The next patent cliff

Much attention has focused on the "patent cliff" faced by pharmaceutical companies. As their proprietary drugs lose patent protect, the drug companies face competition from low-cost generic drugs.  With an exceptionally high cost and long lead time for new drug development, the pharmaceutical companies face significant strategic problems.There is another patent cliff approaching that has not yet received much attention--the end of patent protection for many minimally invasive surgery devices.  Whether the basic stapling devices or more complicated instruments, the 20-year protection period on much laparoscopic equipment is coming to an end.This change will be a major disruption in this industry.  Many of the equipment suppliers have been resting on their laurels for years, relying on relationships with surgeons to force sales of their equipment to hospitals.  Multi-product line companies also have buried the high cost of their instruments into an overall contract pricing regime with other hospital supplies. What most equipment suppliers have not done is to engage internal process improvement, taking waste and inefficiency out of their cost structure. Indeed, some have become separated from the potential for such improvement by relying on outsourced production.  When new entrants to the market arrive, selling the same quality goods for a much lower price, the established equipment suppliers will face a challenge. Their ability to use contract pricing t...
Source: Running a hospital - Category: Health Managers Source Type: blogs