Medical Device Contract Research Organization Market


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Medical Device Contract Research Organization Market

  1. 1. CROs and Cardiovascular Devices December 9, 2009 Prepared by Rachel Little, Stacee Millangue, Kathlyn Smyer, Cory Welch, & Kirk Yoshida School of Information, University of Texas Frost Bank Tower 401 Congress Ave, Suite 2950 Austin, Texas 78701 (512) 721-1200 The information contained in this report is posted with permission.
  2. 2. PROJECT OVERVIEW Objective Focus on the role of Clinical Research Organizations (CROs) in the medical device industry to help Santé Ventures decide whether or not to invest in or acquire a CRO company Main Questions •  How is the CRO industry structured (key players, key sponsors, services, growth rates and trends)? •  Is there evidence of VC firms using CROs for their portfolio companies? •  Are there case studies that describe how a key sponsor used a CRO for medical device development? •  What is the FDA’s position on offshore clinical trials, including their view of offshore test populations as representative of US populations? Secondary Questions: •  What are the stages in the medical device development process and how do CROs help at each stage in the process? •  What are the service offerings that CROs provide and what are the pricing models? •  Are there metrics for sponsors to select CROs? Other Deliverables: •  Provide a list of top CROs that either specialize or have known capabilities in the cardiovascular medical device area •  Provide a list of top VC firms that invest in medical devices •  Links to datasets for clinical trials and medical device submissions 2 Confidential & Trade Secret
  3. 3. OVERALL CRO MARKET •  Current estimated CRO market size: $10.91B (Frost & Sullivan)1 to $23.7B (Goldman Sachs)3 •  Projected CRO market size: $22.87B (1) for 2015 to $33.7 for 2012 (3) •  Current growth rate (2009): 10% (1) •  2008 growth rate: 14-15% (1) •  1,100 CRO companies worldwide (1) Pharmaceutical and Biotechnology Market: R&D Clinical Trial Pipeline by Therapeutic Area (U.S.), 2009 Metabolic 5% Respiratory Cardiovascular 3% 8% Central Nervous System Other 10% 37% Other Oncology Infectious Diseases Central Nervous System Cardiovascular Oncology 25% Metabolic Respiratory Infectious Diseases 11% Percentages rounded up 3 Confidential & Trade Secret Sources: Frost & Sullivan(1,2)
  4. 4. TOP CARDIOVASCULAR CROS Companies chosen from list compiled through searches in Cap IQ, Google, market research reports •  Narrowed down to medical device CRO’S •  Narrowed further to those with cardiovascular capabilities •  Researched for years of experience •  Checked for offices in Europe and Latin America (CRO spreadsheets attached) Top Players in CRO market who work on cardiovascular medical devices! Year Latin American Revenue CRO Europe Offices Company Website Founded Offices ($b) Quintiles 1990 Yes Yes 3 PPD 1985 Yes Yes 1.57 Covance 1987 Yes Yes 1.73 4 Confidential & Trade Secret
  5. 5. CARDIOVASCULAR CRO’S (continued) Latin Latin Year Europe Year Europe CRO American Company Website CRO American Company Website Founded Offices Founded Offices Offices Offices MDS Pharma Averion 1933 Yes Yes Svcs. International 2007 Yes No Corp. Parexel 1983 Yes Yes GRSworldwide 2007 Yes No ParmaNet 1984 Yes Yes Clinimetrics 1988 No No Factory CRO 1998 Yes Yes Alquest 1993 No No Clindatrix 2003 Yes Yes MPI Research 1995 No No Charles River 1947 Yes No Labs Regulatory & Clinical MDCI 1980 Yes No 1999 No No Research Institute Criterium 1991 Yes No CBSET, Inc. 2006 No No ClinSys 1992 Yes No Symbios 2006 No No Clinical, Inc. Integrium 1998 Yes No N/A Innoventz (10+ yrs No No Cidal 2001 No Yes exp.) Venn Life 2006 Yes No Sciences 5 Confidential & Trade Secret
  6. 6. MEDICAL DEVICE MARKET Types of Cardiovascular Devices •  Medical Device Market worth $250 billion in 2009 Cardiac Rhythm Management •  Growth rate 6%-8% Cardiovascular Monitoring & Diagnostic •  Outsourcing has helped medical device manufacturers reduce product development cost by 10% to 30% (MarketsandMarkets)1 Cardiovascular Prosthetic Device Cardiovascular Surgery •  Orthopedics, neurology, cardiology, and cosmetics/aesthetics are the fastest-growing medical device market segments in the United States Electrophysiology •  Industry produces approximately 100,000 individual products per year Interventional Cardiology (Devicelink)2 Peripheral Vascular Devices Top Cardiovascular Device Companies ! (Global Data)3 by FDA submissions, 1976- present Intermedics Inc. Number of Documents Cordis Corp. St. Jude Medical Inc. Medtronic Inc. Boston Scientific Corp. 0 200 400 600 800 1000 1200 1400 1600 1800 2000 (Boliven)4! 6 Confidential & Trade Secret
