Study: U.S. med-tech industry losing edge

  • Article by: JANET MOORE , Star Tribune
  • Updated: January 17, 2011 - 8:33 PM

PwC says nations such as China, India and Brazil are expected to make big gains in developing products.

The innovative edge that brought the U.S. medical technology industry to global dominance may be slipping, according to a study that consulting firm PwC is releasing Tuesday.

In the next decade, the report predicts that China, India and Brazil will experience the strongest gains in developing next-generation lifesaving products, as capital, jobs and research gravitate toward these growing markets.

"The key finding is that the U.S. is declining when compared with other countries across the globe," said Tracy Lefteroff, a Global Managing Partner of PwC's venture capital practice. "And we're in real jeopardy of losing our lead."

Even a slight erosion in U.S. leadership status can siphon off good-paying med-tech jobs, Lefteroff added. And, increasingly, U.S. consumers will not always be the first to benefit from advances in medical technology.

The 52-page report from PwC, formerly PricewaterhouseCoopers, should add fuel to a growing sense of angst felt by Minnesota's med-tech community that its stature as a haven for medical device innovation is eroding.

The report looked at traits that contribute to med-tech innovation and quantified them in a scorecard involving nine countries, including the United States, China, India, Brazil, France, Germany, Israel, Japan and the United Kingdom.

Researchers scored each country on five different "pillars," or areas that have historically supported med-tech innovation. They include the availability of financial incentives, such as government reimbursement for products; havens for innovation, including universities that conduct cutting-edge research; a supportive regulatory system to approve new devices; a pool of patients demanding the best treatments; and a supportive investment community.

Going forward, the United States will see erosion in all of these areas, the report concluded.

While health expenditures in the United States should increase about 6 percent annually between 2009 to 2019, that figure will grow at a slower rate than in emerging nations like China. This could cause big med-tech companies to delay regulatory approval of new products in the United States in favor of launching devices abroad.

In the area of medical research, the U.S. university system has led the world. But the PwC report indicates that as the quality of educational and research institutions improves abroad, money for research will follow.

The report also touches on increasing demands placed on U.S. med-tech companies by the Food and Drug Administration, which regulates the industry. In this area, France, Germany and the United Kingdom rank higher than the United States because they "provide more supportive regulatory processes that encourage innovation yet ensure safety and effectiveness on a timely basis."

In addition, as reimbursement for medical devices grows more difficult in the United States, trends suggest companies will find it easier to get their products covered in China, India and Brazil.

In terms of funding new med-tech inventions, the report found that the United States still ranks first in venture capital investment for start-up firms. But China represents the second-largest pool of venture capital, followed by Brazil. These countries are "building some of the world's most entrepreneurial cultures," the report states.

U.S.-based medical technology giants will increasingly look abroad when contemplating acquisitions -- they "see themselves as global companies, [and] will not hesitate to invest where the growth is most promising."

Janet Moore • 612-673-7752

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