India, China, and the Future of the Medical Device Industry
Posted: September 15, 2011
At the keynote presentation held yesterday at the MEDevice Forum in San Diego,
Vipul Sheth, vice president of quality for the coronary/peripheral business unit
at Medtronic, touched on a number of themes that have been receiving a lot of
attention from the industry lately. His remarks covered everything from the role
of emerging markets to FDA's renewed interest in enforcement (and sending out
warning letters). Following are some of the points that stick out in my mind:
India and China will be the future of the industry. The role Asia will have in
the future is based on simple math: Compare the U.S., with its population of
about 300 million people, with the roughly 2.5 billion people in India and
China. There's no question that there is much more opportunity in emerging
The United States is not the global innovation leader for medical technology for
the simple fact that you can go elsewhere and find more drugs and more devices
on the market than you can in the United States. Maybe the United States is the
safest country for devices because the regulatory process is so thorough, but it
can't really be the most innovative with the current regulatory framework.
More mobile-phone-based apps are coming. In some parts of the world, more people
have access to cell phones than to physicians. Sheth said he wouldn't be
surprised if FDA eventually set up an office that specialized in mobile health
Before 2009, there was a pattern of declining resources and enforcement at FDA.
That has now changed; there is a new emphasis on enforcement.
As regulations change globally, regulatory affairs will be a hot field—even more
so than it is now. New or updated regulations are being generated on an almost
To deal with these increased pressures, industry must maintain readiness for
inspections and respond to FDA promptly.
In addition, industry should carefully monitor FDA and other regulatory bodies
to keep abreast of changes and adapt accordingly.
The big-picture topic covered in Sheth's presentation was the post-market
environment in medical devices. Below is a summary he sent me earlier:
The healthcare reform debate has caused a lot of focus on the medical device
The scrutiny from Congress on FDA's performance has itself come under scrutiny,
due to high-profile quality and safety issues from China.
There has been a lot of media attention that has raised awareness among users
and consumers, which in turn causes more pressure on Congress and FDA to protect
The industry faces pricing pressures (due to the healthcare cost debate and
other scrutiny). There is also the $20-billion device tax looming over the
industry. This is causing industry to control costs, limit resources, and use
outsourcing to reduce manufacturing costs. All of this cost pressure is causing
quality issues and compliance issues.
FDA has a new commissioner (appointed by President Obama). FDA is modernizing
and implementing systems for better oversight and analysis of data trending.
FDA has hired 700 new field inspectors. More inspections leads to more
expectations from companies.
Other developing countries are flexing their political clout. More countries are
strengthening their regulatory systems.
Companies are thinking about changing business models to prepare for the future.
Sheth also mentioned Medtronic's new CEO, who has been getting a lot of
attention lately in the press. As I read over a blog post we recently ran
covering the new CEO, I came across the following quote from a reader, which
dovetails nicely with the some of themes Sheth hit on in his talk:
The developed world has reached a saturation point in terms of what it can
afford to spend on health care. Patent protection has enabled the industry to
charge unsustainably high prices for branded products, which in turn has
fostered expensive R&D, sales, and marketing industry models. Essentially, the
companies have been able to prosper on the back of U.S. and other major
developed markets. They will have to change this business model based on the
dual fact that the developed markets will demand better ROI on the healthcare
spend, and the developing markets are highly price sensitive. Companies in the
healthcare industry will have to adopt a new economic and business model where
the cost of bringing products to market are significantly reduced, profit
margins and prices on products are brought down, and global access and sales are
increased. Successful companies that start dialing these new realities into
their business practices will be hugely successful.
All of this makes me wonder: Is there room for the United States to maintain its
leadership position (measured in terms of volume, if not innovation) in the
medical device industry, considering the burden being placed on it by factors
ranging from the medical device tax to the surge in emerging markets?