The contract service providers have established themselves as an indispensable part of the supply chain in the pharmaceutical / medical device industry.

Given the ongoing efforts to minimize product costs, growing complexity to conduct clinical trials, profound technological advancements and introduction of stringent regulatory standards, outsourcing is considered as a viable and strategically beneficial solution for various stakeholders in the medical device domain.

In fact, outsourcing of clinical trials have attracted several device manufacturers due to operational as well as financial flexibility of outsourcing models.

CROs are fulfilling the needs of medical device companies and help them to avoid incurring the costs and infrastructure.

In the past few years, a shift in the outsourcing percentage of clinical trials has been observed; further, the trend of outsourcing is anticipated to escalate considerably with every passing year.

Moreover, in order to keep pace with latest technological advancements and manage vast amounts of data generated by medical devices, several industry giants are increasingly outsourcing their statistical and data analysis operations.

The medical device CRO domain is witnessing significant consolidation activity since the past few years.

This can be attributed to the rise in competition within this domain, which has further compelled medical device service providers to diversify their portfolios through mergers and acquisitions.

It is worth noting that, of the total number of acquirers, 58% were privately held firms, while the rest were public companies.

Examples of mergers signed in the medical device CROs industry include (in reverse chronological order) the merger of Cato Research with SMS-Oncology (October 2019), Factory CRO with Boston Biomedical Associates (January 2019) and Factory CRO with Five Corners (June 2018).

In terms of geography, maximum number of deals were signed in North America, followed by those inked by Europe based players.

Further, medical device service providers based in North America witnessed significant intracontinental consolidation activity, as compared to intercontinental deals, which were signed only with firms headquartered in Europe.

Over the last decade, there has been a change in the nature of outsourcing relationships.

In addition, with constant updates in regulations in the medical devices industry, innovator companies are increasingly opting to partner with experienced contract service providers in order to successfully navigate the evolving regulatory environment.

Presently, due to lack of in-house expertise to comply with the regulatory requirements, innovator companies are often required to outsource various supply chain processes / operations to contract service providers.

[1] Key Considerations for Selection of Key Performance Indicators (KPIs)It is important to note that the contracts of sponsor companies with CROs can be evaluated based on a number of (up to 100) of KPIs; however, as per the general industry perceptive, having too many KPIs does not help the sponsor to assess the performance of the company more efficiently.

Therefore, it is critical for a sponsor to differentiate between these parameters, to find a partner that is most suitable for their operations.

Figure 7.1 highlights the key attributes related to the selection of a good KPI.

Gene editing technologies allow the researchers to change the genetic material of an organism.

This change can be due to any addition, deletion or alteration at specific location in the genome.

Basically, there are three ways in which genes can be manipulated, namely:[1]Gene Insertion: This involves the addition of new attributes to a gene through the incorporation of nucleotide sequences.Gene Repair: This refers to the replacement of a defective gene sequence by a functional sequence.Gene Inactivation: This involves the use of specific nucleotide sequences or regulatory elements to prevent the expression of a target gene.

Table 10.1 provides information on the companies that are using / have developed proprietary gene editing technology platforms that can be applied for the production of gene therapies.

Table 10.1 Gene Editing Technology PlatformsS.

