Medical Device Link.

Originally Published MX January/February 2006

MARKET ANALYSIS

This year, both traditional device sectors and those on the cutting edge are poised for growth—if executives play their companies' cards right.

Steve Halasey, Lori Luechtefeld, and Art Kerley

In the medtech world, a year can make all the difference, and industry snapshots taken 12 months apart can show vastly different playing fields. Yet despite the breakneck pace of the medical device industry, one element remains the same: the driving force of innovation. Executives tuned into the latest trends in their sectors are better able to harness the energy behind industry change and capitalize on it.

In 2006, growth and advancements in the medical device arena show no signs of slowing. This article takes a look at what's on the horizon for some of medtech's key sectors this year and beyond.

Orthopedics Still Lively

In reading financial analyst assessments during 2005, it may have seemed that the go-go growth days of the orthopedics sector were coming to an end. Yet as the year drew to a close, many of these same analysts were scrambling to retool their thinking, as they largely attributed whatever downturn there was in orthopedics to a function of the normal business cycle.

A look at the financial performance of the leading orthopedic manufacturers readily attests to the continued strength of the sector. Leading companies reported average sales growth of 13.4% for the first nine months of 2005. Only one company, Biomet Inc. (Warsaw, IN), reported less than double-digit growth, while Smith & Nephew plc (London) racked up the most impressive performance with a 17.6% sales gain (see Table I).

According to Knowledge Enterprises Inc. (Chagrin Falls, OH), a consulting firm and publisher of the OrthoKnow and BareBones newsletters, there are about 200 orthopedic manufacturers worldwide, with the vast majority reporting annual sales of $5 million or less. The company's recently released Worldwide Orthopaedic Market report states that 2004 global industry revenues were $22.9 billion, a 15.9% increase over 2003 sales. Reconstructive devices, or joint-replacement implants, led the market with $8.7 billion in sales—a 17.1% increase over the previous year. The spine segment, with 2004 worldwide revenues of $3.6 billion, posted the greatest year-over-year gain with a 21.2% increase.

Engelhardt

Commenting on some of the less-than-bullish remarks from the investment community during 2005, Shirley Engelhardt, president of Knowledge Enterprises, said, "What sometimes gets lost in these reports, particularly as they're filtered through the financial press to the general business media, is the fact that we're talking about the rate of growth slowing, not actual decreases in year-over-year performance. But it's not that long ago that some orthopedic segments were posting percentage gains in the high teens to 20% or more. And within that context, I suppose the overheated prognostications are understandable."

Engelhardt acknowledges that growth has slowed a bit in some segments and that pricing pressure on orthopedic manufacturers from hospitals, particularly in the high-volume joint-replacement sector, will chip away at margins and overall financial performance. However, she adds, "C'mon. This is a healthy business, and it's not going away."

Denhoy

Raj Denhoy, vice president and senior research analyst for orthopedics at Piper Jaffray Inc. (Minneapolis), also sees growth slowing from the torrid pace of a few years ago. However, he expects positive performance within the sector in both the near and long term. "The most significant downside facing orthopedics is pricing pressure," he says. "Many hospitals claim to be losing money on knee and hip replacements, particularly with Medicare patients, and they're putting tremendous pressure on manufacturers to lower their prices." Denhoy says that well-run hospitals can and do make a profit on orthopedic procedures, and he expects that the nascent trend of shifting orthopedics to special-focus hospitals and alternative-care centers will likely accelerate in the years ahead.

Concerns about spiraling medical costs are also providing an opportunity for both hospitals and government regulators to reexamine gainsharing initiatives. Gainsharing provides financial incentives to doctors who agree to use only medical devices from a hospital-approved list of vendors. This enables the facility to save costs through standardization and volume buying. Still technically illegal due to concerns over potential manufacturer-physician kickbacks, gainsharing programs seem to have targeted the orthopedics and cardiovascular specialties. Medtech industry associations and patient advocacy groups, warning that such arrangements could seriously limit access to the full range of medical devices and technologies, are generally opposed to gainsharing.

According to Denhoy, "Gainsharing has yet to blossom, and I don't see it gaining major traction." Some early indications suggest that the concept has been oversold particularly to doctors, many of whom question the financial incentives and see such programs as a major threat to their professional independence.

Both Engelhardt and Denhoy expect the orthopedics sector will continue to benefit from an aging demographic. "Today's orthopedic implants and minimally invasive procedures have the power to effectively give people back their quality of life," Denhoy says. Engelhardt adds, "People are just not willing to live with joint pain and dysfunction when they know they don't have to anymore."

