Do U.S. Medical Device Start-up companies take advantage of less restrictive regulatory and reimbursement regimes outside the United States? Are most start-up companies challenged by the need for international clinical trials and initial product launches? Is the development of advanced medical technologies from countries such as India, Singapore and China fueled by substantial government incentives as well as lower labor costs?
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…In addition to technical and regulatory barriers, global market forces, as with most all industries, are expected to dramatically impact the advanced medical technologies sector. These impacts will be particularly important to start-up companies in the United States, forcing executives of these firms to think, act and network globally. Global market considerations will include:
> Continued off-shoring of manufacturing, especially for less technical Class I and II medical devices
> International clinical trials and initial product launches that take advantage of less restrictive regulatory and reimbursement regimes outside the United States
> Competition in the development of advanced medical technologies from countries such as India, Singapore and China, which provide substantial government incentives as well as lower labor and other operating costs
> The opening of enormous new medical technology markets in new world economies such as those of India, China, Singapore and Vietnam
Many of these factors already have contributed to substantial consolidation in the U.S. medical device industry. In particular, companies have become larger and more diverse, with multi-billion dollar players operating multiple business units targeting a wide range of technologies and diseases. Industry consolidation continues to drive acquisition of attractive technologies and the emerging companies that pioneer them…
…Most all of the large medical device conglomerates are headquartered in these states and have research, development, and often, manufacturing operations there as well. Among the large companies populating these communities are Boston Scientific, Johnson & Johnson, Medtronic, Baxter, Abbott, General Electric Medical, Bard, Stryker Medical, Beckman Coulter and Becton Dickinson.
Over the years, medical technology communities have developed around large companies as the companies have spun off both business and scientific/clinical/engineering talent who then launch more medical technology companies. These communities have significant advantages in not only having the local networking and talent pool, but also the investment backing and related vendor support.
The largest medical technology cluster communities in the United States are Boston, Minneapolis, and several regions of California including San Jose/Silicon Valley, Orange County and San Diego. On a smaller scale, cities including Memphis, Tennessee, and Warsaw, Indiana, have developed focused medical technology cluster communities around a single medical technology, such as orthopedics.
With the attractive future projections for medical technology industry growth, there are also now more new state and city initiatives targeting this sector. At the state level, recent activity has focused on growing medical technology clusters in Florida, Wisconsin, Ohio and Michigan.
Unlike the historically strong medical technology cluster communities, these new emerging clusters do not have large corporate headquarters or facilities.
Instead, they are focused on supporting the launch of companies with leading-edge technologies that will seek larger corporate partners for licensing or acquisition.
The success of such leading-edge technology companies, and the communities that support them, will therefore be based on a number of factors important to emerging company growth. These include access to intellectual property counseling necessary to adequately protect pioneering technology, assistance with regulatory and reimbursement hurdles, support in proving market demand and size through effective market research, and access to business development executives of potential partners and acquirers. Also critical to these companies is access to the seed capital that is so necessary to overcoming early technical and business hurdles.