No.Company NameHQTechnologyNumber of Molecules in Pipeline[2]Highest Phase of Development1Beam TherapeuticsUSCRISPR[3]1Undisclosed2Bioverativ, Sangamo TherapeuticsUSZFN Technology[4]1I/II3bluebird bioUSHoming endonuclease and megaTAL[5]1Preclinical4Caribou BiosciencesUSCRISPR / Cas[6]NANA5CellectisFranceTALEN[7], [8]NANA6CRISPR TherapeuticsUSCRISPR / Cas9[9]5I/II7EdiGeneChinaCRISPR[10]4I/II (Planned)8Editas MedicineUSCRISPR / Cas9, TALEN[11], [12]6I/II9Exonics TherapeuticsUSCRISPR / Cas9[13]1Preclinical10Homology MedicinesUSProprietary Technology[14]4Preclinical11Horizon Discovery GroupEnglandProprietary Technology[15]NANA12Intellia TherapeuticsUSCRISPR / Cas9[16]5Preclinical13LogicBio TherapeuticsUSGeneRide[17], [18]4Preclinical14NovartisSwitzerlandProprietary AAV-mediated editing by Directed Homologous Recombination[19]NANA15Poseida TherapeuticsUSCas-CLOVER[20]NANA16Precision BioSciencesUSARCUS[21], [22]NANA17Sangamo TherapeuticsUSZFN Technology[23]5I/II18Sarepta Therapeutics, Duke UniversityUSCRISPR / Cas9[24]NADiscovery19TransposagenUSFootprint-Free[25], [26]NANA20Verve TherapeuticsUSCRISPR[27]1PreclinicalAbbreviations: HQ: Headquarters; ZFN: Zinc Finger Nuclease; TALEN: Transcription Activator-like Effector Nuclease Source: Roots Analysis 

The demand for high quality and efficient medical devices, driven by a growing geriatric population and increasing incidence of various chronic clinical conditions, is on the rise.

On the other hand, in order to ensure the safety and efficacy of healthcare products, regulatory authorities have increased the stringency of the review process related to the approval of such products.

Consequently, the need to conduct adequate clinical studies has increased.

However, owing to the complexities associated with clinical research, stakeholders in this domain have demonstrated a preference to outsource such operations.

Currently, the medical device CRO industry is characterized by the presence of several established companies, as well as new players.

In the coming years, we believe that the demand for contract research service providers is likely to increase significantly.

The number and geographical distribution of clinical trials are important indicators of both therapeutic viability and future potential of innovative pharmacological interventions and medical devices.

Moreover, the geographical distribution is a direct indicator of the various markets that are conducting trials or enrolling patients for clinical studies.

For instance, most of the regulatory authorities across the globe do not publish guidelines for medical devices (such as adhesive bandages) that pose negligible risk to human subjects, and therefore do not require a clinical trial.

However, devices that pose high risk, such as drug-eluting stents or materials for hip replacement, may necessitate a clinical trial.

It is likely that the domain may witness a significant increase in the number of registered clinical trials in 2020 as compared to the previous year; till March, over 1,250 trials were registered globally.

Most of the ongoing / planned trials for medical devices are centered in North America.

Presently, almost every country has its own regulatory authority, which issues guidelines to regulate the development, distribution and reimbursement of medical devices.

Therefore, it is crucial for a developer to understand and comply to the evolving regulatory environment in order to successfully market its offerings.

Majority of the payers and providers now require stakeholders to demonstrate both clinical and economic value of their new products owing to the fact that lack of appropriate strategies to understand the economics of the healthcare marketplace can relegate a potentially successful, innovative technology to commercial failure.

Thus, preparations should begin early in the product development process; development of a comprehensive strategic regulatory and reimbursement plan can help stakeholders to identify economically attractive indications and market opportunities.

Hence, it is extremely important to focus on providing evidence for both cost-effectiveness and clinical efficacy.3Focus on publications to communicate clinical informationInsurers constantly seek reliable information and therefore, are known to value data published in reputable, peer-reviewed journals.

The most prominent standards have been listed below:[4]ISO 9001 (for general quality standards)ISO 13485 (for medical device quality standards)ISO 14001 (for environmental management system)OHSAS 18001 / ISO 45001 (for occupational health and safety management system)ISO 27001 (for cybersecurity of medical devices) There have been some modifications in the industrial standards that is likely to impact the medical device manufacturing in coming years.

The pharmaceutical industry witnessed a gradual increase in the adoption of autoinjectors for drug delivery.

These devices can be designed / modified to cater to drug specific administration requirements; as a result, autoinjectors are being used for dosing purposes for a variety of drugs, including epinephrine, insulin and human growth hormones, and therapies for fertility treatments, multiple sclerosis and rheumatoid arthritis.

[1] The growing number of such alliances have prompted service providers to enhance their offerings and expand their operations in an attempt to serve the needs of their clients.

