of a drop in sales, but because of the rapid-fire growth coming from emerging nations.
So, who were the executives that took part in the survey?
Most of them came from U.S. and Europe, Matlis said, but a good chunk also came from Asia and Latin America. Some executives who agreed to be identified for the report include Robert Salerno, corporate vice president, global supply chain, Johnson & Johnson; Ron Guido, J&J’s vice president of global brand protection and supply chain integrity; Frank Johnston, corporate director, quality and regulatory operations, Becton Dickinson and Co.; and Stephen McCusker, senior director of global supply chain at Gen-Probe.
Not only are executives expecting sales growth, they are also expecting to undertake more research and development to make that growth happen. Only 3 percent responded that they plan to decrease their R&D activity in developed economies, compared to 59 percent who planned to increase it. In emerging economies, 40 percent said they would up their R&D activity compared with 5 percent who would reduce it.
While as a whole, medtech executives are highly bullish about the next few years, they are more than aware of the challenges that globalization poses.
FDA aside, one big headache is different regulatory regimes globally.
“Really what they are seeing as a challenge is this [patchwork] of regulation that they have to comply with globally, and the fact that although there has been … some level of harmonization initiatives that have taken place, … that harmonization hasn’t gotten there yet,” Matlis said.
Through harmonization, the industry is looking to have greater uniformity between national medical device regulatory systems.
For example, in in-depth interviews respondents said that in some large Asian nations like India and China, a company can import a product without doing trials as long as the product bears the CE Mark. However, to manufacture the same product in-country, a firm has to go through the whole regulatory process from scratch.
Given these challenges, it’s no surprise that 65 percent of respondents said that the biggest business threat over the next three years is theregulatory burden both in emerging and developed markets.