Although the American Academy of Orthopedic Surgeons (Rosemont, IL) reports that the population of people aged 65 and older still receives the lion's share of knee and hip implants, the number of such procedures performed on younger people continues to grow each year. In an effort to increase awareness of the latest developments in joint replacement technologies—and their related products—orthopedic manufacturers DePuy, Stryker, and Biomet have all launched direct-to-consumer television campaigns during the past year.

Among industry watchers, there has been a great deal of speculation about the U.S. Department of Justice's investigation of the major orthopedic firms regarding alleged kickback schemes. But most industry analysts were not surprised by the probe. According to Piper Jaffray's Denhoy, "The DOJ inquiry will not have a major or lasting impact. Fines will be levied. Companies will pay them. And everyone will move on."

It may be that hip and knee implants no longer command their premium price points, but there's no reason to believe that signals an end to the big-growth days of the orthopedics sector. Artificial shoulders, ankles, and digits are expected to be the next wave of joint replacement technologies. Second-generation spinal disks and new developments in synthetic bone, tissue engineering, and other orthobiologics, as well as sports medicine braces and orthotics for weekend decathletes, will continue to drive segment growth. At the heart of this growth will be an ever-expanding, younger, informed, and demanding base of healthcare consumers.

Imaging the Future

Combined revenues in the United States from the sale of selected medical imaging equipment, imaging information technologies (IT), and contrast agents and radiopharmaceuticals were expected to top $13 billion in 2005. With market growth forecast in the high single digits through 2008, the U.S. imaging market will climb to about $14.5 billion in 2006 and top $16.5 billion by 2008. During this period, the U.S. market is expected to represent between 40 and 45% of the global imaging equipment market.¹

The imaging market continues to be driven by a variety of forces. Expanded product applications and increased adoption of imaging by physicians and specialists outside the radiology department have opened wider sales channels. The increased need for digitized imaging files in large and small hospitals alike has also created new markets and revitalized existing ones.

Zimmer

"The biggest potential for growth lies within any modality that provides earlier detection or better treatment outcomes for the major diseases in the United States—cancer, heart disease, and stroke," says John Zimmer, vice president of marketing for Toshiba America Medical Systems (Tustin, CA). "We expect areas that have this impact to achieve significant growth over the next several years, particularly as the baby boomers age. Some examples of this include the recent breakthroughs in 64-slice computed tomography (CT), which is expected to help significantly in the early detection of heart disease."

Molecular Imaging. The medical imaging market continues to brace for the expansion of molecular imaging, which combines molecular biomarkers with molecular imaging products and systems.

Siemens' Biograph 64 PET-CT system was one example of a hybrid molecular imaging system featured by the company during the annual meeting of the Radiological Society of North America. Photo courtesy Siemens Medical Solutions. (click to enlarge)

One area of growth within the molecular imaging market is positron emission tomography (PET) equipment and related hybrid systems. Unlike more-traditional imaging modalities that reveal the structure of organs, PET and hybrid scanners can reveal how they function as well. Although currently accounting for less than 10% of the overall U.S. imaging market, PET and hybrid PET-CT systems are expected to lead the imaging market with an average annual growth rate of greater than 20% over the next few years.

Previously a market characterized by alliances, molecular imaging has become the impetus for major medtech acquisitions. This spurt of M&A activity was kicked off by the 2004 purchase of molecular imaging company Amersham plc (Little Chalfont, UK) by GE Medical Systems (Waukesha, WI), a merger that created present-day GE Healthcare (Chalfont St. Giles, UK). Similarly, in 2005 Siemens Medical Solutions (Erlangen, Germany) acquired CTI Molecular Imaging Inc. (Knoxville, TN) and combined the company with its nuclear medicine operations to form a new division called Siemens Medical Solutions Molecular Imaging.

Reitermann

Siemens highlighted its vision for advances in molecular imaging during the annual meeting of the Radiological Society of North America (RSNA) in late November. "We are moving from treating the illness to treating the patient, utilizing tools from leading-edge hybrid scanners that detect abnormalities before symptoms appear to new biomarkers for identifying disease pathways," says Michael Reitermann, president of the company's molecular imaging division. Specifically, the company reported that the development of imaging biomarkers might eventually make it possible to predict the onset of Alzheimer's disease years before symptoms appear. Also, the company says it has started developing a technology combining magnetic resonance (MR) and PET that within a few years might allow neurologists to monitor the effectiveness of stem cell therapy.

