U.S. Markets for Wound Management Products #RP-181303 23 Corporate Plaza, Suite 125, Newport Beach, CA 92660 • Tel: 949.219.0150 • Fax: 949.219.0067 www.medtechinsight.com This copyrighted report may not be reproduced in any form by any means in part or in whole without written permission from Medtech Insight, LLC. This restriction also applies to photocopying and redistribution of reports to other sites, facilities, units, divisions, corporate offices, or affiliates of the purchaser's organization. Redistribution or resale of illegal copies is strictly forbidden by U.S. and international laws and violators risk civil and/or criminal penalties in addition to suspension of services. The information, data, and estimates in this report have been obtained from sources believed to be reliable. Every reasonable effort has been made to verify their accuracy. Information contained in this report is very time sensitive. Please note the publication date. Table of Contents EXECUTIVE SUMMARY............................................................................................... ES-1 1. i. Cleansing Agents and Patient Preparation Supplies, Cleansing and Debridement Agents............................................................ ES-2 ii. Wound Closure Devices.............................................................................. ES-6 iii. Hydrogel Dressings ..................................................................................... ES-6 iv. Pressure-Relief and Pressure-Reduction Equipment .................................. ES-9 MARKET OVERVIEW .......................................................................................... 1-1 1.1 Impacts of Managed Care .............................................................................. 1-1 1.1.1 1.2 Innovation in Perspective ............................................................................... 1-3 1.3 Purchasing Environment ................................................................................ 1-3 1.3.1 Outcomes Studies......................................................................... 1-5 1.4 Medicare......................................................................................................... 1-5 1.5 Minimally Invasive Surgery........................................................................... 1-7 1.6 Hospital and Alternate Site Markets .............................................................. 1-9 1.7 2. Differentiation to Commoditization ............................................. 1-2 1.6.1 Hospitals....................................................................................... 1-9 1.6.2 Physician Networks and Ambulatory Care ................................ 1-10 1.6.3 Nursing Homes .......................................................................... 1-10 1.6.4 Home Health Care...................................................................... 1-11 1.6.5 Subacute Care Facilities ............................................................. 1-12 1.6.6 Wound Care Centers .................................................................. 1-13 The FDA ...................................................................................................... 1-15 CLINICAL ISSUES ................................................................................................. 2-1 2.1 2.2 Anatomy and Physiology of Soft Tissue........................................................ 2-1 2.1.1 Epidermis ..................................................................................... 2-2 2.1.2 Dermis .......................................................................................... 2-2 2.1.3 Subcutaneous Tissue .................................................................... 2-3 2.1.4 Normal Skin Changes Associated with Aging............................. 2-3 Types of Wound ............................................................................................. 2-4 2.2.1 ©1997, Medtech Insight, LLC Surgical Wounds .......................................................................... 2-4 i #RP-181303 Table of Contents 2.2.2 Trauma-Induced Injuries ............................................................ 2-10 2.2.3 Burns .......................................................................................... 2-10 2.2.3.1 Classification of Burns .......................................... 2-12 2.2.3.2 Therapeutic Intervention for Burns ....................... 2-14 2.2.4 Proliferative Scars ...................................................................... 2-17 2.2.5 Pressure Ulcers........................................................................... 2-18 2.2.6 2.2.5.1 Staging of Pressure Ulcers .................................... 2-18 2.2.5.2 Incidence of Pressure Ulcers ................................. 2-19 2.2.5.3 Therapeutic Intervention for Pressure Ulcers ....... 2-20 Venous Ulcers ............................................................................ 2-21 2.2.6.1 2.2.7 Arterial Ulcers ............................................................................ 2-23 2.2.7.1 2.3 2.4 Therapeutic Intervention for Venous Ulcers......... 2-23 Diabetic Ulcers...................................................... 2-24 2.2.8 Amputations ............................................................................... 2-24 2.2.9 Acquired Immune Deficiency Syndrome .................................. 2-24 Wound Healing Biological Factors .............................................................. 2-25 2.3.1 Inflammatory Phase ................................................................... 2-26 2.3.2 Proliferative Phase ..................................................................... 2-27 2.3.3 Maturation Phase........................................................................ 2-28 Complications Affecting Wound Healing.................................................... 2-28 2.4.1 2.4.2 ©1997, Medtech Insight, LLC Local Factors .............................................................................. 2-29 2.4.1.1 Surgical Technique ............................................... 2-29 2.4.1.2 Blood Supply......................................................... 2-29 2.4.1.3 Hypoxia ................................................................. 2-29 2.4.1.4 Infection ................................................................ 2-29 2.4.1.5 Radiation ............................................................... 2-30 Systemic Factors ........................................................................ 2-30 2.4.2.1 Advanced Age ....................................................... 2-30 2.4.2.2 Nutritional Status .................................................. 2-31 2.4.2.3 Pharmacological Medications ............................... 2-31 2.4.2.4 Diabetes and Other Diseases ................................. 2-32 2.4.2.5 Emotional Stress ................................................... 2-32 ii #RP-181303 Table of Contents 3. CLEANSING, DEBRIDEMENT AND GRANULATION AGENTS ................. 3-1 3.1 3.2 4. Cleansing Agents ........................................................................................... 3-1 3.1.1 Common Cleansing Agents ......................................................... 3-4 3.1.2 Drug-Resistant Bacteria and the Effects of Wound Cleaners....................................................................... 3-4 3.1.3 Competitors and Products ............................................................ 3-5 3.1.4 Market Analysis ........................................................................... 3-5 3.1.5 Competitive Analysis ................................................................... 3-8 Debridement and Granulation Agents............................................................ 3-8 3.2.1 Mechanical Debridement ............................................................. 3-8 3.2.2 Autolytic Debridement............................................................... 3-10 3.2.3 Enzymatic/Chemical Debridement ............................................ 3-11 3.2.3.1 Competitors and Products ..................................... 3-11 3.2.3.2 Enzymatic/Chemical Debridement Development Status .............................................. 3-14 3.2.3.3 Market Analysis .................................................... 3-14 3.2.3.4 Competitive Analysis ............................................ 3-15 WOUND CLOSURE DEVICES ............................................................................. 4-1 4.1 4.2 Needled and Non-Needled Sutures ................................................................ 4-1 4.1.1 Competitors and Products ............................................................ 