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November 01, 2010 (Vol. 30, No. 19)

Regen Medicine Prepares for Growth Spurt

Novel business models, emerging players, and transformative products are starting to have an impact.

  • The regenerative medicine market, still at an early stage of its evolution, is likely to grow exponentially from its current base of $1.8 billion to potentially more than $10 billion by 2020. Historically, the market has been limited to applications in spine fusion and skin/ wound and cartilage repair, but this is likely to change as numerous novel cell-based therapies enter the market and address unmet medical needs.

    Cell-based therapies include fully formed artificial tissue (synthetic bladders, etc.) and stem cell therapies in which stem cells (typically drawn from bone marrow) are introduced to the body in order to repair or heal ailments. Such novel therapies may disrupt segments of the $750 billion pharmaceutical and $200 billion medical-device markets, creating significant new growth opportunities for regenerative medicine players.

    If some of these therapies reach their promise, we are likely to see dramatic changes in the management and treatment of certain chronic diseases and significantly lower overall healthcare costs. These innovations have considerable implications for traditional players in the pharmaceutical and medical-device industries—particularly regarding current business models and market approaches.

  • A Nascent Market To Date

    The regenerative medicine market started in the late 1980s and early 1990s when the first cell-based therapies were introduced in the skin/wound repair area. None of these early therapies had significant impact on the market due to ineffective marketing, high prices, manufacturing problems, and other go-to-market hurdles. For example, Organogenesis’ initial launch of Apligraf failed in 2002, and the company was forced to file for bankruptcy. However, since then the company has grown stronger. Organogenesis is now approaching $100 million in sales.

    Organogenesis’ recovery demonstrates that regenerative medicine is transitioning from early adoption to broader market acceptance as players learn, sometimes the hard way, how business models and go-to-market strategies originally borrowed from the biopharma and medical-device industries must be tailored specifically for regenerative medicine.

    Several other firms have, likewise, struggled for years to find profitable ways to provide regenerative solutions. After observing other companies’ initial difficulties, Medtronic entered the regenerative medicine market in 2002 and introduced BMP (bone morphogenic protein, used in spine fusion), which became the first blockbuster regenerative medicine product with sales of over $600 million four years after launch.

    This success story demonstrates the value of regenerative medicine and the importance of proper business planning to ensure rapid adoption. However, despite increasing product success, regenerative medicine remains a relatively small market, limited to specialized application areas.

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