INTRODUCTION
STUDY GOALS AND OBJECTIVES
This study examines the most rapidly changing sector of the global medical device business. It describes technological and regulatory developments that have influenced the direction of this dynamic industry and also forecasts the global and regional requirements for coating and kindred treatment technologies through 2014.
REASON FOR DOING THE STUDY
In 2006, BCC Research published Medical Device Coatings (HLC049A), a comprehensive study that quantified the extent to which coating materials were being used to improve the functionality, longevity, and cost-effectiveness of medical devices. At that time, BCC noted several key trends. Chief among these was the rapid acceptance of drug-eluting coatings by the medical community, which had spurred interest in the technology on the part of both coating suppliers and device makers. Responding to the new technology, the regulatory community began to proactively adapt itself to encourage the development of coated devices. In the U.S., the Food and Drug Administration (FDA) had created a new office to focus on combination products (e.g., coated stents) that had crossed the regulatory boundaries between drugs and devices.
The earlier BCC study also noted the emergence of pure-play medical device-coating enterprises, several of which were the outgrowth of university-based commercialization programs. Finally it predicted that the future path of development would be typical of many new technologies in that it would be strewn with unanticipated difficulties that would emerge only as products moved off the lab bench and into the commercial pipeline.
Since that 2006 study, the medical device coatings industry has developed more or less along the path that most had anticipated. There have also been reversals, including highly visible product recalls. Not surprisingly, bureaucratic realities have dampened initial optimism regarding swift product approvals. Blue sky projections for rapid growth have been clouded by unanticipated patent litigation, and in the case of start-ups, competition from larger and more financially robust companies has created obstacles. A dearth of financial assistance for initial public offerings has further contributed to dampening enthusiasm. Nonetheless, the secular trends driving the industry remain strong. As the Baby Boom generation ages, the medical outcome advantages of coated implants become more evident, and the spirit of innovation continues to infuse the industry with fresh ideas and institutional support from universities and government funding agencies.
The net effect has been that the medical device coating industry has been growing at less than the predicted 12.4% compound annual growth rate (CAGR), although still at an impressive rate. In this study, which covers the period from 2009 through 2014, BCC forecasts a 9.9% CAGR as this promising industry matures into an essential sector of the world economy.
INTENDED AUDIENCE
This study will be of interest to the medical device industry; the coating industry; suppliers of alloys, ceramics, polymers, and other materials used in the manufacturing of coatings; manufacturers of chemicals, pharmaceuticals, and energy sources that can be incorporated into coatings; coating and medical device importers; and medical device contract manufacturers. It will also provide useful insights for those exploring investments in this vibrant and growing segment of the medical device industry.
SCOPE OF REPORT
The scope of this study is the same as our 2006 investigation of the industry. It looks at medical device coatings industry from the perspective of the coating producer, the manufacturer, and the end-user. This study differs in the way the data have been organized. In the previous report, regional demand was divided on the basis of national income with the U.S. separated as a distinct market. Since then, the medical device coatings industry has begun to divide itself along regional patterns that follow similarities in regulatory behavior. As a result, this report adopts a regional division consisting of the North American Free Trade Agreement (NAFTA) countries, the European Union (E.U.), Other Developed Countries outside of those two major trade locks, and the Rest of the World. Coating technologies are separated on the basis of their underlying chemistry and physics, resulting in eight categories. Finally, the demand in terms of devices used in the 22 areas of medical specialty is examined. The result is a report containing nearly 150 tables, 55 of which provide U.S. dollar-value requirement coatings for 2005, 2008, 2009, and 2014.
We present requirement forecasts by type of technology, by regions of the world in which the devices are used, and by medical specialty. To this end we distinguish among:
- Eight technologies
- Four regions of the world
- Twenty-two medical specialties
The eight technologies, which comprise seven classes of coatings, are grouped on the basis of their most noteworthy chemical or characteristic and all treatment processes that do not use coating materials. For example, chrome plating is considered an alloy. Surface texturing, regardless of whether it is the product of acid etching or laser vaporization, is considered a surface treatment. The technology groups are:
- Alloy
- Ceramic
- Combination
- Energy-absorbing and optical
- Energy-emitting
- Micro and nano
- Protective polymer
- Surface treatment
The four regions in which devices are used are:
1. North American Free Trade Agreement (NAFTA) countries, (i.e., Canada, Mexico, and the U.S., including Puerto Rico)
2. European Union (E.U.) (i.e., the 27 member countries as of September 2008)
3. Other Developed Nations (i.e., the 39 countries that BCC considers to have economies and medical device regulations comparable to those of NAFTA and E.U. countries.