4-2 4.1.2 Development Status ..................................................................... 4-3 4.1.3 Market Analysis ........................................................................... 4-4 4.1.4 Competitive Analysis ................................................................... 4-4 Tissue Glues ................................................................................................... 4-6 4.2.1 Pooled Plasma-Derived Sealants ................................................. 4-9 4.2.2 Autologous-Processed Sealants ................................................. 4-10 4.2.3 Collagen-Based Sealants ............................................................ 4-11 4.2.4 Cyanoacrylate-Based Sealants ................................................... 4-12 4.2.5 Polymer-Based Sealants............................................................. 4-13 4.2.6 Recombinant and Genetically Engineered Sealants................... 4-14 4.3 Delivery of Fibrin Glue ................................................................................ 4-14 4.4 Market Potential of Tissue Glues ................................................................. 4-14 ©1997, Medtech Insight, LLC iii #RP-181303 Table of Contents 5. WOUND DRESSINGS ............................................................................................ 5-1 5.1 Non-Occlusive Dressings............................................................................... 5-3 5.1.1 5.2 Occlusive Dressings ....................................................................................... 5-5 5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 6. Competitors and Products ............................................................ 5-3 Film Dressings ............................................................................. 5-5 5.2.1.1 Market Analysis ...................................................... 5-6 5.2.1.2 Competitive Analysis .............................................. 5-6 Hydrogel Dressings ...................................................................... 5-9 5.2.2.1 Market Analysis ...................................................... 5-9 5.2.2.2 Competitive Analysis ............................................ 5-12 Hydrocolloid Dressings.............................................................. 5-13 5.2.3.1 Market Analysis .................................................... 5-16 5.2.3.2 Competitive Analysis ............................................ 5-18 Foam Dressings .......................................................................... 5-21 5.2.4.1 Market Analysis .................................................... 5-21 5.2.4.2 Competitive Analysis ............................................ 5-23 Calcium Alginates ...................................................................... 5-26 5.2.5.1 Market Analysis .................................................... 5-26 5.2.5.2 Competitive Analysis ............................................ 5-28 SYNTHETIC/BIOSYNTHETIC DRESSINGS AND SKIN REPLACEMENTS .................................................................................................. 6-1 6.1 Autologous Skin Grafts and Flaps ................................................................. 6-1 6.2 Synthetic and Biosynthetic Dressings ............................................................ 6-1 6.3 6.2.1 Competitors and Products ............................................................ 6-2 6.2.2 Synthetic/Biosynthetic Dressing Market Analysis ...................... 6-3 Skin Replacements and Substitutes................................................................ 6-7 6.3.1 Regulatory Status ......................................................................... 6-7 6.3.2 Competitors and Products ............................................................ 6-8 ©1997, Medtech Insight, LLC 6.3.2.1 Advanced Tissue Sciences ...................................... 6-9 6.3.2.2 Genzyme Tissue Repair .......................................... 6-9 6.3.2.3 LifeCell ................................................................. 6-10 iv #RP-181303 Table of Contents 6.3.2.4 6.3.3 6.3.4 7. Development Status ................................................................... 6-12 6.3.3.1 Organogenesis ....................................................... 6-12 6.3.3.2 Ortec ...................................................................... 6-13 6.3.3.3 Purdue University ................................................. 6-14 Skin Replacement and Substitute Market Analysis ................... 6-15 GROWTH FACTORS............................................................................................. 7-1 7.1 Normal Effects of Growth Factors ................................................................. 7-2 7.2 Categorization of Growth Factors .................................................................. 7-4 7.3 7.2.1 Fibroblast Growth Factors ........................................................... 7-5 7.2.2 Transforming Growth Factors...................................................... 7-7 7.2.3 Epidermal Growth Factor............................................................. 7-8 7.2.4 Platelet-Derived Growth Factors ................................................. 7-9 7.2.5 Platelet-Derived Wound Healing Formula .................................. 7-9 7.2.6 Insulin-like Growth Factors ....................................................... 7-10 7.2.7 Interleukins................................................................................. 7-12 7.2.8 Other Growth Factors................................................................. 7-12 Development Status ..................................................................................... 7-13 7.3.1 7.4 8. Integra LifeScience ............................................... 6-12 Concerns about Growth Factors................................................. 7-13 Growth Factor Market Potential .................................................................. 7-14 INSTRUMENTED WOUND HEALING .............................................................. 8-1 8.1 Compression Devices..................................................................................... 8-1 8.1.1 Passive Compression.................................................................... 8-1 8.1.2 Sequential Compression Devices ................................................. 8-4 8.1.3 Dynamic Compression Devices ................................................... 8-4 8.2 Whirlpool Therapy Devices ........................................................................... 8-5 8.3 Lavage Devices .............................................................................................. 8-6 8.4 Electrical Stimulation Products...................................................................... 8-7 8.5 Electromagnetic Stimulation Devices ............................................................ 8-9 8.6 Ultraviolet Wound Healing Devices ............................................................ 8-10 ©1997, Medtech Insight, LLC v #RP-181303 Table of Contents 9. 8.7 Hyperbaric Oxygen Chambers ..................................................................... 8-10 8.8 Mechanically Assisted Wound Healing Devices ......................................... 8-11 8.9 Thermography .............................................................................................. 8-13 8.10 Emerging Technologies ............................................................................... 8-14 Ultrasonic Wound Healing Devices........................................... 8-14 8.10.2 Laser-Based Wound Healing Devices ....................................... 8-16 PRESSURE RELIEF AND PRESSURE REDUCTION EQUIPMENT ............ 9-1 9.1 9.2 10. 8.10.1 Developmental Considerations ...................................................................... 9-2 9.1.1 Pressure ........................................................................................ 9-2 9.1.2 Shear............................................................................................. 9-3 9.1.2.1 Patient Movement ................................................... 9-3 9.1.2.2 Nurse Movement of Patient .................................... 9-3 9.1.2.3 Bed Movement ........................................................ 9-4 9.1.3 Support Surface Requirements..................................................... 9-4 9.1.4 Pressure Relief versus Pressure Reduction .................................. 9-7 Specialty Beds ................................................................................................ 9-7 9.2.1 Air-Fluidized Beds ....................................................................... 9-7 9.2.2 Low Airloss Beds ......................................................................... 