U.S. Medical Devices Market Outlook N1A5-54.

Transcription

1 U.S. Medical Devices Market Outlook N1A5-54

2 Frost & Sullivan takes no responsibility for any incorrect information supplied to us by manufacturers or users. Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Frost & Sullivan reports are limited publications containing valuable market information provided to a select group of customers in response to orders. Our customers acknowledge when ordering that Frost & Sullivan reports are for our customers internal use and not for general publication or disclosure to third parties. No part of this report may be given, lent, resold, or disclosed to non-customers without written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the permission of the publisher. For information regarding permission, write: Frost & Sullivan 2400 Geng Road, Suite 201 Palo Alto, CA United States #N1A Frost & Sullivan

3 Table of Contents Chapter 1 U.S. Medical Devices Market Executive Summary 1-1 Executive Summary for the Medical Devices Industry Outlook 1-1 Introduction 1-9 Overview 1-9 Market Segmentation 1-10 Medical Device Glossary 1-11 Medical Device Industry Challenges 1-25 Industry Challenges 1-25 Product Recalls are a Major Challenge Hampering Growth and Patient Confidence 1-25 Presence of Well-entrenched Competitors Threaten Viability of Smaller Companies 1-25 Medical Device Industry Threatened as Patients Seek Cheaper Treatment Destinations 1-25 Industry Forecasts 1-26 Revenue Forecasts 1-26 Global Trade 1-27 Overview of Export and International Trade 1-27 #N1A Frost & Sullivan iii

4 Chapter 2 Regulatory Framework and Reimbursement Overview of Medical Device Regulation 2-1 Overview 2-1 Classification of Medical Devices 2-3 Classification 2-3 FDA Submission Process 2-6 Submission Process 2-6 Premarket Notification 510(k) 2-6 PMA 2-8 Investigational Device Exemption (IDE) 2-9 Establishment Registration Form 2-10 Medical Device Listing 2-10 Quality System Regulation (QS) or GMP 2-10 Labeling 2-11 Medical Device Reporting (MDR) 2-11 Source: FDA 2-11 Reimbursement Trends 2-11 Trends 2-11 Pay for Performance (P4P) 2-11 Competitive Bidding 2-12 Chapter 3 Financial Benchmarking and Valuation Financial and Investment Analysis 3-1 Financial Analysis 3-1 #N1A Frost & Sullivan iv

5 Private Equity and Venture Capital Activity 3-9 Venture Capital Investments 3-9 Cardiovascular Devices 3-10 Orthopedic Devices 3-10 Ophthalmology Devices 3-11 Neurology Devices 3-11 Cosmetics and Aesthetics 3-11 Exit Market 3-12 Merger and Acquisition Analysis 3-13 Chapter 4 Supply Chain Analysis GPOs 4-1 Group Purchasing Organizations 4-1 DMEs 4-2 Durable Medical Equipment 4-2 ASCs 4-3 Ambulatory Surgical Centers 4-3 Chapter 5 Medical Device Market Segment Analysis by Medical Speciality Cardiology 5-1 Introduction and Overview 5-1 Market Trends 5-4 Market Segmentation 5-4 Market Drivers 5-5 #N1A Frost & Sullivan v

6 Market Restraints 5-7 Total Market Revenue Forecasts and Analysis 5-9 Revenue Forecasts and Analysis by Sub-Segment 5-10 Competitive Landscape and Market Share Analysis 5-14 CRM and CHF Devices 5-15 Interventional Cardiology 5-16 Cardiac Surgery 5-16 Orthopedics 5-16 Introduction and Overview 5-16 Market Trends 5-17 Market Segmentation 5-18 Market Drivers 5-19 Market Restraints 5-21 Total Market Revenue Forecasts and Analysis 5-22 Revenue Forecasts and Analysis by Sub-Segment 5-23 Competitive Landscape and Market Share Analysis 5-28 Joint reconstruction and replacement 5-29 Spinal surgery and rehabilitation 5-29 Trauma fixation 5-29 Orthopedic braces 5-29 General Surgery 5-30 Introduction and Overview 5-30 Market Trends 5-31 Market Segmentation 5-31 Market Drivers 5-32 Market Restraints 5-33 Total Market Revenue Forecasts and Analysis 5-34 #N1A Frost & Sullivan vi

7 Revenue Forecasts and Analysis by Sub-Segment 5-35 Energy-based and Powered Instruments 5-37 Open Surgery Instruments 5-37 Minimally Invasive Surgery (MIS) Instruments 5-38 Adhesion Prevention Products 5-38 Disposable Surgical Supplies 5-38 Medical Robotics and Computer-assisted Surgery (MRCAS) 5-39 Competitive Landscape and Market Share Analysis 5-39 Endoscopy 5-40 Introduction and Overview 5-40 Market Trends 5-41 Market Segmentation 5-42 Market Drivers 5-42 Market Restraints 5-43 Total Market Revenue Forecasts and Analysis 5-43 Revenue Forecasts and Analysis by Sub-Segment 5-44 Competitive Landscape and Market Share Analysis 5-45 Neurology 5-46 Introduction and Overview 5-46 Cerebrospinal Fluid (CSF) Management 5-46 Interventional Neuroradiology 5-47 Neurostimulation Devices 5-47 Spinal Cord Stimulators 5-47 DBS 5-48 VNS 5-48 SNS 5-48 Neuroendoscopes 5-48 Market Trends 5-49 Market Segmentation 5-49 Market Drivers 5-50 Market Restraints 5-50 #N1A Frost & Sullivan vii

