By Mathieu Petitjean, Ph.D. [1] and Joe Camaratta, MBA [2]
The market for health technologies has been estimated at $336B (billion) in 2008. Il correspond au sens large à l'ensemble des technologies utilisées pour le diagnostique, les soins (équipement hospitalier et consommables) et l'instrumentation médicale ou biomédicale utilisées en milieu clinique (en recherche pharmaceutique ou en laboratoire par exemple). It corresponds broadly to all technologies used for diagnosis, care (hospital equipment and consumables) and the medical or biomedical instrumentation used in research settings (research pharmaceutical and diagnostic laboratories for example). Dans un contexte économique mondial difficile, certains segments de ce marché offrent des perspective de croissance extraordinaires, comme par exemple l'orthopédie ($13B à 13% 2 ), la neurostimulation ($2B à 18%) ou l'instrumentation et les prothèses cardiovasculaires ($22M à 7%), les techniques d'imagerie fonctionnelle et de visualisation 3D ou l'informatique d'hôpital et la gestion de dossiers médicaux pour n'en citer que quelques uns. In a difficult global economic environment, some segments of this market offering extraordinary growth prospects, including: orthopedics ($13B with 13% annual growth) neurostimulation ($2B with 18% annual growth) and cardiovascular instrumentation and prostheses ($22B with 7% annual growth), functional imaging techniques and 3D visualization, and electronic medical records and healthcare IT[1].
This market is dominated by U.S. companies (14 of the top 25 medical technology companies are U.S. headquartered[2]), which alone generate more than 72% of the total, worldwide revenues in this industry. Therefore, it is important for European medical technology companies to develop a U.S. market strategy to achieve rapid revenue growth, and develop technology and commercial partnerships.
As with any local market, the U.S. has regulatory and reimbursement issues that must be proactively addressed in order to develop a profitable business. It is strongly advised to develop a clear plan address these challenges before formally entering the market. A successful plan will adequately address the following topics:
Clinical Value Proposition. The need for a strong clinical value proposition is often underestimated when positioning medical technology designed in Europe in the United States. En effet, et pour simplifier, on ne pratique pas la médecine aux Etats Unis de la même manière qu'en Europe. Nous laisserons aux spécialistes de soin de débattre ce fait. Since medicine is practiced differently in the United States than in Europe, U.S.-based Key Opinion Leaders (KOL’s) are required to validate the technology for clinical practice. En tant qu'entrepreneur, il est indispensable de valider la proposition de valeur d'une technologie « made in Europe » avec des spécialistes américains. Appropriate KOL’s should be identified at the beginning of the market entry process, and engaged through formal interview to develop the criteria for clinical and economic acceptance. These interviews also provide an opportunity to discuss plans for clinical assessment, FDA submission, and market penetration. Many European entrepreneur are surprised to learn that these clinical experts are also "business men" well-versed in the economic implications of a new technology. Ces KOLs peuvent être facilement identifiés grâce aux sociétés médicales aux Etats-Unis 4 . Appropriate KOL’s can be easily identified through medical societies in the United States[3]. A clinical assessment protocol to demonstrate the proposed clinical value proposition must be developed, and sites selected to execute the protocol and report results.
Regulatory Strategy. The Center for Devices and Radiological Health[4] (CDRH) is the part of the Food & Drug Administration (FDA) responsible to regulate access to the medical technology market (both hardware and software) in the U.S. Medical device companies are required to obtain either a Pre Market Notification 510(k) or Pre Market Approval (PMA) in order to market and sell their devices in the U.S. A detailed discussion of device classifications (class I, II or III) is beyond the scope of this article, however successful regulatory strategy will contain the following steps:
Establish a quality system that that includes key documents to be included in the submission file.[5]
Search for equivalent products already approved for sale in the U.S. to act as a “predicate” device for the new products.
Develop and submit a clinical assessment protocol of new products simultaneously in the U.S. (pre-IDE) and Europe in order to incorporate U.S. regulatory requirements into the study protocol.
