Support : eNewsletters : Eye on Innovation : Issue 2, December 2009

When is hot hot—Innovation in the medical devices market

Although innovation can occur anywhere in the organization, many companies view it as synonymous with new product development or traditional R&D. But such a shortsighted view can lead to the erosion of competitive advantage. Use Dialog to track innovation in your industry and inspire it within your organization, from identifying new players to spying out global market opportunities.

This issue of Eye on Innovation explores innovation in the medical devices market, a major part of the multifaceted healthcare industry. We will look for clues to see who's innovating in the area of cardiovascular medical devices in the United States and investigate whether China may become a player in the medical devices market.

And, oh yes, we want to follow up by answering questions we posed on solar energy innovation in Eye on Innovation, Issue 1

Get an early warning: Mine Dialog for medical devices trademarks

Keeping an eye on the competition's trademarks can tell you a great deal about the quality of a firm's incremental innovations. If each improvement is given its own new mark, trademarks also can be used to chart the course of product differentiation. Recent advances in international filing and registration of marks has increased the potential use of trademark statistics as a source of information for industrial and innovation studies. Observing trademarks allows you to make inferences about companies' behavior on branding strategies, introductions of new goods and services and upgrade or repositioning of old products

Medical devices: Promising strides
Innovative methods are continually being developed for diagnosing and treating various health conditions particularly in the medical devices market. Medical devices include a wide range of products varying in complexity and application from simple tongue depressors and medical thermometers to meters that measure oxygen levels to complex x-ray machines. The demand for safe and reliable medical devices is growing among both clinicians and consumers.

Three major medical device equipment segments—cardiovascular, orthopedic and neurological—constitute about two-thirds of the market's revenues and are the fastest-growing sectors of the market. We'll zero in on cardiovascular devices.

Medical devices for heart disease
Poor nutritional habits and unhealthy lifestyles are contributing to an increase in cardiovascular diseases in the developed and developing world. Cardiovascular medical products, such as pacemakers, coronary stents, implantable cardiac defibrillators and angioplasty products dominate the world scene. For these, the United States market, estimated at more than $100 billion, is driving the most notable innovations and developments.

News reports and an industry outlook suggest the industry continues to be one of the fastest growing industries within the healthcare sector throughout the world. Will steady growth in the cardiovascular medical devices market continue in the future? What can you expect and who are the major players with whom you might have to compete?

Be methodical: Check the Dialog tea leaves before making your move
Trademark filing data can offer clues about what your competition is up to and illustrate new marketing trends. Innovating firms make extensive use of trademarks. For example, IBM lists more than 1,200 trademarks on its home page. We'll conduct several searches in Dialog's global trademark collection to investigate the medical devices market.

Step 1: Identify activity by the top players.
Just who is actively filing trademarks for future cardiovascular medical devices? Searching TRADEMARKSCAN® – U. S. Federal on Dialog for trademarks in the medical devices field locates a list of companies actively filing “intent to use” trademarks for future cardiovascular medical devices like stents, pacemakers, defibrillators and more. For the last five years, we identify the top companies filing trademarks for cardiovascular-related medical devices. Medtronic leads the list with Pacesetter and Biotronik following closely behind. If we compare the five-year results with a search of just the last year, we see that Medtronic has been a steady industry leader in trademark filing for five years; however, Biotronik has filed 10 “intent to use” trademarks in this market in just the past year. Although Medtronic and Pacesetter have only filed four each, they still continue their presence. While not at the top of the first wave, Biotronik is showing increased interest in this field. Dark horses are Invatec Technology Center and Abbott Cardiovascular Systems, who both filed five marks this year.

Step 2: Know your competition: who wins and who loses?
Now that you have a list of companies that appear interested in cardiovascular medical devices, Dialog offers more. Search your competitor's business name using Dialog's comprehensive collection of business and industry trade journals, newswires, newspapers and newsletters, Dun & Bradstreet comprehensive reports and market research from Investext. Looking at a company's assets/liabilities, news press, credit and risk reports, the industry outlook and more will help you predict whether these companies may actually use their medical devices trademarks in the future.