8 Total Market Revenue Forecasts and Analysis 5-51 Revenue Forecasts and Analysis by Sub-Segment 5-51 CSF Management 5-53 Interventional Neurology 5-53 Neurovascular Stents 5-53 Embolic Devices 5-54 Neurostimulation 5-54 Spinal Cord Stimulators 5-54 Deep Brain Stimulators 5-54 Vagus Nerve Stimulators 5-55 Sacral Nerve Stimulators 5-55 Neurovascular Catheters 5-55 Neurosurgery 5-55 Neuroendoscopes 5-56 Stereotactic systems 5-56 Competitive Landscape and Market Share Analysis 5-56 CSF Management Devices 5-57 Interventional Neuroradiology 5-57 Neurosurgery Devices 5-57 Neurostimulation Devices 5-57 Urology and Gynecology 5-58 Introduction and Overview 5-58 Market Trends 5-59 Market Segmentation 5-60 Market Drivers 5-60 Market Restraints 5-61 Total Market Revenue Forecasts and Analysis 5-62 Revenue Forecasts and Analysis by Sub-Segment 5-63 Dialysis Market 5-65 Hemodialysis Machines 5-65 Dialyzers 5-66 Peritoneal Dialysis 5-66 CRRT 5-66 Urology Devices Market 5-66 BPH therapy 5-66 Urology endoscopes 5-68 Urinary catheters 5-68 #N1A Frost & Sullivan viii

9 Gynecology Equipment 5-68 Gynecology endoscopes 5-69 Competitive Landscape and Market Share Analysis 5-69 Dialysis Equipment 5-70 Urology Devices 5-71 Urinary Catheters 5-71 Gynecology Devices 5-71 Ophthalmology 5-72 Introduction and Overview 5-72 Market Trends 5-73 Market Segmentation 5-73 Market Drivers 5-74 Market Restraints 5-75 Total Market Revenue Forecasts and Analysis 5-75 Revenue Forecasts and Analysis by Sub-Segment 5-76 Competitive Landscape and Market Share Analysis 5-79 Cataract and Vitreoretinal Surgery 5-79 Vision Care 5-80 Ophthalmic Laser 5-80 Cosmetics and Aesthetics 5-80 Introduction and Overview 5-80 Market Trends 5-81 Market Segmentation 5-81 Market Drivers 5-82 Market Restraints 5-83 Total Market Revenue Forecasts and Analysis 5-84 Revenue Forecasts and Analysis by Sub-Segment 5-84 Competitive Landscape and Market Share Analysis 5-86 Aesthetic Lasers 5-87 HA-based Dermal Fillers 5-87 Collagen-based Dermal Fillers 5-88 #N1A Frost & Sullivan ix

10 Hearing and Audiology 5-88 Introduction and Overview 5-88 Market Trends 5-89 Market Segmentation 5-90 Market Drivers 5-90 Market Restraints 5-91 Total Market Revenue Forecasts and Analysis 5-91 Revenue Forecasts and Analysis by Sub-Segment 5-92 Competitive Landscape and Market Share Analysis 5-95 Hearing Instruments 5-96 ABR/ OAE Analyzers 5-96 Wound Care and Management 5-97 Introduction and Overview 5-97 Biomaterials 5-97 HA 5-97 Collagen 5-97 Topical Hemostats 5-98 Tissue Sealants 5-99 Others Market Trends Market Segmentation Market Drivers Market Restraints Total Market Revenue Forecasts and Analysis Revenue Forecasts and Analysis by Sub-Segment Competitive Landscape and Market Share Analysis Wound Dressing Compression Therapy Wound Closure Wound management Hemostats and Tissue Sealants #N1A Frost & Sullivan x

11 Respiratory and Anesthesia Introduction and Overview Anesthesia Disposable Devices Respiratory Disposable Devices Pulmonary Endoscopes Market Trends Market Segmentation Market Drivers Market Restraints Total Market Revenue Forecasts and Analysis Revenue Forecasts and Analysis by Sub-Segment Competitive Landscape and Market Share Analysis Anesthesia Delivery Systems Anesthesia Disposables Respiratory Disposables Pulmonary Endoscopes Ventilator Oxygen Therapy Devices Nenulizer Infusion Systems Introduction and Overview Market Trends Market Segmentation Market Drivers Market Restraints Total Market Revenue Forecasts and Analysis Revenue Forecasts and Analysis by Sub-Segment Competitive Landscape and Market Share Analysis #N1A Frost & Sullivan xi

12 Mobility Aids Introduction and Overview Market Trends Market Segmentation Market Drivers Market Restraints Total Market Revenue Forecasts and Analysis Revenue Forecasts and Analysis by Sub-Segment Competitive Landscape and Market Share Analysis Patient Lift Wheelchair Scooter Disinfection and Sterilization Introduction and Overview Definitions Market Trends Market Segmentation Market Drivers Market Restraints Total Market Revenue Forecasts and Analysis Revenue Forecasts and Analysis by Sub-Segment Competitive Landscape and Market Share Analysis Sterilization Disinfection #N1A Frost & Sullivan xii

13 Chapter 6 Appendix Decision Support Database 6-1 Total Population Aged 65 Years and Above 6-1 Prevalence of Diabetes 6-3 Total Healthcare Expenditure 6-5 #N1A Frost & Sullivan xiii

