Success and Excess

One of the major topics of debate at the 2021 Neurotech Leaders Forum, which took place earlier this month, was the question of whether the recent spate of success that the neuromodulation industry has seen in the last year or two was too much of a good thing. During an editorial panel featuring this editor, senior consulting editor Jeremy Koff, and contributing editor Jo Jo Platt, the panelists and audience members pondered whether the plethora of new market players, FDA breakthrough device designations, and funding activity might prove detrimental to the industry in the long run, much the way runaway exuberance in the early days of the Internet led to the dotcom crash of 2020.

At least one market observer, Paul LaViolette of SV Health Investors, worried in advance that the rapid pace of FDA breakthrough device designations might spook CMS and lead to the cancellation of MCIT [NBR May21 p6]. With respect to the number of new market entrants in the neuromodulation space, Koff felt that the implanted SCS market could support up to 10 competitors, citing his experience with MiniMed, when there were 17 companies offering insulin pumps. “The top few will always have the largest market share,” he said. “Then you’ll have quite a few smaller niche players going after very small indications.”

Victor Pikov of Medipace added that there would be likely consolidation in the SCS market, but pointed to new players like Micro-Leads and Presidio Medical as prime acquisition targets. Dan Powell of Spark Biomedical raised the issue of profitability as a factor that could have a negative impact on investment in neuromodulation down the road. “I don’t think Nevro has turned a profit to this day; Nuvectra never turned a profit, lost millions every quarter. That’s not sustainable,” he said. “I think investors are getting taken for a ride.” He said that although the pain market is huge, the cost of sales is so high that it’s going to make most of these startups fail. Koff shot back that he’s never worked for a profitable medtech company, noting that Advanced Bionics was sold for $3 billion and MiniMed for $4 billion, while Inspire has a $7 billion market cap despite not making a profit.

It may seem ironic that we would question whether there was too much market activity, funding, and regulatory shortcuts in the neurotech industry, given our years of lamenting the dearth of all three. And certainly, any overconfidence that may now exist in the neuromodulation industry is nowhere near the level that was rampant in the dotcom bubble 20 years ago. Still, vendors and funders in this space would be wise to be ever vigilant to the risk of over-promising and under-delivering.

To watch the video from the editorial roundtable, visit this link: Paid subscribers to this newsletter also have access to several other sessions at the Neurotech Leaders Forum.

James Cavuoto
Editor and Publisher


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