Michael Rosen of the Wisconsin Technology Network (Wisconsin’s got lotsa technology, don’tchaknow?) has a great analysis of how and why the medical device industry is growing faster than the drug industry. In short, it’s because biomedical engineers are cooler than biochemists.
…ok, he doesn’t say that (even if it is true). The real analysis is as follows…
The medical device market is about 50 percent of the world pharmaceutical market in terms of relative size, but is also growing faster than its drug counterpart. It is dominated by U.S. companies (16 of the 25 companies are U.S.- based) with 72 percent of the revenue. MX estimates that the medical device market will reach sales of $336 billion in 2008. Assuming similar growth to that of 2007, this means that the market last was in excess of $300 billion.
According to MX, although the top 25 companies represent the lion’s share of sales (almost 60 percent), there are an estimated 20,000 medical devices companies around the world. Only one company showed a decline (however slight) in growth, and two companies had flat sales. The remaining 22 companies all posted positive growth with 15 companies showing double-digit growth. Not mentioned, but with substantial sales and growth, are companies like Toshiba Medical Systems, Hitachi Medical Systems, and Gambro.
The medical device industry faces a number of challenges in addition to the technology convergence factor mentioned earlier. In general, this industry is at lower risk than its pharmaceutical/biotech drug counterpart for a couple of reasons:
• Shorter product development times (about 33 to 50 percent of drug development time).
• Less regulatory (Food and Drug Administration) approval risk.
Additional factors favoring the growth of this industry include the greater physician need for better and more precise diagnostics and imaging to guide them on patient disease status and proper disease management, whether surgical or pharmaceutical (or both).
There’s more analysis of the challenges facing medical devices, with the biggest issue being reimbursement.
Snarky commentary aside, we would venture that medical device development does lend itself to more predictable product development cycles than pharma. Engineering project management and “gizmo” development is at least a century old, and medical devices are just a small subset of other devices, meaning there’s tons of common knowledge regarding engineering project management. Drugs are a lot more of a biochemical craps-shoot, taking years of effort before you can even begin targeting production.
Full story: Global medical device market outperforms drug market growth…
Image credit: Wellcome images: Surgery by robot…
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