Explore the use of STED[6] (Summary of Technical Document) to harmonize the market entry process in the U.S. and European Union.
Economic Value Proposition / Reimbursement Strategy. The need for a strong economic value proposition is a fast-growing requirement for innovative medical technologies in the U.S. When developing a successful economic value proposition, 2 factors must be considered: 1) reimbursement and 2) cost effectiveness studies. Reimbursement is governed by CPT codes[7], and the identification and interpretation of these codes is required to establish a pricing policy. When no reimbursement is available, the economic value proposition must convince potential customers (physicians and administrators) that the new technology helps to improve patient outcomes and / or reduce costs. Economic criteria (e.g. length of stay, procedure time, etc.) can be included in the clinical assessment protocol, or a separate cost effectiveness study can be developed.
Market Segmentation and Introduction Strategy. The healthcare market in the United States is very diverse consisting of hospitals, integrated delivery networks, free-standing surgery and imaging centers and physician offices. Clinical and economic value propositions must be tested against specific market segments, to determine the desirability on the technology for a specific customer group. This approach will help focus efforts and resources, identify candidates for the Medical Advisory Board and potential clinical evaluation sites, and support the development of clinical and economic arguments to be used by the sales force. Also, a decision must be made on the optimal distribution channel: direct sales, distributors, or strategic partners (or a combination of the three). The introductory phase could last 12 to 24 months and must develop leaders to evangelize the adoption of the new technology by the medical community.
Even given the recent difficult economic conditions in the United States, medical technology (“MedTech”) remains an attractive industry. Beyond the usual obstacles that an European entrepreneur faces in building a business in the U.S., the introduction of medical technology must include a “calibration phase” that defines clinical and economic value propositions, and a comprehensive regulatory strategy including existing equivalent products (“predicates”). The calibration must also identify target market segments, Key Opinion Leaders and clinical evaluation sites in those segments, and a distribution strategy to reach those customers. The market introduction strategy should recognize that the evangelization and adoption of new technology can take several years, and define actions to support this adoption. Entrepreneurs and investors that can develop a successful strategy to demonstrate superior clinical performance and cost effectiveness, will be rewarded with a quicker return on investment in the technology.
References
[1] Frost & Sullivan, 2008
[2] In order: Johnson & Johnson (U.S.), General Electric (U.S.), Siemens (Germany), Medtronic (U.S.), Baxter International (U.S.), Covidien (Ireland), Philips (the Netherlands), Roche (Switzerland), Becton Dickenson (U.S.), Abbott Labs (U.S.), Stryker (U.S.), Cardinal Health (U.S.), Olympus (Japan), 3M Healthcare (U.S.), Zimmer (U.S.), St. Jude Medical (U.S.), Smith & Nephew (U.S.), Beckman Coulter (U.S.), Synthes (U.S.)
[3] A list of U.S. medical societies can be found at: www.americanhospitals.com/resources/medicalassns.htm
[4] See www.fda.gov/cdrh for further information.
[5] FDA, Center for Devices and Radiological Health, Design Control Guidance for Medical Device Manufacturers.
[6] For further information: http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/HowtoMarketYourDevice/PremarketSubmissions/SummaryTechnicalDocumentSTEDPilotProgram/
[7] See https://catalog.ama-assn.org/Catalog/cpt/cpt_search.jsp?_requestid=583573
About the Authors
[1] Mathieu Petitjean, ESPCI Engineer and Doctor of Science, is Advisor for the Foreign Trade Office of France, specializing in health technologies. In the United States for over ten years, he has had several roles at executive roles at General Electric Healthcare in several international markets. He now leads MedNest, LLC (www.mednest.com), which he founded in 2007. Contact: mathieu.petitjean@mednest.com
[2] Joe Camaratta has extensive international experience in medical imaging and healthcare IT. He held several executive roles for Siemens Healthcare (both in the U.S. and Germany) and most recently was a Senior Vice President for a firm that develops and manufactures innovative surgical instruments. Contact: joe.camaratta@mednest.com