9-8 9.3 Mattress Replacements .................................................................................. 9-8 9.4 Mattress Overlays .......................................................................................... 9-8 9.5 Market Analyses ............................................................................................ 9-9 9.5.1 Specialty Bed Market Analysis .................................................. 9-10 9.5.2 Specialty Bed Competitive Analysis.......................................... 9-12 9.5.3 Mattress Replacement Market Analysis .................................... 9-15 9.5.4 Mattress Replacement Competitive Analysis ............................ 9-15 9.5.5 Mattress Overlay Market Analysis ............................................ 9-16 9.5.6 Mattress Overlay Competitive Analysis .................................... 9-21 COMPANY PROFILES ........................................................................................ 10-1 10.1 3M Corporation ............................................................................................ 10-1 10.2 Advanced Tissue Sciences, Inc. ................................................................... 10-2 ©1997, Medtech Insight, LLC vi #RP-181303 Table of Contents 10.3 Bristol-Myers Squibb Company/ConvaTec ................................................. 10-3 10.4 Cardio Systems ............................................................................................ 10-4 10.5 Carrington Laboratories, Inc. ....................................................................... 10-5 10.6 Coloplast Corporation .................................................................................. 10-6 10.7 ConMed Corporation ................................................................................... 10-8 10.8 C.R. Bard, Inc. ............................................................................................. 10-9 10.9 Cryolife, Inc. .............................................................................................. 10-10 10.10 Curative Health Services, Inc..................................................................... 10-11 10.11 Genzyme Tissue Repair ............................................................................. 10-12 10.12 Haemacure Corporation ............................................................................. 10-13 10.13 Hillenbrand Industries/Hill-Rom ............................................................... 10-14 10.14 Integra LifeSciences Corporation .............................................................. 10-15 10.15 Invacare Corporation.................................................................................. 10-16 10.16 Johnson & Johnson .................................................................................... 10-19 10.17 Kinetic Concepts, Inc. ................................................................................ 10-20 10.18 LifeCell Corporation .................................................................................. 10-20 10.19 Mylan Laboratories, Inc./Dow Hickam Pharmaceuticals .......................... 10-22 10.20 Organogenesis, Inc. .................................................................................... 10-23 APPENDIX: COMPANY LISTING ................................................................................ A-1 ©1997, Medtech Insight, LLC vii #RP-181303 List of Exhibits Exhibit ES-1: 1996 Wound Incidence by Etiology in the United States ..................... ES-3 Exhibit ES-2: U.S. Wound Cleanser Market Forecast, 1996-2002 ............................. ES-4 Exhibit ES-3: U.S. Chemical/Enzymatic Debridement Market Forecast, 1996-2002 ............................................................................................. ES-5 Exhibit ES-4: U.S. Suture Market Forecast, 1996-2002.............................................. ES-7 Exhibit ES-5: U.S. Hydrogel Dressing Market Forecast, 1996-2002 .......................... ES-8 Exhibit ES-6: U.S. Pressure-Relief and Pressure-Reduction Market Forecast, 1996-2002 ............................................................................ ES-10 Exhibit 1-1: Sales Approaches in a Managed Care Environment ................................ 1-4 Exhibit 1-2: Surgical Dressing Durable Medical Equipment Regional Carrier Utilization Guidelines .............................................................................. 1-6 Exhibit 1-3: U.S. Rate of Conversion Rate to Endoscopic or Other Minimally Invasive Surgeries by 2000 ...................................................................... 1-8 Exhibit 2-1: Classification of Wounds by Severity...................................................... 2-5 Exhibit 2-2: Classification of Wounds by Morphology ............................................... 2-6 Exhibit 2-3: Classification of Wounds by Etiology ..................................................... 2-7 Exhibit 2-4: 1996, Wound Incidence by Etiology in the United States ....................... 2-8 Exhibit 2-5: Incidence of Wound Care Procedures, 1994............................................ 2-9 Exhibit 2-6: Types of Burns Referred to Burn Centers.............................................. 2-11 Exhibit 2-7: Lund and Browder Chart for Measuring Extent of Burn Wounds......... 2-13 Exhibit 2-8: Classification of Burns According to Mechanisms of Injury ................ 2-15 Exhibit 2-9: An Ideal Dressing................................................................................... 2-22 Exhibit 3-1: Recommendations for Wound Cleaning .................................................. 3-2 Exhibit 3-2: Evaluation of Irrigation Device................................................................ 3-3 Exhibit 3-3: Selected Manufacturers of Wound Cleansers .......................................... 3-6 Exhibit 3-4: U.S. Wound Cleanser Market Forecast, 1996-2002 ................................ 3-7 Exhibit 3-5: 1996 Wound Cleanser Market, Share by Supplier................................... 3-9 Exhibit 3-6: Chemical/Enzymatic Debridement Agents ............................................ 3-13 Exhibit 3-7: U.S. Chemical/Enzymatic Debridement Market Forecast, 1996-2002 ............................................................................... 3-16 Exhibit 3-8: 1996 Chemical/Enzymatic Debridement Market, Share by Supplier ................................................................................... 3-17 Exhibit 4-1: U.S. Suture Market Forecast, 1996-2002................................................. 4-5 Exhibit 4-2: 1996 Suture Market, Share by Supplier ................................................... 4-7 ©1997, Medtech Insight, LLC viii #RP-181303 List of Exhibits Exhibit 5-1: Selected Manufacturers of Gauze and Impregnated Gauze Dressings....................................................................................... 5-4 Exhibit 5-2: U.S. Film Dressing Market Forecast, 1996-2002 .................................... 5-7 Exhibit 5-3: Selected Manufacturers of Film Dressings .............................................. 5-8 Exhibit 5-4: 1996 Film Dressings, Share by Supplier................................................ 5-10 Exhibit 5-5: U.S. Hydrogel Dressing Market Forecast, 1996-2002 ........................... 5-11 Exhibit 5-6: Selected Manufacturers of Hydrogel Dressings..................................... 5-14 Exhibit 5-7: 1996 Hydrogel Dressings, Share by Supplier ........................................ 5-15 Exhibit 5-8: U.S. Hydrocolloid Dressing Market Forecast, 1996-2002..................... 5-17 Exhibit 5-9: Selected Manufacturers of Hydrocolloid Dressings .............................. 5-19 Exhibit 5-10: 1996 Hydrocolloid Dressing Market, Share by Supplier ....................... 5-20 Exhibit 5-11: U.S. Foam Dressing Market Forecast, 1996-2002 ................................. 5-22 Exhibit 5-12: Selected Manufacturers of Foam Dressings........................................... 5-24 Exhibit 5-13: 1996 Foam Dressings, Share by Supplier .............................................. 5-25 Exhibit 5-14: U.S. Alginate Market Forecast, 1996-2002 ........................................... 5-27 Exhibit 5-15: Selected Manufacturers of Alginates ..................................................... 5-29 Exhibit 5-16: 1996 Alginate Dressing Market, Share by Supplier ............................. 5-30 Exhibit 6-1: U.S. Synthetic/Biosynthetic Dressing Market Forecast, 1996-2002 ................................................................................................ 6-5 Exhibit 6-2: 1996 Synthetic/Biosynthetic Dressing Market, Share by Supplier ..................................................................................... 