  7. 7. MEDICAL DEVICE INVESTMENTS Top VC Firms •  Medical Device investments up 2002-2007 (Thomson)1 in Medical Device Field •  Medical Device investments fell 2008; increased in Q2 2009 (Dow Jones) 2 ($100+ M in health care capital) •  VC firms investing in device companies (1,2, •  Established medical device companies investing in start-ups Accuitive Medical Ventures o  Ex: Johnson & Johnson’s investment arm - JJDC group Golden Pine Ventures •  Evidence of CROs investing in medical devices, drugs, start-ups o  Ex: Quintiles takes cut in product revenues (4243B attached) Mayfield Fund o  Ex: Cato Research started investment arm Cato Bioventures4 MPM Capital o  Ex: PPD investing in Celtic Therapuetics (private equity firm) Three Arch Partners Versant Ventures VC Investment in MedTech Sierra Ventures Source: MedTech Field Includes •  Nonimaging diagnostics •  Research and other equipment •  Imaging •  Therapeutic Devices Source: Ernst & Young Confidential & Trade Secret Source: Ernst & Young, Capital IQ, Dow Jones VentureSource and Windhover
  8. 8. CRO & DEVICE SPONSOR PARTNERSHIPS What to ask a CRO: Pricing Models •  What are the capabilities and capacity of existing clinical personnel? •  What are the critical business factors Fixed (e.g., time, money, headcount) for the organization? Great for small projects •  What are the long-term needs to support clinical development? Option for tight budgets •  Do they substantiate in-house capabilities? What can be outsourced in conducting clinical trials? Billable Hours, by service •  SOP development Current standard for most CRO’s •  Site Protocol development Allows for some flexibility •  Monitoring / Project Management •  Data Management / Statistics •  Audits of internal and external of clinical processes, procedures and Sources: Clinpage: 1,2 personnel (Source: Kate Giovino, OrganoGenesis Inc. ) 8 Confidential & Trade Secret
  9. 9. MEDICAL DEVICE TESTING PROCESS Graphic Source Major categories under which medical device testing fall aligned with the stages of product development: 1. Research and Development (2-3 years): includes screening and qualification tests that chemically characterize raw materials or medical device components 2. Design and Validation (6-12 months): or functionality testing, usually involves surgical studies that evaluate how well the device performs the intended treatment 3. Biocompatibility (1-2 years): testing uses both in vitro and in vivo models to ensure that the device or component material is biologically safe for its intended use 4. Clinical Trials (1-2 years): scientific studies are employed to evaluate a drug, device, or biologic on patients in the treatment, prevention, or diagnosis of a disease or condition 5. Sterility Assurance & Microbiology (1-2 years): sterilization validation, environmental monitoring, and packaging validation with shelf-life testing (Source) 9 Confidential & Trade Secret
  10. 10. MEDICAL DEVICE POST-APPROVAL PROCESS FDA charged to seek Device company Sites for trials are “least burdensome may choose CRO determined by means” to evaluate data, for post-market sponsor. which necessitates post- testing. market surveillance. •  Clarify CRO •  Study tracking responsibilities. website developed. •  When failure may •  Concur on study •  Sponsor legal team result in health purpose and data and CRO negotiate consequences. management. contract to facilitate •  When intended for study start-up. •  Reviews of implantation for more milestones. than one year. •  When life-supporting devices will be used outside facility. (Source)! 10 Confidential & Trade Secret
  11. 11. CLINICAL TRIALS •  82,466 trials with locations in 170 countries registered with FDA, 3/2000-12/1/2009 •  6,731 related to medical devices •  3,480 outside U.S. •  2,930 actively recruiting outside U.S. •  1,945 trials related to cardiovascular conditions and medical devices  975 conducted outside U.S. (Source: Percentages to whole number Source: (Source: 11 Confidential & Trade Secret
  12. 12. CRO/MEDICAL DEVICE TRENDS CRO Industry Trends (Source)1 •  "Undercurrent of interest" among private equity firms in acquiring CROs •  Possible emerging trend: Long-term partnering arrangements between CROs & recruiting firms •  Number of CROs has reached 1,100 despite continued consolidation (Source)2 Medical Device Trends (Depends on who you are talking to) •  FDA leadership on role of outsourcing: (Source)3 •  Outsourcing requires more international collaboration on inspections, enforcement, and compliance policy issues. Also, greater regulatory focus on supplier selection, qualification, and monitoring •  Market opportunity in fusion pumps – look at recalls •  Five new science platforms that apply to the medical device industry: nanotechnology, synthetic biology, tissue engineering, stem cells, and robotics •  CRO Industry (Source: Linda Alexander, Alquest CEO)4 •  Seeing a more cautious, rigorous approach from FDA, but not necessarily scientifically or medically sound •  Suggestions for sponsors - Take products abroad first •  With longer U.S approval process, companies should develop a strategy for selling their product abroad •  Revenue stream can help sustain the company and show VC market that they have a viable product •  Europe is best choice right now 12 Confidential & Trade Secret
