Almost two decades ago when I came to Singapore, medical device technology was a field unknown to me. With 14 years in the pharmaceuticals business in India and the Middle East, I had assumed I would not be surprised by what I would see. However, nothing was further from the truth. Medical device technology quickly became an obsession of mine and soon I started wondering — even regretting — why I hadn’t found this exciting field sooner in my career! This was an area of business and a phase in an industry’s development where one could make a real impact in meeting the medical needs of an emerging Asia.

In the early 1990s, the market was largely dominated by distributors selling goods on behalf of American and European multinationals, and little work had been done to decipher how to develop Asia’s markets other than by meeting surgeons who had been trained in the West. A few enterprising individuals experimented with market development, but the task was too enormous for them to be able to make a significant impact on the vast Asian market. Collaborative ecosystems did not exist and industry leadership was lacking. Why had the MedTech industry not taken off in Asia? Asia had already developed a mature pharmaceutical market, so why hadn’t the MedTech sector flourished? Although Asia represented less than 10% of the world market at that time, it was substantially larger in terms of the number of patients needing treatment.  

Market development and innovation

putting in substantial fieldwork to try and understand the market’s dynamics, I concluded that there were four essential gates to adoption of a new technology or surgical procedure. These were:

a. Access (the regulatory and reimbursement system used to admit and fund devices, as well as access to the capital infrastructure needed to facilitate surgery);

b. Adoption (the need for surgeons to be trained in usage of the device);

c. Awareness (end-user education about the product’s features and benefits); and

d. Affordability (how much the product would cost the end-user).

There still was the question of how these gates influenced the flow of devices into the market and in what sequence. After much deliberation, I arrived at the following conclusion: When a new device is quite similar to an existing device or procedure, access, adoption and awareness barriers are crossed very rapidly, leading to a steep rise in the value of the market and speedy penetration. The key in this scenario is overcoming regulatory and reimbursement hurdles, and affordability.

An example of this is drug-eluting stents —. While the new product, Cypher, had a drug coating, its physical structure and method of deployment was essentially the same as existing stents. This meant that the market was already familiar with the basics of the product: hospitals already had catheter laboratories and trained physicians to do the procedure. Market penetration of this new technology was therefore achieved quickly, in spite of a complex regulatory pathway and high initial price of the product. Conversely, a technology like robotic surgery has a relatively longer pathway to maximum penetration. Each barrier represents a significant hurdle, including infrastructural access (high capital investment); regulatory barriers; surgeon adoption; patient referral; and affordability.

Often in emerging markets, affordability is a significant barrier and innovative companies can reap benefits by producing more market-appropriate products. The challenge is to reduce costs without compromising quality. Johnson & Johnson’s ValuTrus is a linear cutter-stapler with a handle that can be sterilised 200 times. While ordinarily, a liner cutter-stapler’s handle must be disposed of following a single usage, Johnson & Johnson created a model that could be used again and again.   

Collaborative leadership

At the heart of MedTech innovation is the collaborative effort between three parties - a surgeon, a biomedical engineer and a venture capitalist — often referred to as the triangle of co-invention. Many successful medical devices are the result of collaborative efforts between these three stakeholder groups. Commercialisation of a product involves interfacing and collaboration between industry, regulators, policymakers, payers and physicians.

The medical technology industry is a multi-stakeholder ecosystem and needs careful development and nurturing of talent with ability to lead and manage across these multiple interfaces. It takes several years of training, experience and systematic development to create a competent MedTech leader.

Of course, this ecosystem is not without challenges; the biggest of which, particularly here in Asia, is one of culture.

Creating an environment where all the surgeon, biomedical engineer and venture capitalist can get together is something the industry has struggled with. Many years ago, a student of mine was doing his MBA at Nanyang Technological University in Singapore. I asked him to question his peers as to whether upon creating a new research product, they think of its commercial value. In addition, I wanted to find out whether they were in dialogue with doctors and others on the ground, as I was trying to see if the different stakeholders were being included in their creative process. They were not and were instead working independently.

Singapore has a unique asset in that many of the multinational MedTech companies are headquartered on the island. Because of this, I set about founding a medical technology industry group, involving players from various companies, including competitors of Johnson & Johnson.

Soon after I established the group, I realised that I had made a mistake, as our meetings were full of my competitors and not potential partners. What Singapore needed was not an industry group, but a cluster. Rather than establish an organisation comprising many different companies with similar interests and perspectives, we needed to form a group that involved the stakeholders from the MedTech sector, more specifically the five ‘P’s — the providers, physicians, patients, payers and policymakers. Only upon achieving this would we have the complete ecosystem required for MedTech innovation. To date, Asia has not quite reached this point; however, we are getting there.

Another threat to MedTech innovation here in Asia is regulation. Regulators across the region face a talent shortage, with many people leaving their positions for better jobs in the private sector. As a result, regulatory approval of new inventions takes twice as long as in Europe and the United States. For a company the size of Johnson & Johnson, this is not a problem. Yet, for start-ups — which is where most innovations begin — this is problematic: they will not be able to commercialise a product until it has been granted regulatory approval. A delay of 12 months would mean the company won’t be able to make any income for over a year – and its commercial life will be shorter reducing the overall returns on research investment. For many start-ups, this shortage of cash flow is catastrophic and is a problem that must be solved.

To get around this, we need regulators that ensure the quality of products meets the highest of international standards, irrespective of how long their approval takes. Where the MedTech industry differs from some other sectors is that senior executives must be close to their customers. In many industries, such as the pharmaceutical sector, it is not necessary for senior executives to see their customers. In the MedTech industry by contrast, customer contact is very frequent, not just for the building of relationships, but to discuss ideas and opinions. It is not uncommon for surgeons to act as counsel for acquisitions, as they will quickly be able to ascertain whether a product has any commercial value.

In addition, the MedTech industry actively participates in market development, as it is not only the quality of the device that is important, but also the quality of the surgery. As with all medical devices, the quality lies in the training. Often in this industry, how you are judged is not on the product itself, but on the quality of outcome. Therefore, getting involved with the training and education of the various stakeholders — including regulators — is key to a company’s success in the MedTech industry.

In Asia, where healthcare systems in many countries are rapidly evolving to serve the needs of their people, collaboration between industry and healthcare institutions has helped raise the standard of care. In 1986, Johnson & Johnson partnered with a Singapore academic institution to create the company’s Regional Hospital Management Program to help doctors transition from clinical roles into hospital administration. A week-long intensive training process creates the foundation for good hospital management but the key to the programme’s success is the ongoing sharing of knowledge and experience that is fostered through an alumni programme. In conclusion, the MedTech industry today calls for a collaborative approach and working seamlessly across the stakeholder ecosystem to optimise the returns to the patient, the payer, the provider and the industry.   It is critical for us to have skilled leaders to foster deep collaboration in order to achieve our shared mission: Bringing better care to patients.  

This article was first published in HQ Asia (Print) Issue 03 (2012)