6-6 Exhibit 6-3: U.S. Skin Replacement and Substitute Market Forecast, 1996-2002 .............................................................................................. 6-16 Exhibit 6-4: 1996 Skin Replacement and Substitute Market, Share by Supplier ................................................................................... 6-17 Exhibit 7-1: Sequence of Biological Events in the Repair of Soft Tissues .................. 7-3 Exhibit 8-1: U.S. Market for Instrumented Wound Healing Devices, 1996 and 2002 .......................................................................................... 8-2 Exhibit 8-2: Selected Manufacturers of Pulsed Lavage Systems................................. 8-8 Exhibit 8-3: Selected Manufacturers of Hyperbaric Oxygen Chambers.................... 8-12 Exhibit 8-4: Selected Manufacturers of Thermography Systems .............................. 8-15 Exhibit 9-1: U.S. Specialty Bed Market Forecast, 1996-2002 ................................... 9-11 Exhibit 9-2: Selected Manufacturers of Specialty Beds............................................. 9-13 Exhibit 9-3: 1996 Specialty Bed Market, Share by Supplier ..................................... 9-14 ©1997, Medtech Insight, LLC ix #RP-181303 List of Exhibits Exhibit 9-4: U.S. Mattress Replacement Market Forecast, 1996-2002 ..................... 9-17 Exhibit 9-5: Selected Manufacturers of Mattress Replacements ............................... 9-18 Exhibit 9-6: 1996 Mattress Replacement Market, Share by Supplier ........................ 9-19 Exhibit 9-7: U.S. Mattress Overlay Market Forecast, 1996-2002 ............................. 9-20 Exhibit 9-8: Selected Manufacturers of Mattress Overlays ....................................... 9-22 Exhibit 9-9: 1996 Mattress Overlay Market, Share by Supplier ................................ 9-24 ©1997, Medtech Insight, LLC x #RP-181303 Executive Summary EXECUTIVE SUMMARY This report examines the market in the United States for wound care products, including wound cleansers, debridement agents, wound closure products, wound dressings, skin replacements, growth factors, instrumented technologies and pressure-relieving equipment, from the year 1996 to the year 2002. Each of these markets is discussed in detail, with special attention given to current practices, products in development, competitors and market forecasts. Many wound care products have undergone a gradual transition from specialty to commodity products, but in certain segments, the industry has fought against commodization and resultant pricing pressures. Many manufacturers of dressings successfully resisted some of the pressure by focusing on products that promoted healing in moist environments. This technological innovation, however, invited new companies into the dressing market which produced fierce competition with even more pricing pressure in the various dressing segments. Managed care has also had a major effect on most wound care markets. With managed care, the hospital knows what its revenues for the year will be and expects its providers to manage the costs of that care. When working as a cost center instead of a revenue center, the paradigm of care moves from a treat/repair mode to a prevention/treatment/rehabilitation model. Manufacturers of wound care products must, therefore, be able to demonstrate that their products are more cost effective and provide better outcomes. Minimally invasive surgery (MIS) is having an impact on the wound market due to the smaller size and severity of wounds in these procedures. As fewer large incisions are made, fewer large dressings are required. It is likely that the move to less invasive procedures will also lower the number of infections and hard-to-heal wounds which occasionally result from surgical procedures. This trend will certainly have major impact for the suture segment of the market because; minimally invasive procedures require fewer sutures. As the average life expectancy grows and the number of elderly persons increase in the United States, patients with chronic wounds are expected to significantly increase as shown in Exhibit ES-1. Arterial and diabetic ulcers are expected to grow at an annual rate of 14%, and the cost for diabetic ulcer treatment is approximately $16-$21 billion per year. Pressure ulcers are also costly to treat, with annual expenditures for these types of wounds at ©1997, Medtech Insight, LLC ES-1 #RP-181303 Executive Summary approximately $3 billion per year. While there were about 2.9 million persons with pressure ulcers in 1996, approximately 2 million of these were preventable. i. Cleansing Agents and Patient Preparation Supplies, Cleansing and Debridement Agents Prior to any invasive intervention, and as an adjunct to any therapeutic management of wounds and ulcers, the skin and wound must be cleansed. In addition, debridement of devitalized tissue, especially in traumatic injuries, must be completed before wound closure and healing can occur. Several different types of products are used to accomplish these goals, including cleansing, debridement and granulation agents. Open wounds have delicate wound beds, and must be handled with care. A variety of appropriate methods and cleaning agents are used to cleanse skin, wounds and ulcers. The caregiver must take care in the choice of these agents as the very act of cleansing the wound could cause harm. Before cleansing the wound, the clinician must weigh the potential for traumatizing the wound bed against the benefits of a clean wound. In addition, due to the increased incidence of drug-resistant bacteria, wound care experts are adhering to stringent infection control and exercising judicious use of antibiotic cleansers. As the cytotoxicity of these traditional cleansers becomes more evident, the market for cleansers is expected to increase at an annual growth rate of 13.6% as shown in Exhibit ES-2. Chemical and enzymatic debridement agents are experiencing less growth than cleansers because their use is limited by the increased utilization of surgical debridement, which helps decrease the patients length of stay in hospitals. As shown in Exhibit ES-3, chemical and enzymatic debridement agents are expected to grow at a modest 3.6%, from $74.2 million in 1996 to $91.0 million in 2002. While discount pricing will also limit this market, a more important trend will be the influence of managed care. In this environment, providers will quickly determine which products only require application once per day. Nursing homes must reduce the time allocated for skilled care, while home health agencies will adopt care paths that will focus on the ability of a home caregiver to reduce the number of skilled visits. ©1997, Medtech Insight, LLC ES-2 #RP-181303 Executive Summary Exhibit ES-1: 1996 Wound Incidence by Etiology (Chronic and Acute) in the United States Wound Type Surgical wounds Traumatic wounds Percentage of Annual Total Growth Rate Incidence 24,370,000 725,000 44.3% 1.3 3.0% 1.2 Burn wounds (non-hospitalized) Burn wounds (hospitalized) 1,200,000 680,000 2.2 1.2 1.0 1.0 Pressure ulcers Venous ulcers Arterial/diabetic ulcers 2,900,000 1,250,000 2,350,000 5.3 2.3 4.3 5.0 6.0 14.0 530,000 1.0 0.8 Procedure-based wounds 21,000,000 38.2 3.0 Total 55,005,000 100.0 3.5 Amputations Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC ES-3 #RP-181303 Executive Summary Exhibit ES-2: U.S. Wound Cleanser Market Forecast, 1996-2002 Year Sales Growth 1996 1997 1998 1999 2000 2001 2002 $16.4M 18.5 21.2 24.6 28.1 31.5 35.0 — 12.8% 14.6 16.0 14.2 12.1 11.1 CAGR 1997-2002 13.6% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC ES-4 #RP-181303 Executive Summary Exhibit ES-3: U.S. Chemical/Enzymatic Debridement Market Forecast, 1996-2002 Year Sales Growth 1996 1997 1998 1999 2000 2001 2002 $74.2M 76.4 79.0 81.9 85.1 88.1 91.0 — 3.0% 3.4 3.7 3.9 3.5 3.3 CAGR 1997-2002 3.6% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC ES-5 #RP-181303 Executive Summary ii. Wound Closure Devices Sutures are a mature market even though manufacturers continue to produce new and different products as line extensions every year. While one of the largest markets in the wound care industry with sales of $668.2 million in 1996, the suture market is expected to grow at a minimal 1.3% per year, reaching $730.5 million. This modest growth is partially due to the substitution of other types of wound closure devices, including staplers and adhesives, and also due to the rise of procedures performed through minimally invasive techniques, which use less suture material to close the wound. In addition, managed care will have its usual price erosion impact, causing intense price competition in this commodity market. Exhibit ES-4 presents the suture market forecast in the United States from 1996 to the year 2002. Tissue glues and