Emerging Medical FINAL PDF

Emerging Medical Device Markets and Technologies

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July, 2008

July 2008 ©Rochester Institute of Technology. All Rights Reserved

Purpose The intent of this report is to provide insights to emerging medical device market opportunities that have potential to be addressed by manufacturers in the Upstate New York geographic area. Medical devices, in the context of this report, are defined as: instruments, apparatus, implements, machines, contrivances, implants, in-vitro reagents, or other similar articles that are intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease. This is derived from the United States Food and Drug Administration (www.fda.gov/cdrh/devadvice/312.html). Disclaimer There are likely many more opportunities for new products and markets than those presented in this report and no representation is made, or should be taken by the reader that this is an exhaustive presentation of new market opportunities. Recent industry history illustrates that many technologies have been adapted to vastly different markets than they were originally designed for and new markets will give rise to continued adaptations and technology convergence. References in this report to any specific commercial product, process or service by trade name, trademark, manufacturer or otherwise does not constitute or imply endorsement, recommendation of any kind. We do not assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, product, or process included in this report.

July 2008 ©Rochester Institute of Technology. All Rights Reserved

Table of Contents

Executive Summary .......................................................................................................... 1 Global Market Environment ........................................................................................... 3 Industry Composition ....................................................................................................... 4

Largest US-based Medical Device Companies ........................................................... 4 International Competitors............................................................................................ 4

High Growth Categories................................................................................................... 5 Implantable Devices...................................................................................................... 5

Cardiac Rhythm Management ................................................................................ 6 Other Implantable Electro-Medical Devices .......................................................... 6 Orthopedic Implants................................................................................................. 7

Diagnostic Testing Devices ......................................................................................... 11 In-Vitro Diagnostics................................................................................................ 11

Ophthalmic Devices .................................................................................................... 13 Home Healthcare Products ........................................................................................ 17 Home Diagnostic Device Examples ........................................................................... 18 Home Monitoring Device Examples.......................................................................... 22

Contract Manufacturing Opportunities ....................................................................... 24 Biocompatibility .......................................................................................................... 24 Anti-Microbial Sterilization ....................................................................................... 25 Device Coatings ........................................................................................................... 26 Drug Release Technologies......................................................................................... 26 Electronic Medical Device Connectivity ................................................................... 27

Materials and Processes ................................................................................................. 29 Materials ...................................................................................................................... 29 Computer-Based Product Design .............................................................................. 30 Computer Controlled Machining .............................................................................. 31 Surface Coating Application ...................................................................................... 32 Sterilization.................................................................................................................. 32

Regulatory Factors.......................................................................................................... 34 Establishment Registration ........................................................................................ 34 FDA Medical Device Classifications.......................................................................... 35 FDA Approval Path .................................................................................................... 36

Premarket Notifications ......................................................................................... 36 Premarket Applications.......................................................................................... 36 Investigational Device Exemption (IDE) .............................................................. 37

Non-US Regulatory Requirements ............................................................................ 37

July 2008 ©Rochester Institute of Technology. All Rights Reserved. 1

Executive Summary The global medical devices market continues to grow, driven by the aging worldwide population and technological innovations in diagnostic and therapeutic medical devices. Estimates place the current global market at $336 billion in annual revenues. The United States is the largest consumer and producer of medical devices in the world. Large, multi-product companies have the dominant share of revenues. These companies have grown by acquiring smaller, innovative companies and they make extensive use of contract manufacturing services. Most medical device manufacturing companies in the United States have 50 employees or less. The US Department of Commerce reports that there are over 8,000 companies in the U.S. engaged in the production of medical devices. Device segments that are expected to have high growth include:

• Implantable devices, like: pacemakers, drug pumps, stents, and joint replacements • Diagnostic testing devices, including clinical blood, urine, and tissue testing • Home healthcare products and electronic monitoring devices

As the population ages, more joints are being replaced. Orthopedic devices for join replacements are benefiting from new materials, including metallic alloys, ceramics, and biocompatible plastics. New coating materials and application technologies that improve orthopedic device performance and longevity are also improving patient outcomes. Manufacturing processes for these devices are now being automated through the use of CAD/CAM systems that communicate with CNC milling and grinding machines as well as 5-axis Electronic Discharge Machines. Diagnostic testing devices, at $34 billion in 2007 sales, currently represent about 10% of the total worldwide market for medical devices. The fastest growing segment within diagnostic testing is In-Vitro Diagnostics (IVD). These sophisticated devices are used in clinical settings to assist with disease diagnosis through the analysis of blood, urine, and tissue samples. IVD devices also have many consumable materials associated with them. Ophthalmic devices represent over $17 billion in annual revenues globally and this segment is also expected to continue growing because of the increased incidence of eye diseases, such as glaucoma and macular degeneration in an aging population. Diagnostic devices are increasingly being integrated into therapeutic devices, such as laser-based surgical tools, that can provide patient specific corrective vision treatments. Additionally, intra-ocular lens technologies have improved dramatically, expanding the range of options available to patients and physicians for addressing the multiple vision issues that can confront aging eyes. Home health and remote patient monitoring, currently a $5.6 billion segment, is forecast to grow at close to 70% annually for the next several years. Devices for monitoring chronic diseases, such as blood glucose testing for diabetics, as well as screening devices, such as pregnancy and fertility tests, are included in this category. Technical advances that are making these tests more sensitive and accurate are presenting new opportunities


to device manufacturers, as is expanding the range of tests to include cholesterol and triglyceride levels, infectious diseases, and genetic tests. Remote patient monitoring systems are now being used to monitor patients with Congestive Heart Failure, diabetes, asthma and hypertension. Home monitoring and telemedicine services will allow aging patients to remain in their homes and receive a high degree of medical care. Many opportunities exist for developing diagnostic devices that are compatible with home-based telemedicine communication systems. Contract manufacturing opportunities abound in the medical device industry. Companies with expertise in biocompatible product design, sterilization technologies, device coatings, drug release technologies, and electronic device connectivity are especially sought after and have high-value in the industry. New materials and process technologies are enabling medical devices to be miniaturized, which is particularly important for implantable devices. Many new materials also improve biocompatibility and device safety. As an example, due to recent safety concerns related to PVC and DEHP plastics, an opportunity currently exists for manufacturing commodity devices with non-PVC/non-DEHP plastics, such as intravenous tubing, drug delivery containers, catheters, and many other single-use medical products. Computer-based design and manufacturing technologies enable medical device creators and manufacturers to design, test, and produce small and complex parts. These systems also maintain documentation history required by regulatory authorities. Contract manufacturing companies that have equipment compatible with leading CAD/CAM software systems, such as SolidWorks and ProEngineer, are sought after because these tools help improve overall economic efficiencies through reduced inventory needs, production errors, and shortened cycle time for finished product availability. While many opportunities abound for medical device manufacturers and medical product design, machining, packaging, and sterilization contract businesses, the highly regulatory nature of the business has been a key factor restraining new product development. The US FDA requires manufacturers of medical devices to register their establishments, comply with Good Manufacturing Practice specifications, and also requires extensive data related to new products prior to permitting marketing and sales of new devices in the United States. The FDA also regulates products that are manufactured in the US but sold abroad. The FDA provides extensive amounts of information concerning medical device manufacturing requirements and there are many resources available to assist with regulatory compliance, including computer-based tools that document device history from initial concepts to finished product shipments. The potential rewards for overcoming the regulatory hurdles could be well worth the effort.


Top Global Medical Device Markets

0 10 20 30 40 50 60 70 80 90 100

United States

Japan

Germany

France

China

Italy

United Kingdom

Canada

Coun

try

Billions of Dollars (2006)

Global Market Environment Aging populations, technology innovations, and opportunities in non-U.S. markets are driving forces in the continued worldwide growth of the medical device industry. The world’s population is aging, particularly in the United States, the European Union, and Japan. These three global regions constitute nearly 90% of medical device revenues. The United Nations estimated that the number of people aged 60 or older will grow from 688 million in 2006 to almost 2 billion by 2050, representing 32% of world population. Older people are more prone to chronic and degenerative diseases. Standard & Poors reported that 80% of all people aged 65 or older have at least on chronic condition, such as diabetes or arthritis. Technologies that diagnose and improve the physical and mental health of the aging population such as Magnetic Resonance Imaging (MRI), reconstructive implants for hips and knees, as well as minimally-invasive surgical procedures are becoming widely used. Home medical kits for monitoring chronic medical conditions, such as diabetes and heart rhythm management, are also growing markets linked to the aging population. The medical products industry is vast and includes many categories of products, leading to a range in estimated global sales for medical devices. The U.S. Department of Commerce International Trade Association (DOC/ITA) estimated the U.S. market for medical and dental equipment and supplies, using six NAICS codes comprising the medical devices industry, at $82.4 billion in 2004-- which is stated to be half the world market. AdvaMed (www.advamed.org), a U.S. based medical device trade organization, estimated the global market for medical devices at $220 billion in 2006. EuroMed, the European medical device trade association, estimated the global market at $235 billion in 2005. MX Magazine (www.devicelink.com/mx/archive/08/05/news1.html) estimates the global market at $336 billion in 2008. The United States is the largest producer of medical devices worldwide. S&P reports that US medical device manufacturers receive 40% to 50% of their revenues in foreign markets. Revenues come from direct exports as well as from sales made by foreign subsidiaries, thus the current strength in foreign currencies may provide a benefit to US producers. Global demand for medical devices and supplies is being driven by increasing expenditures by on healthcare by nations around the world that are building hospitals and clinics, implementing public health insurance programs, and focusing resources on improving the health of their citizens.


