CardioVascular Industry Overview and Prospects
You bet Bill and nothing is more powerful than good DD and keeping a tab on the market trend today. ABMI bodes well for all who have been accumulating and holding patiently. Todays price is over 100% more that when Jeff started his first post and a significant milestone. Here follows an industry report on Cardiovascular Devices with a complete market overview: Hope all ENJOY
Heart Care
CARDIOLOGY INDUSTRY
The Stage Is Set For A Healthy Sector
The industry is valued at more than $7 billion worldwide!!!
Cardiovascular disease is the number one cause of death in the U.S. More than a million people die from coronary artery disease every year. On a worldwide basis, over 600,000 coronary bypass surgeries, more than 200,000 valve procedures and at least 800,000 less invasive interventional cardiology procedures are performed each year. These numbers are expected to increase substantially as the population ages in the U.S., Japan and Europe.
This fact, plus the timely introduction of new technologies and procedures to improve treatment options, set the stage for a healthy cardiology sector, which is valued at more than $7 billion worldwide.
The cardiovascular device industry is affected by managed care; the role of innovation in product development; and the corporate philosophy that "bigger is better" relative to the competition.
Innovative products are being developed in various niches that make up the cardiovascular market. The key segments include implantable cardiac rhythm management devices, such as defibrillators and pacemakers; vascular intervention products, such as stents and balloons for angioplasty; and the emergence of minimally invasive surgery techniques. The U.S. market generated more than $5 billion in sales last year and should hit nearly $9 billion by 2000.
In the cardiology sector, minimally invasive surgery solutions are exciting alternatives to conventional procedures because they result in less trauma, complications and side-effects.
This translates into more cost-effective healthcare by reducing length of hospital stay and rehabilitation time. "With a potential $4.3 billion market, cardiac surgery devices could become the largest medical device market known."
In conventional open-chest cardiac surgery, the physician must make a large incision to perform a sternotomy (saw open the breastbone) and separate the two halves of the rib cage. Minimally invasive approaches allow the surgeon to gain access to the heart with much smaller incisions or by removing a small piece of rib. Key issues influencing the rate of adoption of minimally invasive techniques include rate of physician training and proven clinical safety and efficacy.
Two approaches are being pioneered in the marketplace: the stopped heart method by Heartport and the beating heart method by CardioThoracic Systems and United States Surgical Corp. All of these companies quote mortality rates that are comparable to conventional surgery, and all have approval for marketing in the U.S. and Europe.
The stopped heart technique applies to a wider patient population because it can be used in more complex procedures, which make up about 80% of the market. Heartport's stopped heart technology, known as Port-Access, is made up of three systems with reusable and disposable devices: Heartport's EndoCPB (cardiac pulmonary bypass) System,
Port-Access CABG (coronary artery bypass graft) System and Port-Access MVR (mitral valve replacement and repair) System.
The EndoCPB System allows the surgeon to connect the patient to the heart-lung machine, and stop and protect the heart. The Heartport systems are used in conjunction with each other for single- and multiple-vessel bypass and heart valve surgery. David Singer, CFO of
Heartport, explains, "Our systems give surgeons versatile technology that allows them to approach the heart in a minimally invasive way in order to perform a wide range of cardiac operations. This may provide important benefits for patients and hospitals by reducing pain
and trauma, shortening hospital stays, speeding recoveries, leaving smaller scars and potentially reducing healthcare costs."
To repair heart valves and perform multi-vessel bypass procedures, the stopped heart method is used because the organ must be still and empty of blood so that surgeons can cut into the valves or turn and manipulate the heart. Minimally invasive repair or replacement of
the mitral heart valve is currently possible only with the stopped heart method offered by Heartport's Port-Access MVR System.
The stopped heart method of conventional cardiac surgery remains the gold standard and yields effective long-term results. Surgical costs using Heartport's Port-Access systems may initially be comparable to conventional bypass surgery. However, the reductions in trauma,
post-operative pain and scarring, length of hospital stay, recovery time and potential for complications might make this alternative more preferable.
