Market Place

Exceptional expansion

The medical technology sector in Ireland continues to grow. Exports of medical device and diagnostic products during the first half of 2009 increased by more than 10% over the same period in 2008. This confirms Ireland as the second largest exporter of medical products in Europe, second only to Germany. In addition, a recent survey by the Irish Medical Devices Association found that 46% of companies had experienced an increase in their order books in the second quarter of 2009 and 23% indicated that they expect to employ more staff in the last three months of 2009. Investments by overseas companies in their Irish operations have been significant in 2009. In parallel, indigenous Irish companies have been successful at securing buyers, investment and global distribution deals.

Companies operating in Ireland today are focused on expanding their mandate by aligning around one or more of three business areas:

■ high technology manufacturing

■ research, development and commercialisation

■ global business services.

This strategy has proven effective. A number of recent significant company announcements are outlined below.

Headquarters relocated

Covidien (www.covidien.com), a global manufacturer of healthcare products, recently relocated its principal executive office to Dublin, Ireland. The company has operated in Ireland for 30 years with operations in Dublin, Galway, Tullamore and Athlone. In a news release, Covidien cited Ireland’s stable economic, legal and regulatory environment and strong relationships as a member of the European Union as reasons for the move.

Investment by overseas companies

Boston Scientific (www.bostonscientific.com) announced a €91 million investment in Galway and a €21.7 million investment in Cork in 2009. This financing represents a major step forward in research, development and innovative new technology at the Irish sites. Isotron (www.isotron.com) has also announced the expansion of its Tullamore facility with the introduction of an electron beam accelerator. Electron beam irradiation technology provides an alternative to the ethylene oxide gas and gamma irradiation processes it currently provides in Ireland.

Acquisition of indigenous companies

In January 2009, Boston Scientific (www.bostonscientific.com) invested in Irish expertise when it acquired Labcoat Ltd, a development stage drug-eluting stent technology company located in Galway. Similarly, Lake Region Medical (www.lakergn.com), a subsidiary of Lake Region Medical in Chaska, Minnesota, USA, recently acquired Brivant Medical (www.brivant.com) also based in Galway. Brivant Medical’s expertise, technology, research and development (R&D), operations and product portfolio strengthen Lake Region Medical’s presence in the interventional guidewire market place.

Securing investment and global distribution deals

Aerogen (www.aerogen.com), another indigenous company, is already a well established leader in drug delivery technology in the respiratory sector. Having completed more than three years of development in surgical aerosol drug delivery, the company recently set up a new company, AeroSurgical Ltd, which has pioneering technology for a platform product called AeroSurge that will be used in laparoscopic surgery. It completed a phase three European study, which demonstrated a huge impact in the reduction of post operative pain; commercialisation of the product into Europe began in July 2009.

In June 2009, Cappella (www.cappella-med.com) completed a US$17.3 million Series C investment led by new investors Fountain Healthcare Partners and Mitsui & Co. Venture Partners. Enterprise Ireland also participated together with the company’s existing investors, Polytechnos Partners and ACT Venture Capital. Proceeds will be used to finance the launch of Cappella’s proprietary Sideguard Side-branch stent for the treatment of bifurcated vascular disease in Europe as well as additional R&D activity. Crospon (www.crospon.com), a medical device developer based in Galway, Ireland, has announced a worldwide distribution deal for its EndoFLIP (endolumenal functional lumen imaging probe) imaging system used to measure the dimensions and function of a variety of hollow organs. The company has also been recognised with the 2009 European Gastroenterology Technology Implementation of the Year Award by Frost & Sullivan.

Responding to the competitive market place

Although the headline figures and trends remain positive for Ireland, the industry is conscious of the challenging global environment in which hospitals are struggling financially. Price pressure is increasing and margins are contracting, and the Irish medical device industry is being vigorous in its response.

Ireland has a track record of being flexible and asset prices, wage levels and price levels are all adjusting rapidly to the new circumstances to improve the country’s competitiveness. Medical technology companies in Ireland are reinvesting in upgrading their facilities, expanding R&D capability and establishing global business service operations. Ireland now has a highly capable workforce. These skilled innovators are driving down cost by introducing business excellence models and developing new opportunities for business and product development to secure long term growth.

Technological advances and convergence across the subsectors provide high growth opportunities for those companies prepared to adapt and equip themselves to take advantage of these changes. Ireland is well placed to capitalise on the growing global market for medical and support systems that will enable the country to compete as a mature, high value added economy, with innovation at its core.

The industry response to the fast changing global environment is to be competitive in every aspect of operations. In the past, innovative thinking is what transformed the landscape for business in Ireland and made it one of the most open economies in the world. With the calibre of leadership and skills supported by appropriate government economic and educational polices, there is plenty of scope for the continued success of the sector in the years ahead.