Industry Composition Large multi-product companies lead the medical device industry in terms of revenues, though the DOC/ITA estimates that there are over 8,000 medical device manufacturing companies in the U.S., most have fewer than 50 employees. Small companies tend to create innovative medical devices, often through collaborations with researchers. Regulatory requirements for approval and manufacturing of medical devices as well as the costs of clinical research are factors that affect a company’s ability to develop new medical technologies. Larger companies with resources to address these factors are in more favorable positions to bring products to market. Consequently, well-funded medical product manufacturers tend to buy small, innovative companies, or create alliances with them in order to address new and expanded market opportunities. Largest US-based Medical Device Companies

Company

Total Sales 2007(millions of

dollars)

Medical Device Sales 2007 (millions of

dollars)

Foreign sales as % of total

Johnson & Johnson 61,095 21,736 52% GE Healthcare 163,391 16,562 N/A Medtronic 12,299 12,299 36% Boston Scientific 8,357 8,357 39% Abbott Labs 25,914 6,894 47% Becton Dickinson 6,360 6,360 51% Stryker 6,001 6,001 34% Zimmer 3,898 3,898 41% St. Jude Medical 3,779 3,779 42% Alcon 5,560 3,286 50% C.R. Bard 2,202 2,202 30% Biomet 2,107 2,107 38%

Source: Standard & Poor’s Healthcare Products & Supplies Survey March, 2008 US firms have been building manufacturing and marketing centers in foreign countries to improve manufacturing and distribution efficiencies, enabling delivery of products with timeliness and at a lower-cost basis. Asia, Latin America, Ireland and Puerto Rico have especially high concentrations of manufacturing facilities for US-based medical device firms. International Competitors The U.S. industry is mainly facing competition from Germany (Siemens), Japan (Hitachi Medical Corp. and Toshiba), the Netherlands (Philips Electronics) and Italy (Marconi Medical Systems) in high technology products. It is important to note that most of these foreign companies manufacture a significant amount of their products in the United States. High-quality but lower technology medical firms are being challenged by numerous lower-cost producers in China, Brazil, Korea, Taiwan and India, countries which are building up their domestic industries and also compete globally.


A stent is a tiny wire mesh tube used to prop open a coronary artery after it has been cleared of a blockage in a minimally invasive procedure called balloon angioplasty. The balloon is inflated to compress the plaque against the wall of the artery and to expand the stent. (Courtesy Medtronic, Inc.)

The Medtronic Intrinsic® implantable cardioverter-defibrillator (ICD) is the world’s first ICD with a new pacing mode designed specifically to promote natural heart activity and reduce unnecessary pacing in the lower right chamber of the heart. (Courtesy Medtronic, Inc.)

High Growth Categories High-tech medical products that address health issues in the aging population have a positive outlook for the future. Manufacturers and suppliers of lower-tech products to hospitals, outpatient centers, and other medical facilities will face uncertain futures because these products tend to be vulnerable to flat health insurance re-imbursement rates that restrict purchases and profit margins. Device segments that are expected to have high growth include:

Implantable devices, such as pacemakers, drug pumps, stents, and joint replacements as well as devices related to minimally-invasive surgery

Diagnostic testing devices, such as those used for blood, tissue and genetic testing as well as optical devices for glaucoma and macular degeneration screening

Home healthcare products, such as diabetic tests, liver function tests, and electronic monitoring devices

Implantable Devices Medical devices that are surgically introduced into the human body with the intent that they remain in place after the procedure are implantable devices for the purpose of this report. Implantable devices may be further classified as “active” if it uses a power source other than that directly generated by the human body or gravity. Electro-medical implants such as cardiac pacemakers, neuro-stimulators, and cochlear implants are examples of active implants. Devices like: stents, heart valves, and orthopedic implants such as knee and hip replacements are typically inactive. Implantable devices are increasingly used to reduce pain, extend and improve patient’s lives. Cardiovascular (CV) diseases, including: high blood pressure, heart attack, stroke, congestive heart failure, and other ailments related to the heart and circulatory system, increase in incidence with aging populations. A wide range of implantable devices are now used to treat CV diseases and several major manufacturers make both active and passive implantable devices to address this market. Examples include stents, pacemakers, and implantable cardioverter defibrillators (ICDs) marketed by Medtronic (Minneapolis, MN). Active implantable devices typically have several component parts that function as a system. In the case of cardiac pacemakers, there are three key components: the implantable pacing device, an electrical pacing lead that connects the pacing device to heart tissue,


and an external programming device, used by a physician in a hospital or clinic, that sets operating parameters for the implanted device. Cardiac Rhythm Management Cardiac Rhythm Management (CRM) products include: pacemakers, implantable cardioverter defibrillators (ICDs) cardiac resynchronization therapy (CRT) devices, and related items. CRM products represented around $9.8 billion in North American sales in 2005. CRT has been the fastest growing segment of cardiology, driven by the introduction of new, device-oriented treatments for congestive heart failure. Frost & Sullivan forecasts a compound annual growth rate of 17% for CRT between 2005 and 2011. Other Implantable Electro-Medical Devices Muscle stimulators, neurological stimulators, insulin and pain control drug pumps, and cochlear hearing aids are other implantable electronic devices. There is an increasing use of implantable devices for treatment of chronic diseases. Innovations in microelectronics, microfluidics, and biocompatible materials will enable future generations of implantable devices to be used for even wider ranges of applications. The increasing incidence of diabetes, in particular, is expected to drive growth for implantable drug pumps. Product Components Many component parts are used to create implantable electro-medical products such as: lithium-ion batteries; high-power capacitors; titanium, stainless steel, aluminum and alloy enclosures; electronic device connectors and feed-throughs; lead-wire assemblies and anchors; embedded software for implantable devices and external system programming software; as well as bio-compatible coatings for implantable materials. Manufacturing of these subcomponents is provided by a range of companies that are typically have FDA and ISO certifications and may also have clean-room manufacturing environments. An example of a CRM component manufacturing company in the region is Greatbatch, Inc. in Clarence, New York (www.greatbatch.com). Manufacturers The largest manufactures of implantable electro-medical devices includes: Medtronic, Inc. based in Minneapolis, MN (www.medtronic.com); St. Jude Medical, Inc. based in St. Paul, MN (www.sjm.com); Boston Scientific Corporation based in Natick, MA (www.bostonscientific.com); Biotronik based in Berlin, Germany (www.biotronik.com) and Sorin Group in Saluggia, Italy (www.sorin.com).

Behind the ear cochlear implant (photo credit: Hearing Loss Association of Washington)


Ceramic orthopedic Implant components from Morgan Technical Ceramics (www.morgantechnicalceramics.com)

Smaller developers and manufacturers are often acquired by larger companies. Examples include ANS-Medical based in Plano, Texas which is now part of St. Jude Medical and Guidant Corporation based in Indianapolis, Indiana which is now part of Boston Scientific. Notable stand-alone companies include: Advanced Bionics, based in Sylmar, California (www.advancedbionics.com) which is an example of a small, innovative company that claims to be the only US based manufacturer of cochlear implants and Angel Medical Systems, based in Shrewsbury, New Jersey (www.angel-med.com) which is developing an implantable cardiac monitoring and alerting system. Orthopedic Implants The US orthopedics market, which accounted for more than 54% of the global market in 2004, is experiencing record growth with estimated compound annual growth rates projected at 12% through 2011 by Frost & Sullivan. Stryker Corporation reported that the 2007 worldwide market for reconstructive devices for knees, hips and extremities was on the order of $11.8 billion in size. Knee reconstructions constituted over 50% of the total market. Stryker also reported the 2007 worldwide spinal market at approximately $5.1 billion with Thoracolumbar implants (Relating to the thoracic and lumbar portions of the vertebral column) having about 50% share of the spinal market. Orthopedic Implant Materials The most common materials used in orthopedic implants are metals and polyethylene plastic. Some implants also use ceramics. Most metal implants are made from alloys of pure metals to achieve particular characteristics. The most common metal alloys used in orthopedic implants are stainless steels, cobalt-chromium alloys, and titanium alloys. When properly designed and implanted, the combinations of materials can rub together smoothly while minimizing wear. Stainless steels, cobalt-chromium alloys, titanium and titanium alloys, and tantalum tend to be used for many implants. Stainless steel is used for bone plates, bone screws, pins and rods. The stainless steels used in orthopedic implants are designed to resist the chemicals and environmental conditions found in the human body. Cobalt-chromium alloys are used in a variety of joint replacement implants as well as some fracture repair implants. Titanium and alloys with titanium have higher flexibility and are used in some implants to aid in bone in-growth for better grip.