GE Healthcare made its share of molecular imaging announcements during RSNA as well. Amid myriad product launches, the company showcased its new molecular imaging PET-CT system, the Discovery STE, designed to help physicians detect, diagnose, and monitor treatment of cancer. GE also showcased its previously announced joint research collaboration with Eli Lilly and Co. (Indianapolis) to explore new diagnostics and therapeutics for Alzheimer's disease, as well as its recent collaboration with Roche (Basel, Switzerland) aimed at developing personalized care for patients with Alzheimer's disease.

Royal Philips Electronics (Amsterdam, The Netherlands) and Schering AG (Berlin) at RSNA also announced an alliance to research, develop, and commercialize medical equipment and associated contrast agents for optical imaging. As part of their collaboration, the companies will also explore the emerging field of molecular imaging.

Imaging IT. In addition to expectations in the molecular medicine market, the medical imaging market is expected to continue to see substantial growth in the IT arena. Over the next few years, the imaging IT market, which includes three-dimensional imaging, picture archiving and communication systems (PACS), and computer-aided design applications, is expected to see annual growth of greater than 15%.

This anticipated growth was evident in 2005, with some of the year's biggest medtech acquisitions centered on the ever-blurring line between medical imaging and IT. In August, Philips Medical Systems (Andover, MA) completed its acquisition of Stentor Inc. (Brisbane, CA). Stentor merged into Philips' healthcare IT business and became the global PACS business unit of the company. Similarly, in late September, GE Healthcare announced its plan to acquire IT provider IDX Systems Corp. (Burlington, VT). GE predicts the merger will "create a leading healthcare IT vendor, offering one of the most comprehensive suites of clinical, imaging, and administrative information systems on the market."

Despite these high-growth segments of the imaging market, there are multiple factors restraining the sector. Market maturity in certain sectors, including x-ray, CT, MR, and ultrasound, has led to growth rates in the low single-digit range. Also, the rapid innovation of the sector and resulting shorter product life cycles may negatively affect spending on imaging technologies as hospitals become increasingly wary of investing in technology that might quickly become outdated. Increased market concentration is also resulting in higher barriers to market entry for smaller companies.

Continuing IT Connections

Because of the breadth of IT applications emerging in the realm of medical technology, market estimates for healthcare IT are elusive. Projections for IT within the high-end imaging market, where information technologies arguably have found firmer footing than in other medtech sectors, put 2005 revenues somewhere around $2 billion.1 But that's only the tip of the IT iceberg.

Healthcare IT encompasses a variety of technologies used to monitor and manage patients, as well as to assist physicians in day-to-day tasks. Healthcare IT includes everything from infusion pumps that help prevent medication errors by alerting healthcare providers before an error occurs to computer-assisted physician order entry systems that allow physicians to enter prescriptions directly into a computer.

Electronic Health Records. By far the hottest topic of discussion concerning healthcare IT today is electronic health records (EHRs). While market demand and technological innovation traditionally drive the advancement of medtech sectors, the federal government has in recent years taken the reins in dictating the future of EHRs in the United States. Ever since President Bush announced his 10-year goal of creating a national health information network, in 2004, government officials at all levels have been pushing for initiatives and legislation to speed the nation toward this target.

Last fall, bills were introduced in both the House of Representatives and Senate that would encourage and fund wider adoption of healthcare IT. The Health Information Technology Promotion Act, introduced by Representative Nancy Johnson (R–CT), would make the national health IT coordinator's post, currently filled by David J. Brailer, MD, a permanent one. It would also create uniform information security standards, require healthcare IT certification to ensure nationwide interoperability, and update diagnosis coding systems for the digital age.

On the other side of Congress, Senator Norm Coleman (R–MN) has introduced the Critical Access to Health Information Technology Act, which would create a federal grant program for healthcare IT. "Digitally enabled medical devices coupled with seamless electronic health records promise to make patients safer and healthcare delivery more efficient," says Stephen J. Ubl, president of industry association AdvaMed (Washington, DC), which applauded both pieces of legislation. "Many providers lack the financial ability or consistency of commitment required to make the up-front investment needed to install and operate an advanced healthcare IT system," Ubl adds.