Most recently, in August 2019, Thermo Fisher expanded its sterile capabilities to provide autoinjector / pen assembly specific facilities to its clients.

[2] In another instance, in August 2019, Oval Medical Technologies moved to a new location in Cambridge Research Park in order to gain access to a larger space for its operations.

[3] Similarly, in January 2019, PCI Pharma Services invested USD 20 million for the expansion of clinical and commercial packaging requirements for advanced injectable delivery platforms, including safety syringes, pen injectors and autoinjectors.

The medical device sector, a part of the pharmaceutical industry, is one of the few businesses that has been relatively less impacted amidst the COVID-19 pandemic.

Moreover, as the disease spreads, the demand for accurate diagnostic measures, medical devices (including handled scanners, and personal protective equipment (PPE)), and effective preventive and treatment solutions for COVID-19, is growing at a rapid pace.

In this context, it is worth mentioning that the sales of handheld ultrasound / x-ray scanners and infrared thermometers have increased manifold, in compliance to social distancing guidelines.

[1] In fact, the medical device industry is presently overwhelmed with the need to develop and supply various types of products to cater to the ongoing COVID-19 testing initiatives, across the world.

As more cases of the disease are identified, restrictions imposed on both national and international movement of goods are anticipated to impact the import / export of medical devices, as well.

In order to address this problem, it is very important for MedTech manufacturers to be flexible in their operations, leveraging all applicable exemptions, and optimizing internal processes by fulfilling emerging needs through innovation.

Competitive benchmark analysis allows the companies to compare their existing capabilities within their respective peer groups (based on company size and location of headquarters) and thereby, identify ways to gain a competitive edge in the industry.

In addition, this analysis can be used by companies to spot potential improvement areas by identifying gaps between their existing capabilities and industry best practices.

The following peer group includes small medical device CROs that are based in North America.

According to our selection criteria, there are 48 companies in this peer group.

Figure 8.2 presents a summary of the existing benchmarks (in terms of CRO capabilities and services offered) within this peer group, as inferred from our research.

Figure 8.2 Competitive Benchmarking: North America, Peer Group I Note 1: The position of the dots in the representation highlights the locations of headquarters of the companies considered in the analysisNote 2: Companies offering more than one type of clinical trial management / regulatory affairs-related / additional services have been counted multiple times in this representationNote 3: Key players in a peer group are companies that claim to provide 16+ contract research services  The charts present distribution of companies in peer group I across the following parameters:Additional services: We observed that all the companies in this peer group offer consulting services, while over 55% companies offer more than three additional services for medical devices.

During our research, we were able to identify over 250 industry players that presently claim to offer contract services for clinical development of medical devices.

In addition, there are more than 40 companies that are presently offering contract services for preclinical development of medical devices.

The market is currently dominated by the presence of very small and small companies (less than 51 employees), that represent over 50% of the total players.

In terms of geography, more than 70% of medical device CROs are based in North America and Europe.

However, only a limited CROs (11%) provide services for both class II and class III devices, while close to 5% companies offer services for both class I and class II devices.

In addition, close to 50% CROs claim to have elaborate clinical service portfolio, offering end-to-end solutions.

Over the years, monetary assistance from angel investors, venture capitalists and funding schemes of various public and private organizations / funds, along with assistance from regulatory authorities, have allowed start-ups / small companies to further their R efforts related to the ADC therapeutics.

In this chapter, we have reviewed the various capital investments that have been made into the ADC therapeutics market.

It includes details of only those instances wherein investments were made into different companies / research institutes for the development of ADC molecules, offering insights on how the overall market has evolved in terms of investment activity.

We have also highlighted the most active venture capital investors in this domain.During our research, we were able to identify around 90 funding instances between 2011 and 2019, amounting to a total of nearly USD 4.7 billion.

In fact, in 2019, we identified 6 instances of funding till July 2019.

According to our research, more than 80% of the total investment (in terms of the amount invested) was made in last five years alone; a total amount of nearly USD 3.9 billion has been invested since 2015.

Over the years, outsourcing has become an indispensable business strategy within the global medical devices market.