14 List of Figures Chapter 1 U.S. Medical Devices Market 1-1 Medical Devices Market: Revenue Forecasts (U.S.), Chapter 3 Financial Benchmarking and Valuation 3-1 Medical Devices Industry: Short- and Long-term Liquidity Ratios of Companies (U.S.), Medical Devices Industry: R&D and Capex-to-Sales Ratios of Companies (U.S.), Medical Devices Industry: Financial Metrics of Selected Segments (U.S.), Medical Devices Industry: List of Key Mergers and Acquisitions (U.S.), #N1A Frost & Sullivan xiv

15 Chapter 5 Medical Device Market Segment Analysis by Medical Speciality 5-1 Cardiology Market: Market Drivers Ranked in Order of Impact (U.S.), Cardiology Market: Market Restraints Ranked in Order of Impact (U.S.), Cardiology Market: Revenue Forecasts by Various Segments (U.S.), Cardiology Market: Major Market Participants and Market Share Estimates (U.S.), Orthopedics Market: Market Drivers Ranked in Order of Impact (U.S.), Orthopedics Market: Market Restraints Ranked in Order of Impact (U.S.), Orthopedics Market: Revenue Forecasts by Various Segments (U.S.), Orthopedics Market: Major Market Participants and Market Share Estimates (U.S.), General Surgery Market: Market Drivers Ranked in Order of Impact (U.S.), General Surgery Market: Market Restraints Ranked in Order of Impact (U.S.), General Surgery Market: Revenue Forecasts by Various Segments (U.S.), #N1A Frost & Sullivan xv

16 5-12 General Surgery Market: Major Market Participants (U.S.), Endoscopes Market: Market Drivers Ranked in Order of Impact (U.S.), Endoscopes Market: Market Restraints Ranked in Order of Impact (U.S.), Endoscopy Market: Revenue Forecasts by Various Segments (U.S.), Endoscopy Market: Major Market Participants and Market Share Estimates (U.S.), Neurology Market: Market Drivers Ranked in Order of Impact (U.S.), Neurology Market: Market Restraints Ranked in Order of Impact (U.S.), Neurology Market: Revenue Forecasts by Various Segments (U.S.), Neurology Market: Major Market Participants (U.S.), Urology and Gynecology Market: Market Drivers Ranked in Order of Impact (U.S.), Urology and Gynecology Market: Market Restraints Ranked in Order of Impact (U.S.), Urology and Gynecology Market: Revenue Forecasts by Various Segments (U.S.), Urology and Gynecology Market: Major Participants and Market Share Estimates (U.S.), #N1A Frost & Sullivan xvi

17 5-25 Ophthalmology Market: Market Drivers Ranked in Order of Impact (U.S.), Ophthalmology Market: Market Restraints Ranked in Order of Impact (U.S.), Ophthalmology Market: Revenue Forecasts by Various Segments (U.S.), Ophthalmology Market: Major Participants and Market Share Estimates (U.S.), Cosmetics and Aesthetics Market: Market Drivers Ranked in Order of Impact (U.S.), Cosmetics and Aesthetics Market: Market Restraints Ranked in Order of Impact (U.S.), Cosmetics and Aesthetics Market: Revenue Forecasts by Various Segments (U.S.), Cosmetics and Aesthetics Market: Major Participants and Market Share Estimates (U.S.), Hearing and Audiology Market: Market Drivers Ranked in Order of Impact (U.S.), Hearing and Audiology Market: Market Restraints Ranked in Order of Impact (U.S.), Hearing and Audiology Market: Revenue Forecasts by Various Segments (U.S.), Hearing and Audiology Market: Major Participants and Market Share Estimates (U.S.), #N1A Frost & Sullivan xvii

18 5-37 Wound Care and Management Market: Market Drivers Ranked in Order of Impact (U.S.), Wound Care and Management Market: Market Restraints Ranked in Order of Impact (U.S.), Wound Care and Management Market: Revenue Forecasts by Various Segments (U.S.), Wound Care and Management Market: Major Market Participants (U.S.), Respiratory and Anesthesia Market: Market Drivers Ranked in Order of Impact (U.S.), Respiratory and Anesthesia Market: Market Restraints Ranked in Order of Impact (U.S.), Anesthesia and Respiratory Market: Revenue Forecasts by Various Segments (U.S.), Respiratory and Anesthesia Market: Major Participants and Market Share Estimates (U.S.), Infusion Systems Market: Market Drivers Ranked in Order of Impact (U.S.), Infusion Systems Market: Market Restraints Ranked in Order of Impact (U.S.), Infusion Systems Market: Revenue Forecasts by Various Segments (U.S.), Infusion Systems Market: Major Participants and Market Share Estimates (U.S.), #N1A Frost & Sullivan xviii

19 5-49 Mobility Aids Market: Market Drivers Ranked in Order of Impact (U.S.), Mobility Aids Market: Market Restraints Ranked in Order of Impact (U.S.), Mobility Aids Market: Revenue Forecasts by Various Segments (U.S.), Mobility Aids Market: Major Participants and Market Share Estimates (U.S.), Disinfection and Sterilization Market: Market Drivers Ranked in Order of Impact (U.S.), Disinfection & Sterilization Market: Market Restraints Ranked in Order of Impact (U.S.), Disinfection and Sterilization Market: Revenue Forecasts by Various Segments (U.S.), Disinfection and Sterilization Market: Major Participants and Market Share Estimates (U.S.), Chapter 6 Appendix 6-1 Decision Support Database: Population 65 Plus in Million (World), Decision Support Database: Prevalence of Diabetes in '000 (World), Decision Support Database: Total Healthcare Expenditure in Billion USD (World), #N1A Frost & Sullivan xix