Depuy Sigma RP-F Knee replacement


Willemin 408E 5-6 axis bar-fed milling machine (www.willemin-macodel.com)

Trabecular metal, which is made from tantalum over carbon, is another strong, flexible, biocompatible material that is porous and also allows tissue in-growth. Ceramic materials are usually made with metal oxides, such as aluminum and zirconium oxides. Ceramic materials used for implants are strong, resistant to wear, and biocompatible. They are used mostly to make implant surfaces that rub together but do not require flexibility, such as in the surfaces of a hip joint. Ceramic powders, particularly hydroxylapatite, can also be used as coatings on implants to promote bone growth into implants. Medical-grade polyethylene for orthopedic implants is often used on the surface of one implant that has been designed to come into contact with another implant used in joint replacements. This grade of polyethylene is very durable and provides smooth contact with minimal amounts of wear. Implant Fabrication Processes The most common fabrication methods used for metal implants are machining, investment casting, hot forging, and cold forging. In some cases, specific fabrication methods are necessary to achieve a complex shape. Machining of implant materials is usually performed with Computer Numerically Controlled (CNC) machining of standard bar form materials. This allows for high precision and repeatability of the final shape. Cobalt-chrome stem caps for used in hip implants are often manufactured using automated machining processes for turning, grinding and polishing. Investment casting is often used for implants that have more complex shapes, such as knee implants. Metal is melted and poured into a ceramic mold to create the shape of the implant. Creating the wax inserts and ceramic molds can be a time consuming process and process controls are critically important. Some orthopedic implant manufacturers are now using a combination of solid-modeling Computer Assisted Engineering and Computer Aided Design CAE/CAD systems along with a rapid prototyping system to automate the production of the wax molds. This allows the wax mold that is lost in the investment casting process to be made with a minimum of labor and with high repeatability. Forging processes press materials into shape between molds. Implants made by forging can be stronger than similar parts made by casting, though forging is limits the complexity of the resulting shape. Some metals must first be heated to make them more


Examples of magnified porous coatings for orthopedic implants. Courtesy of Zimmer, Inc.

FMP Acetabular System (hip replacements from DJO Surgical) with highly cross-linked Polyethylene liner (www.djosurgical.com)

pliable to be shaped, which is hot forging; others are naturally more pliable and be shaped at room temperatures, which is cold forging. Polyethylene fabrication begins with Ultra High Molecular Weight PolyEthylene (UHMWPE) powder which is then consolidated into a solid piece. Different consolidation processes affect the characteristics of the final implant. Three consolidation processes that are widely used for implants are: ram extrusion, compression molding, and net-shape compression molding. The requirements of the implant determine which of these processes is used. Ram extrusion produces polyethylene material that requires further machining. Compression molding presses polyethylene into sheets that are cut and shaped to create an implant. Net-shape compression molding produces an implant with smooth surfaces and consistent shapes by heating, and compressing polyethylene powder. Cross-linking the polymer chains of polyethylene improves wear reduction of finished material. Post Fabrication Coatings After fabrication, some implants can be treated to improve the physical characteristics of the material and to help improve physical characteristics or function. Some of these techniques change the material while others simply add a coating to the surface for enhancement. Heat treating, or annealing, is the most common method for treating metal implants to reduce brittleness. Other treatments include nitriding, ion implantation, bone cement pre-coating, porous coatings, and surface roughening. Hydroxylapatite (HA) is used as a porous coating to promote bone growth onto orthopedic implants. HA powders are typically applied using robotic plasma spraying to apply the HA particles, which are typically less than 100 micrometers in size, onto preheated implant cores mounted in carousel trays.


Largest Orthopedic Companies The top seven companies in orthopedics hold more than 80% of the global market share. Five of these companies are based in the United States.

Company and website Geographic location

Reconstructive devices estimated

market share

Spinal devices estimated

market share

Zimmer www.zimmer.com Warsaw, IN 26% 4%

DePuy/ Johnson & Johnson www.depuy.com

Warsaw, IN (reconstr.) Raynham, MA (spine) 21% 16%

Stryker www.stryker.com Kalamazoo, MI 20% 9%

Smith & Nephew www.smith-nephew.com London, U.K. 12% --

Biomet www.biomet.com Warsaw, IN 10% 4%

Medtronic www.medtronic.com Minneapolis, MN -- 41%

Synthes www.synthes.com Solothurn, Switzerland -- 13%

Others N/A 11% 13%

Sources: Stryker Corporation 2007-2008 Fact Book and individual company websites


VISTA Intelligent Lab System from Siemens Healthcare Diagnostics

Diagnostic Testing Devices Many medical devices are commonly used for diagnostic testing, such as thermometers, sphygmomanometers (for measuring blood pressure), and stethoscopes. The growth rates for these devices is holding steady. However, the growth rate for In-Vitro Diagnostics (IVD) has been growing dramatically over the past several years. The IVD products segment had an estimated worldwide market of $34 billion in 2007. In-Vitro Diagnostics IVD refers to testing systems used for analysis of blood, urine, tissue, or other bodily fluids to detect disease, presence of pathogens, or other genetic abnormalities. These systems typically include chemical reagents and analytical equipment, such as a specialized microscope. Companies sell or lease the instruments to hospitals, clinics, physician offices, and independent clinical labs. The chemical reagents mix with the patient’s bodily fluid or tissue sample and the instrument captures data that can then be used to provide a diagnosis. Blood glucose testing is a strong driver of IVD growth and is a profitable sub-segment. Annual growth rates for blood glucose testing are in the range of 13-14% for the next few years. Growth drivers include worldwide population growth and increased detection of diabetes in the aging population. Additionally, medical guidelines recommend that diabetics test their blood more frequently throughout the day. Near and mid-term growth opportunities for IVD testing devices include cardiac testing, human immunodeficiency virus (HIV) testing and monitoring, and molecular diagnostics. Molecular diagnostics are based on genetic analysis of patient samples and typically provide higher sensitivity and specificity than conventional tests, which makes earlier detection of diseases possible with lower rates of error. However, molecular testing is much more expensive than conventional tests. Since this category of testing product did not exist a decade ago, many new molecular tests are currently being developed. The estimated global sales for molecular diagnostics are $3 billion in 2007 with about half of those sales generated in the United States. Growth rates for IVD products are estimated to be about 15% annually through 2009. The IVD business to date is concentrated in seven companies that hold about 75% of the world market share. However, since this segment is immature and in a high-growth mode, there is room for many new players.


Top IVD Companies Company headquarters location and website

Global IVD market share

Example IVD products

Roche Diagnostics Basel, Switzerland www.roche.com/div_diag.htm

19%

COBAS Blood Serum Analyzers ACCUTREND cholesterol field monitors LIGHTCYCLER Septifast PCR

Siemens Healthcare Diagnostics (includes Dade Behring, Bayer Diagnostics and Diagnostic Products Corp.) Deerfield, Illinois http://diagnostics.siemens.com

18%

DIMENSION VISTA intelligent lab system ADVIA Hematology systems SYSMEX hemostasis systems STRATUS CS Acute care diagnostic system

Johnson & Johnson Ortho Clinical Rochester, New York www.orthoclinical.com

13% VITROS integrated systems

Abbott Laboratories Abbott Park, Illinois www.abbott.com

12% ARCHITECT immunoassay system

PRISM chemiluminescent immunoassay CELL-DYN blood analyzer

Beckman Coulter, Inc. Fullerton, California www.beckmancoulter.com

6% UNICEL SYNCHRON ACCESS Clinical System

COULTER LH 755 hematology workcell ACCESS 2 IMMUNOASSAY SYSTEM

Bio Merieux SA Marcy l’Etoile, France www.biomerieux-diagnostics.com

6% VIDAS automated multiparametric

immunoassay system VITEK 2 bacterial detection system

Sources: Standard & Poor’s and company websites


Digital Slit Imaging System used for detecting cataracts, corneal injury, macular degeneration, retinal detachment, and other eye diseases by examining structures at the front of the eye. Kowa Optimed, Inc. Torrance, California. www.kowa-usa.com.

Ophthalmic Devices The eye-care industry has experienced growth from both treatments for age-related vision disorders, such as: presbyopia, cataracts, macular degeneration, and glaucoma; and cosmetic surgeries, such as: laser vision correction and implantation of refractive intraocular lenses. The ophthalmic products market reached an estimated $17 billion in 2006, not including consumer eye-care products. Carl Zeiss Meditec reported that the ophthalmic systems and devices segment of this market was at $2.2 billion in 2006 and was growing at approximately 10% annually (presentation by James L. Taylor, Munich, October 2007 available via www.meditec.zeiss.com). The worldwide market, like other medical technologies, is concentrated in the United States and Europe. Manufacturers in this segment include: Advanced Medical Optics, Bausch & Lomb, Canon, Kowa Optimed, Nidek, Topcon, and Zeiss Meditec, The ophthalmic medical device sector can be divided into three major segments:

Diagnostics, including handheld office-base diagnostic instruments Cataract surgery products, including intraocular lenses (IOLs) Refractive surgery products, including excimer and femtosecond lasers

Many diagnostic and therapeutic devices can be used for a range of ophthalmic conditions. Common eye diseases and conditions are further described at the end of this section to aid the reader’s understanding. Diagnostic Devices Diagnostic instruments are the key tools for ophthalmologists and eye-care professionals. These tools are used to identify diseases and conditions of the cornea and macula, but also to plan vision-correction therapies. Many diagnostic devices in this category are considered to be capital equipment due to their selling price and long useful life. Purchases of new and replacement devices is driven by growth in the market or advances in technology; which makes this a relatively slow growth segment. A trend in diagnostic instrumentation is to combine diagnostic tests with clinical assessment where diagnostic findings can be integrated into therapeutic instrumentation, such as in laser-based corrective eye surgeries.