Moreover, the increasing regulatory stringency worldwide, is causing many innovator companies to rely on the expertise of CROs to liaise regulators and handle the intricacies associated with product approval.

As per our analysis, we expect the overall medical device CRO market to be worth USD 8.5 billion in 2020, and this value is projected to reach USD 15.7 billion by 2030, growing at a CAGR of 6.4%.

In terms of scale of operation, the market for CROs offering services for clinical scale development of medical devices is likely to be worth USD 6.6 billion, and this value is projected to be USD 12.5 billion by 2030.

Further, in terms of preclinical services being offered, sterility and microbiology testing services presently capture the highest share (35%) in the overall medical device CROs market (in terms of service revenues).

In terms of therapeutic area, in 2020, services offered for the development / approval of devices intended for the treatment / management of CNS disorders capture the highest market share (in terms of service revenues) and this trend is unlikely to change in the foreseen future; this segment is anticipated to be worth USD 2.2 billion by 2030.

Brand positioning analysis of the key industry players helps to develop an understanding on how the brands of companies are currently perceived / positioned in different market segments relative to their competitors.

In addition, this analysis can help players to determine improvement areas by identifying gaps between their existing capabilities as well as recognize ways to gain a competitive advantage in the mid to long term.

Figure 9.2 presents a summary of brand positioning analysis of the top 10 industry players, based on their portfolio strength, portfolio diversity, type of device class and geographical presence.

Figure 9.2 Brand Positioning of Key Industry Players: Reasons to BelieveSource: Roots Analysis  Brand Positioning Matrix: LabcorpLabcorp claims to have expertise in the healthcare diagnostics domain, offering a broad range of clinical laboratory and drug development services through its LabCorp Diagnostics and Covance Drug Development (CDD) segments.

In February 2015, Labcorp acquired Covance with an aim to provide a complete set of services to the healthcare industry.

Presently, CDD offers end-to-end solutions / services for conducting medical device focused clinical trials with the help of its experienced staff.

Furthermore, new advancements have facilitated the development and enforcement of more informed regulatory guidelines and instructions to ensure the safety of medical devices.

In order to overcome the abovementioned challenges, medical device developers are actively outsourcing their clinical research and associated operations to contract service providers, which are known to have the required capabilities and expertise.

In 2017, the US represented 40% of the global medical device market.

Further, as per a report published by the World Bank, more than 50,000 types of medical devices are presently used in healthcare facilities worldwide.

Further, the establishment of stringent regulations, such as the new MEDDEV 2.7/1 Rev4 European regulation (published in 2017), has forced manufacturers to develop devices that include supporting equipment, delivery tools and software versions to prove their safety.

In addition, manufacturers are increasingly conducting clinical trials in order to differentiate their products from competitors and enhance adoption rates amongst patient population.

The pharmaceutical sector is one of the few industries that has been relatively less impacted amidst the COVID-19 pandemic.

As the disease spreads, the demand for accurate diagnostic measures, and effective preventive and treatment solutions for COVID-19, is growing at a rapid pace.

At the time of writing this article, more than 70 vaccines and around 100 therapeutic interventions were under development for the prevention and treatment of the disease, respectively.

Moreover, there are heavy restrictions on international boundaries, preventing sponsors from leveraging the assistance of contract service providers.

In this section, we have attempted to assess the impact of the COVID-19 pandemic on the businesses of peptide API contract service providers.

Based on our assessment of the impact of the COVID-19 pandemic, the peptide API CMO market across the world, is likely to witness / have witnessed the following developments:Complete / partial disruption of normal operations and manufacturing taking place at sub-optimal capacityDecline in short-term demand from existing pharmaceutical sponsors / innovator companiesImmediate decline in outsourcing, especially from offshore locationsLimitations on workforce available on premises, as a result of government-imposed social distancing regulationsHeavy restrictions on cross border movement of goods and other logistical challenges, leading to the disruption of established supply chainsIncreased regulatory scrutiny Based on the abovementioned insights, it is unlikely that contract manufacturers are currently operating at full capacity.