20 List of Charts Chapter 1 U.S. Medical Devices Market 1.1 Total Medical Devices Market: Market Segmentation (U.S.), Medical Devices Market: Revenue Forecasts (U.S.), Chapter 3 Financial Benchmarking and Valuation 3.1 Medical Devices Industry: Common Size Income Statement of Companies (U.S.), Medical Devices Industry: Common Size Balance Sheet (Assets) of Companies (U.S.), Medical Devices Industry: Common Size Balance Sheet (Liabilities) of Companies (U.S.), Medical Devices Industry: Percentage of Fixed Costs of Companies by Category (U.S.), Medical Devices Industry: Fixed Cost Analysis of Companies (U.S.), Medical Devices Industry: Return on Assets vs. Return on Equity (U.S.), #N1A Frost & Sullivan xx

21 3.7 Medical Devices Industry: Revenues per Employee (U.S.), Medical Devices Industry: Cash Conversion Cycle of Companies (U.S.), Medical Devices Industry: Profitability Metrics of Companies (U.S.), Medical Devices Industry: Venture Capital Investments (U.S.), Q Medical Devices Industry: Venture Backed IPOs (U.S.), 2000-Q Chapter 5 Medical Device Market Segment Analysis by Medical Speciality 5.1 Cardiology Market: Market Segmentation (U.S.), Cardiology Market: Revenue Forecasts (U.S.), Cardiology Market: Percent of Revenue Per Segment (U.S.), Orthopedics Market: Market Segmentation (U.S.), Orthopedics Market: Revenue Forecasts (U.S.), Orthopedics Market: Percent of Revenue Per Segment (U.S.), General Surgery Market: Market Segmentation (U.S.), #N1A Frost & Sullivan xxi

22 5.8 General Surgery Market: Revenue Forecasts (U.S.), General Surgery Market: Percent of Revenue Per Segment (U.S.), Endoscopy Market: Market Segmentation (U.S.), Endoscopy Market: Revenue Forecasts (U.S.), Endoscopy Market: Percent of Revenue Per Segment (U.S.), Neurology Market: Market Segmentation (U.S.), Neurology Market: Revenue Forecasts (U.S.), Neurology Market: Percent of Revenue Per Segment (U.S.), Urology and Gynecology Market: Market Segmentation (U.S.), Urology and Gynecology Market: Revenue Forecasts (U.S.), Urology and Gynecology Market: Percent of Revenue Per Segment (U.S.), Ophthalmology Market: Market Segmentation (U.S.), Ophthalmology Market: Revenue Forecasts (U.S.), Ophthalmology Market: Percent of Revenue Per Segment (U.S.), #N1A Frost & Sullivan xxii

23 5.22 Cosmetics and Aesthetics Market: Market Segmentation (U.S.), Cosmetics and Aesthetics Market: Revenue Forecasts (U.S.), Cosmetics and Aesthetics Market: Percent of Revenue Per Segment (U.S.), Hearing and Audiology Market: Market Segmentation (U.S.), Hearing and Audiology Market: Revenue Forecasts (U.S.), Hearing and Audiology Market: Percent of Revenue Per Segment (U.S.), Wound Care and Management Market: Market Segmentation (U.S.), Wound Care and Management Market: Revenue Forecasts (U.S.), Wound Care and Management Market: Percent of Revenue Per Segment (U.S.), Respiratory and Anesthesia Market: Market Segmentation (U.S.), Respiratory and Anesthesia Market: Revenue Forecasts (U.S.), Respiratory and Anesthesia Market: Percent of Revenue Per Segment (U.S.), Infusion Systems Market: Market Segmentation (U.S.), Infusion Systems Market: Revenue Forecasts (U.S.), #N1A Frost & Sullivan xxiii

24 5.36 Infusion Systems Market: Percent of Revenue Per Segment (U.S.), Mobility Aids Market: Market Segmentation (U.S.), Mobility Aids Market: Revenue Forecasts (U.S.), Mobility Aids Market: Percent of Revenue Per Segment (U.S.), Disinfection and Sterilization Market: Market Segmentation (U.S.), Disinfection and Sterilization Market: Revenue Forecasts (U.S.), Disinfection and Sterilization Market: Percent of Revenue Per Segment (U.S.), #N1A Frost & Sullivan xxiv

25 1 U.S. Medical Devices Market Executive Summary Executive Summary for the Medical Devices Industry Outlook The attached Power Point presentation provides an overview of the U.S. market for medical devices from 2003 to The U.S. Medical Device Outlook 2007 N1A Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan. #N1A Frost & Sullivan 1-1

