Operating in the US Market

Key Considerations for Device & Diagnostics Companies

David Avitabile

President

JFK Communications, Inc.

Good News

The growth of Personalized Medicine– Total market expected to rise $119-$220 billion in a 16 year

span U.S. Medical Device Market is still # 1

– An estimated $94.9 billion will be made in 2010– California being the lead state for medical device manufacturing

& development– Johnson & Johnson highest earnings overall in 2009, $23.6

billion Medical Device innovation in U.S. accredited for

– 15% decline in annual mortality– 25% decline in disability rates– 3.2 year increase in life expectancies– 56% decrease of the amount of days spent in hospitals

Sources: 1. PricewaterhouseCoopers 2009; 2. Marketresearch.com; 3. Advamed.org Testimony on U.S. Medical Technology Industry

Personalized Medicine Market Projections

Sources: 1. PricewaterhouseCoopers 2009; 2. Pascal Yvon, President BioSciences Expansion, Committee Co-Chair

Top U.S. Medical Device Manufacturers

Source: Medical Products Outsourcing, Top 10 Medical Device Companies

510 (k) Regulatory Pathway

FDA Center for Devices and Radiological Health (CDRH) 510 (k) process: the pathway for approval in the US

Recent proposed changes raise concerns from medical device and diagnostics companies

If you don’t have an approved product in the US, you don’t have a business in the US

Medical Device Innovations Contributions

AdvaMed Tesitmony on U.S. Medical Technology Industry:

“The contribution of the life sciences to our economy goes beyond conventional measures of employment, wages, and exports. By improving the health of the population, progress in the life sciences

is an engine driving productivity and labor force participation, both significant contributors to economic growth and GDP. Between

1980 and 2000, medical progress added more than three years to life expectancy. The death rate from heart disease was cut in half;

the death rate from stroke was cut by one-third, and the death rate from breast cancer was cut 20%”

Source: Advamed.org, Testimony on U.S. Medical Technology Industry

Bad News

FDA 510(k) Process changes may cause issues in:– Pre-Approval timelines

– Costs in conducting clinical trials

– May cause clinical trials and medical devices to go overseas in order to become more cost-effective

New Health Care Reform could prove costly to Industry– The 2.3 % tax on medical devices companies

U.S. could lose lead position in Medical Device manufacturing– Increase tax and regulations could cause companies to prioritize

overseas markets over US

Sources: 1. AdvaMed Press Release- Comments in Response on FDA’s Proposed 510(k) Changes; 2. Medicaldevices.org; 3. Advamed.org, Testimony on U.S. Medical Technology Industry

Effects of Proposed 501(k) Changes

Source: AdvaMed Press Release- Comments in Response on FDA’s Proposed 510(k) Changes

Heath Care Reform Effects

Scheduled 2013, 2.3 % tax on medical device companies

Totals approximately $20 billion over a 10 year span– Lay offs– Mid-sized companies could owe more in taxes than their

annual profits– Closing of mid-sized medical device companies– Delay development of new devices– Cause significant budget cuts to companies

Source: Associated Pres , September 2010

Pathway for EU Companies Entering the US Market

Identify partners with experience supporting US market entry – Life sciences private equity/VCs– Tax advisors to life science companies– Legal counsel– Regulatory affairs– Marketing & communications– National / state Bio associations– Life sciences incubators

Life Sciences Associations