The past year has not been as gloomy for the medical device industry as it has, say, for home builders, automakers and just about everyone else. In the US, demand for the latest and greatest technologies to keep people healthy and happy is higher than ever. However, one of the illustrative primates – federal health care legislation – casts a large shadow over future prospects for medical device designers, manufacturers and end users alike. The other, a choked-up financial services industry, may strangle anyone who dares come up with a better medical “mousetrap.”According to Scott Davison of Raydiance Inc., medical technology is a recession-resistant industry. “Where other companies have lost 10 to 30 percent, this industry is steady because people are still getting sick,” he said. “The med devices companies are posting very good revenues.”Market advisory company Ernst & Young reported earlier that publicly traded medtech companies grew by 11 percent in 2008, even though the rest of the market was diving into a deep recession. But it noted that the first half of 2009 was relatively flat, with further concern for the second half of the year. The reason for the slow turn downward? Lack of investment in new (and existing) companies and technologies.Tight start-up fundingGeorge Tegos of the Wellman Center for Photomedicine in Boston said that there are many companies with huge potential that are suffering financially because of a lack of funding. “It is a lot harder to develop and bring to market new technologies in the US,” he said. At the Wellman Center, the drive is on to develop photodynamic therapy and other marketable light-based diagnostic tools and treatments for cancer, infectious diseases and other human ailments.Michael Greeley, a general partner at Flybridge Capital Partners in Boston, agrees. “Biotech is having a hard time raising funds,” he said.Flybridge has a history of funding young biotech and medtech companies, compiling syndicates of investors who then dole out funds in short bursts, or tranches, as companies meet various criteria. Typical milestones for releasing tranches are technology or product development stages and team development.According to Greeley, tranching is a “pretty well understood model” for funding start-ups. Nonetheless, he said that Flybridge is less active these days in biotech because of prevailing market conditions. “The venture capital pool is shrinking overall, giving entrepreneurs fewer choices.”While the market catches its breath, Greeley said, academics looking to break out a new device or technology will likely end up staying put and waiting out the economy. However, according to a report by Mark Trusheim, founder and president of Co-Bio Consulting LLC and executive in residence at MIT’s Sloan School of Management, the medtech industry may lose all investment momentum if the Medical Device Safety Act of 2009 is enacted into law. The legislation, designed to include makers of medical devices among companies required to disclose the risk of their health care products, is under consideration in both the House and Senate.There are some bright spots on the medtech horizon, though. Tegos noted that there are a lot of developments happening in other countries, such as Brazil, that are of great interest because they are less inhibited by regulatory bodies like the FDA. And Greeley offered that government grants are helping the medical industry, which is a new trend, with the hope of boosting job growth, homeland defense, “green” tech, basic research for oncology and chronic diseases, and electronic records (a $19 billion industry to be, according to Greeley).Medtech on the marchPhysicians and other hospital and clinic end users are increasing their demand for optical sensors on the medical devices they already use every day. Improved imaging systems are being sought after, with speed and resolution the top drivers. The new technologies of note include positron emission mammography, OCT systems that operate at various infrared wavelengths, advanced picture archiving communications systems, breast-specific gamma imaging and the aforementioned photodynamic therapies.Mature technologies, such as lasers and spectrometers, are improving incrementally: New wavelengths and power levels for lasing, for example, help bring the devices toward new applications in the surgical suite or in aestheticians’ clinics.Point-of-care technology is also surging, as medtech companies respond to doctors and hospitals that want to treat patients but keep them at home as much as possible. Consultations between doctors, nurses and patients are heading away from the clinical setting, and health monitoring, including drug compliance, is staying at home. Telemedicine, driven by a shrinking labor force of doctors and nurses, is spiking as well.“Connected health is the next big thing: Intelligent, connected diagnostics, monitoring [and] drug delivery systems,” Flybridge’s Greeley predicted.New applications are being found for old technology in other areas. So-called virtual colonoscopy may be used to diagnose osteoporosis, for example, and x-ray technicians have been at the vanguard of discovering the problem of “self-embedding disorder,” in which teens and other kids with emotional problems insert paper clips and other small objects deep into their flesh.The wish list doesn’t end there. Ultrafast lasers are migrating from the academic lab to clinics and hospitals – as well as to medtech factory floors, where they are being used to make tiny medical devices such as stents. Ultrafast lasers – those with picosecond or shorter pulses – are desirable because they leave ultrasmooth cuts that reduce the time and effort normally required to finish producing a stent. And many stents are going to need to be efficiently produced in the future.“Stents are a $6 million to $7 million business – the golden standard for treating cardiac issues,” said Raydiance’s Davison. “Over the next 10 to 15 years, cardiac stents will deal with all other arteries, as well as with brain aneurysms.”Ben Bernanke of the US Federal Reserve has stated that the recession has ended, but lingering issues remain. For one, the FDA and other regulators are still bogged down with approvals of new technologies. Although desirous of improved health care, doctors are wary of false promises and unproven technologies. And, despite the beginnings of a recovery, there is still high unemployment. Thousands of job openings exist for medical technologists, but techs remain scarce, because most unemployed workers don’t have the skill set to fill these good-paying jobs.Institutions of higher education, especially community colleges, are stuffed with people seeking retraining, but there remains a lag; it will take another year or two before they hit the workforce. Until then – and probably for years to come – designers and makers of medical devices will place increased emphasis on simple-to-use systems that don’t require an advanced degree to operate.If the problems all seem circular in nature, it may just be that the medical device industry is forming a cyclone that will blow through the recession and forward into a very profitable future.