26 Introduction The Food & Drug Administration (FDA) defines a Medical Device as: an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is: recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them, intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of it's primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes." Source: FDA N1A Frost & Sullivan. All rights reserved. 2 United States Stats Snapshot Population Age structure 0-14 year years 65 years and over Median Age Total Male Female Birth rate Death rate Population Growth GDP GDP per Capita Health Expenditure Health Expenditure per capita Health Expenditure as % of GDP July 2007* July 2007* July 2007* July 2007* July 2007* July 2007* July 2007* July 2007* July 2007* July 2007* ,139, % (male 31,152,050/female 29,777,438) 67.2% (male 100,995,752/female 101,365,035) 12.6% (male 15,858,477/female 21,991,195) 36.6 years 35.3 years 37.9 years births/1,000 population 8.26 deaths/1,000 population 0.894% $13.13 trillion $44,000 $1.97 trillion $ 6, % N1A Frost & Sullivan. All rights reserved. 3 #N1A Frost & Sullivan 1-2

27 Segmentation Parameters Medical Devices are classified using any of the following classification. No particular method of classification is standard and complete in itself, as there is always some overlap in the below mentioned parameters Design Facilities Used In Treatment Degree of Control for safety Clinical Application Cost End Users Number of Uses Source: Frost & Sullivan N1A Frost & Sullivan. All rights reserved. 4 Market Segmentation Cardiovascular Devices Cardiac rhythm management and congestive heart failure devices, interventional cardiology, and cardiac surgery Orthopedic Devices Joint reconstruction and replacement, trauma or fixation, spinal surgery and spinal rehabilitation, arthroscopy, orthopedic softgoods, braces and supports, and orthobiologicals, biomaterials, and growth factors General Surgery Energy-based powered instruments, open surgery instruments, minimally invasive surgery instruments, adhesive prevention products, disposable surgical supplies, medical robotics and computer assisted surgery Endoscopy Conventional GI endoscopes and capsule endoscopy Neurology Devices CSF management, interventional neurology, neurostimulation devices and neurosurgical products, and neurovascular catheters Urology and Gynecology Dialysis equipment, urology devices, urinary catheters, and gynecology devices Ophthalmic Equipment Cataract, vision care, and ophthalmic lasers N1A Frost & Sullivan. All rights reserved. 5 #N1A Frost & Sullivan 1-3

28 Market Segmentation Cosmetics and Aesthetics Aesthetic lasers, implants and breast prosthesis, hyaluronic acid-based dermal fillers, and collagen-based dermal fillers Hearing and Audiology Hearing aids, ABR/OAE analyzers, and ENT endoscopes Wound Care and Management Wound dressings, compression therapy, wound closure, wound management, hemostats, and tissue sealants Respiratory and Anesthesia Equipment Anesthesia delivery systems and disposables, respiratory disposables, pulmonary endoscopes, ventilators, oxygen therapy devices, and nebulizers Disinfection and Sterilization Central sterilization equipment and sterilants, sterilization supplies, endoscope reprocessors and liquid sterilants and disinfectants Infusion Systems Implantable drug infusion pumps, ambulatory infusion pumps, large volume infusion pumps, syringe infusion pump, insulin infusion pump, and enteral feeding pumps Mobility Aids Wheelchairs, scooters, and patient lifts Disinfection and Sterilization Disinfection (endoscope reprocessors), central sterilization equipment and sterilants N1A Frost & Sullivan. All rights reserved. 6 U.S. Medical Device Market - Snapshot The medical device industry continues to be one of the most vital and dynamic sectors of the U.S. economy and a leading force in the revolution The industry depends on the large sums of money funneled into the research and development activities that form the basis for life-saving innovations Reimbursements play a major role in the medical device industry, as the availability of adequate reimbursements determine the existence of the product in the market There are an estimated 8,000 medical device companies in the United States constituting a few large and mid-sized companies and a large number of start-up companies Physician training and acceptance of new technology plays a vital role in ensuring optimum usage of the device, and hence, its success Increasing awareness among the patient population also supports the growth of this market N1A Frost & Sullivan. All rights reserved. 7 #N1A Frost & Sullivan 1-4

29 United States Medical Device Market Revenue Forecasts Revenues($ Billion) Year Note: All figures are rounded. Source: Frost & Sullivan N1A Frost & Sullivan. All rights reserved. 8 Medical Device Industry U.S. Segment Revenues (2006) Neurology Urology Respiratory Ophthalmic Equipment General Surgery Mobility Aids Infusion Pumps Wound Care Cosmetics Hearing and Audiology Disinfection Endoscopy Orthopedic Cardiovascular Revenues in Million Note: All figures are rounded. Source: Frost & Sullivan N1A Frost & Sullivan. All rights reserved. 9 #N1A Frost & Sullivan 1-5

30 Medical Devices - Global Markets Opportunities The U.S. market for medical technology is the largest market, but there are many large, rapidly growing, and profitable markets overseas that the US competitors can consider for lucrative opportunities. In 2005 U.S. medical device exports accounted to around $25.50 billion a significant increase of 36.0 percent from Exports to the EU have risen by 39.0 percent between , with Germany accounting to a maximum of $3.58 billion. France, Italy, the UK, and Spain are also large and potentially attractive markets for medical device products with their markets growing at 9.0 percent annually. China is a very high-demand market for medical devices, although a great deal of manufacturing for USbased companies has been outsourced to China. The United States already exports over $ million worth of medical devices annually to China. N1A Frost & Sullivan. All rights reserved Medical Devices Market Vision 2015 and beyond. Greater focus on minimally invasive surgery As awareness about the dangers of exposing the patient viscera to external air spreads, all medical specializations are working toward having more efficient minimally invasive techniques of surgery, diagnosis, and therapy Minimization of Hospital Stay Many hospitals and care centers face a problem of space constraint even today. There is an increasing trend toward homecare set-ups and remote monitoring which is expected to reduce waiting lists fro critical patients. Innovative Technologies Devices incorporating advanced safety features that aim at improving patient quality of life and reducing procedure periods with high efficacy are expected to further enhance the quality of health care provided Growth of disposable products With growing infection rates and infectious diseases, there will be a strong move toward disposables, wherever possible, to avoid contamination. Integration and Synergy of technologies A one-stop-shop equipment with modular facility would result from market consolidation of the large market participants. N1A Frost & Sullivan. All rights reserved #N1A Frost & Sullivan 1-6