adhesives, which are expected to be approved in 1998, will not only impact the suture market, but are expected by some experts to revolutionize the care of lacerations. Sales in 1998 are expected to reach as high as $10 million, increasing to $30 million in 1999. Average annual growth thereafter is forecasted in excess of 100% until some degree of maturity is achieved. Tissue glues will primarily be used in the hospital setting; however, by 2000, approximately 10% of tissue glue sales will be distributed among alternate site locations. Some industry experts even predict a day when coaches will apply adhesives to wounded sports players on the field, and families will take tissue glues on camping trips. iii. Hydrogel Dressings A previously rapidly growing market, hydrogels experienced a major setback due to changes in Medicare reimbursement in the fourth quarter of 1995. As a result of this change and cost containment pressures from hospitals, and this market became increasingly cost conscious, causing major manufacturers to reduce prices and offer greater discounts to maintain customer accounts. Carrington, the traditional leader in this segment with a 36% market share, had to cut their prices to distributors by 19.1% in 1996. As a result of this and other pricing discounts, the sales in the market plunged to $32.1 million in 1996, while industry estimates the year before were approximately $75 million to $95 million. As shown in Exhibit ES-5, this market is expected to slowly increase to $39.5 million in 2002 as competitors introduce new products or perhaps use hydrogels as delivery systems with liposomes. Competitors are also expected to more actively pursue the alternate and home care markets. ©1997, Medtech Insight, LLC ES-6 #RP-181303 Executive Summary Exhibit ES-4: U.S. Suture Market Forecast, 1996-2002 Year Sales Growth 1996 1997 1998 1999 2000 2001 2002 $668.2M 685.1 697.8 707.9 716.5 724.0 730.5 — 2.5% 1.9 1.4 1.2 1.0 0.9 CAGR 1997-2002 1.3% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC ES-7 #RP-181303 Executive Summary Exhibit ES-5: U.S. Hydrogel Dressing Market Forecast, 1996-2002 Year Sales Growth 1996 1997 1998 1999 2000 2001 2002 $32.1M 33.4 34.7 35.9 37.2 38.3 39.5 — 4.0% 3.8 3.6 3.4 3.2 3.0 CAGR 1997-2002 3.4% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC ES-8 #RP-181303 Executive Summary iv. Pressure-Relief and Pressure-Reduction Equipment Specialty beds, mattress replacements and overlays are the primary products used for the relief and reduction of pressure for patients with chronic wounds. Manufacturers in these markets offer low-, medium- and high-tech products which in many cases can be purchased or rented. Consumers are understandably confused in making the difficult decisions concerning the correct support surfaces for patients. Manufacturers of these products are continually debating the best product for the treatment and prevention of pressure ulcers. The purchaser must balance the technological advantages of the products with various other factors, including cost, decreased hospital waste and reduced labor costs. In 1996, manufacturers in the pressure-relief and pressure-reduction equipment market had to review their product and marketing strategies due to changes in Medicare reimbursement in the home care segment. Group 2 reimbursement was changed to add non-airloss forms of air floatation, which allowed these manufacturers to be reimbursed at high rates. However, for manufacturers of traditional low-airloss products, this meant more competition in the home market and loss of reimbursement for pressure ulcer treatment. In some cases, this change caused low-air loss manufacturers sales to significantly decrease. However, for some lowairloss manufacturers, the home market continued to grow due to the introduction of new products and marketing strategies which were specifically targeted at the home care environment. The pressure-relief and pressure-reduction market forecasts are presented in Exhibit ES-6. Full-framed specialty beds are the largest market with $520 million in sales in 1996; however, this market is forecasted to experience the slowest growth at 2.6% Pricing pressure is a major limiter in this market, and manufacturers in this segment must often compete with less costly mattress replacements. Thus, mattress replacements are projected to experience the highest growth at 5.7% due to the use of some of this segments powered devices as costeffective alternatives to specialty beds. Unit volume will continue to increase in the overlay market with the aging of the American population and higher acuity of patients. The dollar growth is attributed to increasing unit volume of static and dynamic air overlays, as foam products exhibit a slight decline in unit volume. The overall, estimated sales for overlays is expected to grow from $210.3 million in 1996 to $272.2 million in 2002 at an average annual growth rate of 4.3%. ©1997, Medtech Insight, LLC ES-9 #RP-181303 Executive Summary Exhibit ES-6: U.S. Pressure-Relief and Pressure-Reduction Market Forecast, 1996-2002 Year Total Growth Beds Growth — $520.1M — 1996 $865.4M 1997 898.2 3.8% 536.0 3.1% 1998 931.3 3.7 551.5 2.9 1999 965.5 3.7 567.2 2000 999.8 3.6 2001 1034.6 2002 1070.4 CAGR Mattresses $135.0M Overlays Growth — $210.3M — 5.3% 220.1 4.7% 149.9 5.5 229.9 4.5 2.8 158.5 5.7 239.8 4.3 582.4 2.7 167.8 5.9 249.6 4.1 3.5 596.7 2.5 177.5 5.8 260.4 4.3 3.5 610.8 2.4 187.4 5.6 272.2 4.5 3.6% 142.1 Growth 2.6% 5.7% 4.3% 1997-2002 Note: Beds includes full-framed specialty beds, while mattresses include all devices that can replace a conventional mattress. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC ES-10 #RP-181303 Chapter 1: Market Overview 1. MARKET OVERVIEW Manufacturers are seeking to create well-rounded, advanced offerings in all aspects of wound care. To offer clinicians a wider variety of choices and to offset risk associated with too great a dependence on any one technology, manufacturers have created a situation where product comparisons are breeding price sensitivities. Even those companies that feel their products have feature advantages over the competitors’ similar products cannot price their product significantly above the competitors because of managed care buying practices. What is happening to wound care companies, beyond simple price pressure, is common to many other areas of medical product innovation. Like other highly innovative, clinicianpreference products, such as orthopedic implants and cardiovascular devices, real technical differentiation in advanced wound care is no longer protection against the leveling forces of a cost-conscious buyer. Rapid technological innovation creates alternatives to existing therapy without allowing clinicians the time to prove, from both a clinical and an economic point of view, which approach works best. Eventually, the clinician becomes numbed to the new array of products and begins to force the manufacturer to prove the value of a new technology on more than just clinical efficacy. While transparent film was a definite advance over traditional dry approaches, and hydrocolloids were advances over films, subsequent innovations in advanced wound care such as calcium alginates have largely been seen as alternatives to currently available advanced approaches rather than better ways of healing. These latest products are not the quantum leap as with dry-to-moist dressings; they are only incremental advances. 1.1 Impacts of Managed Care The uncertainty of today's healthcare environment makes finding a way to succeed in the face of cost-conscious managed care no longer a choice for wound care manufacturers, but a necessity. As Medicare beneficiaries enroll in Medicare risk plans at an increasing rate, wound care is certain to become a target for increased cost containment by managed care organizations. This is sure to be precipitated by the high costs associated with the care of certain wounds. For example, each year it costs as much as $60 million to treat burn wounds; as, in the U.S. approximately 100,000 burns are treated in the hospital environment. Forwardthinking suppliers can bring their organizations to preferred supplier status with a managed care organization by reducing the cost of wound care treatment through clinical support and outcomes data. ©1997, Medtech Insight, LLC 1-1 #RP-181303 Chapter 1: Market Overview 1.1.1 Differentiation to Commoditization It has been the less than happy fate of most medical/surgical supply product segments over the past 15 years to undergo a gradual transition from sustainable clinical differentiation to general commoditization, from price protection to price pressure. Two decades ago, even products like surgeons’ gloves were considered appropriately a matter of surgeon preference; today an