JANUARY 2011
Recent Market Trends are the New Market
Reality
TCG's Forecast for 2011 and Beyond
As we enter the New
Year, this is a great time for all of us to look back on 2010. From this vantage point, it can be fun
(or not) to see if the trends and events in the industry predicted last January
actually came true. It is nice to
know you were right --- or at least to know you were more right than someone
else!
However, since TCGÕs
goal is to create measurable value for the companies we work with, we will take
this opportunity to focus on the trends that will affect you and your business
in 2011- 2012. As we do that, one
overall theme we are compelled to note is an even sharper focus on de-risking
the business enterprise. In fact, one could argue that this attitude represents
a shift in thinking that will persevere for some time to come, given the
uncertainty that remains in the global economy, and with health care and
regulatory reforms.
In todayÕs changing
global medical market, the key questions have become ÒwhatÕs the opportunity?Ó,
and Òhow can we reduce our risk as we increase the value of our assets and grow
our revenues and profits?Ó
As opposed to the
past decade, when companies in our industry literally expected that customers
would adopt virtually all new products, if enough money was thrown into
marketing, the reality now is very different. For proof, we only need to look at the data:
á
Currency fluctuations for the dollar and Euro are affecting
the debt status of nations. As a
result medical companies view multiple revenue sources from international
markets as a proven way of de-risking the business. Even small to medium size companies in Europe are looking to
US revenue sources, and vice versa.
á
Good economic policies implemented by the more stable
European countries are driving expansion into overseas markets. As an example,
GermanyÕs medtech exports grew by 5.5% last year and now represent 40% of total
turnover. To de-risk their
business, German manufacturers are developing US markets by picking and
choosing selected customers and markets that generate attractive profits in the
fastest way possible.
á
Government budget
reductions
in Europe and the US are favoring cost effective innovation and new products
that offset medical care costs. Before product development is complete, smart
companies know which innovations will help them meet these goals, and then
complete the product, marketing, and financing plans.
á
To increase flexibility
and operations efficiency,
medical firms are down-sizing and out-sourcing manufacturing, R&D, and
sales forces. In this environment,
companies are doing more partnering deals and acquisitions of advanced and more
proven products.
á
Emerging firms, including US startup subsidiaries of
established European companies, have increasingly moved to the virtual model to
be more flexible and less capital intensive while launching products. While technical expertise is still a
core competency, these virtual teams often include customer focused market and
product development experts charged with ensuring the products will meet the
marketÕs true needs before major marketing dollars are committed.
á
Venture capital remains scarce and the firms still
investing are interested primarily in reducing risk, while the number of IPOÕs
remains relatively low as well.
This means that investors will be primarily focused on exits via
acquisition, but this option wonÕt exist unless the products or technologies
are targeting a true, proven, customer need.
á
The EU Medical Device
Directive is increasing global
harmonization and reducing regulatory risk even though it will increase the
cost of regulatory approval for certain products. US companies launching first
in Europe will increase in number, but the more informed executives have
learned that Europe is not a unified market because of different reimbursement
schemes in each country. They
develop very specific, yet fully comprehensive European launch plans.
á
FDA changes in the 510K
approval process,
along with proposed user fees, are galvanizing increased interest in launching first
in Europe. This is also driving
small to medium European medical companies to develop more thoughtful US market
entry plans and commercial strategies. No longer do they view signing up with a
distributor as some sort of guarantee of success.
The bottom line is
that companies of all sizes are learning how to de-risk their business because
of the worldÕs economic conditions and because customers, patients, regulatory
agencies and payors are demanding it. Companies canÕt assume that just because
they have regulatory approval, and money for marketing, or have signed up a
distributor in a new market they will be successful. Innovative companies have found that it is possible to
increase both focus and flexibility --- two key risk reducers --- by leveraging
outside experts to help commercialize their truly innovative products with
proven cost effective marketing and sales plans.
TCG LLC has the market experts with the
experience and capabilities to help you survive and thrive in this new medical
market. Call or contact us. reinhard.merz@tcgmedtech.com (Heidelberg, Germany)
or robert.keefer@tcgmedtech.com (Research Triangle Park, NC) or 919-941-0700.
Pulse is a publication of Technology Commercialization
Group, LLC, 1009 Slater Road, Suite 450, Durham, NC 27703. To contact the
publisher and editor of Pulse, phone 919-941-0700 or email robert.keefer@tcgmedtech.com. All materials
copyright ©2009-2011 TCG, LLC. All rights reserved.
Upcoming
Events
Clinica Webinar
March 1
Join an online workshop on entering the US market from the
global leader in Cambridge.
Click here for more
event info
Join TCG at industry and medical meetings in 2011
We will be at 20 industry events in
Europe and the US such as STS, EMT, ERBI and AACC.
Click here for more
event info
EuroMedtech
May 15-17
Turin, Italy
EuropeÕs largest medtech partnering conference, will include a TCG workshop.
Click here for more
event info