An index of the most innovative medical device and pharmaceutical companies shows that device makers fall short when it comes to developing next-generation technologies.
Strategos, a division of consulting company Innovaro (NYSE:INV), collaborates with stock research firm wRatings Corp. to create a quarterly index of the most innovative companies.
The results indicate that the top 10 most innovative medical device and pharmaceutical firms trail the top-rated food & beverage and consumer electronic companies in innovation. The average index scores of the top 10 performers in medical device and pharma were 46 out of 100; the averages of the top 10 for food & beverage and consumer electronics were 76 and 84, respectively.
Strategos director George Chen told MassDevice that the med-tech and pharma companies studied for the index boosted their R&D spends during the recent economic slowdown, while other industries cut back, further highlighting the disparity.
“Because the [food & beverage and consumer electronics] industries are generally more reflective of economic cycles than pharma/medical devices, the deficiency noted in our report probably was a bit understated,” Chen wrote in an email.
wRatings CEO Gary Williams said that the companies’ attempts to create blockbuster medical devices and so-called wonder drugs may not be an effective business model going forward.
“It’s becoming clearer that they will need to apply their creative energy to developing revolutionary business models in addition to inventing revolutionary drugs and devices in order to improve their ranks in innovation,” Williams said in prepared remarks.
“Companies that break away from the wilting blockbuster drug business model will win,” wrote Chen. “Some pioneers, such Novartis, as noted in the report and BusinessWeek, are taking actions to radically shift the way they conduct R&D and market their products as well as innovating at other business elements. We highly anticipate these companies will be able to respond to the changing healthcare environment better than others that are stuck in the wilting blockbuster drug business model.”
Companies should consider how they reconfigure their development value chain, he added.
“Think open innovation,” he wrote. “There is still a lot value in coming up with the next ‘wonder drug,’ but companies should rethink how they put together the pieces. The ‘IP’ market is growing rapidly and market intermediaries are making the discovery and acquisition of IP ever faster and less costly. A forward-thinking medical device chief technology officer explicitly included ‘external IP scout and external knowledge-web manager’ in his job description.”
The Strategos/wRatings Innovation Index:
- Vertex Pharmaceuticals, Inc. (NSDQ:VRTX):
- Acorda Therapeutics, Inc. (NSDQ:ACOR):
- Medivation, Inc. (NSDQ:MDVN):
- Abraxis BioScience, Inc. (NSDQ:ABII):
- Auxilium Pharmaceuticals, Inc. (NSDQ:AUXL):
- ev3, Inc. (NSDQ:EVVV):
- Isis Pharmaceuticals, Inc. (NSDQ:ISIS):
- Watson Pharmaceuticals, Inc. (NYSE:WPI):
- Novartis AG (NYSE:NVS):
- Perrigo Co. (NSDQ:PRGO):
- Teva Pharmaceutical Industries Ltd. (NSDQ:TEVA):
- Abbott Laboratories (NYSE:ABT):
- St. Jude Medical, Inc. (NYSE:STJ):
- Cephalon, Inc. (NSDQ:CEPH):
- Edwards Lifesciences Corporation (NYSE:EW):
- Covidien Plc (NYSE:COV):
- Becton, Dickinson and Co. (NYSE:BDX):
- Novo Nordisk A/S (NYSE:NVO):
- Glaxosmithkline Plc. (NYSE:GSK):
- Inverness Medical Innovations, Inc. (NYSE:IMA):