In addition to legislative moves on the IT front, the federal government in recent months has been doling out contracts to further its EHR initiative. In November 2005, the U.S. Department of Health and Human Services awarded contracts totaling $18.6 million to four groups of healthcare and health information technology organizations to develop prototypes for a nationwide health information architecture. Prior to that, in October, the department awarded three contracts totaling $17.5 million to create and evaluate processes to harmonize health information standards, develop criteria to certify health IT products, and develop solutions to address variations in privacy and security practices that may pose challenges to the secure communication of health information.

The contract to develop certification criteria for EHRs was awarded to the Certification Commission for Healthcare Information Technology (CCHIT; Chicago). Mark Leavitt, chair of CCHIT, says that although the contract does not immediately include certifying the interface of EHRs with medical devices, it certainly will in future years.

Remote Monitoring. Although less touted than the quest for universal EHRs, remote monitoring is another area driving the evolution of healthcare IT today. Medical device companies are increasingly choosing to embed into their products systems that allow off-site personnel to monitor the equipment's performance. While most current monitoring detects only equipment failures, medtech executives expect to see a gradual shift to a model of monitoring under which companies would potentially be able to predict when failure is likely to occur, and remotely diagnose and fix the equipment.

Although medtech giants such as GE Healthcare have been developing remote diagnostic capabilities for capital-intensive equipment since the early 1990s, smaller companies are now beginning to outfit their devices with these IT capabilities—and these capabilities are beginning to be implemented on less-expensive devices, such as drug-dispensing machines.

Although the proliferation of monitoring capabilities for hospital equipment remains big news, the form of remote monitoring that is gaining the most attention—including that of the federal government—is the development of technologies that enable physicians to remotely monitor patients with chronic conditions. In November, Senator Coleman and Senator Jeff Bingaman (D–NM) introduced the Remote Monitoring Access Act, which encourages the use of remote monitoring technologies to track patient information in real time. The bill would provide Medicare coverage for certain monitoring services for patients with heart failure, diabetes, cardiac arrhythmia, and other chronic conditions.

The Contak Renewal 3RF cardiac resynchronization therapy defibrillator by Guidant Corp. (Indianapolis) integrates with Guidant's Latitude patient management system, enabling patients and physicians to conduct wireless, automatic device data uploads from the patient's home. (click to enlarge)

Whether or not the bill passes, the medtech market is already responding to the call for in-home monitoring. Last fall, for example, Guidant Corp. (Indianapolis) announced that it had received FDA approval for its Latitude communicator and secure data storage system, the final components of the Latitude patient management system. The system allows physicians and patients to conduct wireless, automatic device data uploads from patients' homes to a server accessible by the patients' physicians. The system, which currently can be used with the Contak Renewal 3RF cardiac resynchronization therapy defibrillator, also allows for active monitoring of the device itself to ensure proper functioning.

Cardiovascular Products: High-Stakes Competition

With heart disease the leading cause of death in the United States and most of the world's industrialized nations, it's not surprising that the cardiovascular market is a major focus of product development for medtech manufacturers. The cardiovascular sector continues to introduce a steady stream of new devices and technologies, including the latest advances in angioplasty balloons and drug-eluting stents that restore the flow of blood through coronary arteries and prevent reclogging without surgery, implantable cardioverter defibrillators (ICDs) and pacemakers that monitor and maintain vital heart rhythms, prosthetic heart valves that ensure the proper direction of blood flow, ventricular assist devices that support patients with both acute and chronic heart failure, the promise of a clinically viable self-contained artificial heart, and countless other advances.

According to Kalorama Information (New York City), the 2005 U.S. market for cardiovascular devices was expected to reach approximately $14 billion. By 2014, it is expected to exceed $25 billion. Industry analysts estimate that drug-eluting stents and cardiac rhythm management devices account for nearly two-thirds of the total market, which is growing at an annual pace of 16%. The United States constitutes about 62% of the global market, which is valued at around $22.3 billion.

Drug-Eluting Stents. The worldwide market for drug-eluting coronary stents reached an estimated $4.2 billion in 2004 and is expected to nearly double by 2010. In the United States, about 1.5 million patients were implanted with coronary stents in 2005. The domestic market is dominated by the Taxus stent from Boston Scientific Corp. (Natick, MA) and the Cypher stent from Cordis Corp. (Miami Lakes, FL), a Johnson & Johnson company. First-to-market Cypher received FDA approval in 2003, with Taxus coming on board a year later.

