James Hayward, Principal Analyst at IDTechEx, and Dr Nadia Tsao, Senior
Technology Analyst at IDTechEx, have released the latest edition of the report
on electronic skin patches – Electronic Skin Patches 2019-2029. The below article
has recently been published by James Hayward on the topic.
Regulatory challenges exist across each of the
market sectors where electronic skin patch products have been proposed and
commercialized. As part of the research for the report, Electronic Skin Patches 2019-2029, IDTechEx Research has
characterized some of the regulatory considerations in the context of each of
the product sectors covered. Then, during the extensive program of primary
research via interviews, IDTechEx has had input on these matters from companies
throughout each of these ecosystems. The result is a description of the current
situation and details of how different individuals and companies are deploying
strategies within each space.
Each of the market sectors considered for electronic skin patch products,
whether it be the established markets today or the emerging areas looking to
the future, have some relevance in a medical context. For medical devices,
following regulatory approval, the funding of these devices can come from
different sources, including government-led reimbursement schemes. These
provide funding for medical devices defined within certain categories according
to central definitions and understandings of the performance and cost of the
device. Whilst systems do vary by country, it is typical for central procedural
terminology to be linked to reimbursement amounts for each device. Therefore,
post-approval, the competitive landscapes and profitability for companies
behind each device depends strongly on their positioning on this terminology
and reimbursement amount, relative to their competitors.
Cardiovascular skin patches sit within a unique competitive landscape. Skin
patches for cardiovascular monitoring represent a compromise between data
quality and patient comfort. By enabling the patient to be active whilst
wearing the device, they can minimize additional issues caused by remaining in
a hospital bed for too long. However, they also typically produce simpler data
sets than the full 12-lead standard, and with less control over the quality of
the data produced. Similarly, skin patches can also compete in other
directions, with cardiac implants for a more accurate but less safe approach,
or with consumer wearable devices such as smartwatches or chest straps which
provide cardiac data but with limited medical usefulness due to a lack of
medical approval. These competitive landscapes drive the development of
products, but whilst consumer opinion does matter, it is often the central
regulatory and funding bodies that have the power to drive changes.
In the past, mobile cardiac telemetry products have benefited from a favourable
reimbursement scenario in the US, defined under a Category 3 CPT code for
“extended Holter monitoring”. This code entitles them to twice the
amount of reimbursement as “Event monitoring” and more than 8 times
the amount afforded to generic “Holter monitoring” (both Category 1
CPT codes). As such, if the reimbursement situation were to change, the entire
revenue structure for these devices will change with it. How companies are
adapting to this potential change is defining current strategies and outlook
for each player. Some players have divested altogether, whereas others are
doubling down and lobbying in order to manage the change. Full details and case
studies are described in the report, Electronic Skin Patches 2019-2029.
A second example from a different sector illustrates
different challenges. Continuous glucose monitoring as part of diabetes
management has been the standout success for electronic skin patches, with
annual revenue upward of $2.5bn in 2018. Four companies (Medtronic, Abbott,
Dexcom and Senseonics) have received FDA approval and CE marks for CGM
products. Medtronic, Abbott and Dexcom each offer a skin patch with a needle
that tests glucose concentration in interstitial fluid. Senseonics use a
subcutaneous implant which is then read using a skin patch as a communication
hub. Full details of each of these players, including interviews with staff in
various roles throughout the organisations, are included in the report, Electronic Skin Patches 2019-2029.
However, even with just four companies in the space, the regulatory and
reimbursement situation raises some interesting challenges. The three, large,
incumbent players have enjoyed the bulk of the benefits from the growing
market, with many territories now offering partial or full reimbursement for
CGM products under national healthcare schemes. However, each of the three
products are treated under a single category, and therefore (typically) receive
the same amount per device. This does not recognize the differences between
devices from different players when it comes to performance and functionality
of the devices (e.g. whether the patch lasts 7 days or 14 days, how much
functionality comes alongside the patch, and so on). Therefore, the
reimbursement situation sets the framework for the competitive ecosystem which
emerges, and potentially favours simpler, cheaper devices over more advanced,
expensive ones.
This landscape becomes more complex when Senseonics enters the mix. They are a
smaller company (albeit working with very large partners, such as Roche), and
come to the CGM market much later than their rivals. However, the opportunity
to offer the device as a 3-month implant rather than 1-2 week skin patches
gives them significant differentiation from their rivals. Whilst Senseonics
remain orders of magnitude behind the others in revenue, many of the larger
companies have indicated significant concern at the competition from a
longer-lasting implant. This illustrates just two of the key questions
addressed within the report when looking at the competitive landscape in these
market categories within the overall report Electronic Skin Patches 2019-2029.
These scenarios apply most prominently to existing product areas, but a
separate challenge exists for those players looking to develop new product
types. If the product is to be a medical device, it must go through regulatory
approval processes, either showing equal performance to existing equivalent
products or going through a de novo process to prove the efficacy and safety of
the device. These significant barriers to entry often push players towards
“consumer healthcare” markets will less stringent regulatory hurdles,
even where longer-term opportunity may be larger in the direct healthcare
space. We are seeing this in case studies from temperature sensing for fever
and fertility monitoring, in general, patient monitoring devices (e.g. for
medical patients or the wider population in a clinical or academic trial), in
motion sensing and in many more sectors. IDTechEx Research have interviewed
companies and compiled case studies about their progress in each of these
areas, allowing the reader to learn from their experience and make appropriate
business decisions accordingly.
All of the extended discussion around these topics, complete with supporting
interviews and market data, is included within the IDTechEx report Electronic Skin Patches 2019-2029. With coverage across 26
application areas and over 100 companies, historic market data from 2010 – 2018
and market forecasts from 2019 to 2029, it is the most comprehensive study
compiled for this emerging product area.