  13. 13. CRO/MEDICAL DEVICE TRENDS (continued) Market Potential (Source)1 •  The CRO medical device industry is smaller than pharmaceutical & biotech but growing •  Few blockbuster (>$1B sales) medical devices in the past but cardiovascular drug-eluting stents is game changer •  Anecdotal evidence shows firms moving into the medical device area •  Some CROs are differentiating themselves by concentrating on cardiovascular medical device testing •  Four fastest growing medical device segments are orthopedics, neurology, cardiology, and cosmetics/aesthetics •  Fueled by aging populations •  Barriers to growth - device recalls & device-related deaths (spiked in 2006 vs 2005) Small to Medium CROs forming networks or alliances (Clinpage1, Clinpage2, Centerwatch) •  Smaller CROs provide better one-on-one service but do not have global presence •  Establish standard methodologies to expedite and improve operations •  Target sponsors based on specialties •  Allow smaller CROs to compete with larger companies •  Examples: Pharmaceutical Services Network and Agile Network Expert Networks & Management Tools •  Beginning to see resources for connecting companies to CRO’s (example: GoBalto for pharma) •  Online business network for medical device industry and software reduce time & costs o  E-Zassi’s database and FDA regulation calculator o  M2S’s iMAP for collecting clinical trial images •  Management tools are often targeted to both sponsor and CRO’s for conducting trials (Example: StudyManager) o  Some CRO’s use multiple electronic data capture (EDC) vendors (Clinpage) •  Some CRO’s specialize in in-house management tools for EDC (Contractpharma) o  EDC allows smaller CRO’s to compete with larger ones o  EDC makes allows for easier management of global clinical trials o  Example: Clinipace 13 Confidential & Trade Secret
  14. 14. FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES •  Permissible to conduct offshore clinical trials of medical devices. •  No FDA jurisdiction over foreign clinical trials, but FDA does set standards for data submitted in support of U.S. marketing applications for medical devices (including Premarket Approvals (PMA) and Premarket Notifications(510 (k) ). (Source: FDA’s Total Product LifeCycle: What Clinical Data from Outside the U.S. Does FDA Accept?) If a clinical trial is conducted overseas pursuant to an approved Investigational Device Exemption(IDE):  The trial must comply with U.S. FDA regulations (21 C.F.R. §814.15(a)) If a clinical trial is conducted overseas and no IDE is filed, the FDA will accept the study if it conforms with: # The 1983 version of the Declaration of Helsinki (FDA regulations have not been updated to include the current version of the Declaration) OR The laws and regulations of the country in which the research was conducted (21 C.F.R. §814.15(b)). •  Clinical trials that use host country laws and regulations must state the difference between those laws and the Declaration, and must explain why they offer greater protection to human subjects (21 C.F.R. § 814.15(b)).  •  Foreign clinical data must be applicable to the U.S. population and U.S. medical practice, clinical investigators must have recognized competence, and clinical data is subject to FDA inspection (on-site or through other means) (21 C.F.R. §814.15(d)). •  IDEs place a higher regulatory burden on CROs. Further research is necessary to determine how often they are used in foreign clinical trials. Source: FDA Guidance – Acceptance of Foreign Clinical Studies.  14 Confidential & Trade Secret
