Emerging markets, led by China, India and Brazil, are gaining ground in their capacity to produce the latest in medical technology innovation and may surpass developed countries in innovative healthcare delivery over the next decade, according to a new PwC report published today titled Medical Technology Innovation Scorecard: The race for global leadership. Growth in these emerging market economies is attracting the focus of the world’s innovation resources and activity, and they are taking the lead in developing a new generation of small, faster, more affordable medical devices.
The report is based on the findings of the PwC Medical Technology Innovation Scorecard, a new, multifaceted assessment of the capacity of nine countries to adapt to the changing nature of innovation: Brazil, China, France, Germany, India, Israel, Japan, the United Kingdom and the United States.
While there has been much anecdotal evidence that the centre of innovation is moving away from the U.S. the incumbent global leader, PwC is the first to analyse the specific factors that contribute to medical technology innovation. PwC quantified five factors, using 86 different metrics, to evaluate how well each nation promotes the advance of innovation, looking at the past five years and projecting change over the next decade to 2020.
The Innovation Scorecard ranks the overall capacity of each country on a scale of 1 to 9 with 9 being the highest score. A top-line view of the report finding reveals:
- The U.S. currently holds its position as the global leader in medical technology innovation, and because of decades of innovation dominance, it continues to show the greatest capacity for medical technology innovation. The U.S. currently has a total score of 7.1.
- The scores of the other developed nations (the UK, Germany, Japan and France) fall within a tight band of 4.8 to 5.4. Among the developed countries included in this study, Germany and the U.K. demonstrate the strongest support for innovation and Japan the weakest.
- Israel, despite its small size, ranks near the level of the European nations, a reflection of its strong capacity to foster innovation.
- The emerging markets lag behind developed ones. China, with its powerful economic growth engine, scores 3.4, ranking it higher than India and Brazil, each of which scored 2.7.
Looking to the future, the U.S. is expected to continue to lead in medical technology innovation, but also will lose ground to other countries during the next decade. The Innovation Scorecard also projects relative declines for Japan, Israel, France, the UK and Germany. By contrast, China, India and Brazil are likely to see gains during the coming decade. China, which has shown the largest improvement in its medical technology innovation capacity during the past five years, is expected to continue to outpace other countries and reach near parity with the developed nations of Europe by 2020.
Mike Swanick U.S. pharmaceuticals, medical device and life sciences industry leader, PwC, said:
“A confluence of social, demographic, economic and technology changes is altering the dynamics of the medical technology field. As a result, ecosystems that promote medical technology innovation – with supportive elements such as access to financing, scientific knowledge and patient interaction – are being established around the world, These changes are creating opportunities for companies – and entire nations – that are able to adapt to a rapidly evolving environment.”
Simon Friend, global pharmaceuticals, medical device and life sciences industry leader, PwC, added:
“If developed counties do not step up levels of investment in innovation, over the next decade new markets will surpass developed countries in innovative healthcare delivery; stimuli for new technologies is being built through the education system and we will see businesses focussing on new markets for new ideas and expanding sales bases.”
The Innovation Scorecard examined where each of the nine countries evaluated stands in relation to five broad “pillars” that helped to make the U.S. a leader in medical technology innovation for the past several decades: Powerful financial incentives such as reimbursements for adoption of new technologies; resources for innovation, such as academic medical centers; a supportive regulatory system; demanding and price-insensitive patients; and a supportive investment community of venture capitalists and other investors.
The Innovation Scorecard indicated that the ideal innovation ecosystem itself is changing as the nature of medical technology innovation evolves. Some of this transformation is being driven by changes in the U.S., such as more expensive, less-predictable regulatory approvals, an increased focus on value and cost-effective solutions in healthcare and increasingly international investments in R&D. Other dynamics are the result of changes abroad, including increasing investment in local academic medical centers; investment in research programmes; the return of foreign-educated scientists and doctors to their homelands; advancement of mobile health technologies that expand access to care; and a focus on the lean, frugal and reverse innovation necessary to deliver faster, better, cheaper and more effective healthcare solutions in these markets.
As a result of these many factors, medical technology companies increasingly are seeking clinical data, new-product registration and first revenue in non-U.S. markets that are becoming more attractive and supportive of new innovation. Medical technology innovators already are going first to market in Europe and, by 2020, likely will move into emerging countries before entering the U.S.
Despite the size of the markets in China, India and Brazil, their global leadership in medical technology innovation is not necessarily preordained. Factors related to intellectual property protection, difficulty of doing business in some emerging countries and weak local supplier networks could make these markets less attractive, despite their size, and could hinder these nations’ effort to assume innovation leadership.
Christopher L. Wasden, PwC managing director and co-author of the report said:
“We created the Innovation Scorecard because we wanted to better understand how medical technology innovation is changing and which nations have the strongest capacity and capability for innovation. The findings will be helpful to government officials and regulators seeking to advance policies that foster innovation as well as medical technology companies working to develop their own commercialisation strategies.”
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.