The much-anticipated Taxus stent quickly grabbed a commanding 70% of the market, but was subsequently dogged by balloon deflation failures and catheter removal problems, which resulted in significant sales erosion. Although the problems were eventually resolved, Taxus' share of the drug-eluting stent market is now about 55%. The remainder of the market is owned by the rebounding Cypher, which overcame its own production problems and quality system compliance issues with FDA. Cordis and Boston Scientific continue to tout studies that they say attest to superior performance of their particular stent, but most researchers see both devices as clinically equivalent.

Gunderson

Going forward, Thomas Gunderson, senior medtech analyst with Piper Jaffray Inc. (Minneapolis) sees Boston Scientific with a possible edge. "Their next-generation drug-eluting stent, Liberté, is expected to gain FDA approval for U.S. market entry later this year, while Cordis as of yet has nothing announced to follow Cypher," he says.

Other U.S. medtech companies with coronary stents in development include Medtronic Inc. (Minneapolis), Guidant Corp. (Indianapolis), Abbott Inc. (Abbott Park, IL), and Conor Medsystems Inc. (Menlo Park, CA). Gunderson says that if and when these devices are approved, they will have to fight for market share. "With competition increasing, there will be some—perhaps significant—price cuts on drug-eluting stents, particularly from the 'upstarts' who want to gain a foothold in the market."

Cardiac Rhythm Management. The cardiac rhythm management sector is growing at an annual rate of 20% worldwide and includes leading medtech manufacturers such as Medtronic, Guidant, and St. Jude Medical Inc. (St. Paul, MN). Each year, 400,000 Americans die of sudden cardiac arrest, and recent studies have demonstrated that ICDs can reduce death rates by 23%. Such studies have supported a significant expansion of reimbursement coverage for both Medicare and private- insurance patients, which is expected to further boost growth in the market.

Medtronic is the leader of the cardiac rhythm management sector. Guidant was a strong second, but following a year of damaging disclosures and several rounds of product recalls of both its ICD and pacemaker devices, St. Jude Medical was able to take away a good chunk of its business—at least temporarily. Piper Jaffray's Gunderson expects Guidant to recapture about 90% or more of its lost market share by the end of the current quarter.

The need for a high-visibility presence in the high-growth, high-margin cardiac rhythm management sector was the backdrop for one of the largest proposed acquisitions in medtech history—the $25.4 billion sale of Guidant to Johnson & Johnson. When first announced in December 2004, the merger was widely hailed as a good fit for both companies. However, as Guidant's product quality procedures and safety notification systems were called into question, and more than 300,000 of the company's devices were recalled, J&J began to get cold feet. Although the world's largest medical device maker eventually agreed to complete the deal, it was not before J&J had wrangled a $4 billion reduction in its offer to Guidant, resulting in a settlement price of $21.5 billion—or so they thought.

Enter into the acquisition fray Boston Scientific, with a $25 billion bid for Guidant that was just shy of J&J's original offer. As surprising as the move was, it followed on rumors that Boston Scientific was itself a takeover target. Will J&J counter, or walk away and seek out a new acquisition candidate like smaller, but squeaky-clean St. Jude Medical? At this juncture, it's anyone's guess. But regardless of the outcome of the current skirmish, the final deal is not likely to be closed until later this year. And, it could be much later.

In November 2005, cardiac rhythm manufacturers Medtronic, Guidant, and St. Jude were issued subpoenas by the U.S. Department of Justice (DOJ) as part of an investigation into alleged fraud, illegal incentives, and kickbacks given to doctors by manufacturers. As with a similar DOJ inquiry into the orthopedics sector, most industry analysts do not see the investigation as adversely affecting the growth of the sector. With coronary disease responsible for the largest share of healthcare spending, the demand for diagnostic and therapeutic devices that can lead to both early detection and improved patient outcomes is expected to provide a powerful stimulus for sector growth in the years ahead. The pace of clinical developments and keen physician interest in new cardiovascular devices typically results in relatively short product life cycles, which can be problematic in terms of securing adequate capital, but nonetheless enables innovative companies to introduce new products to meet clearly defined market needs.

IVDs: Looking for Growth

In 2005 as in many previous years, the in vitro diagnostics (IVD) sector continued to be fraught with contradictions that confound investors and exasperate company leaders. Pulling in worldwide revenues of approximately $29.7 billion in 2004, the sector is by far the largest in the medical device industry. Its total revenues were projected to reach $31.7 billion in 2005.

But when it is compared with medtech's other major sectors, which habitually produce double-digit sales growth year after year, the IVD sector looks anemic, managing a compound annual growth rate (CAGR) of just 5% over the past 10 years.

