J.P Morgan H&Q Healthcare Conference
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Info.Resource, publisher of Oregon-Bioscience.com
Medical Technologies: boomers embrace
quality of life solutions
By Lorraine Ruff and David Gabrilska,
Milestones, the critical thinking company
Baby boomers are having as significant an impact on the development of medical
technologies as they are in drug development. "Boomers are vitally concerned with
keeping their bodies fun to live in for as long as possible and they're backing up their
preferences with solid buying power," observed Elizabeth "Bess" Weatherman,
managing director, E.M. Warburg, Pincus & Co.
Their expectations have created huge demand for innovative technologies that address
medical needs: hearing, seeing, fit bodies, sexual function, or insomnia. Americans will
price shop for just about everything. But when it comes to healthcare everybody wants the
best and they are not willing to settle for "just good enough." They are
demonstrating that they want function restored and in some cases theyre willing to
pay for it as evidenced by their willingness to pay thousands of dollars for visual
enhancement procedures where, thus far, there is no reimbursement.
"Going forward, medical technology development will focus on technologies that
address quality of life," said Weatherman. "Currently approximately 70-to-80
percent of the [medical technology] design talent is focused on addressing life
threatening needs. In the next few years, I believe the momentum will shift to quality of
life and meeting consumer demand. Moreover, we're getting to cost effective solutions that
marry technologies with drugs," she said.
But for boomer its not all about access to technology. According to Thomas J.
Fogarty, MD, Stanford professor and founder and senior partner at Three Arch Ventures,
"medical practice is a service business whose primary objective is the prevention,
maintenance and repair of customer problems - 'customer' defined as patient."
" There are physicians that may resist this notion because its not glamorous
enough," Foharty observed. "I believe the medical industrial complex has lost
sight of this, and it's too bad, because if we thought this way again, we'd bring greater
value to the patient and to ourselves," he said. "All this technology is being
introduced to physicians, a very conservative crowd, who have been trained to stick with
what works. At the same time, physicians are responsible for reducing health care costs by
eliminating redundancies and by incorporating new technologies and drug modalities into
their practices. In reality, we contract with more than the patient
systems and payers. This split has fundamentally changed the way we practice
medicine," Fogarty said.
During the next five years, the panelists predicted that market-savvy medical
technologies developers will focus increasing attention, with commensurate revenues and
profits lines, on prolonging quality of life among boomers. "Americans want to be
able to continue walking, running, and climbing," Weatherman said. That means
maintenance of healthy hearts or fixing broken ones.
Areas of innovation to watch include cardiology and cardiac rhythm management.
Companies in this sector have a combined market cap of $70 billion and annual sales of
$8.7 billion. One of the hottest sectors is interventional cardiology, specifically
restenosis, and the resolution of totally occluded arteries through de-bulking.
Jay Watkins, vice president, Guidant Corporation, said that the challenge that lies
ahead is to fully understand consumer needs, many of which are unmet, and recognize
opportunities created when medical technologies developers "draft" off the work
of other industries.
"For instance, the capacitors coming out of flash cameras have utility in medical
technologies, a good example of complement development streams," he said. "Much
of the advancement in medical technologies comes from small companies, while refinements
or improved second generation products are introduced by larger, more established
companies," he said. "One of the most significant opportunities in the medical
technologies field is the combination of devices and therapeutics, thus creating a new
treatment framework. Thats essentially what a pacemaker is: a medical device with
therapeutic use," he said.
The panelists concurred that investor confidence in the medical technologies sector is
generally positive, with a bit of consolidation going on, but all agreed that the sector
has solid potential.
The sector is not without its challenges, such as reimbursement, including how
professional caregivers are reimbursed for their role in the integration of medical
technologies into treatment modalities.
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