ReZoom (Advanced Medical Optics) is a multifocal refractive IOL that distributes light over five optical zones to provide near, intermediate and distance vision. The first version of this multifocal IOL was brought to the U.S. market in the late 1990s; the ReZoom is the second-generation version and was FDA-approved in March 2005. www.amo-inc.com

Cataracts Cataracts are clouding of the eye's lens. The vast majority of cataracts are related to age. Most people do not even realize they have a cataract, as cataracts grow very slowly. When the cataract has become so dense that it compromises a patient's quality of life, the patient and an ophthalmologist should discuss the appropriate time to remove it. Surgery is the only treatment. By age 65, over 90% of people have a cataract and 50% of people between the ages of 75 and 85 have lost some vision because of a cataract. In the United States, cataract surgery is the most frequent therapeutic procedure performed on people age 65 and above and with over 2 million cataract procedures are performed annually. Cataract is the most common cause of blindness in the world, although it is treatable. Diagnosis and treatment for cataracts has been practiced for several decades though recent advances in intraocular lens implant technologies and surgical tools have increased the treatment options available to both patients and surgeons. Advances in materials and implant technologies for IOLs have made it possible to achieve clear vision at multiple focal points with multifocal and accommodating lenses. Innovations in this area have brought about opportunities for new business entrants to this segment that challenge long-time market leaders. Cataract surgery is considered to be one of the most commonly performed ophthalmic surgical procedures in the world with about one-third of practicing ophthalmologists performing this surgery. Until recently, the placement of IOLs began with removing the patient’s clouded native lens and a synthetic lens was inserted to restore vision. Any remaining visual impairments were then corrected with eyeglasses or contact lenses. Today, refractive surgery and advanced IOLs present more treatment options. Refractive Eye Defects Presbyopia (aging of the lens in the eye and the muscles that control the shape of the lens) commonly occurs after age 40, when the lens of the eye becomes more rigid and does not flex as easily. The result is that it is more difficult to read at close range. Presbyopia is a refractive error, which results from a disorder rather than from disease. This normal aging process of the lens can also be combined with myopia, hyperopia or astigmatism. A refractive error means that the shape of the eye does not bend light


The Technolas™ 217z Excimer laser and laser bed used in Zyoptix treatments, has been designed to be comfortable for the patient, yet effective, efficient and easy to use for the surgeon. www.zyoptix.com

Zeiss Meditec Stratus OCT incorporates Optical Coherence Tomography to provide comprehensive imaging and measurement of glaucoma and retinal disease. www.meditec.zeiss.com.

correctly which results in a blurred image. Corrective lenses are usually prescribed for treatment and new diagnostic devices as well as laser-based corrective systems have been developed to address this growing market. Laser vision correction continues to evolve. These systems have become more accurate and enable patient-by-patient customization for vision corrections. Laser vision correction and IOLs are dynamic treatments and have created a spectrum of options for treatments. However, these systems are very expensive and adoption of the technology is affected by economic considerations. Most capital equipment manufacturers that provide laser vision correction systems charge a per-procedure fee for the use of the system. The procedures themselves are correspondingly expensive and not usually covered by insurance plans. It is estimated that the global annual expenditures on purchases of refractive surgery products and physician and facility fees is greater than $4 billion. Glaucoma Glaucoma is a group of eye diseases causing optic nerve damage. The optic nerve carries images from the retina, which is the specialized light sensing tissue, to the brain so we can see. In glaucoma, eye pressure plays a role in damaging the delicate nerve fibers of the optic nerve. When a significant number of nerve fibers are damaged, blind spots develop in the field of vision. Once nerve damage and visual loss occur, it is permanent. Most people don't notice these blind areas until much of the optic nerve damage has already occurred. Blindness results if the entire nerve is destroyed. Glaucoma is a leading cause of blindness in the world, especially in older people. Early detection and treatment by an ophthalmologist is the key to preventing optic nerve damage and vision loss from glaucoma. Glaucoma treatments have historically been the largest segment of the ophthalmic pharmaceutical sector, representing about 40% of revenues worldwide.


The Foresee Preferential Hyperacuity Perimeter (PHP) from Notal Vision, based in Tel Aviv, Isreal. This is a non-invasive visual field analyzer for monitoring Age-related Macular Degeneration. www.notalvision.com.

Nidek Handheld Fundus Camera NM200D Used for imaging at the back of the eye to screen for diabetes, glaucoma, macular degeneration and other retinal diseases. www.usa.nidek.com

With recent advances in treatments for back-of-eye diseases new products to treat age-related macular degeneration (AMD) will become dominant in the sector over the next few years. Because of the growing and aging population that will be subject to glaucoma and AMD, considerable attention will be focused on new device technologies for AMD treatment as well as combination therapies that couple pharmaceuticals with device innovations. Macular Degeneration Macular degeneration is damage to or breakdown of the macula of the eye. The macula is a small area at the back of the eye that allows us to see fine details clearly. Macular degeneration makes close work like threading a needle or reading a book, difficult or impossible. When the macula doesn't function correctly, we experience blurriness or darkness in the center of our vision. Although macular degeneration reduces vision in the central part of the retina, it does not affect the eye's side or peripheral vision. For example, you could see a clock but not be able to tell what time it is. Macular degeneration alone does not result in total blindness. Most people continue to have some useful vision and are able to take care of themselves.


Home Healthcare Products Major changes are expected in the home healthcare marketplace over the next three to five years as people begin taking more direct charge of their health and manage their wellness. The home health and remote patient monitoring market is currently close to a $5.6 billion level and will continue to grow at close to 70% for at least the next three to five years, according to a new strategic report published by Insight and Intelligence, a Mary Ann Liebert company (www.liebertpub.com). Existing diagnostic testing devices for end-use are evolving from Over-The Counter (OTC) tests, which usually are simplified versions of established clinical laboratory or Point-Of-Care (POC) based tests, to a new class of consumer diagnostics. Many existing tests that can be purchased at pharmacies today are little more than sample collection devices that are sent back to reference laboratories for analysis. New tests will be technological advancements to meet the needs of consumers for rapid and effective diagnosis and management of wellbeing. Clinical diagnostic tests in the US only obtain FDA approval when the user is appropriately qualified and the test environment is approved. The Clinical Laboratory Improvement Amendments (CLIA) law specifies that laboratory requirements are to be based on the complexity of the tests to be performed. The CLIA also established provisions for waiving tests from a regulatory perspective if they meet certain requirements. Waived tests are defined as simple laboratory examinations and procedures that are cleared by the FDA for home use, employing methods that are simple and accurate, rendering the likelihood of erroneous results negligible, or pose no reasonable risk of harm to the patient if the test is performed incorrectly. Many providers of these traditional laboratory waived tests are now converting them to tests suitable for sale to consumers. As technological improvements make tests simpler and reduce the likelihood of patient error, the number of diagnostic tests designed for home use or covered by the CLIA waiver regulations will expand—increasing the number and range of tests available to the consumer. Diagnostic testing devices for the consumer market must also provide actionable information for the individual being tested. The demands of the consumer and the demands of a physician are often significantly different. Physicians typically seek quantitative tests that enable them to create therapeutic regimes—they want to use the numbers and inter-relationships with other factors to develop a course of action. Patients tend to be more interested in tests that provide a positive or negative result—such as a home pregnancy test—than those that are quantitative, such as at-home cholesterol tests. Where the course of action is more obvious, as is the case with pregnancy test kits and blood glucose monitors, patient acceptance has been widespread and the market has developed significantly. Complete packages of test kit, education, and the means to undertake specific actions, growth in new tests could be similar to that experienced to date with diabetes home monitoring—which is an expanding market area by itself.


Home Health Categories Two broad categories of home health monitoring devices are: 1) screening devices that provide a diagnostic assessment for specific health conditions; and 2) monitoring devices that collect body functioning data that can be either used directly by the patient or transmitted to a clinical facility for further analysis. Diagnostic screening tests can be further divided into:

Infectious disease detection tests--such as Streptococcal or HIV infections-- that enable the patient to identify the condition and modify their behavior to prevent transmission to others,

Chronic disease management testing--such as diabetes, high blood pressure, congestive heart failure and kidney functioning—where regular testing can improve the quality of life for individuals, and

Genetic screening—such as predispositions to heart diseases, certain cancers, and drug efficacy prediction—which enables individuals to take actions and make changes in their lifestyles to reduce their health risks.

