Market Research Blog

 As Implant Files, an investigation by International Consortium of Investigative Journalists (ICIJ), have exposed failure of medical regulators to test faulty medical implants and save lives, companies are using an exemption clause to escape from EU’s new rules. The May 2020 Deadline for manufacturers who test medical devices to comply with recertification norms has led many companies to look for loopholes in the law.

EU instead of making new regulation is opting for stricter compliance of norms in the existing law.

ICIJ’s Implant files reported 4400 violations by device companies to report complaints and device problems in the last decade, the outrage ran across all sections of public opinion.

Companies are exploiting a grandfathering clause in the law to postpone recertification for another five years. European commission stated that the intention for the clause was to apply under some very specific conditions so that key products which could not make it up to the deadline wouldn’t have to be taken off the shelf. A clause which was meant to be a safe exit or a Plan B is being used by medical manufacturers to bypass implementation deadline.

The postponement of recertification will result in delay in access to critical medical devices to patients.   The grace period clause which allows companies to postpone recertification up to 2025 will not be feasible for the safety of patient as well as by transparency perspective, according to a senior member of EPF, A nodal patient advocacy group in Europe.

The Delay seems deliberate as MedTech, a lobbying firm for device makers warned of large scale discontinuation of vital medical technology products the healthcare industry has relied on for decades. In May 2018, just two years away from deadline, the firm replied with a negative response on whether recertification was on track. Concerned voices in European Parliament have shown skepticism about the new framework’s ability to effectively ensure compliance.

The medical device industry has around 27,000 players which collectively make 5, 00,000 products. Around a handful of 60 bodies which have been notified, has gained final approval from European commission to scrutinize and certify medical products according to safety standards. The regulation attracted criticism as the bodies which appointed certification are themselves waiting for final approval. The administrative lapses along with escapist attitude of companies has enraged patient rights and advocacy groups all over the continent.

Spain and Denmark seems to have taken the issue seriously and it was put on immediate agenda on Health Council in December last year. The commission having worked for decades to formulate these norms, can’t wait for another delay in its implementation, said Ellen Trane Norby, the Danish Health Minister.

Researchers in Barcelona have found a new grapheme based implant to map the brains activity below 0.1 Hz of frequency. The prototype created at Barcelona Microelectronics Institute will help in understanding the brains activity exponentially.

For decades researchers were using electrode arrays to map the activity in the various parts of the brain. The electrode arrays were helpful in understanding which areas of the brain are active when a particular activity was being performed and which areas were silent. But a limitation to this technology was that this could only detect frequencies over certain threshold. This limited the scope of understanding brains working at subtle frequencies. The new technology has paved the way for understanding brains working below the frequency of 0.1 Hz.

The technology was invented as a collaboration project involving Barcelona Microelectronics Institute, CIBER in Bioengineering, Catalan Institute of Nano sciences and Nanotechnology, August Pi i Sunyer Biomedical Research Institute. The Technology by using a transistor based architecture amplifies low frequencies before they are transmitted to the receiver, this technology will do away the existing electrode array method of brain’s activity mapping.

Graphene being flexible and slim will enable the use of implants in various parts of brain earlier unexplored by the electrode array method of mapping. Information on Many new regions of brain will be available by this technology’s application. For neurologists this is good news as hearing and understanding subtle whispers of the brain will be possible for the first time with the new technology. Unprecedented insights are awaited by academia and researchers alike on such matters like the origins of seizure and effective diagnosis and treatment for conditions like epilepsy by the full throttle application of this technology.

The technique where a large number are recording sites are explored by using transistor configuration is called multiplexing strategy. A European project BrainCom, is using the same technique to restore communication and speech in patients. The project is working on creating new array of brain-computer interfaces to repair high level of cognitive functions focusing particularly on speech disorders caused by spinal cord or brain injuries.

Graphene has shown promising applications in medical implants field, with news reports in April 2018 breakthrough innovation where vertical; grapheme could be used to kill bacteria while surgery and stop further infection. When the flakes were added to the surface of the implant Graphene hindered bacterial infection during the surgery. This and other interesting applications of Graphene has shown promising future for nanotechnology applications in medicine and medical implants.

Intel and GE Health’s, two of the  biggest players in the digital healthcare sector, have in a collaborative project shown promises to significantly reduce the time between imaging and medical diagnosis. The new technology will harness the Intel Distribution of OpenVINO Toolkit which runs on Intel’s x-ray systems to help prioritizing and optimizing patient care.

Before the latest development, a longer amount of time was wasted to effectively diagnose a health condition based on the massive imaging data generated which would often lead to delayed diagnosis and treatment which in the case of critical conditions would take a toll on patient’s health. 97% of medical imaging data remains unused or unanalyzed every year according to reports. This inability of medical imaging data.

A specialized deep learning based training is undertaken where numerous labelled example images are fed to the models without specifying exact features to look for. These optimized models are able to identify details not noticeable to human eye which when integrated into GE applications with API’s from OpenVINO inference engine. The x-ray machine will acquire the images and inference engine will run the medical diagnosis. GE Healthcare’s Bigelow said that the technology’s potential will help diagnose life threatening events like pneumothorax. The technology will enable effective and efficient decision making, a good news and hope for nearly 16,000 Americans who are diagnosed every year for lung cancer. As delayed diagnosis is one of the major determining factor of cancer death rate, the technology’s promises to on time correct diagnosis will improve the patient’s chance of survival radically.