31 Industry Challenges Well-entrenched entrenched Competitors Threaten Viability of Smaller Companies Introducing New Technology that Improves Patient Quality of Life Recognizing Effective Branding Strategies Dedicated and Active Sales Force N1A Frost & Sullivan. All rights reserved Industry Challenges Product Recalls Hamper Growth and Patient Confidence Evidence Based Medicine: Providing thorough clinical data on new devices and technology Patience: Allowing time to alleviate concerns and not panic over lost revenue or market share Communication within all levels of Healthcare Regulatory Agencies Medical Providers and Specialists Patients N1A Frost & Sullivan. All rights reserved #N1A Frost & Sullivan 1-7

32 Top Medical Device Companies N1A Frost & Sullivan. All rights reserved Conclusion The overall medical technology industry in the United States is extremely dynamic, and holds high potential for growth and innovation, as it is the largest in terms of population, production of medical devices, and research and development (R&D). The U.S. is home to many of the world's leading medical device manufacturers, such as Johnson & Johnson, General Electric, Baxter, Tyco, and Medtronic. Seven out of the world's top ten device manufacturers are U.S. companies. Thus, this country is a major site for R&D and clinical trials. Imports are forming an increasingly significant part of the market. This growth is partly explained by U.S. manufacturers using low cost locations abroad in order to re-export to the US market. US manufacturers are also looking for overseas trade opportunities. The market is highly regulated, and can be an expensive one to operate in. It is, however, transparent and 'rules-based'. The medical device market is one that can never reach stagnation, as it grows with the medical field which is always filled with challenges, discoveries, and innovations. N1A Frost & Sullivan. All rights reserved The executive summary provides an introduction to the market with a segmentation overview and a review of major market trends and revenues. Challenges and probable strategies have also been suggested. The enlisted market participants that were active in 2006 depict the competitive scenario of the U.S. market for medical devices. #N1A Frost & Sullivan 1-8

33 Introduction Overview The medical device industry continues to be one of the most vital and dynamic sectors of the U.S. economy and a leading force in the revolution that is transforming the U.S. health care system. This industry is responsible for the development and production of high quality devices armed with the latest technology. Constantly driven by research and development (R&D), the industry strives to keep pace with the increasing demand of the medical fraternity. The United States market is the largest in the world for medical devices. The market is characterized by well qualified and skilled personnel, state-of-the-art technology and a well aware patient population. The medical device industry is an amalgamation of the various science and engineering modalities. A medical device is defined as an instrument, apparatus, implement, machine, contrivance, implant, in-vitro reagent, or other similar or related article, including a component part or accessory that is: recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them. intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals. intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of its primary intended purposes through chemical action within or on the body of man or other animals, and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes." Firms in this industry approach the diagnosis and treatment of ailments by providing a wide range of quality products suited to increasingly specialized needs. There are an estimated 8,000 medical device companies in the United States. The industry consists of a few large and mid-sized companies and a large number of start-up companies. The medical device industry is characterized by significant consolidation, largely attributed to the mergers and acquisitions it has witnessed over the decade. This trend has transformed the outlook of delivering medical technology to patients with the evolution of innovative solutions. Reimbursements play a major role in the medical device industry, as the availability of adequate reimbursements determines the existence and position of the product in the market. The Department of Health and Human Services' Center for Medical and Medicaid Services (HHS/CMS) is the chief body responsible for control and change in the area of cost containment and reimbursement for Medicare and Medicaid. Other participants influencing the reimbursement of medical devices include Health Maintenance Organizations (HMOs), private insurance companies and the Veterans' Administration. #N1A Frost & Sullivan 1-9

34 The U.S. medical device industry channels a large amount of money into research and development (R&D), which forms the basis for innovation. Medical device manufacturers usually collaborate with medical and academic institutions, and hospitals to execute their R&D procedures. This not only helps in leveraging core knowledge of technology, but also aids in reducing overheads and the expenditure on individual resources. Some R&D that medical device companies conduct is supported by governmental agencies, such as the National Institutes of Health (NIH). The government's funding efforts are targeted to improving the understanding of the biological and behavioral basis for disease, and to promote better prevention and treatment of these disorders. In the future, areas such as device miniaturization and nanotechnology, molecular and genebased diagnostics, information technology, artificial organs, and tissue engineering promise to provide innovative solutions to some of the most persistent and debilitating health care problems. Such innovations forecast progress not only for the economic health of the medical device industry, but also for the overall health of the U.S. population and health care system. Market Segmentation Chart 1.1 presents the market segmentation for the total medical devices market in the U.S. in Chart 1.1 Total Medical Devices Market: Market Segmentation (U.S.), 2006 Medical Devices Market Cardiology Equipment General Surgery Devices Neurology Equipment Ophthalmic Devices Hearing and Audiology Orthopedics Equipment Endoscopy Urology Devices Cosmetics and Aesthetics Wound Care and Management Respiratory and Anesthesia Equipment Mobility Aids Infusion Pumps Disinfection and Sterilization Source: Frost & Sullivan #N1A Frost & Sullivan

