Five predictions for medtech in 2016

by Brian Chapman

The holidays are the perfect time for reflection. It’s time to think about the year and the accomplishments of the past, and especially to contemplate the future. It’s in this spirit that I want to offer my five predictions for medtech in 2016.

1. Tech Companies Will Rise to Prominence in Healthcare

Reading the press, this might not seem like such a controversial prediction. Every day there’s another article about Apple, Google, Philips, Fitbit—tech companies large and small flocking to apply their disruptive mindsets and agile creativity to the musty establishment of old-world healthcare. It seems natural that the world’s productivity engine should set its sights on healthcare.

But if Uber thought that Paris cabbies were tough, just wait until a tech company runs headlong into the FDA or tries to navigate the Centers for Medicare & Medicaid Services. We’ve seen quite a few great ideas stymied by stodgy, old-school thinking, not to mention legitimate quality questions. But with so many great ideas circulating, and such a tremendous amount of resources backing the solutions, isn’t it inevitable? I might be a bit premature in calling 2016 the year of tech’s rise to prominence in the healthcare space given the labyrinthine world of regulation and reimbursement, but why not make it interesting?

2. Diagnostics Will Get Closer to Pharma

I used to explain to colleagues why companion diagnostics are so hard and why even the pharma companies that own a diagnostics company, such as Roche and Abbott, struggle to create companions for their own drugs. The problem is simple: Drugs have very long and risky approval cycles, 10% success rates and more than a decade of waiting for drugs, compared with one to two years and much more predictable cycles for diagnostics. Companions are needed very early in development to aid in patient selection, surveillance and other purposes in the trials, whereas few diagnostics companies have the stomach to wait and see if the drug will be approved, especially when the difference in peak revenue between the drug and its companion can be orders of magnitude.

But this is changing. Drugs are becoming more targeted and specialized, more tailored and aimed at rare diseases, and, at the same time, a great deal more expensive. These therapies need to make sure that they have the right patients selected in order to deliver their value, so drugs need companions more than ever, and diagnostics are getting less difficult to develop in a targeted manner. Design of biomarker detection is getting comparatively easier. I think that we’ll see this play out in 2016 for more companions being offered, and more deals and collaborations being struck, if not pure ownership, between diagnostics and pharma.

 

3. Medtech Is a Better Investment

In 2016, we will have set aside our preoccupation with complaining about the device tax and calculating its calamitous effects. Now that the political establishment has turned its collective sights on pharmaceutical pricing (thank you, Mr. Shkreli), there will be heat, smoke and fire aimed at pharmacos. An election year will bring scrutiny, criticism and eventually even increasing intervention for pharma drug pricing. Medtech, on the other hand, will continue to invert to lower U.S. tax bills, acquire startups to launch compelling therapies, and innovate to address quality measures. In 2016, I believe that government interventions will favor what medtech offers while punishing pharma. It’ll be a good year to be a medtech CEO.

4. M&A Will Continue but at a Slightly Slower Pace

After 2015, how risky is this prediction? We know that acquisitions are the lifeblood of our industry and a key way that innovation makes it to the patient. Many a startup will get consumed in the new year as with any other year before it.

But the more interesting speculation is what will happen next among the bigs: Medtronic has a ton of cash, Johnson & Johnson has sold a couple of businesses and hasn’t really bought much since Synthes, and Baxter needs to consider what the split from Baxalta means for its portfolio strategy. Will Edwards remain stand-alone? So many interesting questions.

But I also predict at least one medtech purchase from big pharma—and a deal in which the acquiring company is strategically seeking entry into the medtech space, rather than Pfizer’s “packaged deal” entry into medtech via its purchase of Hospira or Allergan. Referring back to predictions 2 and 3, I think that we’ll see something happen here.

5. We’ll Finally Start to Put All of our Data to Good Use

2016 will be the year that we figure out how to harness the power of all of the data that we’ve been diligently collecting. Large data sets are being created by hospital systems; insurers; implanted, embedded and wearable devices; and regulatory bodies. But as of yet, we haven’t harnessed the full power of these data sets. We continue to insist on clinical studies to be our “proof” of anything economic or outcomes-related. This is going to change.

Smart researchers will show the link between interventions and levels of activity in their patients, links between mobilization and long-term outcomes, complications to readmissions to specific surgeons to specific devices or procedures. It has taken way too long to have any verdict on the use of morcellation in endoscopic hysterectomy; theoretically, we should have all of the data that we need to determine what should be the standard of care, but a conclusive answer remains elusive. While there are still many forces working against a more harmonized big data longitudinal view of outcomes, many demonstration programs with accountable care organizations focused on episodes of care and the potentially game-changing Comprehensive Care for Joint Replacement model due in April 2016 will start to tear down the challenges posed by electronic medical records’ inoperability.

I also think that we’ll see wearable technology put to use for things a little more aspirational than inter-office step counting challenges. There’s so much promise for its use in primary prevention, and very useful applications such as allowing aging patients to remain at home and independent longer.

Maybe not every one of these predictions will pan out in 2016, but we’re definitely ready to start an exciting year for medtech. Happy New Year!

Brian Chapman is a principal at global sales and marketing firm ZS, and based in Evanston, Ill. He leads the consulting practice for ZS’s Medical Products and Services team. While at ZS, he has worked with companies on a range of sales and marketing issues, including sales force effectiveness, organizational design, opportunity assessment, channel design, new product launch strategy, value proposition development, territory alignment and incentive compensation. Having spent several years working and living in Europe and Asia, Brian focuses on both US and global projects.

The opinions expressed in this blog post are the author’s only and do not necessarily reflect those of MassDevice.com or its employees.

The post Five predictions for medtech in 2016 appeared first on MassDevice.

from MassDevice http://ift.tt/1P8MLpB