4. Rest of the World
TWENTY-TWO MEDICAL SPECIALITIES
The BCC listing expands upon the FDA medical specialties grouping by separating several areas that are combined by the FDA. For example, the FDA treats gastroenterology and urology as one group for the purpose of device review. In the table entitled Medical Devices By Type and Variation, BCC follows the FDA practice of using combined areas in reporting the number of types of devices (i.e., 4,432) and device variations (i.e., 106,768), but the study provides separate dollar-value forecasts for gastroenterology and urology products. Similarly, many devices used in hospital settings are also used by outpatients. The FDA combines hospital and personal use products for device review purposes. Here, BCC also provides separate forecasts. Some products have significant use in several medical specialties. In those cases, the study includes those devices in the listings for that specialty. Forecasted values proportionately reflect use in that medical specialty. Forecasts are therefore provided for the following 22 medical specialties.enty-two Medical Specialties
- Anesthesia
- Cardiovascular
- Clinical medicine
- Clinical toxicology
- Dental
- Ear, nose, and throat
- Gastroenterology
- General hospital
- General surgery
- Hematology
- Immunology
- Microbiology
- Neurology
- Obstetrics and gynecology
- Ophthalmology
- Orthopedics
- Pathology
- Personal use
- Physical medicine
- Radiology
- Respiratory therapy
- Urology
The country groupings have also been changed. In BCC’s 2006 study, regions were grouped in a manner that reflected World Bank income levels. Since then, considerable efforts have been undertaken to consolidate and harmonize device regulation among the two major trade blocks—the North American Free Trade Agreement (NAFTA) nations and the European Union (E.U.) nations. As a result, trade in medical devices is now more strongly driven by regulatory than gross economic conditions. Reflecting that reality, this study reports the U.S. as part of NAFTA and identifies the E.U. as a separate region.
The study also includes more precise forecasts for medical specialties. In BCC’s earlier report, only values for those medical specialties that were expected to make significant use of coatings within the original forecast period, which concluded in 2010, were reported. Since then, coatings have come into general use in 22 medical and healthcare specialties for which comprehensive FDA data is available. Hence, in this report, BCC is able to provide separate use by coating technology and use by region forecasts for all 22 areas.
Finally, to harmonize the present work with the 2006 study, BCC has included a column showing 2005 forecast values as redistributed to reflect the previously described NAFTA/E.U. regional reporting format. The redistributed data for 2005 presented in this report is also more accurate than that available when the 2006 report went to press. Consequently, the value for coatings at the producer price level has been adjusted downward by $16 million (i.e., from $2,960 million in the 2006 report to $2,944 million).
A special note to purchasers of the 2006 study:The mostobvious change is that BCC now presents forecast values at the million-dollar rather than billion-dollar level.
METHODOLOGY
The FDA recognizes more than 106,000 different types of medical devices distributed among nearly 4,400 general types of products. In this study, BCC focuses on the subset of those products that are currently benefiting or will soon benefit from the addition of coatings (e.g., drug-eluting polymers) or surface treatments (e.g., texturing) to improve performance or enhance patient safety.
In this study, BCC reports values at the producer price level, shown to the nearest $1 million. Values are in current U.S. dollars and are not adjusted to compensate for inflation.
INFORMATION SOURCES
BCC Research studied approximately 250 companies to obtain data for this study, including coating manufacturers, medical device manufacturers, and pharmaceutical companies. Also reviewed were reports and studies prepared by the FDA and comparable foreign regulatory agencies; organizations representing physicians, surgeons, hospital administrators, and trade and professional associations; foreign government trade associations; and insurers. In addition, data were compiled from the FDA medical device data registry, the U.S. Security and Exchange Commission corporate filings database, and the U.S. Patent and Trademark office.
ANALYST’S CREDENTIALS
James Wilson prepared the original version of this study, Medical Device Coating (HLC049A), published in 2006. He is the author of more than 300 articles and several books dealing with science, medicine, technology, and business. Formerly the editor of the Princeton Business Journal and a senior science and technology editor for Hearst Magazines, he is a member of the National Association of Science Writers and American Medical Writers Association. He has served on the adjunct faculty of Temple University and on the staffs of Drexel University and the Academy of Natural Sciences. His previous medical-related studies for BCC include Controlled Release Technologies (MST027G).