35 Medical Device Glossary Acute care: Immediate, short-term, medical treatment for a serious illness or injury, usually in a hospital or skilled nursing facility. Administration set (intravenous): A device used to administer fluids from a container to a patient's vascular system through a needle or catheter inserted into a vein. Alginate dressings: Alginates absorb wound exudates to form a gel that provides a moist environment for healing. They are used mainly for highly exudative wounds. Allograft valves: Replacement valves recovered from the hearts of humans who have died (cadavers). Angina pectoris: The discomfort experienced by individuals when their heart muscle does not receive sufficient blood supply. Every patient's angina is somewhat different. In some cases it is heaviness in the chest, in others a burning sensation or discomfort in the left arm, and in some cases a pain in the left jaw. Aorta: Blood vessel that delivers oxygen-rich blood from the left ventricle to the body; it is the largest blood vessel in the body. Aortic aneurysm: An abnormal dilation of the main artery leaving the heart, resulting from disease of the vessel wall. Asynchrony or Desynchrony: A condition in which the heart fails to maintain the normal time sequence of atrial and/or ventricular contractions. Atherosclerosis: A type of arteriosclerosis caused by a build-up of plaque in the inner lining of an artery. Atrial septal defect (ASD): Normally there is a wall or septum between the right and left atrium, the upper, low-pressure chambers of the heart. When there is a hole in that wall allowing blood to flow both directions it is called an atrial septal defect or"asd". Atrium: There are four chambers in the heart, two on the right side pumping to the lungs, and two on the left side pumping to the body. On each side there is an upper, low-pressure chamber that collects blood from the veins and delivers it to the ventricles, the main pumping chambers of the heart. These upper chambers are called the atria (plural) or atrium (singular). Avascular necrosis: Avascular necrosis is a disease that may lead specifically to degeneration of the hip joint. With this disease, the femoral head does not receive blood supply, resulting in death of the bone. The eventual result will be collapse of the femoral head and degeneration of the joint. Avascular necrosis is often attributed to alcoholism, trauma to the hip, and long-term cortisone treatment. #N1A Frost & Sullivan

36 AVM: Arteriovenous Malformation. Balloon angioplasty: Balloon angioplasty is a procedure performed by cardiologists to help open narrowings in the coronary arteries. This procedure requires cardiac catheterization, and involves passing a catheter with a balloon into the artery which is then inflated to increase the size of the narrow area. Benefit period: In a long-term care insurance policy, this is the maximum length of time specified in the contract during which benefits will be paid. Periods available vary considerably from policy to policy and insurer to insurer, ranging from as short as a year to as long as a lifetime. In some cases, especially for longer benefit periods, a maximum dollar limit may also apply. For example, the policy might provide for a lifetime benefit period capped at $500,000 maximum benefits. When $500,000 in benefits have been paid, benefits cease even if the insured is still living and receiving long-term care. Bone graft: This is a section of bone which is harvested from one location in an individual and placed in another individual (allograft bone), or in a different location in the same individual (autogenous bone). Brachytherapy: Placement of a radioactive source in or near tissue to deliver radiation therapy. Bradyarrhythmia or bradycardia: Slow heartbeat, of less than 60 beats/minute. Bradycardia: Abnormally slow heartbeat. Breast implant: A manufactured sac that is filled with silicone gel (a synthetic material) or saline (sterile saltwater); the sac is surgically inserted to increase breast size or restore the contour of a breast after mastectomy. Burn wounds: Burns fall under three different categories, first, second, and third degree, depending on the severity which increases in that order. A burn is classified as first-degree if the top layer, called the epidermis of the skin is affected. A second-degree burn occurs when the epidermis and the layer below it, called the dermis are affected. Third degree burns affect the epidermis, dermis, and the underlying flesh and bones. The treatment of the burn wounds is dependent on the size and severity of the burn. The size is measured relative to the total body surface area (TBSA). The average size of burn injuries is about 14.0 percent of the TBSA. Burns of 10.0 percent surface area or less account for 54.0 percent of burn center admissions. Conventionally, the larger wounds are treated with autografts, which use the person's own skin from unaffected parts of the body. Autografting causes donor site wounds, and typically, four such wounds are created in an average burns patient. As a result, bioengineered tissues or skin substitutes are being used. #N1A Frost & Sullivan

