High prices continue to haunt needleless system sales

High prices continue to haunt needleless system sales

Despite their proven effectiveness in stopping the spread of bloodborne pathogens such as HIV and hepatitis B virus, needleless systems have yet to catch on in a big way in U.S. hospitals. The three reasons: cost, cost and cost.

The situation is a case study of how an emerging technology possessing safety, efficacy and the potential for saving literally millions of dollars and scores of lives still has trouble making a significant dent in sales of traditional, but undeniably less effective, competing products and technologies.

Not only must the handful of major players in the needleless, or needle-free, systems market battle each other for a share of a dwindling provider pie, they must compete with widespread use of simpler, much cheaper products like needles, and also patches and pills, for use as drug delivery systems.

In a cost-conscious time, manufacturers of needleless systems that commonly sell for between $500 and $1,000 each have a difficult time selling their wares in the face of detailing from needle producers that sell their products literally for pennies.

Hospitals are not required by law to use needleless systems, though OSHA does mandate facilities implement needlestick prevention programs. Before embarking on an expensive conversion to needleless systems, hospitals generally complete a needlestick analysis. Most sticks are found to take place in the vicinity of I.V.s.

Somewhat ironically, in several cases, manufacturers of needleless systems must cannibalize their own market to succeed. At least two of the market leaders in the needleless systems segment–Becton Dickinson Co., Franklin Lakes, N.J., and Sherwood Medical, St. Louis–also produce needles and syringes. The market also contains products made by players such as Abbott Laboratories, Abbott Park, ill. and B. Braun Medical Inc., Bethlehem, Pa., and many others.

A brief report on one large and one small player:

BD profits smartly from injection system sales

Injection systems sales are a major part of Becton Dickinson’s profit picture. More than half of the company’s overall business, which registered sales of $2.7 billion in 1995 with an estimated $2.8 billion expected for 1996, involve medical products like syringes, I.V. catheters and other surgical products. Its net earnings for 1995 were $251.7 million with an estimated $282.4 million anticipated for this year.

Of those sales totals, an estimated 25% is derived from injection systems, mostly hypodermic and prefilled syringes, two markets where BD holds a strong worldwide position. Becton Dickinson and Baxter Hospital Supply, McGaw Park, Ill., have collaborated on the successful InterLink I.V. Access System needleless system. Of all BD’s product areas, injection systems show the sharpest U.S. growth. In 1995, Becton Dickinson’s injection systems revenue increased 5.9% in the U.S. (11.5% internationally) to $284.9 million. U.S. sales for 1996 are expected to jump another 8.5% to $309 million. This is in contrast to flat 1995 sales growth in this country for BD’s non-injection products.

Analysts like New York-based C.J. Lawrence believe that providers’ continued conversion to safety systems like the InterLink, the Safety-Lok syringe and the Med-Saver, along with the introduction of new cost-effective products, should sustain near 10% growth for the company. The analysts say that Becton Dickinson will boost its already impressive sales momentum with forays into less developed and undeveloped markets involving injection systems.

Medi-Ject thrives in home care market

Medi-Ject, Minneapolis, produces a needle-free drug delivery device mostly for the home health care market on a selective, drug-by-drug basis. The company, which is privately held, expects to branch out into markets other than home care in the future. Its system, known as the Medi-Jector, is produced on a license basis in which Medi-Ject licenses the technology and develops drug-specific systems by working with pharmaceutical manufacturers.

All Medi-Ject sales are attributable to needle-free systems. The company calls itself the number one supplier of such systems to the home health care market. The Medi-Jector cuts the amount of unit doses needed by patients, and their small size allows users to inject insulin discreetly.

The company recently made a significant move when it signed an agreement forming a collaborative program with Becton Dickinson to develop an improved needle-free injection system for self-administration of parenteral drugs. Under terms of that deal, Medi-Ject will develop and produce a pen-sized, reusable, needle-free injector, and Becton Dickinson will develop and produce single-use disposable drug chambers designed for use with this injector. The system is intended to be smaller, lighter and easier to use than current needle-free injectors and will compete with a similar, but larger and presumably more cumbersome product made by another player, Portland-based Bioject Inc.

Todd Leonard, vice president of business development for Medi-Ject, believes the Bioject product is probably better suited to the clinical market rather than to the home care market. The Medi-Ject product utilizes a single-use disposable drug chamber that can either be filled by the patient or supplied pre-filled with a drug. Becton Dickinson will distribute these needle-free systems and will fund Medi-Ject’s development program as well as internal development of associated disposable drug chambers. The two companies are expected to collaborate with pharmaceutical concerns in a partnering program to develop customized systems for use with specific drugs. BD has also acquired a minority interest in Medi-Ject.

Medi-Ject also has an agreement in place with Swartz Pharma, a German pharmaceutical company, that involves the development of needle-free systems used in the impotency market for prostaglandin. Medi-Ject also has an agreement with Ferring Gmb in the Netherlands that involves human growth hormones. That latter market is also attractive to Medi-Ject, though nothing has developed in this country yet. An agreement with the Texas-based biotech firm Gene Medicine Inc. is yet another partnership designed to develop needle-free drug delivery for gene therapy.

Since Medi-Ject is primarily a home care supplier, to a degree it has escaped the negative fallout caused by the declining number of U.S. hospitals. Instead, its sales are expanding as it continues to gain recognition from U.S. home health care providers. The BD agreement will also help in this regard.

As Medi-Ject develops additional programs, the company expects to branch out into the hospital market. Strategic partnerships will be used to enter that sphere, but just how it plans to reach that market is still undecided.

Historically, the company distributed direct to the patient. Now, patients get the device through pharmacies after obtaining the name and number of their nearest location from Medi-Ject via an 800 line.

Prices coming down

Needleless system prices continue to fall, but how much they must drop to gain share in U.S. hospitals is still open to question. Medi-Ject’s Leonard expects the prices will keep dropping as needle-free becomes more of a mainstay type of technology that competes with needles. An even higher degree of price parity, he says, “is just a couple of years away, not five to 10 years away, but a couple of years away.”

Three years ago, the Medi-Jector sold for about $1,000. Today, it sells for about $500. “Improvements mean cost savings, and the device must be cost-effective to use. Our goal is to make our product affordable to the industry on a customized basis.”

A full-blown needleless system is the most expensive in the segment, costing as much as three times the price of a gravity set that accepts needles. An interim device made by Baxter and by small companies like Tri-State Hospital Supply Corp., Howell, Mich., includes a set of adapters and connectors that reduce needle sticks.

COPYRIGHT 1996 J.B. Lippincott Company

COPYRIGHT 2004 Gale Group