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The Orthopaedics Universe. Industry:Device ManufacturersSuppliers/OEMDistribution and LogisticsPharmaceuticals/Biologics. Research:UniversitiesInstitutesFoundations. Payors:CMSInsuranceHMOPPO. Patients:Chronic PatientAcute PatientCare Givers. Providers:Orthopaedic SurgeonsHospitalsOut Patient Surgery CentersClinicsPhysical Therapy.
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1. “Industry View of the Future of Orthopaedics” Indiana: The State of Innovation in Orthopaedics Summit
2. The Orthopaedics Universe
3. The Future “Those who cannot remember the past
are condemned to repeat it.”
George Santayana
.
Orthopaedics History—Lessons Learned
(form OrthoKnow by John Englehardt January 2006)
1983 - “In ten years, all solutions will be biologic. There will be no metal and plastic in orthopaedics.”
1985 - “Titanium will eliminate cobalt chrome in joint replacement.”
1985 - “Disc replacement will eliminate fusion: -spine.”
1996 - “Interbody fusion devices will eliminate traditional hardware in spine.”
4. The Future “Those who cannot remember the past
are condemned to repeat it.”
George Santayana
Orthopaedics History—Lessons Learned
(form OrthoKnow by John Englehardt January 2006)
1996 - “Chondrocyte transplantation will eliminate the need for knee replacement.”
1999 - “Synthetics will destroy the allograft business.”
2001 - “Drugs and hyaluronic acid will be the death of our industry.”
2004 - “In ten years nearly all hip replacement will be minimally invasive.”
5. The Future “Those who cannot remember the past
are condemned to repeat it.”
George Santayana
Orthopaedics History—Lessons Learned
(form OrthoKnow by John Englehardt January 2006)
Still the hype continues:
Dynamic Stabilization
Minimally invasive surgery
Computer Assisted Surgery
History suggests some key things in order to remain a consistent success:
If it sounds too good to be true, it probably is.
Keep your head down and focus on bringing value to your customers.
Seek information from objective sources (and multiple ones.)
6. The Medical Device Industry Today Model in the Medical Device Industry:
“Small companies bring innovation, Big companies dominate marketing and distribution.”
“Pharmaceutical (biologics) industry focuses on research with less product development.”
“Medical device industry spends less time in the research phase, but uses more resources on product development.”
David Cassack
7. The Medical Device Industry Today Investors beginning to show much more interest in medical device companies:
Straight-forward business model
Quicker product turn around
Incremental innovation
VC’s willing to invest
Innovation rate will still likely be slowed by the adoption rate of physicians:
Training takes time
Conversion slower due to current successful treatment
Conservative Mind Set/Comfort Zone
David Cassack
8. Orthopaedic Segment—Underlying Fundamentals “Favorable Growth and Strong Profitability”
Aging demographics provide a constant source of patients
New Technology continues to expand the patient base among both younger and older populations
Critical role of surgeon preference in product selection
Source: InVivo
9. Orthopaedic Trends Industry Growth slowing (pricing), but demographics are completely compelling.
Key Issues affecting both surgeons and industry
Medical Legal Liability
Intellectual Property
Obesity continues to drive and confound orthopaedics
In Canada, 90% of TKA and 70% of THA patients are overweight
Overweight children:
Break more bones
Have more joint problems
Have more spine related disorders
Small bone and joint products and treatments gaining the attention of surgeons and industry
Biologics continues to expand
Regulatory requirements increasing worldwide (U.S., Europe, Japan and China)
FDA proposal to Track Medical Devices
10. Major Drivers of Rising Health Care Costs How rapidly Americans embrace new drugs and technology
Rising costs for medical services:
Hospital costs
Labor costs
Waste
Inefficiency
Fraud
Obesity
Source: USA Today
11. Orthopaedic Industry Revenue
12. Another Take on Forecasting the Orthopaedic Market U.S.
Knees
Primary Procedures: 3.48 MM in 2030 (8% CAGR over 24 yrs.)
Revision Procedures: Same Growth Rate
Hips
Primary Procedures: 0.572MM in 2030 (2.3% CAGR over 24 yrs.)
Revision Procedures: 3.5% CAGR over 24 yrs
Exponent, Inc.
Latin America
Orthopaedic device market=$290MM in 2005
CAGR at 10% over next 5 years
India
May be the answer to challenges of drug/device trials
Cost savings of 40-60%
Large, ethnically diverse population (English speaking)
Regulatory environment more lax
13. Orthopaedic Economics 1991-2006
DRG 209-544 19%
Implant list price 171%
Average Implant selling price 117%
2007
Doctor Reimbursement 5.1%
1995-2003
Surgical Specialist Income 8.2%
Gain sharing ?
Consultancy ?
Surgeon Priority
1st “Best” patient outcome
2nd Hospital economics
14. Are Costs Limiting Total Joint Replacement? “Hip replacement was the most cost-effective intervention when compared to a number of other surgical and medical interventions.” --Cecil Rorabeck, MD
“Results of hip and knee arthroplasty are sustainable over time.”
--Cecil Rorabeck, MD
“Patient thanks us for “giving them their life back”. --William Maloney, MD
“Study Finds Medical Spending Worth The Investment” --New England Journal of Medicine
ISSUE: Awareness/Education
Patients take orthopaedic care for granted!
15. Health Care Economics Patient’s Perspective
Healthcare = Entitlement
Unease with rising costs
Confusion about causes
Desire for reform
BUT
Distaste for giving anything up
Source: USA Today
16. Goal of Musculoskeletal Care Relieve Pain
Return Function/Mobility
Minimize Surgical Trauma
17. “Holy Grails” in Orthopaedics Low Back Pain
Molecular Medicine-Mechanisms of Degradation
Cartilage
Tendon
Regenerative Medicine – Tissue Engineering
Scaffolds
Cells
Total Joint Arthroplasty (including disc)
Kinematics
Performance
Biologic Interaction
Multidisciplinary Approach
18. InMotion a Partnership / Collaboration for ResearchHospitals – Clinics – Universities - Industry
19. The Patient of the Future Baby Boomers (78 million Americans born between 1946-1964) and “Boomeritis”
Increasingly Aging Population
Impact of Direct to Consumer Advertising
Easy access to Medical Information
20. Global Orthopaedics Geographic Product Development
North America
Europe
Japan
China/India
Geographic Regulatory Environment
US/FDA
Europe/CE Mark
China/SFDA
Japan/MHLW
Regional Reimbursement
21. Can Indiana Maintain and Grow Its Musculoskeletal Industry? Innovation Entrepreneurship Idea Creation
NIH Research Grants
Medical School
Engineering School
Industry Funding
Patents & Licensing
22. The Future – The Bottom Line Orthopaedic History—Lessons Learned
(from OrthoKnow by John Engelhardt January 2006)
“With almost no exceptions, technology in the orthopaedic space doesn’t happen in those types of gigantic leaps and bounds, but generally in slow and systematic creeping substitution.”
“…What will happen is that a multitude of devices will exist alongside each other in an extensive product matrix, with each product serving a particular niche in design philosophy, pathology, activity level, etc.”
23. The Future Orthopaedic Opportunities
Blood, Sweat & Tears