The medtech advocacy group also included a number of solutions and was optimistic about the future, noting shortened time-to-approval for new devices through the FDA and policy wins, such as the suspension of the medical device tax.
Data in the report comes from dialogues with entrepreneurs and investors in the medtech sector, as well as research from a “range of industry analysts,” AdvaMed said. Sessions to gather data for the report include over 60 entrepreneurs, angel investors, venture capitalsts and corporate investors.
AdvaMed chair-elect & CVRx prez & CEO Nadim Yared focused primarily on the need to monitor the health of small businesses in the industry, calling them a “canary in the mines” for medtech.
“As you know, the medical technology industry is dominated, in a good way, by smaller companies. Approximately 2/3rds of the companies in our space have 20 employees or less. Much of the innovation that drives our industry comes from this space,” Yared said in a presentation at AdvaMed’s 2016 meeting in Minneapolis. “They’re not only a source of new treatments and cures, they also provide job growth and they also provide new avenues of expansion for the larger players, whether its through mergers, acquisitions or licensing. So anything that impacts those smaller companies has a ripple effect throughout the entire medtech innovation system.”
Of note, Yared pointed out, was the “graying” of medtech, with more than 30% of firms being at least 25 years old, and more than half 16 years old or more.
“Less than 20% of our companies are 6 years or younger. Contrast that with the information and communications industry, where 40% are 6 years or younger,” Yared said.
The number of medtech startups has been on decline as well, AdvaMed noted in its report. Thirty years ago, the medtech field averaged 1,500 start-ups, which has slid to approximately 600 in 2012.
Venture capital investments have also shrunk, with investment in the industry decreasing from 13% to 4% in recent years, AdvaMed reported. Early stage start-ups are the hardest hit, according to the group, shrinking from 10% in the early 1990s to only 3% now.
“If these early stage companies fold, you can be sure that the tech they were developing are more likely not to ever exist. So not only have we lost a company, we’ve lost jobs, we’ve also lost a way to get treatments that many patients need. So the question for us is what can we do to address these trends and create an environment that allows for a thriving innovation ecosystem for medical technology,” Yared said.
The outlook wasn’t all doom and gloom, with AdvaMed laying out policy solutions that could aid the industry. Continuing improvements to the FDA led the list, along with more changes to coverage, coding and payment processes that “recognize the value of medical technology and reward innovation.”
The group also advocated for the full repeal of the medical device excise tax, saying that it was “necessary for long term investment.”
“The technologie deveoped by AdvaMed member companies allow people to live longer, healthier, more productive and independent lives. In addition, advancements in medical technology yield savings for health care systems and bring value to society. A policy environment that supports a sustainable health innovation ecosystem is required in order to continue to put these tools in the hands of the public,” AdvaMed chairman & Becton Dickinson & Co. (NYSE:BDX) CEO and prez Vince Forlenza said in prepared remarks.
Announced in June, Yared is slated to replace Forlenza as chairman of AdvaMed. It’s the 1st time the Advanced Medical Technology Assn. will have a small company’s leader at the head of the board, the group said.