37 Cancer: Abnormal cells that divide without control, with the ability to invade nearby tissues or spread through the bloodstream and lymphatic system to other parts of the body. Cardiac catheterization: Cardiac catheterization is a procedure accomplished by passing small tubes or catheters into the heart from arteries and veins in the groin or arm. It is performed by a cardiologist with specialized training. Many conditions affecting the heart require direct measurement of pressures in the chambers, or injection of dye (contrast material visible on X-ray). Cardiology: The clinical study and practice of treating the heart. Catheter: A tubular medical device for insertion into canals, vessels, passageways, and body cavities, usually to permit the injection or withdrawal of fluids, or to keep a passage open. Center for Device Evaluation and Radiologic Health (CDRH): That division of the U.S. Food and Drug Administration (FDA) concerned with the safety, approval, and marketing of drug agents. Clinical trials: Prospective studies involving human subjects, that are conducted to evaluate preventive, therapeutic, or diagnostic interventions such as experimental drugs, biologics, and medical devices. Cochlear implant: A medical device that bypasses damaged structures in the inner ear and directly stimulates auditory nerves, to allow hearing impaired individuals to learn to hear and interpret sounds and speech. Collagen: A fibrous protein which is a major constituent of connective tissue, such as skin, tendons, ligaments, cartilage, and bones. Combination product: Combination products include: A product comprised of two or more regulated components, with combinations such as drug and device, biologic and device, drug and biologic, or drug, device and biologic, that are physically, chemically, or otherwise combined or mixed and produced as a single entity Two or more separate products packaged together in a single package or as a unit, comprising of drug and device products, device and biological products, or biological and drug products A drug, device, or biological product packaged separately that according to its investigational plan or proposed labeling is intended for use only with an approved individually specified drug, device, or biological product, where both are required to achieve the intended use, indication, or effect, and where upon approval of the proposed product, the labeling of the approved product would require changing, for instance, to reflect a change in intended use, dosage form, strength, route of administration, and significant change in dose #N1A Frost & Sullivan

38 Any investigational drug, device, or biological product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or biological product, where both are required to achieve the intended use, indication, or effect Computed tomography (CT or CAT scan): A non-invasive procedure that takes cross-sectional images of the brain or other internal organs, to detect any abnormalities that may not appear on an ordinary X-ray. Congenital: Present at and existing from the time of birth. Continence: Ability to retain a bowel movement or urine. Contrast agent: A substance opaque to X-rays, which is introduced into an organ, duct, or vessel for the purpose of defining its size, shape, or location radiographically. Coronary artery bypass grafting (CABG): A surgical procedure adopted to treat narrowing or stenosis of the coronary arteries. Cardiothoracic surgeons create bypasses around the obstructions in the coronary arteries with arteries or veins from elsewhere in the body to improve blood flow to the heart. Critical reprocessed device: Critically reprocessed device is a reprocessed single-use device that is intended to contact normally sterile tissue or body spaces during use. CSF: Cerebrospinal Fluid Cyanosis: Bluish color in the skin due to insufficient oxygen levels in the blood. Deductible: The amount of health care expense that a Medicare beneficiary must first incur and pay out-of-pocket annually before Medicare will begin payment for covered services. Medicare deductibles include the Part-A hospital deductible, the Part-B deductible for all covered services under Part B, and the blood deductible. Defibrillation: High-energy shock impulses delivered to control fibrillation, which could be fatal. Defibrillator: A device that delivers an electric shock for defibrillation (restoration to normal heart rhythm) of the atria or ventricles of the heart, or to terminate other cardiac arrhythmias. The device delivers the electrical shock through paddles placed directly across the heart or on the surface of the body. Dental implants: Small dental appliances that are inserted into the upper and lower jaws to help restore a mouth that has little or no non-restorable teeth. Diabetes mellitus: Diabetes, a common disease in which the blood sugar levels are not appropriately controlled. It is a risk factor for coronary artery disease, among other conditions. There are two primary types of diabetes mellitus, and they are known as type-1 and type-2 diabetes. #N1A Frost & Sullivan

39 Diabetic foot ulcer wounds: Diabetes reduces the circulation in the system and also affects the nerve endings in the feet. The higher blood sugar levels in diabetics damages the blood vessels, causing them to thicken and leak. The circulation is reduced because over time, the thickening vessels are unable to provide the body with the blood it requires to remain healthy. This leads to the formation of skin ulcers, which again due to the poor circulation are slow to heal, and often become deep and infected. In severe cases, the foot may eventually have to be amputated. Advances in the technology of growth factors, reengineered tissues, and antimicrobials have improved the treatment of these wounds. Diagnostic related group (DRG): A classification based upon an individual's medical diagnosis at the time of admission to a hospital for treatment, that is funded by Medicare and determines in advance how much will be reimbursed to the hospital for treatment, regardless of the length of the hospital stay. The DRG classification is part of Medicare's prospective payment system (PPS), designed to help contain costs. This has resulted in shorter hospital stays and an increase in nursing home admissions since its implementation in DRG is also known as diagnosis related groups. Dialysis: The process of separating macromolecules from ions and low molecular weight compounds in solutions by the difference in their rates of diffusion, through a semipermeable membrane. Diastole: Diastole is the portion of the heart's pumping cycle during which the muscle relaxes to let the heart fill. The portion of the cycle when the heart empties is called systole. Diastolic blood pressure: The lowest blood pressure measure in the arteries, which occurs between heartbeats. Echocardiogram (ECHO): An ECHO is a sound wave picture of the heart that gives information about the valves of the heart and the function of the muscular walls of the heart. EDS: External drainage system Ejection fraction (EF): A measure of the amount of blood pumped out with each ventricular contraction. The EF of a healthy heart is generally 50 percent or more. Electrocardiogram (ECG or EKG): A test that records the electrical activity of the heart, shows abnormal rhythms (arrhythmias or dysrhythmias), and detects heart muscle damage. Embolization devices: The devices that are placed in a blood vessel to permanently obstruct blood flow to an aneurysm or other vascular malformations. Endoscope: A medical device for viewing internal portions of the body. It usually comprises of fiber optic tubes and video display instruments. #N1A Frost & Sullivan