WHITE PLAINS, N.Y. (July 18, 2:50 p.m. ET) — A new analysis says the
“For decades now, the
“But mounting threats to the industry from within the U.S., coupled with a flourishing medical technology industry abroad, are putting these advances at serious risk,” he said. “If we don't do something now, we will see the
In the report, Holtzman said that “the
There are also other reasons why the U.S. leadership in the $350 billion medical device market is being challenged, said Holtzman who interviewed 28 CEOs from medical devices companies in the U.S., China, United Kingdom, Germany, France, Brazil, Israel, Japan and India for the report, which was published July 17 by White Plains, N.Y.-based WTP.
“Gross domestic product and unemployment numbers remain weak in much of the developed world [and] Western governments are faced with unprecedented levels of debt and are taking extreme measures to slash budgets,” he said. “Developed nations like the
To help ensure that the U.S. does not lose ground in medical market, Holtzman said that the 2.3 percent excise tax on medical devices that is scheduled to go into effect in January must be repealed, that the approval process at the Food and Drug Administration must be reformed, and that the United States must make the R&D tax credit permanent and develop a tax policy that stimulates innovation and discovery.
“Not repealing the medical devices tax ... could be devastating to innovation, patient care and job creation,” Holtzman said. “The result will be devastating to innovation, patient care, and job creation.”
He pointed to a study conducted for AdvaMed that claims the tax could ultimately cost more than 45,000 jobs.
To compete with faster regulatory approval processes in
“Across the developed world, medical device developers face multiple challenges,” Holtzman said. “Emerging companies must ensure that they can survive and sustain innovation through the challenging funding climate. Companies of all sizes will need to continue exploring ways to leverage foreign markets to offset domestic challenges from emerging markets.
“Real-time patient diagnostic data could prove as valuable as the newly developed medical device for some product categories,” said the report. “In tandem, a new device, with rich patient diagnostic data and a full array of supportive services might prove essential as the key for the future success of the medical device industry.”
“The medical device industry will be fueled by scientific progress in this new century of the life sciences, as fundamental discoveries and advances in computing, materials, engineering, and physics create the knowledge base for an explosive growth in the creation of new treatments and cures,” said the report. “Mobile health, value-based purchasing, and personalized medicine will also drive more cost-effective, outcome-based initiatives and greater collaboration among payers, providers, and the medical technology industry to develop and deliver complete patient-centered solutions.”
More than half of the leading global medical device companies today—including 32 of the 46 companies with $1 billion or more in revenue—are based in the United States and those companies employ 400,000 people and indirectly provide 2 million more jobs in the U.S., said the WTP report.
“Between 2005 and 2007, the industry created 80,000 new jobs [and] from 2007-2009, R&D investment in medical devices increased by 9 percent,” said the report. “Not only is the industry a source of life-enhancing and life-sustaining treatments and cures, but it is also an important manufacturing industry and a driver of current and future U.S. economic growth. It is one of the few American manufacturing industries that consistently export more than it imports,” said the report, which pointed out that medical exports doubled between 1998 and 2008, to $33 billion annually.
As a result, the report called the “future potential for
“Worldwide markets for medical technology will expand dramatically as populations' age in countries across the globe,” said the report. “Additionally, hundreds of millions of people in countries like
“However, the regulatory environment is growing more stringent, which will decrease profits and force some companies to shift functions overseas,” he said. “Revenue in the device industry will not grow as quickly over the next five years, and the increasingly strict regulatory environment will remain a significant hindrance.”
“The Patient Protection and Affordable Care Act of 2010 will place an excise tax on medical devices, eating into revenue and reducing profit,” he said. “Also, potential reform to the approval process for new devices will likely hamper innovation and encourage more companies to shift functions overseas.”
The report by Holtzman also said the outsourcing of manufacturing, R&D, and other operations from the
“During the past five years, consolidation has swept the industry, with the number of companies decreasing at an average annual rate of 5.5 percent to total 828,” said the report. “Meanwhile, emerging markets like