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”.