Technology And Cost Sharing
As the sector develops, mergers and alliances are forming to share research and development costs and complementary technology.
Medtronic is a good example of the concept of "bigger is better."
says, "The company has a leading position in pacemakers in the cardiac rhythm management business, in cardiothoracic surgery and in neurology and related markets. Moreover, it is attempting to build a franchise in interventional cardiology. During the next eight to 12 months, Medtronic intends to launch 15 to 20 products in that area." The
company's corporate objective is to sustain earnings growth in excess of 20%.
As an alternative to cardiac pulmonary bypass surgery, stents, which are metal coils, can be positioned in coronary arteries to keep them open. "The stent market this year is estimated to be about $1.3 billion worldwide." Johnson & Johnson currently holds a leadership position in the U.S., with an 85% share of the U.S. stent market. However, later in 1997 and in 1998, several companies with innovative products are poised to offer fierce competition in the U.S. market. These companies include Medtronic, Guidant, Boston Scientific Corp. and Arterial Vascular Engineering. Innovations in stents have led to products with greater flexibility and the ability for use in narrower
arteries. The products that have already been released in Europe have gained significant market share.
Guidant is a relative pure play in cardiac rhythm management devices and vascular intervention products. Its Multi-link stent, approved in Europe, has been approved for marketing in the U.S. in late 1997. Guidant was the best new product story in the industry, with a greater exposure to stents and defibrillators than any of its competitors. The company did over $80 million in global stent sales in 1997, and expects more than $200 million this year.
In the implantable cardiac defibrillator (ICD) market, Guidant sees significant growth. Arora says the factors that are influencing larger sales are recent clinical studies that have demonstrated superior results relative to drug therapy, adoption of the prophylactic use of
ICDs, the increasing number of survivors of cardiac arrests and the expanded use of external defibrillators. According to Reicin, this $800 million market is growing by more than 20% per year. Implantable defibrillator market leadership seesaws between Guidant and Medtronic, with each holding about a 42% to 45% share. Also, Guidant has extended a $30 million credit facility to Endovascular Technologies, a
company that is the leader in the minimally invasive repair of abdominal aortic aneurysms (AAA). It has developed three versions of its Endovascular Grafting System to treat this disease.
With 350,000 cardiac arrests per year in the U.S. alone, innovations in treatment devices have led to technological advances in the automatic external defibrillator (AED) market.
Heartstream has the potential to put a lighter, more user-friendly device in the hands of first responders, such as firemen, police, flight attendants and others at less accessible emergency sites. American Airlines ordered 300 of the company's ForeRunner AEDs last
November for placement on all of its flights. Heartstream's product is a bi-phasic automatic external defibrillator, which is more effective than a mono-phasic defibrillator on patients with more downtime. Also, it is more effective in the presence of anti-arrhythmic drugs, and
less energy is used with a bi-phasic wave form, causing less damage to the heart. The industry leader, Physio-Control, produces mono-phasic technology for its external defibrillators, which are used mostly by paramedics and other medical professionals. The rush is on to prove technological superiority in efficacy. AEDs represent a $450 million to $500 million market in 1997.
Although some cardiology stocks have slid along with other small caps, the sector offers vast growth opportunities. There is a huge market awaiting those companies that address the medical problems of older people. This includes cardiology. As technology advances, innovative implantable devices and vascular intervention products will proliferate. And the short-term shift toward minimally invasive cardiac surgery offers many advantages. New techniques will gain acceptance as more physicians are trained and more studies emerge that show equivalence to the cardiac pulmonary bypass standard. The winner is the consumer who will have better options for cardiovascular treatment as this trend progresses. And investors who get in early on this sector can benefit from the rising enthusiasm in cardiology stocks - large,small and Micro caps alike.
ABMI will fall under a class of its own and definitely benefit by serving the industry need. That will perhaps play a different role than anyone anticipates and time will tell when the whole story unfolds.
Go ABMI !!!
Regards,
Sri. |