increasing number of products including gloves, are finding themselves covered under hospital group purchasing agreements, which all but ignore features and benefits in the name of securing lower prices or meeting practice guidelines. The wound care industry has fought against the trend toward commoditization and price pressures. Many manufacturers of dressings have successfully resisted some of this pressure by focusing on a key technological shift in the treatment of wounds—the shift from dry to moist healing. Today, advanced wound care markets such as hydrocolloids and calcium alginates are increasing, taking more and more market share from traditional dressings. This rapid technological innovation, however, is inviting new companies into the market, which in turn introduces a fierce competitive environment. Advanced care companies are discovering, however, that technological innovation in a managed care environment presents singular problems. A more crowded technological portfolio creates skepticism on the part of clinicians about the value of new approaches. Suppliers of traditional dressing products are providing product lines that include both dry and moist healing in the hopes that this move will best position them to deal with the new buyer, while advanced dressing manufacturers are seeking to broaden the scope of advanced technologies in their product line. The manufacturers of other wound care products such as pressure reduction equipment are facing similar managed care pricing pressures and are striving to differentiate their products out of their commodity status by continually adding features. Perhaps the only segments where the individual products continue to have brand identity and differentiation are those of growth factors and skin replacements. Even as these firms resist the trend toward commoditization and blurred differentiation by moving into advanced product lines, the key issue for wound care companies, including all manufacturers of products illustrated in this report, is not the assault of biotech or synthetics, but the larger industry dynamic of group purchasing and managed care. The key players in the market are bound to become smaller in number and more entrenched. In addition, companies will have to switch their marketing style from selling on the basis of features and benefits, and learning to play in the arena of managed care contracting. ©1997, Medtech Insight, LLC 1-2 #RP-181303 Chapter 1: Market Overview 1.2 Innovation in Perspective Perhaps the biggest challenge for wound care companies is to put technological innovation in perspective, to resist the temptation to place too great a faith in the ability of technology alone to heal wounds. Clinicians state that wound healing is an art, not a science. In many cases traditional gauze will heal a wound as effectively as some advanced products as long as the care provider pays the same amount of attention to the wound. Thus, with some advanced products, it’s the marketing that is important, not technological advances. Compliance is a critical issue in wound care. If the clinician does not change the dressings when appropriate, or if the clinician does not remove the pressure from a pressure sore, the wound will not heal no matter the technology of the wound care products applied. All factors—dressings, nutrition, support surfaces and nursing care—have to come together. 1.3 Purchasing Environment Healthcare providers are moving from a system that was revenue driven to a cost-driven system. With managed care, the hospital or integrated healthcare delivery network (IHDN) knows what its revenues for the year will be, and expects its providers to manage the costs of that care. When working as a cost center instead of a revenue center, the paradigm of care moves from a treat/repair mode to a prevention/treatment/rehabilitation model. Manufacturers of wound care products must, therefore, be able to demonstrate that their products are more cost effective and provide better outcomes. Manufacturers of wound care products are learning that a partnership approach works best with this newly emerging managed care customer. The customer interface must become more collaborative and less transactional. Some specific suggestions to enhance this collaboration are presented in Exhibit 1-1. Many manufacturers are replacing their commissioned sales personnel with account teams, which include middle management personnel from the corporate office. As the customer base consolidates, manufacturers are finding that purchasing decisions are being made at higher levels within the customer’s company and more empowered manufacturers’ representatives are necessary to negotiate contracts on an appropriate level. ©1997, Medtech Insight, LLC 1-3 #RP-181303 Chapter 1: Market Overview Exhibit 1-1: Sales Approaches in a Managed Care Environment • Differentiate the customers. Identify those most important in meeting the manufacturer’s goals and objectives and treat those customers with special care and deliberation; • Develop high-level, well-trained, knowledgeable and empowered executives to interface with major customers; • Develop “customer specific” proposals and contracts that emphasize cost effectiveness, improved outcomes and improved product standardization and utilization; • Make a true commitment to “customer satisfaction” and “customer-specific” needs; • Develop skills in consultative selling and relationship building to augment existing transactional sales skills; and, • Consider “risk-sharing” contracts and agreements that exhibit a true commitment to reducing the IHDN’s costs of care. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 1-4 #RP-181303 Chapter 1: Market Overview 1.3.1 Outcomes Studies With cost and price pressures a fact of life, clinical research will be more and more important; research must show not only improved clinical outcomes, but must also prove better economic outcomes while establishing protocol that results in faster healing at a measurably reduced cost. Hospital buying groups and managed care organizations will be requesting these studies and much work will go into validation of manufacturers’ product claims. Capitation and risk sharing will be dangerous unless the manufacturer has knowledge that the company’s products do indeed result in overall lowered cost-per-covered life. 1.4 Medicare In addition to the growing effects of managed care, surgical dressing benefits for Medicare have been revised through durable medical equipment regional carrier (DMERC) coverage, sometimes causing radical changes in specific markets. For example, changes in reimbursement for hydrogels in 1996 resulted in a sharp decline in sales in this segment. Exhibit 1-2 reviews the DMERC utilization guidelines for surgical dressings. In mid 1997, the House Ways and Means Subcommitee in Congress unanimously approved a package of changes in the Medicare system, entitled the Medicare Amendments Act of 1997. Growth in federal spending on the program would be trimmed by over $100 billion over the next five years. The majority of the savings will come from reducing payments to providers and health plans. Hardest hit by the deficit reduction plan would be HMOs, with an average 22% reduction, nursing homes with an average 16% reduction and home health services with a 14% reduction. ©1997, Medtech Insight, LLC 1-5 #RP-181303 Chapter 1: Market Overview Exhibit 1-2: Surgical Dressing Durable Medical Equipment Regional Carrier Utilization Guidelines Primary Dressing Frequency of Dressing Change Alginates Once daily Film, transparent Three times per week Foam dressings Three times per week Foam wound fillers Once daily Gauze (non-impregnated) Three times per day, no more than two pads on a wound Once daily Gauze (impregnated with other than saline or water) Hydrocolloids Three times per week Hydrogel wound cover Once daily or three times per week if using adhesive border Only daily and no more than 3 ounces per month Hydrogel wound filler Source: DMERC Utilization Guidelines, 1996. ©1997, Medtech Insight, LLC 1-6 #RP-181303 Chapter 1: Market Overview 1.5 Minimally Invasive Surgery The wound care product marketplace has been affected by the move to less -invasive surgical procedures, due to the smaller size and severity of wounds in these procedures. The continuing conversion of open surgical procedures to endoscopically directed and other lessinvasive treatments will continue to impact this industry, but at a moderate pace. The demand for minimally invasive surgical (MIS) procedures will be driven by the efforts to cut cost, provide quality care and good patient outcomes. In each surgical specialty, surgeons continue to seek new and increasingly less-invasive techniques to offer their patients in the interest of reducing costs, lessening