The new development is particularly promising for radiology as its trained models will be able look for target features in images such as anatomies and tumors. This will reduce retakes which will reduce patient’s unwarranted exposure to painful radiation and will make radiologists life easier by managing workload and enhanced quality of images.

Reconstructing an image from imaging modalities will become easier with deep learning based models. Future applications may include cellular microscopy, pathology, patient’s digital health records in helping develop precision based medicine and targeted drugs.

The healthcare industry has been continually witnessing a wave of strategic mergers and acquisitions, which could bring in major transformations in the spectrum of healthcare business. Post multiple series of consolidation between the pharmacy benefits managers and health insurers last year, biotech companies have been flourishing in the healthcare space as they have evolved as highly attractive targets for large firms after their valuations came down in the past few months.

This is apparently evident as Bristol-Myers Squibb, a leading American pharmaceutical company, agreed vis-à-vis acquiring Celgene Corporation for a valuation worth $74 billion, in terms of cash and stock deal. This proposed deal would be beneficial for either of the companies that are struggling in the cancer market (presently one of the largest pharmaceutical spaces) for innovation-oriented treatments.

Details of the Deal

As per terms and conditions of the deal, Celgene investors would be receiving one Bristol-Myers share and around $50 cash for every holding of Celgene, along with a contingent value of $9, in case three treatments in development get approvals at the right time.

The deal values Celgene at $102.43 each, a premium of around 53.7% to the closing price and would bring in together two of the global leaders in cancer drug businesses in the largest ever pharmaceutical deal. The combined company would be 69% taken by Bristol-Myers and will frame a specialty biopharma company dedicated for treatments in cancer, inflammatory, and cardiovascular diseases. It will also have a robust portfolio of around nine drugs with a surpassed valuation of $1 billion in case of annual sales.

The transaction would eventually translate into an overall cost savings of around $2.5 billion by 2022, with around 55% derived from cuts in expenses in terms of  general, sales, and administrative, 35% via reduction in the research & development spending and around 10% from the manufacturing spectrum. Therefore, Bristol-Myers anticipates the deal to supplement 40% to its net earnings in the first year post closing.

The news has shed some light on multiple number of ETFs in healthcare, primarily in case of biotech and pharma, which could be in absolute favor of investors to leverage opportunity coming from the BMY-CELG deal. Investors should also keep a close track of the movement of ETFs in the forthcoming weeks.

In multiple cases, acquisitions are instrumental in terms of overcoming significant hindrances in achieving organic growth or growth obtained with the help of the existing assets. Otherwise, in case the existing business is not growing in significant terms, purchasing another business has become more of a common strategy to flourish and reap significant benefits through augmented cash flow.

Chinese drug maker’s stocks plunged by $46 billion in December 2018.  Chinese government is planning a shift in its drug pricing policy by undertaking bulk procurement of drugs as part of its new program. The move is significant as it will bring down prices of drugs as a major step towards universal and cheaper access of drugs to its citizens.

Generic drugs are a class of drugs whose patents have been expired, Chinese domestic pharmaceutical industry relied mostly on manufacturing generic drugs. After serving inflated profit margins to the industry, governmental policy shift has raised concerns about the efficacy of generic drugs profitability in the long run.

The central procurement program of drugs launched by Chinese government buys drugs for a city in bulk, as contracts are placed in competitive bids by pharmaceutical companies the prices of drugs have fallen forcing the fragmented industry into consolidation. This is only the beginning as the government plans to expand the program to all major cities in near future. One such bidding, drove down the price of the drugs by 55% and the other by as much as 90%. This radical shift in governmental policy has forced pharmaceutical companies into introspecting its business model.

According to fresh data gathered by Bloomberg, of the top 100 generic drug makers, Chinese companies with a gross and profit margin of 74% and 18% respectively, outran the global average of 55% and 9.5%.  The oversized profit margins owe their existence to regulatory privileges enjoyed by many. The domestic generic drug makers swiftly acquired government approval for copying drugs, while foreign multinationals had to wait for years to get government’s green signal. This along with the absence of any regulatory quality control gave domestic companies to rapidly expand in the market.  

But now many companies are planning to reverse this overdependence on generic drugs driven business model by investing more on Research and Development. The new landscape will favor companies who have already invested heavily in R&D. The companies with impressive R&D investment are Jiangsu Hengrui Medicine, Yipinhong Pharmaceutical and Chengdu Kanghong Pharmaceuticals with 16%, 8.4% and 8% of R&D investment of their total revenues respectively. Jiangsu Hengrui has 20:80 novel to generic drugs revenue ratio, the company wants invert this by focusing on new research.

Launching any novel drug is a many-year-long process, Chinese pharmaceuticals will find it hard to compete with global giants with vast talent pool and deep pockets. However, experts believe that with generic drugs revenue in shock, the transition to R&D and novel drugs won’t be easy.