New Report Showsmajor Shift in Innovation Focus For

News Release

HEALTH CARE REFORM IMPACT:

New Report ShowsMajor Shift in Innovation Focus for

Medical Device Companies

MedTech Companies Also CiteJob and R&D Reductions Because of New Device Tax

350+ MedTech Execs Attend Annual MassMEDIC Conference

BOSTON, MA – May 8, 2013– Medical device companies across the region are shifting their focus from doctors to health care administrators and purchasers when innovating and developing new products and services, according to a new analysis presented to over 350medical technology leaders at UMass-Boston today at the Massachusetts Medical Device Industry Council’s (MassMEDIC) 17th Annual Conference.

The change in focus cited by the report becomes clear when respondents were asked to assess whether patients or care givers will drive their innovation plans or whether hospital administrators or insurance companies will impact their new products. The stark difference—about 40% more say the latter will be the new drivers of innovation--is a response to new cost containment policies included inthe Affordable Care Act (ACA), making hospital administrators more involved in medical technology purchasing decisions. Device companies have traditionally centered attention on input and feedback provided by physicians and clinicians in developing new medical technologies.

“Healthcare in our country is changing tremendously with more change to come, so it is as important as ever to gather our state’s MedTech leaders and discuss the future of medical device investment and innovation as the sector continues to grow and develop,” said Tom Sommer, president of MassMEDIC.

The report’s results are contained in The 2013 MedTech Industry and Innovation Study developed for MassMEDIC by Chadwick Martin Bailey, a Boston-based custom market research firm. The survey examined current medtech industry perspective on the impact of policy changes contained in the ACA. Data for the study were collected through a 15-minute online questionnaire in February and March of 2013. The questionnaire was completed by123 MassMEDIC members and industry colleagues.

Nearly half of the 123MedTech companies surveyed also indicated that they have executed or are in the process of planning workforce reductions in response to the full implementation of the new federal medical device excise tax.

Key findings of the study include:

• Domestic and overseas sales have increased over the past five years for most medical device companies, with more significant growth coming from export sales.

• Nearly 70 percent of respondents indicated that their company’s success in the past five years has been directly linked to the organization’s ability to successfully develop innovative medical products.

• One third of respondents expect increased sales due to expanded coverage mandated by the ACA, however only one-quarter of these believed that the increased revenues will cover payments of the medical device excise tax.

• Survey takers also report the following actions resulting from the implementation of the medical device excise tax:

-43% have taken action or have discussed plans for workforce reductions

-Nearly 40% have executed or are developing plans to reduce R&D spending.

-A third of respondents have or are making plans to move manufacturing offshore

“The research also revealed the deepening influence that economic buyers and payers will have on the medical deviceindustry in the years to come,” notes Andrew Wilson, Director of Medical Devices at Chadwick Martin Bailey.

The independent study of executives at medical device OEMs, components manufacturers, service suppliers, and consultantsprovides evidence that the changing health care payment model and the reality of the medical devicetax have had a significant impact on the medical device industry; furthermore these findings also show that those companies willing to invest in innovation are best positioned for future success.

The Conference agenda also included:

Remarks by Dr. John Collins, Chief Operating Officer of CIMIT, Partners Health Care System’s Center for the Integration of Medicine and Innovative Technology. Dr. Collins discussed a new platform technology, CoLab, that will help increase medtech collaborations around the world.

Winners in the New Health Care Economy - A panel discussion moderated by Amy Siegel, Founder of S2N Health, that included: Andrew Diston, Head of Medical Technology Practice at Cambridge Consultants, Justine Carr, M.D., Chief Medical Officer at Steward Health Care System, and Aaron Sandoski, Co-founder and Managing Director at Norwich Ventures.

A roundtable discussion with area MedTech CEOs moderated by David Cassak, Managing Director of Medical Devices at Windhover Information, a unit of Elsevier Business Intelligence. CEO panelists included Michael Frazzette, President of the Advanced Surgical Devices Division at Smith & Nephew, Douglas Godshall, CEO of Heartware International, and Stuart Randle, President and CEO of GI Dynamics.

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About MassMEDIC:

The Massachusetts Medical Device Industry Council, an organization of over 350manufacturers, suppliers, research institutions, and academic health centers, promotes the unique interests of the Bay State’s growing and vibrant medical device sector. Through a variety of programs, informational seminars, advocacy campaigns and other projects, MassMEDIC provides medical device manufacturers and suppliers with information on industry trends and regulatory policies, and creates forums that allow members to exchange ideas and information on issues affecting the industry. For more information on MassMEDIC, please contact us at (617) 414-1340, or visit our web site at

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