patient trauma and reducing length of stay in the hospital by the surgical patient. The number of potential patients for these procedures will increase as the U.S. population ages, and as patients that originally were not candidates for open procedures become candidates for therapy that is less invasive. Endoscopically directed minimally invasive therapies can significantly lower overall costs of care for individual patients. Adoption of some procedures may, however, increase overall societal costs due to increases in procedure volume. This occurred with laparoscopic cholecystectomy. When consumers became aware of the reduced pain and shorter recuperation time, many more patients than expected sought treatment. Manufacturers and market analysts predicted that all general surgery procedures would rapidly follow the same trend as cholecystectomy in conversion to the laparoscopic approach; however, this expected trend has not occurred. There are two areas, however, where procedural conversion to MIS will still enjoy large increases: vascular surgery and neurosurgery. This will be due to new opportunities in laparoscopic technology that are likely to emerge as minimally invasive abdominal approaches to spinal fusion and aortic surgery are developed. Exhibit 1-3 presents the conversion rates expected by the year 2000, by surgical specialty. ©1997, Medtech Insight, LLC 1-7 #RP-181303 Chapter 1: Market Overview Exhibit 1-3: U.S. Rate of Conversion Rate to Endoscopic or Other Minimally Invasive Surgeries by 2000 Specialty Cystoscopy Converted 100% Total MIS Procedures 1,767,000 Endogynecology 100 473,000 Endothoracic 100 662,000 Endourology 100 375,000 General surgery (endoscopic) 100 112,000 Orthopedics (other) 98 1,500,000 Plastic surgery 93 721,000 Gynecology (laparoscopic) 86 1,540,000 Ear, nose and throat 82 720,000 Thoracic 78 173,000 General surgery (laparoscopic) 71 3,350,000 Orthopedics (spine) 50 195,000 Neurosurgery 41 18,000 Urology (laparoscopic) 23 112,000 Cardiovascular 16 114,000 Totals 83% 11,832,000 Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 1-8 #RP-181303 Chapter 1: Market Overview 1.6 Hospital and Alternate Site Markets End-user markets for wound care products can be categorized into various sites, including hospitals, nursing homes and home health. Physician offices and freestanding clinics usually purchase through some type of group purchasing or hospital group purchasing programs and contracts. Their unit volumes and dollar volumes are relatively low compared to the total unit and dollar volumes of the “Big 3” (e.g., hospitals, nursing homes and home healthcare organizations). The wound care provider can choose from a dizzying array of products available on the market. In addition, the market is becoming more difficult to differentiate, with more and more products sold in the fragmented and difficult-to-reach alternate site market. For many manufacturers, their biggest challenge has not been assembling a line of advanced care products, but finding a cost-effective way to get to the alternate site market. The alternate site market is not only fragmented, it is extremely price sensitive, and, in the case of home care, can utilize completely different distribution channels such as retail pharmacies. It is also a segment where getting information to clinicians and patients about advances in product design is a cumbersome and labor-intensive process. 1.6.1 Hospitals The Sachs Group’s study, Health Care 1999, provides a framework for understanding managed care’s effect on inpatient utilization. The study used as its basis a group model managed care market with the practice pattern of California, recognized as the most aggressive state with respect to managed care. According to this analysis, total inpatient days will decrease 34% nationwide from 1994 to 1999, due primarily to a dramatic (26%) decrease in admissions. The Northwest could potentially see the largest drop in utilization; the West will experience the smallest drop. Regional differences in patient days are even more profound at the product line level. For instance, general surgery patient days are projected to hold fairly constant in the Midwest, with a drop of 1%, from 3.4 million to 3.3 million. Patient days in the South, however, will decline 18%, from 5.9 million to 4.9 million. In the West patient days are expected to decline 19%, from 2.6 million days in 1994 to 2.1 million days in 1999. ©1997, Medtech Insight, LLC 1-9 #RP-181303 Chapter 1: Market Overview Inpatient volume, as measured by discharges, will decline 26%, from 32.5 million to 24.2 million. Outpatient procedures will increase. Average lengths of patient stay will decrease 11%, from 6.1 days to 5.5 days between 1994 and 1999. Several conclusions can be drawn from this study. First, there are too many hospital beds. In 1994, the demand for beds was 643,000. A 34% reduction in bed days would result in a 1999 bed demand of 424,000. In 1996, the number of beds in U.S. hospitals totaled 1.2 million. Without a significant decrease in capacity, by the end of the century, there will more than double the beds needed. Second, traditional hospital providers will continue to consolidate. Excess bed capacity will be corrected through provider mergers to achieve economies of scale. This downsizing will trickle down throughout the healthcare industry. In addition, networks will be the entities destined to succeed. Hospitals that choose either to create or buy alternate site delivery facilities, and form or join integrated healthcare delivery networks, have a greater chance of surviving. Affiliations or partnerships with home health agencies and long-term care providers will ensure that services are in place throughout the entire cost-effective continuum of care. 1.6.2 Physician Networks and Ambulatory Care As part of the trend toward a cost-effective continuum of care, there will be more outpatient/ambulatory networks. In addition, as prevention and wellness become more attractive financially, demand for primary care physicians will skyrocket and the development of physician practice management (PPM) companies will increase. These entities pool the doctors’ skills and practices, handle administration, purchase medical/ technical products, and, more importantly, negotiate contracts with HMOs and other managed care groups. 1.6.3 Nursing Homes The nursing home industry can be characterized as fairly fragmented, with occupancy rates running between 90% -95% in most states. Improvements in the industry’s finances has encouraged growth through facility acquisition by the larger chains; however, the 30 largest chains accounted for about 25% of all nursing home beds in 1996. The nursing home industry is unlike most other healthcare sectors because of its high occupancy levels and its reimbursement mix. The industry has experienced significant rebound since the mid 1980s as ©1997, Medtech Insight, LLC 1-10 #RP-181303 Chapter 1: Market Overview a rising Medicare census, improved Medicaid rate reimbursement in many states and moderate labor cost increases bolstered margins. The high occupancy levels are partly the result of state limitations on new construction and bed additions. Such limits are imposed as a means to limit the states’ expense for care as evidenced in runaway Medicaid budgets. Industry occupancy levels have not increased significantly as lower acuity patients are transitioned to other alternate sites, such as assisted living and home care. The higher acuity patients often have acute conditions that improve quickly and allow for discharge directly home, thereby decreasing the average length of stay. The aging population is also responsible for the increased demand for home care as the over 65 year old population is expected to approach 35 million people by 2000. The over 85 year old population, the group most likely to require nursing home care, is expected to grow to 4.6 million people from 3.2 million people in 1990. Nursing home that provide skilled nursing services to Medicare and Medicaid beneficiaries are classified as skilled nursing facilities (SNFs) for reimbursement purposes. The majority of nursing homes are not owned or operated by hospitals and are classified as freestanding skilled nursing facilities. The nursing home market is projected to reach $500 million in 2000, while SNFs are forecasted to reach $350 million. 