Home Diagnostic Device Examples Home testing devices, such as home pregnancy tests and hemoglobin tests for diabetics, have been used for many years. New device technologies have improved ease-of-use and accuracy of these tests. Additional test types are also becoming available for cholesterol, fertility, and pathogen detection. A few examples are presented below. Pregnancy and Ovulation Inverness Medical Innovations, Inc. of Waltham, Massachusetts (www.invernessmedical.com) developed and manufactures home pregnancy test kits worldwide using the brand names of ClearBlue, PERSONA, Accu-Clear, Fact-Plus and Clearplan. The company claims to have a consolidated #1 unit market share in the US, UK, France, Canada, Japan, Australia and Germany. They have also entered into a Joint Venture Agreement with Proctor & Gamble in 2007 under the name “Swiss Precision Diagnostics” for development, manufacturing, marketing, and sales of both existing and to-be-developed consumer diagnostic products.

Above: Clearblue Home digital pregnancy test device

Below: Clearblue Easy Digital Ovulation Kit


Left: LifeScan OneTouch Ultralink blood glucose monitoring system for use with Medtronic Paradigm insulin pump pictured below. Wireless communication of glucose levels enables rapid adjustment of insulin dosing.

Fertility Monitoring Inverness Medical Innovations also makes the Clearblue Easy Fertility Monitor that detects increases in luteinizing hormones and estrogen, which indicate times of increased female fertility. This test is an improvement in sensitivity above the level of other ovulation tests and can inform users of up to five additional days of fertility surrounding peak fertility days. The test sticks are a disposable component for collecting urine samples. The reader device is built to read many samples over multiple ovulation cycles and is intended to last for years. Glucose Monitoring LifeScan, Inc., Milpitas, CA (www.lifescan.com), a Johnson & Johnson company, manufactures a line of blood glucose meters for diabetes management. The company has recently developed a meter that wirelessly communicates with an insulin drug pump manufactured by Medtronic. The benefits of the technology are simplification of insulin bolus dosing by eliminating the need for the patient to enter data into the drug pump and rapid control of dosing in response to glucose level changes in the patient—such as immediately before and after meals. Many new blood glucose monitoring devices are expected to be on the market in the next few years. The FDA Office of In Vitro Diagnostic Device Evaluation and Safety lists over 20 glucose testing devices from 10 companies that have received FDA 510(K) clearance since January, 2008.


Abbott Diabetes Care FreeStyle Navigator continuous glucose monitor receiver.

FreeStyle Navigator sensor and transmitter package

Abbott Diabetes Care, based in Alameda, California and a division of Abbott Laboratories, is introducing a continuous glucose monitoring system called the FreeStyle Navigator. By continuously monitoring glucose levels, the system provides more and better information than traditional finger-stick methods and can lead to improved diabetes management. The system has a glucose sensor and wireless transmitter package that can be attached to the back of the upper arm or to the abdomen and a small receiver system that can be worn on the patient’s belt or carried in a purse. The device provides audible or vibrating alarms before glucose levels become too high or low; displays five directional arrows to help people understand if glucose is rising or falling; and stores historical data and glucose trend information for up to 60 days. The sensor and transmitter are designed to accommodate showering, swimming and a range of normal physical activities. The sensor technology used in the FreeStyle Navigator uses amperometry to convert glucose concentration in interstitial fluids to an electrical current. The filament used on the sensor is 5mm in length, about the same thickness as several stands of hair.


OraSure Technologies, Inc. OraQuick HIV rapid test

Cholesterol Test Devices Polymer Technology Systems of Indianapolis, Indiana (www.cardiochek.com) has developed the CardioChek product line for point-of-care diagnostic use and at-home cholesterol, triglycerides, HDL cholesterol, glucose or ketones (fat metabolism) testing to manage risks related to heart disease and diabetes. The handheld analytical and display devices works with test strips that hold a drop of blood from a finger stick that is inserted into the device. The CardioChek provides results within two minutes, is battery operated, and stores up to 30 test results for each type of test. The company also manufactures a similar unit for use by medical professionals that is CLIA-waived. Infectious Disease Detection Many tests are in development for use in the home for detection of a wide range of infectious diseases, such as: influenza, strep throat, human immuno-deficiency virus (HIV), malaria, lyme disease and others. These tests are currently provided to clinical laboratories and may eventually be available for home use testing. Devices that are currently on the market for use by clinicians provide an insight to the design of future diagnostic devices for infectious diseases. Orasure Technologies, Inc. of Bethlehem, Pennsylvania (www.orasure.com) markets the OraQuick ADVANCE Rapid HIV-1/2 Antibody test which is an FDA approved and CLIA-waived point-of-care test that provides accurate results for both HIV-1 and HIV-2 in 20 minutes using oral fluid, finger-stick or venipuncture whole blood or plasma specimens.

The CardioChek system for consumer use. Made by Polymer Technology Systems.


The Cardiocom Commander Home Monitor is an interactive home monitoring device for disease states such as CHF, Diabetes, COPD, Asthma and Hypertension. The modular design allows selection of the Cardiocom peripheral devices that provide the most appropriate and cost-effective care for a patient. Patients also answer a series of questions about their current symptoms. Questions are both displayed in large font and spoken. The data is transmitted over the patient's telephone line directly to a Commander Data Management System at a remote telemedicine care facility.

Home Monitoring Device Examples The home “telemonitoring” market is an emerging market that electronically links patients and home caregivers to remote healthcare support from doctors and other healthcare service providers. Remote monitoring and interactive devices allows the patient to send in vital signs on a regular basis to a provider without the need for travel. Two notable organizations, the American Telemedicine Association (www.atmeda.org) and the Telemedicine Information Exchange (http://tie.telemed.org) provide industry information and list many manufacturers of telemedicine devices. Some of the companies that are active in this market provide complete service solutions—meaning that they provide proprietary devices for at-home biometrics, networking infrastructure, data collection systems and remote call centers staffed with nurses and physicians to support two-way communication between a healthcare provider and a patient. Other companies provide devices or services that are integrated by healthcare service companies to provide telemonitoring services. Cardiocom, based in Chanhassen, Minnesota designs, manufactures, and supports all of its products internally and has its own in-house research and development team and manufacturing operations, along with a full call-center staffed by registered nurses. The products and services operate as an integrated system for specific disease states. By incorporating monitoring technology with targeted, personalized care management services and advanced rule-based software, Cardiocom provides a complete patient management system. Customizable monitoring options are also available for specific conditions. The two largest disease management services offered by Cardiocom are focused on cardiac conditions and diabetes. Other diseases that have dedicated systems include hypertension, end-stage renal failure, high-risk obesity, COPD, asthma, and obesity management.


Intel Corporation, based in Santa Clara, California, received FDA 510(K) clearance to market the Intel Health Guide PHS 6000 in July, 2008 (www.intel/healthcare/telehealth). This device enables two-way video communication between a remote patient and a healthcare provider as well as connection to biometric devices, such as heart rate, weight, blood pressure, glucose, and other monitoring devices. The Intel Health Guide PHS6000 allows patients to participate in a health session personalized by the patient’s healthcare professional for his or her specific situation. During each session, the patient may measure their vital signs, respond to health assessment questions, receive educational information and motivational messages, and surveys. Once the session is completed, the results are made available to authorized healthcare professionals who can use the latest recorded information to assess each patient’s health status and to modify the patient’s care plan accordingly. Healthcare professionals can include multimedia content as part of a patient’s scheduled health session. Patients can also access the content at anytime that is convenient for them, and organizations can add additional educational content to the patients’ libraries. The system includes an integrated video camera, allowing healthcare professionals to arrange and conduct two-way video calls with their patients. This helps them strengthen their interaction with their patients by observing them performing specific tasks, or providing advice and encouragement. The Intel Health Guide PHS6000 may be connected to a variety of both wired and wireless vital sign monitoring devices that have been tested and validated to ensure interoperability with the Intel Health Guide PHS6000. From blood pressure monitors and glucose meters to pulse oximeters, peak flow meters and weight scales, measurements can be obtained as part of a regular session scheduled by the clinician or on an ad-hoc basis. Designing and manufacturing biometric devices that are compatible with the Intel PHS 6000 may be an opportunity for medical device manufacturers to participate in this emerging and rapidly growing market.


A mechanical heart valve from ATS Medical, Minneapolis, Minnesota. www.atsmedical.com.

Heart valve made from the aortic valve of a pig sewn into a supporting stent made of polypropylene and Dacron cloth. bme.biomed.dal.ca.

Cross-section drawing of heart showing placement of mechanical heart valve. www.worldmedassist.com.

Contract Manufacturing Opportunities The rising tide of worldwide growth in medical devices has led many Original Equipment Manufacturers (OEMs) to outsource some or all of the manufacturing for new products. This provides the OEM with the ability to expand their revenues without excessively increasing their long-term capital investments as well as a solution to finding specialized manufacturing talent. The future for OEM/contract manufacturer relationships is expected to be lucrative in specialist areas. The trend towards the incorporation of outsourced technologies is particularly prevalent in product areas related to implantable and in-vitro diagnostic devices where the fusion of biotechnology, chemistry, and medical device technologies is occurring. Manufacturers with capabilities for designing, manufacturing, and packaging handheld diagnostic and therapeutic devices that combine nanotechnology, chemistry, and biology are also expected to have high demand in the near future. Companies that provide contract manufacturing services of many types and varieties abound in the United States, as evidenced by viewing the hundreds of company listings in the Medical Design Buyers Guide (www.medicaldesign.com). While there is a large base of existing companies in the medical devices market, continued growth and technological advancements will provide many opportunities for new entrants. High-value opportunities are emerging for contract manufacturers with expertise in biocompatibility, anti-microbial sterilization, device coatings, drug release technologies, and electronic medical device connectivity. The sections that follow provide more insight to these areas of expertise as well as examples of technologies and companies that may be either customers or partners for medical device manufacturers.

