Our mission at acroMIS is to implement and develop medical device technology in new markets
using cost effective and sustainable methods.
We offer our services to VC firms & entrepreneurs, start-up & early-stage companies, and later stage corporations.
Our clients benefit from our international experience and global network of opinion leaders,
utilize our capital-efficient methods, and engage us in our collaborative approach.
Please contact us at:
Phone: +1 (650) 336-8641
email: info@acromis.com
Current U.S. Economy’s Impact on Medical Device Industry
A Price Waterhouse Coopers report about investment activity indicates that medical device deals are down all over the country: 1Q09 dollars down 61%, deals down 45% from 1Q08. Many industry experts believe there are two fundamental reasons for this.
First, overall, the climate for medical technology investment is mostly perceived as negative and investors are citing regulatory changes at the Food & Drug Administration as their primary concern. A new comprehensive institutional examination of the 510(k) process that will likely result in recommendations for change, the regulatory path for new devices is likely to become longer in the near future.
Second, the economic performance of the medical device industry is dependant on the strength of the U.S. healthcare system, which currently is being reformed. The American Hospital Association (AHA) feels that hospitals, which already are facing $38 billion in reform-related cuts as well as $41 million in cuts related to the proposed Medicare inpatient prospective payment system, are being unfairly targeted and will not be able to deliver quality patient care to their patients and communities. The Reconciliation Act of 2010 does not address the cost issues that we are facing with the expansion of availability of healthcare services and as a consequence provider payment reductions will indirectly affect medical device manufacturers. Device manufacturers in high-cost segments expect the need to plan for reimbursement reductions.
Furthermore the medical device excise tax applies to products ranging from surgical instruments to implants. Starting in 2013, the U.S. Device makers face a 2.3% tax on U.S. sales. This tax is estimated to raise $20 billion over 10 years. In addition the impact of the new Patient Centered Outcomes Research Institute (PCORI) on CMS payment decisions is uncertain. Any potential investor needs to take the above factors into account. VCs continue to invest in med-tech start-ups as long as the companies can demonstrate value propositions for the patient, the physician, the provider and the payer industry in spite of the healthcare reform.
The expected U.S. economic policy and regulatory changes are making it more attractive to do business outside the U.S. For some device makers, going international offers the opportunity to debug technology, and to complete opportunity assessments and market research. Going after smaller international markets first allows U.S. companies to evolve, define, and develop more IP around the method and devices used for a procedure, thereby increasing the likelihood of a successful attack on the bigger U.S. market.