Our business review suggests companies at the top of our trademark list show strength in this market. Although Medtronic, a leader in the medical devices industry, has suffered from restructuring charges, an unfavorable patent litigation settlement and lost market share, the company still continues high sales in the cardiovascular sector and has received a new U.S. patent related to unique electrodes and/or electrical lead assemblies for stimulating cardiac tissue. Biotronik, a pioneer in the field of telecardiology, was nominated for the most important award for achievements and innovation in Germany. Not only did Biotronik identify the potential of telecardiology early, but also pioneered its successful implementation in the market. Because of increased demand for its innovative product, it is currently expanding its business. And, Edwards Life Sciences and Cameron Health received approval for their devices allowing for commercialization of their products in the European Union and countries in Asia and Latin America. Abbott Cardiovascular has the potential to enter this market. The company had higher than expected earnings; an acquisition to support its position in the cardiovascular market; a favorable patent litigation settlement and approval in China for a next-generation drug-eluting stent.

Step 3: Expand your search worldwide. China: opportunity or threat?
What does a company need to do to succeed today? Find the opportunity. Look below the radar at China, the wild, wild east of medical devices. Let's see what the trademark crystal ball tells us. Results from our search indicate Chinese trademarks are increasing. Non-Chinese medical devices companies active in China are also major players in the industry worldwide and include Johnson & Johnson, Medtronics, Edwards LifeSciences, to name a few. The Chinese company Zhe Jiang Hao Zhong Hao Jian Kang Chan Pin You has exploded into the medical devices market with 83 trademarks in this year alone, while Ha Er Bin Le Tai Yao Ye You Xian Gong Si continues its presence with 20 new trademarks in 2009 for a total of 100 in the last five years. An interesting note is the Chinese company Guang Zhou Da Ming Lian He Xiang Jiao Zhi Pin, a holder of 85 trademarks for the last five years, filed no new trademarks in 2009—has the company changed directions?

The medical devices industry in China is young, but maturing rapidly, and has been growing steadily as a result of more interest from local medical facilities in importing foreign devices. From 2001 through 2008, Chinese imports of medical devices increased dramatically; however; local manufacturers still account for the majority of sales. Moreover, foreign companies continue to partner with Chinese firms to gain access to the world's fastest-growing devices market. Demand can only increase as the population ages, digital and biomedical technologies continue to advance, and an ever larger number of people have the resources to become customers. Cardiovascular product sales are projected to increase attesting to the significant opportunity in China.

Conclusions and Next Steps—Are you better at spotting the forest or the trees?
Tracking trademarks allows us to make inferences about companies' behavior in terms of branding strategies, introductions of new goods and services and upgrade or repositioning of old products. With just a few short searches on Dialog, we now understand how we can learn about medical device technologies rapidly making their way toward the market and what competing technologies may become available and from whom. By knowing what research is being conducted and where and how far the technology is from the market, we learn how upcoming research is likely to affect current products and technologies.

As a result of the trademark and company searches, you can explore further:

• Check the Goods & Services trademark descriptions. You may pick up hints on types of cardiovascular and other medical devices—is a device a spin-off of a pre-existing product or something new and different that your company hasn't considered, for example, implantable and wireless medical devices.
• Find out which countries are expanding into the market.
• Watch for the next generation of cardiovascular devices.
• Track the trademark filings over time to follow product variations that seem to be gaining in popularity.

The rationale for believing that past successes will continue into the near future is compelling but far from guaranteed. You now have actionable intelligence to influence your development of new products, conduct further investigations, determine mergers and acquisitions to pursue for a more competitive position and decide the place your company can expect to have in the future of this important market in the healthcare revolution. When the economy turns around, those companies that have found ways to maintain their pace of innovation will be positioned to capture market share and succeed in the long run. Don't be late to the party; partner with Dialog on innovation in this hot market.

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