Biocompatibility Biocompatibility refers to the use of synthetic or natural materials used to replace part of a living system or to function in intimate contact with living tissue including materials that are safe and conformable for human implantation, such as: heart valves, stents, and joint replacements. Because the human body has complex chemical and mechanical systems, the shape, geometry and surface treatments of the completed device are also factors that affect biocompatibility.


A large steam sterilizer from Getinge

Anti-Microbial Sterilization While disinfection of materials that contact human tissues is always a concern of modern healthcare professionals, Hospital Acquired Infections (HAIs) are a high concern due to an increase in antibiotic resistant bacteria. Sterilizing substances or processes that kill or inhibit the growth of microbes, such as bacteria, molds, or viruses are in increased demand in hospital and outpatient clinics. Chemical disinfecting agents, such as ethanol, isopropanol, phenolics, quaternary ammonium salts, peroxides and glutaraldehyde kill micro-organisms almost instantaneously but do not provide long-term protection. Triclosan and chlorhexidine gluconate are now being incorporated into sutures and surgical preparation cloths to reduce surgical site infections. Long-term micro-organism hostile surfaces are now being made with silver, titanium dioxide, zinc oxide, and copper. (source: The Expanding Role of Biocides in Medical Devices, Medical Device Link, http://www.devicelink.com/mddi/archive/08/03/003.html.) Biosafe, Inc., Pittsburgh, Pennsylvania (www.biosafe.com), manufactures a polymeric material that physically disrupts the target organism’s cell membrane on contact. The Biosafe material molecularly bonds to treated substrates and makes the material itself antimicrobial. The material is said to be safe and effective against a broad spectrum of fungi, bacteria, algae, and yeast. Biosafe material is available in solid and liquid forms as well as in plastic resin masterbatch formulations. Applications include use for medical textiles, wound dressings, catheters, surgical instruments, and architectural surfaces in patient care rooms. Getinge Group, a Swedish company with US headquarters in Rochester, New York (www.getinge.com)and Steris Corporation based in Mentor, Ohio (www.steris.com) manufactures many products for disinfection of medical devices for manufacturers and medical facilities. Steam sterilizers, or autoclaves, are probably the most common types of sterilizers in use today. These systems come in many different sizes and configurations to suit particular needs. Other sterilization devices for production systems include steam and air mix sterilizers, Ethylene Oxide (EtO) sterilizers, electron beam irradiation, and Vaporized Hydrogen Peroxide (VHP) sterilizers. Both Getinge and Steris provide technical consultation services for sterilization device selection. Steris also provides outsourced sterilization services.


Titanium Nitride coating with surface features averaging approximately 75 nanometers from Isoflux Biomed.

Device Coatings Coatings are often used on medical devices for adding properties to surfaces for biocompatibility, lubricity, anti-microbial action, electrical functions, and corrosion resistance. These coatings help alleviate undesirable complications such as bacterial infections, blood clot formation, and tissue trauma caused by device insertions. Typical medical device applications include coatings for: stents, cardiac assist devices, electrosurgical tools, mandrels and molds, catheters, elastomeric seals, needles and epidural probes, and medical electronics. Many different coating materials and application processes are used in the medical device industry. Polymeric materials can be used in dry and solvent-based solutions (including water) for dip and spray material applications. Various metals and alloys, such as titanium, tantalum, and titanium nitride are applied with Physical Vapor Deposition (PVD). AST Products, Inc. based in Billerica, Massachusetts (www.astp.com) produces a line of coating materials for use on medical devices. These coatings are for solvent-free processing and several types are available for lubricity, antimicrobial surfaces, and hydrophilic, anti-thrombogenic and anti-encrustive treatments. The coatings are said to be used in a wide variety of medical devices that have been approved by the FDA. Specialty Coating Systems, based in Indianapolis, Indiana (www.scscoatings.com) specializes in parylene conformal coatings. Parylene provides biocompatibility and biostability as well as moisture, chemical and dielectric barrier protection. It also has a low co-efficient of friction for lubricity. The company also provides coating services on an outsourced basis. Isoflux Biomed, based in Rochester, New York (www.isofluxbiomed.com) provides coatings and PVD application technologies at the nano- and micro-scale levels. These surface treatments can enhance cell growth and promote bone in-growth in implanted devices, such as orthopedics. They can also be used for radiopaque coatings that provide improved x-ray visibility for stents and other implantable devices where improved visibility for positioning and post-implant visualization using x-ray imaging are important considerations. Drug Release Technologies Medical devices and drug delivery are converging and new methods of delivery beyond ingestible pills and injectable liquids, such as transdermal patches, are now being used. Device and drug combinations include functional augmentation of the device with a drug, and drug delivery by an implanted device. Implantable devices can also use drug coatings to increase their useful lifetimes and improve biocompatibility, such as coatings on pacemaker leads or in drug eluting stents. New therapeutic approaches combine semi-


permeable polymer coatings for encapsulated cell therapies, such as islet cell encapsulation for in situ insulin delivery for diabetes treatments. Various combinations of materials can provide biodegradable drug coatings, extended release coatings, and coatings that improve healing processes. The following companies provide some examples of available drug coating technologies: Surmodics, Inc. based in Eden Prairie, Minnesota (www.surmodics.com) manufactures several drug coating products for medical devices. Their “Bravo” drug delivery polymer matrix allows variations in the ratios of the polymers used in the coating to control drug delivery rates and mechanical properties. This type of coating has been used for Drug Eluting Stents (DES), a $4 billion segment of the global medical device market. The Bravo coating technology can be used on metals, such as stainless steel, nitinol, titanium, and cobalt chromium as well as polymers such as silicone, nylon, and high-density polyethylene and polypropylene. It is also compatible with several coating processes, including spray and dip-coating techniques. This allows medical device manufacturers to automate production lines. MIV Therapeutics, Inc. based in Atlanta, Georgia (www.mivtherapeutics.com) produces drug delivery coatings based on hyroxyapatite and lipid-based materials. Hydroxyapatite is naturally found in bone and tooth enamel. It is considered to be biocompatible and does not trigger immune responses that are associated with some polymeric coatings. The hydroxyapatite and lipid coatings are new and not widely used on medical devices that are currently on the market. 3M Drug Delivery Systems, based near St. Paul, Minnesota (http://solutions.3m.com/wps/portal/3M/en_WW/DDS/DrugDeliverySystems/ ) has been providing transdermal drug delivery patches and component materials for over 20 years and is said to provide 80% of the drug delivery patches in the US market. The Microstructured Transdermal System (MTS) is a state-of-the-art micro-needle system for transcutaneous drug delivery including vaccines, proteins and peptides to the dermal and epidermal layers of the skin. 3M combines pharmaceutical expertise, formulation chemistry, and adhesive know-how to develop transdermal drug delivery systems to customer specifications. Electronic Medical Device Connectivity Electronic medical device connectivity is information systems technology that supports remote data collection and analysis as well as workflow improvements through Electronic Health and Electronic Medical Records (EMR) systems. The use of EMRs is increasing throughout the medical system because it can help improve overall productivity, reduce errors, and consequently improve patient outcomes while lowering coasts. Connecting medical devices to the EMR system is important for further reducing data input errors and improving the timeliness of data availability to caregivers.


PACS image example. Source: www.wikipedia.com.

Digital Picture Archiving and Communication Systems (PACS) is an example of medical device connectivity that has become widely used among radiologists for storing radiological images and making them available via secure remote access to other medical professionals involved in the diagnosis and treatment of a patient. Most PACS handle images from several imaging systems including: ultrasound, magnetic resonance, PET, computed tomography, endoscopy, mammography, and digital x-ray images. Connectivity of other medical devices, such as infusion pumps, blood analyzers, glucose meters, ventilators, EKG units, and other devices into EMR systems will be a future growth opportunity for embedded systems and software companies. Manufacturers who are developing devices with EMR capabilities include: Cerner, GE Healthcare, Lantronix, and Welch Allyn. Cerner Corporation, based in Kansas City, Missouri, (www.cerner.com) is a major provider of computerized information technology systems to the healthcare industry. They have created architecture for EMR systems called “CareAware” that connects people and medical devices to improve workflows. Cerner is partnering with many device manufacturers to certify the interoperation of devices with the CareAware architecture. GE Healthcare and Welch Allyn are two companies that are Cerner CareAware partners. Lantronix, based in Irvine, California, (www.lantronix.com) is a secure computer communications networking company. Lantronix offers embedded wired and wireless (802-11b) solutions that can be easily incorporated into new equipment designs, as well as solutions that can quickly network-enable existing equipment. Wireless affords the benefit of not having to run wire through the hospital or laboratory and adds a great deal of flexibility by making equipment truly mobile components of the Ethernet network. Putting devices on the network gives staff an easy way to track equipment eliminating wasted time spent trying to locate or account for missing devices. Lantronix has developed remote patient monitoring and device management components and systems for several manufacturers, including Bayer Diagnostics and Welch Allyn.