The sector is dominated by just seven companies that among them control more than two-thirds of the global market for IVDs: Abbott, Bayer, BD Diagnostics, Beckman Coulter, Dade Behring, Johnson & Johnson (with two companies, Lifescan and Ortho-Clinical Diagnostics), and Roche Diagnostics. Several of the key players are diversified medtech companies that derive the majority of their revenues from activities in other sectors, including pharmaceuticals. Even without those revenues, however, each of these companies ranks among the 40 largest publicly traded firms in the medical device industry.

Nevertheless, significant growth has been a rare commodity for IVD manufacturers, even among the sector's Big Seven companies. In fact, comparing nine-month revenues for the top 10 public IVD companies in 2004 and 2005, only Sysmex (16.8%), Johnson & Johnson (15.3%), Abbott (12.8%), and Bio-Rad Laboratories (11.8%) showed year-over-year growth in double digits. Somewhat surprisingly, sector leader Roche Diagnostics turned in the worst performance of this group by logging a year-over-year increase of just 4.2% (see Table II).

Although large players may command the majority of the IVD sector's revenues, they don't necessarily dictate the direction of the field's research and development activities. Burdened with the need to supply existing customers with a wide variety of low-margin products, including both instruments and reagents, the IVD sector's largest companies have necessarily restricted their R&D expenditures to core areas of expertise. Meanwhile, in a quest for returns that might outpace the sector's otherwise paltry growth, venture capitalists and other early-stage investors have thrown their support behind the several hundred smaller companies that populate the remainder of the sector.

Some of these smaller companies—many of which are in various stages of prerevenue development—are exploring alternative diagnostic approaches for fields already mined by larger players. These include blood-glucose monitoring for diabetes, cardiology diagnostics, and cancer detection. By investigating the clinical utility of newly discovered biomarkers or applying new technologies for sample processing, detection, and analysis, small companies contribute to the advance of the field. If they survive—and not all such companies do—they can offer investors significantly better returns than their large-company counterparts.

A major area of growth for IVD companies—and especially for smaller companies—is the emerging field of molecular diagnostics, which promises to offer determination of genetic predisposition to disease, earlier disease detection, and exquisitely accurate monitoring of disease progression and therapy. Such characteristics provide a major underpinning for the much-publicized movement toward personalized medicine. As a whole, the IVD sector would seem to have the most direct pipeline for commercializing such products, which are among many benefits projected to come from the completion of the Human Genome Project.

But in practice, growing the field of molecular diagnostics has proven more difficult than originally imagined. In its early years, the field was bedeviled by ethical considerations for ensuring the privacy of patient information and issues related to the patenting and licensing of genetic sequences. More recently, growth of the field has been hampered by FDA's inconsistent approach to regulating commercial molecular diagnostics compared with testing conducted by clinical laboratories using analyte-specific reagents or their own 'home-brew' probes. Convincing FDA's Office of In Vitro Diagnostics Evaluation and Safety to eliminate such inconsistencies is a major goal for IVD companies and likely a precondition for major growth of the field.

Another factor that has limited growth of the IVD sector, including new molecular technologies, is the restricted reimbursement pricing offered under the federal government's Clinical Laboratory Fee Schedule (CLFS). Modernizing the CLFS is among a number of key recommendations made in a July 2005 report commissioned by industry association AdvaMed (Washington, DC) and prepared by the Lewin Group (Falls Church, VA).² Other recommendations of the report include development of procedures to correct historical pricing errors and adoption of value-based processes and criteria for incorporating new technologies into the CLFS.

Companies in the IVD sector have put a lot of muscle behind AdvaMed's initiatives, anticipating that they will generate significant benefits for IVD companies and for the healthcare system as a whole. Certainly, the fee structures used for the IVD sector are long overdue for an overhaul. Implementing a more rational structure would encourage the development and adoption of advanced technologies and create a stronger foundation for a healthcare system focused on personalized medicine.

But transforming and updating the entire sector will take time. In the coming year, the most that should be expected is that progress will be made toward these goals. And along the way, perhaps, stakeholders in the IVD sector will finally begin to realize the growth potential that they have always believed their companies could achieve.

References

1. U.S. Medical Imaging Industry Outlook (San Antonio, TX: Frost & Sullivan, 2004).
2. The Value of Diagnostics: Innovation, Adoption, and Diffusion into Health Care (Washington, DC: AdvaMed, 2005).

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