WASHINGTON, Oct. 13 -- Revenues for the US and European medical technology industry grew
“While the medtech industry has not been immune to the effects of the global economic crisis, it has fared better than most industries and the fundamental drivers for long-term growth in the sector remain intact,” said Scott Sarazen, Markets Leader, Ernst & Young’s Global Life Sciences Center. “We expect that the industry’s long-term prospects will be bolstered by fundamental trends, including an aging global population, an expanded pool of patients in both emerging markets and traditional geographic strongholds, and new product innovations.”
Key industry findings described in the report include:
New challenges loom
The Pulse of the industry report also identifies emerging challenges that could create new sources of opportunity and uncertainty for companies and investors:
A changing reimbursement environment: Healthcare reform in the US —the world’s largest healthcare market — and elsewhere could have a profound impact on the global medtech industry. It is likely that reimbursement for devices will change significantly in the years ahead, as payors adopt some form of comparative effectiveness in making reimbursement decisions.
Product approval uncertainty: The US Food and Drug Administration (FDA) is currently considering restricting the types of medtech products eligible for 510(k) marketing clearance, which requires that a product be substantially equivalent to a device cleared by the FDA or marketed before 1976. Changes to the approval process could increase the time and expense of bringing new products to market.
Medtech business model under strain: Financial and regulatory developments are placing increased strain on the traditional medtech emerging company business model, which is based on a streamlined regulatory pathway that allows for rapid innovation cycles and relatively quick exits for investors. In addition to potentially longer product approval timelines and increased reimbursement uncertainty, reduced levels of capital across the global financial markets will result in less capital invested in medtech and likely a drop off in M&A exits in the sector. This will create new challenges for companies to fund their innovation and provide adequate returns for their investors.
“While the industry faces financing and other challenges, it has successfully used its ingenuity to overcome similar issues in the past,” remarked Heinrich Christen, Ernst & Young’s Medtech Leader for Europe, Middle East, India and Africa. “Within this challenging environment, companies will need to be nimble and creative in tackling a host of challenges simultaneously, including: using capital more efficiently, adapting business strategies for a changing regulatory environment, finding new methods to demonstrate product value, and embracing innovation in their business models as much as they do with their products.”
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
For more information, please visit www.ey.com
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limed, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.
SOURCE Ernst & Young
Subscribe to our Free Newsletters!
Summer is a time for fun but the hot weather brings with it a host of diseases. With some health ...
Bacterial infection that causes inflammation of the membranes of the brain, is called bacterial ...
Liver disease that ends in liver failure (end stage liver disease), disrupting several important ...View All