Materials and Processes Technological advancements in the medical device industry are increasing the demands on product designers to use new materials and maintain compliance with regulatory requirements. Product engineers are tasked with turning those designs for new devices into realized products that can be made at a reasonable profit. Additionally, products that require sterilization have challenges related to the materials used, packaging, and production processes cycle-times. New design and production tools are available to medical device manufacturers for coping with these multiple challenges. Materials New materials for use in medical devices range from metal alloys, such as nitinol and cobalt-chromium, to ceramics and plastics. Nitinol is a combination of nickel and titanium that shape-memory characteristics. Nitinol is used for implantable devices, such as stents, as well as surgical tools such as kidney stone removal devices, where the shape memory characteristics and high yield strength can be used to advantage. However, nitinol can be difficult to machine and its abrasive qualities make it hard on tooling. Companies active in Nitinol material and device development include Nitinol Development Corporation, based in Fremont, California (www.nitinol.info ), Pulse Systems, based in Concord California (www.pulsesystems.com), and 3M (http://solutions.3m.com/wps/portal/3M/en_US/orthodontics/Unitek/solutions/archwires/Nitinol/ ). Ceramics, composed principally of alumina and zirconia, provide high strength and electrically insulting characteristics. Ceramic parts are used in electrosurgical instruments to protect surgeons from the electric current running through the device. Zirconia is a very rigid material and can be machined to tight tolerances. Orthopedic devices and component parts for a wide range of implantable medical devices are now being made with ceramics. Companies that are active in this area include CoorsTek, based in Golden, Colorado (www.coorstek.com) and Morgan Technical Ceramics, a U.K. company with U.S. offices in Bedford, Ohio (www.morgantechnicalceramics.com). Plastic formulations can replace metals for use in some medical devices. Plastics can be easier to machine and have electrical insulation properties similar to ceramics. Plastics such as PEI, LCP and PEEK cost much less than ceramics, though plastics tend to move more than ceramics when machining. Some biodegradable polymers are now used for production of bone screws, which dissolve over time when implanted in the human body and do not require a surgical procedure to remove them once they have served their purpose. New plastics are also being used to replace PVC materials for single-use disposable medical devices due to concerns about long-term negative effects of plasticizers used in PVC. Plasticizers used to make PVC flexible can migrate to varying degrees into the

Nitnol stent made by Pulse Systems based in Concord, California. www.pulsesystems.com


VisIV polypropylene-based, non PVC and DEHP free Intra-Venous drug dispensing container from Hospira, Lake Forest, Illinois (www.hospira.com)

surrounding environment. Results from some animal trials have put health authorities on alert by showing high levels in the body of diethylhexyl phthalate (DEHP)--the most commonly used PVC plasticizer--which may have adverse affects on reproduction and/or development. The validity of the tests is disputed, but various groups are taking a precautionary approach to the use of PVC in general and DEHP in particular. In the US, the FDA no longer recommends DEHP for some applications, including enteral feeding, dialysis and tubing for newborns, young children and pregnant women. However, PVC is still one of the most frequently used polymers for medical devices. Some 30% of the total world market for plastics in medical devices is accounted for by PVC. Around 95% of all medical-grade PVC goes into flexible containers, tubing and gloves, mainly single-use devices. A market opportunity exists for developing non-PVC plastic versions of many single-use products that are currently made of PVC. An example of a company that is doing this is Hospira, based in Lake Forest, Illinois (www.hospira.com). Computer-Based Product Design New medical devices must comply with regulatory and market requirements and be economically feasible for manufacturing, testing and sterilizing. Computer aided design and manufacturing systems such as SolidWorks (www.solidworks.com) and Pro/Engineer Wildfire (www.ptc.com) for 3-D solid modeling and mechanical design, supporting Product Data Management (PDM) modules for the design software, and ANSYS (www.ansys.com) for mechanical analysis. Tools like Pro/Engineer include extensions that allow designs to be translated for CNC machines and 2-axis to 5-axis milling and turning operations; enabling quicker cycle times from concept to manufacturing. Analytical tools provide simulations for a wide range of tests such as structural fatigue, thermal analysis, and fluid dynamics. Product Data Management tools permit requirements and design traceability throughout the product development cycle and support the FDA’s regulatory requirements. Use of integrated computer software systems like SolidWorks enables medical product design companies to work with contract manufacturers that can use those files on their CNC equipment; reducing risks of error in translating the designs to a manufactured product. An on-line listing of contract manufacturers who work with SolidWorks files can be found at www.suppliersource.com.


Fanuc Wire EDM system. www.methodsmachine.com

Computer Controlled Machining Many machining technologies have some type of computer control system interfaces that allow precision cutting control and automation of the manufacturing process. Electronic Discharge Machining (EDM) is used for production of medical devices such as orthopedic implants, which are made of conductive metals, like stainless steel, and titanium. EDM uses an electric arc to sculpt intricate geometries on conductive materials to a dimensional accuracy on the order of ± 0.0001 inch. Widely viewed as a reliable and precise machining technology, EDM provides burr-free, multi-axis machining of parts that, because of hardness or shape may be difficult or impossible to machine by other methods. Wire EDM, or electrical discharge wire cutting, uses a thin piece of wire as the cutting electrode. The process is similar to contour cutting with a band saw, though the wire cutting edge never actually touches the material. The heat of the electrically conductive wire vaporizes the material by the action of rapidly occurring electrical discharges that are applied to the work surface in a non-conductive solution. 5-axis wire EDM machines are capable of producing geometries that cannot be produced with any other maching techniques and are capable of interpolation in nanometers. Companies that make EDM machines include: Agie, Fanuc, Makino, and Mitsubishi, as well as many others. Other manufacturing technologies that are used for micro-sized components used in the medical device industry include:

CNC Milling, which uses computer-controlled cutting tools to sculpt materials to tolerances of ± 0.0002 in.

Metal Injection Molding, which produces complex shapes, multiple wall thicknesses and surface detailing in a single component to tolerances of ± 0.004 in.

Photochemical Etching, which creates 2-D profile geometry on thin, flat parts to tolerances of ±0.001 in. on materials that may be as thin as 0.002 in.

Precision Metal Stamping, for producing complex shapes and intricate geometry through a series of stations in a progressive die to tolerances of ±0.001 in., at speeds of hundreds of parts per minute.

Swiss Screw Machining, for production of seamless cylindrical components with capability for cross-drilling and slotting.


ICM 10 batch PVD system from Isoflux, Rochester, New York. www.isoflux.com.

E-Beam sterilization system from Getinge, a Swedish company with US headquarters in Rochester, New York. www.getinge.com.

Surface Coating Application Surface coatings are used to provide or enhance biocompatibility, enhance electrical properties, to provide chemical and moisture barrier properties, to influence frictional properties, to improve hygienic properties, or to improve cosmetic perception of a finished product. These coatings may also facilitate the application of other coatings and to control the extraction or release rates of compounds within the substrate materials. Incorporating Physical Vapor Deposition (PVD) and Chemical Vapor Deposition (CVD) coating systems as well as more traditional spray and dip coatings into production processes for medical devices can be challenging. Many PVD and CVD coatings are applied either by outsourced service providers or in batches. On-line directories, such as www.thomasnet.com and www.globalspec.com can be useful resources in locating contract surface coating specialty firms as well as providers of PVD and CVD equipment for use directly at the manufacturing site. Sterilization Sterilization processes include: steam, or autoclaving; Ethylene Oxide gas (EtO) applied under vacuum; Gamma ray ionization; and cold plasma-based sterilization. Cold plasma is a recent alternative for low-temperature sterilization of biomedical devices created by applying an electric or magnetic field to a hydrogen peroxide solution. Materials, volume, surface texture and features all create a need for different cleaning and sterilization procedures. Product material compatibility, device designs, and manufacturing process integration are key considerations for selecting a sterilization process. As an example, gamma and e-beam radiation are rapid sterilization methods, though gamma irradiation can damage some products or packaging and e-beam radiation can be harmful to products containing batteries or electronic components and can also degrade rubber and polypropylene. However, gamma radiation is very useful to sterilize enclosed places and e-beam is widely used for sterilization of packaged products.


A large-scale EtO sterilizer system from Getinge

Biological sterilization test kit from Steris, based in Mentor, Ohio. www.steris.com.

Ethylene oxide (EtO) sterilization is widely used, though some plastics absorb large amounts of EtO and require extended periods of post-sterilization aeration. Complete EtO sterilization cycles can take two to three days. Some devices that require sterilization of cavities below a surface layer may either not be candidates for EtO sterilization or require higher temperatures and vacuum chambers for getting the EtO into those cavities. An advantage of EtO is that many pallets of medical devices and packaged materials can be sterilized simultaneously in the same device. EtO diffuses several millimeters into surfaces and penetrates all kinds of packing materials. Validation of sterilization takes the form of biological and parametric indicators. Biological testing consists of sending samples from the sterilization batch to a testing service that cultures the devices to growth any bacteria remaining on the devices. Biological testing typically takes two to seven days to complete. Parametric testing requires measurements of EtO concentration, relative humidity and product temperature in the sterilization chamber to determine sterility. Parametric testing requires tight validation of measurement devices, though it can speed turn-around times compared to biological validations. Most sterilization equipment manufacturers, such as Getinge and Steris, have consulting groups that help in selection of sterilization methods and equipment. There are also sterilization consulting companies that can provide guidance without allegiance to one manufacturer’s product line. Sterilization can also be outsourced to contract firms that provide consulting services as well as production volume sterilizations.


