According to a new report by PricewaterhouseCoopers, the U.S. is losing ground to emerging market countries such as China, India and Brazil as the world's center of innovation on medical technology advancements. While this can certainly be viewed as a threat to the American R&D community, I see it more as a trigger -- and an opportunity to spur the U.S. med-tech community to new heights.
According to the PwC research, which quantified five factors using 86 different metrics, the U.S. is still solidly in place as the world innovation leader in the medical technology field with a total score of 7.1 on a scale of 1 to 9. The scores of other developed nations (Germany, U.K., Japan and France) fell within a narrow band with scores ranging from 4.8 to 5.4. Meanwhile, emerging market entrants such as China, India and Brazil clock in with scores of 3.4, 2.7 and 2.7, respectively. The five factors examined by PwC, according to a Wall St. Journal article, are price incentives, resources for innovation, a supporting regulatory system, patient demand and price sensitivity and a supportive investment community.
The PwC report states that while the U.S. is expected to continue as the world's innovation leader in this space, it will "lose ground to other countries over the next decade," namely, China, India and Brazil. For its part, China, which has shown the biggest increase in medical technology innovation capacity over the past five years, "is expected to continue to outpace other countries and reach near parity with the developed nations of Europe by 2020."
Although this sounds grim for the U.S. med-tech innovation community, there are positives that can be drawn from this as well as emerging trends which combined can help to drive future innovation out of the U.S.
First of all, competition is good. It's a marvelous incentive for pushing people and organizations to endeavor to work harder. Granted, this same logic could be applied to any number of fields where BRIC nations are making gains, including IT and service industries. But these pressures, along with evolving U.S. healthcare industry reform, may well provide the U.S. fresh motivation to kickstart its med-tech innovation efforts.
As U.S. healthcare regulatory reform continues to develop, the market is expected to become much more open and competitive. Whereas roughly 80 percent of U.S. healthcare insurance customers are currently beholden to employer-sponsored healthcare plans where there's little if any choice, a more competitive market is expected to emerge in which consumers will have greater opportunity to pick and choose between types of medical coverage and between practitioners.
As the U.S. healthcare market becomes more competitive, healthcare insurers, or payers, will be more incented to wage battle for customer loyalty. One way of doing that is by simplifying the healthcare process for consumers through technological innovation. Payers that make it easier for consumers to gain access to and obtain information about medical care will have a competitive advantage over their rivals. This includes providing consumers with state-of-the art medical testing and other technologies.
Sure, BRIC nations will have the same opportunities to develop new medical technology innovations for the U.S. market. But American innovators who strike early and seize these opportunities on their home turf will be well-positioned to succeed.