  15. 15. BIOETHICAL ISSUES SURROUNDING CLINICAL TRIALS 1.  Lack of foreign government regulation of CROs and human subject research activities. 2.  Lack of strong international standards and legal remedies to protect patients in clinical trials. 3.  Unethical or exploitative conduct by researchers (physician practices may be unacceptable by U.S. standards). 4.  Lack of understanding by patients of purpose of clinical trials. 5.  Participation in clinical trials may be the only way for individuals to access medical care. 6.  Lack of patient consent (and inability of patients to give informed consent). 7.  Risks to sponsors of working with CROs that are inexperienced in a particular market or that do not follow required clinical trial standards. 8.  Liability in U.S. courts under Alien Tort Statute (though risk appears to be fairly limited). 9.  Liability under U.S. Foreign Corrupt Practices Act if U.S. sponsors or their CROs accept bribes from foreign government officials. 10.  Limited FDA oversight and inspections of overseas clinical trials. 11.  Intellectual property theft, limited patent protections (especially in India and China), and trade secret issues with employees who leave CROs to work for competitors. Source: FDA Research Summary (Appendix). 15 Confidential & Trade Secret
  16. 16. FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS? The FDA values diversity in clinical trial populations, but acknowledges that various issues that may exist in creating comparable U.S. and foreign test populations. (See Drug Testing Goes Offshore). Barriers to creating representative test populations: (See FDA Presentation - Total Product Lifecycle) 1.  Demographic variables - race, gender, ethnicity and age. 2.  Clinical variables - prevalence of smoking, obesity, and diabetes; compliance with medical regimen and follow-up; education level of patients (e.g. ability to understand directions), and language/cultural differences. 3.  Medication/device usage - economic factors in medication usage, legal/regulatory factors, and differing standards of care. 4.  Differing physician/medical practices - adherence to study protocol, varying regional practice guidelines, and economic/legal considerations. 5.  Availability of drugs/adjunct devices Recommendations 1.  Use statistical analysis to draw comparisons between foreign and U.S. populations (Id.). 2.  Consult with the FDA on clinical protocol prior to conducting overseas clinical trials (Id.).   3.  Create targeted enrollment programs based on geographic region and intended use of product ( New England Journal of Medicine). 4.  Use bridging studies to link foreign and U.S. clinical data (Concept is discussed in Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data and Questions and Answers, though this guidance is specifically applicable to drug trials where the safety and efficacy of a drug is linked to ethnicity). •  Recommendations are very vague. This topic merits further research and may require discussions with actual CROs to determine how they structure their clinical trials to address this issue. 16 Confidential & Trade Secret
  17. 17. SOURCES Slide 2: OVERALL CRO MARKET •  Frost & Sullivan: •  Frost & Sullivan: •  Goldman Sachs: Slides 3-4: CARDIOVASCULAR CRO’S •  See company website links •  Attached CRO Spreadsheet: Appendices/MedicalDeviceCROs_and_Full_CRO_lists.xls Slide 5: MEDICAL DEVICE MARKET •  MarketsandMarkets: •  Devicelink: •  Global Data: •  Source chart created with search aggregator from FDA data: Slide 6: MEDICAL DEVICE INVESTMENTS •  Thomson: •  Dow Jones: •  Devicelink VC list: •  Johnson & Johnson investment arm: •  Quintiles SEC: Appendices/QUINTILESTRANSN424B3-20040330.pdf •  Cato Research: •  Cato Bioventures: •  PPD investing: •  Ernst & Young Pulse on the Industry:$FILE/Pulse_Final.pdf 17 Confidential & Trade Secret
  18. 18. SOURCES (continued) Slide 7: MEDICAL DEVICE PARTNERSHIPS •  Kate Giovino presentation: •  Clinpage article 1: •  Clinpage article 2: Slide 8: MEDICAL DEVICE TESTING PROCESS •  Expanding role of CRO (graphic): •  Post-Approval Process article: Slide 9: POST-APPROVAL PROCESS Slide 10: GLOBAL CLINICAL TRIALS • • medical device & cardiovascular map: Slide 11: CRO/MEDICAL DEVICE TRENDS •  Frost & Sullivan: •  Global Insights: •  Devicelink: •  Devicelink2: 18 Confidential & Trade Secret
  19. 19. SOURCES (continued) Slide 12: CRO/MEDICAL DEVICE TRENDS (continued) • • • • •  Pharmaceutical Services Network: •  Agile Network: •  GoBalto: •  E-Zassi: •  FDA Regulation Calculator: •  iMAP: •  StudyManager: •  Clinpage: •  Contractpharma: •  Clinipace: Slide 13: FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES FDA’s Total Product Lifecycle: IDE: 21 C.F.R. §814.15(a) (b) (d): Declaration of Helsinki: Current Declaration of Helsinki: FDA Guidance – Acceptance of Foreign Clinical Studies: Slide 14: BIOETHICAL ISSUES •  FDA Research Sumamary (attached in Appendix): Appendices/FDA_Research_Summary.doc Slide 15: FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS? •  Drug Testing Goes Offshore: •  FDA Presentation - Total Product Lifecycle: •  New England Journal of Medicine: •  Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data: •  FDA Questions and Answers: 19 Confidential & Trade Secret