Regulatory Factors The medical device industry is heavily regulated and, according to AdvaMed, compliance with FDA regulatory requirements is the top factor influencing companies’ ability to develop new medical technologies. The US Food and Drug Administration (FDA) is the principal federal agency responsible for protecting the public from unsafe or ineffective products and they monitor the manufacture, transport, storage, importation, and sales of foods, drugs, medical devices, and cosmetics--totaling over $1 trillion in annual sales. Establishment Registration Manufacturers must obtain FDA approval of their products before they can sell them in the United States or export them abroad but does not regulate devices that are both made and sold abroad. Establishments involved in the production and distribution of medical devices intended for marketing or leasing in the United States are required to register with the FDA. This process is known as “establishment registration” and it applies to operators engaged in the manufacture, preparation, propagation, compounding, assembly, or processing of a medical device intended for commercial distribution. Establishment registration includes manufacturers, contract manufacturers and contract sterilizers that place the device into commercial distribution, specification developers, repackagers or relabelers, reprocessors of single-use devices, remanufacturers, US manufacturers of export only devices, and manufacturers of components or accessories that are ready to be used for any intended health-related purpose and are packaged or labeled for distribution. Fees apply for this registration and the 2008 fee is $1,706. More information about FDA establishment registration can be found at: http://www.fda.gov/CDRH/devadvice/341.html. Registration of an establishment is not an approval of the establishment or its products by the FDA. It does not provide clearance to market medical devices. Medical device manufacturers are required to provide extensive documentation of their products’ safety and effectiveness before giving marketing approval. More information about FDA compliance requirements for medical devices can be found at www.fda.gov/CDRH/comp/gmp.html . Device Claims Require Supporting Data In order to receive FDA clearance for marketing a medical device, the FDA requires manufacturers to give the agency data supporting their claims for their devices; the amount of evidence required depends on the degree of risk to the patient using the device. Devices may fall into one of three general classifications for new submissions, depending on potential risks.


FDA Medical Device Classifications The FDA requires manufacturers to provide them with data to support any marketing and clinical claims made for their devices. The amount and type of data required varies depending on the degrees of risks to patients. The FDA has three categories for new medical devices submitted for review that are based on the relative degrees of risk.

Class I Devices: include commodity products such as stethoscopes, scalpels, and other commodity products that pose relatively little patient risk. Makers of these products need only register their establishment, conform to Good Manufacturing Practices (GMP) and notify the FDA at least 90 days before they start marketing the devices. GMPs are standards set by the FDA for ensuring manufacturing quality. More information about GMP requirements can be found at www.fda.gov/CDRH/comp/gmp.html.

Class II Devices: include devices that present a moderate degree of risk to the patient. Examples include x-ray machines, endoscopes, and surgical lasers. Manufacturers have to provide the FDA with some evidence of safety and efficacy and meet certain performance standards. In addition, they are responsible for post-market surveillance and maintenance of patient registries.

Class III Devices: these are sophisticated products that present significant risk to patients and must go through extensive clinical trials before undergoing FDA reviews. Included in this category are life supporting devices, such as implantable cardiac pacemakers, angioplasty catheters, stents, and similar devices that prevent potentially dangerous medical conditions such as heart attacks and cardiac arrhythmias.

FDA Modernization Act The Medical Device User Fee and Modernization Act of 2002 brought new responsibilities, resources, and challenges to the FDA. Three important provisions that affect manufacturers are:

• Pre-market review user fees, including reviews of reprocessed single-use medical devices, for funding the device application review process.

• Manufacturing facilities are inspected by accredited third party inspectors under carefully prescribed conditions

• New regulatory requirements apply to re-processed single-use devices, including a pre-market report submission. Reprocessed single use devices are defined as those originally intended for one use, or use on a single patient, that have been used but are then reprocessed to allow subsequent use as though they were new.


FDA Approval Path Manufacturers of new medical devices typically start the FDA approval process using one of two types of filings—a premarket notification or a premarket application. Complex devices may also require an Investigational Device Exemption (IDE), which is an FDA approval to use the device in clinical trials. Premarket Notifications Premarket notifications are also known as 510(k). This is a more commonly used filing and applies to devices that are Substantially Equivalent (SE) to approved products already on the market. Many Class I devices are exempt from the 510(k) process, although other regulations apply. Once the device is determined to be SE, it can then be marketed in the U.S. The SE determination is usually made within 90 days and is made based on the information submitted by the submitter. Detailed information about the 510(k) process can be found at www.fda.gov/CDRH/DEVADVICE/314.html. In many cases, descriptive data and a labeling review are sufficient, though some devices may require further clinical studies to support a 510(k). Before marketing a device, each submitter must receive an order, in the form of a letter, from FDA which finds the device to be substantially equivalent and states that the device can be marketed in the U.S. This order "clears" the device for commercial distribution. The submitter may market the device immediately after 510(k) clearance is granted. The FDA does not perform 510(k) pre-clearance facility inspections. The manufacturer should be prepared for an FDA quality system inspection at any time after 510(k) clearance. Premarket Applications Premarket applications (PMA) apply to most Class III devices due to the level of risk. PMA is the most stringent type of device marketing application required by FDA. The applicant must receive FDA approval of its PMA application prior to marketing the device. PMA approval is based on a determination by FDA that the PMA contains sufficient valid scientific evidence to assure that the device is safe and effective for its intended use(s). An approved PMA is, in effect, a private license granting the applicant (or owner) permission to market the device. The PMA owner, however, can authorize use of its data by another. FDA regulations provide 180 days to review the PMA and make a determination. In reality, the review time is normally longer. Before approving or denying a PMA, the appropriate FDA advisory committee may review the PMA at a public meeting and provide FDA with the committee's recommendation on whether FDA should approve the submission. After FDA notifies the applicant that the PMA has been approved or denied, a notice is published on the Internet (1) announcing the data on which the decision is based, and (2) providing interested persons an opportunity to petition FDA within 30


days for reconsideration of the decision. More information about PMA can be found at: http://www.fda.gov/CDRH/DEVADVICE/pma/. Investigational Device Exemption (IDE) An investigational device exemption (IDE) allows the investigational device to be used in a clinical study in order to collect safety and effectiveness data required to support a Premarket Approval (PMA) application or a Premarket Notification [510(k)] submission to the FDA. Clinical studies are most often conducted to support a PMA. Only a small percentage of 510(k)’s require clinical data to support the application. Investigational use also includes clinical evaluation of certain modifications or new intended uses of legally marketed devices. All clinical evaluations of investigational devices, unless exempt, must have an approved IDE before the study is initiated. Clinical evaluation of devices that have not been cleared for marketing requires:

• An IDE approved by an institutional review board (IRB). If the study involves a significant risk device, the IDE must also be approved by FDA;

• Informed consent from all patients; • Labeling for investigational use only • Monitoring of the study and; • Required records and reports.

An approved IDE permits a device to be shipped lawfully for the purpose of conducting investigations of the device without complying with other requirements of the Food, Drug, and Cosmetic Act (Act) that would apply to devices in commercial distribution. Sponsors need not submit a PMA or Premarket Notification 510(k), register their establishment, or list the device while the device is under investigation. Sponsors of IDE's are also exempt from the Quality System (QS) Regulation except for the requirements for design control. More information about IDEs is available at: http://www.fda.gov/cdrh/devadvice/ide/index.shtml. Non-US Regulatory Requirements The US leads the world in medical technologies and is the leading exporter of medical products. Therefore, compliance with regulatory requirements for overseas markets are very important for continued revenue growth. Non-US regulatory requirements for new medical devices vary significantly. The largest markets for medical equipment outside of the US are the European Union (EU), Japan, Canada, China, Brazil, Taiwan and Australia. Japan, Australia, and the EU have regulatory processes that are similar to the US FDA in that they establish criteria for approval based on the device’s risk to the patient and the commercial availability of substantially equivalent devices. Many countries in Latin America and Asia have minimal regulatory requirements, though the expectation is that this will change in the years ahead.


The process for obtaining marketing approvals in overseas nations ranges from months to years. Some nations permit human studies earlier in the product development cycle than the US allows. Others, such as Japan, have standards very similar to the US FDA. The EU countries require medical devices and products to have a Conformité Européene (CE) mark before they can be sold. The CE mark indicates product conformance to EU standards for safety, construction, and performance. An oversight organization comprised of representative from EU member states reviews supporting data for new medical devices and grant CE marks to approved products. The CE mark allows products to be sold in any EU country without separate approvals from each member country. The EU regulatory process for devices has traditionally been less demanding than the US FDA processes, though it is expected that the EU processes will become more stringent in the future.

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