1.6.4 Home Health Care The major segments within the home market include nursing services, infusion therapy and respiratory therapy. The increasingly burdensome Medicare paperwork demands, the tight limits on reimbursement and unreliable interpretations of the Medicare home care benefits by the Health Care Financing Administration (HCFA) increases the barriers for future market entry. However, as a result of products that have been adapted for home care use and the need to discharge to alternative healthcare sites to reduce costs, the market potential for home care is enormous. Home health care has also moved to the forefront of public policy debates. According to study released by the U.S. General Accounting Office, expenditures for home health care services and products are out of control: $18 billion in 1996, from just $2.1 billion in 1988. Recent publicity regarding fraudulent claims has highlighted some potential drawbacks of the current Medicare reimbursement structure. ©1997, Medtech Insight, LLC 1-11 #RP-181303 Chapter 1: Market Overview As a result, Medicare policy may be moving toward a prospective “case rate” reimbursement structure for home health care, similar to that used to pay hospitals. In fact, part of the proposed legislation in the Medicare Amendments Act of 1997 establishes a prospective payment system in fiscal year 2000, and a significantly downward redefinition of the home health benefit is also included. Within the home health care market, wound care management is required by over 30% of patients. Wound care is an integral part of the home health care market, and the potential for wound care products in this segment is encouraging. These markets will be the growth areas for many of the mature markets, such as for debridement agents. Cleansers and dressings will also expand in this sector. However, in the last several years, insurance providers have been concerned with the increasing intensity of nurse visits and utilization of wound care products. Medicare reimbursement in this sector has also been scrutinized. For example some manufacturers in the pressure-reduction market experienced a flattening in the home care segment due to changes in Medicare codes in 1996. 1.6.5 Subacute Care Facilities The primary goals of subacute care facilities are multifaceted and offer patients continued quality of care while payers are able to use a cost-effective healthcare source. For acute health care providers, the use of subacute care facilities means earlier discharges of stable patients in order to reduce costs. Subacute care facilities are defined by the kind of care performed. These entities can be categorized into three types: medical, rehabilitative and combined facilities. Competition in this market comes from medical product manufacturers that focus on the home health care, as well as companies that focus on products used for acute care. Both of these manufacturer groups can service this market if they are able to modify their products and adapt to the specific needs of the subacute care facility. For the home healthcare manufacturers, this means redesigning to incorporate more sophisticated parameters and storage capability than that found in current home healthcare products. Conversely, acute care manufacturers must streamline acute care products/devices to meet the cost criteria and subacute care clinical needs. Healthcare performed in subacute facilities costs significantly less than similar services delivered in the acute care setting. Revenue per patient day in a subacute bed is between $300 and $500, compared to $600-$1200 in a full-service acute or rehabilitation hospital. ©1997, Medtech Insight, LLC 1-12 #RP-181303 Chapter 1: Market Overview A subacute wound care program provides the support and services necessary to manage and prevent wounds. Wound care may include complex treatment and dressing procedures; whirlpool debridement, electrical stimulation, specialty beds and pressure-reducing devices, frequent laboratory evaluation, teaching wound care to the patients, and ongoing assessment of the effective treatment by changes in wound status. The goal of a wound care program is to facilitate healing of wounds of various types, while managing potential complications and reducing risk factors. Effective wound care programs incorporate nutrition and hydration services with specific treatment protocols. Subacute wound care programs typically focus on treatment of large surgical wounds that have not closed, infected wounds, multiple stage III and IV decubitus ulcers, recent debridement, second- or third-degree burns and unstable wound healing. In addition, patients with recent amputations or skin grafts and patients with impaired healing processes, including those with medical complications, digestive disorders, cancer or AIDS, are candidates for admission to a wound care program. Patients recovering from surgery, complicated wounds, burns, decubitus ulcers, vascularrelated tissue breakdown, grafts or amputations receive specialized services, including advanced wound care management, specialized beds, nutritional support and physical therapy services. In addition, wound care programs treat patients infected by certain forms of antibiotic-resistant bacteria. These kinds of patients must be isolated under strict infection control procedures to prevent the spread of the disease. These patients are ideal candidates for a subacute care facility, since treatment of this condition is not practical at home. 1.6.6 Wound Care Centers Hospitals, healthcare professionals and medical suppliers are establishing wound care services designed to attract a strong client base and generate additional revenues. As wound care continues to move from an inpatient to an outpatient service, this expansion of existing services and creation of new outpatient centers is a natural. Wound care centers are a way to attract new clients and provide innovative treatment to many patients who have been shifted from provider to provider, often without satisfactory coordinated treatment. Hospital-based centers are an excellent way of drawing communitybased patients into the network of care provided by an institution. There is no perfect model or formula for establishing a wound care center. Each facility or agency will be unique in its settings, goals and marketing. ©1997, Medtech Insight, LLC 1-13 #RP-181303 Chapter 1: Market Overview Any institution or provider should consider a number of market issues prior to establishing their individual wound center. One model for a wound care center is a hospital-owned and operated center, billing and receiving payment from a fiscal intermediary while using the hospital provider number. Another mechanism is a hospital-owned center which operates under a separate provider number. A third type is a center under separate ownership and management. Reimbursement and billing procedures are different for each type of clinic. Other privately managed delivery models are appearing to take advantage of the growing interest in advanced wound healing. Specialized wound care centers have been established by independent providers and cater to the highest acuity, hardest-to-heal wounds. Curative Health Services claims market leadership, with approximately 109 such centers. What impact these centers will have on the market remains to be seen. Some critics feels these centers are simply “marketing ploys,” achieving high success rates and impressive revenue levels by carefully screening patients to find those most desperate, and therefore, most willing to be compliant with established protocols. Curative Health Services, however, has grown significantly over the last several years; revenues in 1996 alone increased 29% to $67.4 million compared to $52.4 million in 1995. Centers charge for a visit as brief, intermediate or comprehensive based on the procedure performed and the length of time spent with the patient. Ambulatory patients are often seen weekly in a wound care center. Those who are homebound are followed by a home health agency after the wound care treatment plan is established. Health maintenance organization patients usually have prior approval for a specified number of visits, so the director of nursing and the patient decide together how best to utilize the allocated benefit. One of the major advantages of wound care centers is that they are able to conduct outpatient clinical studies. Research generates additional revenue per patient and often means that treatment supplies are provided by the sponsor of the study. An aging population and strong emphasis on reducing utilization of more expensive services mean that treatment of wound care patients at the outpatient/clinic level will grow and be accepted positively by payers. However, facilities contemplating the establishment of a wound care center must conduct a thorough analysis of reimbursement issues to ensure success. ©1997, Medtech Insight, LLC 1-14 #RP-181303 Chapter 1: Market Overview 1.7 The FDA This government agency’s decisions can have life or death consequences on new products being developed for the wound care market. While 1996 has seen some improvement in the speed with which new products are evaluated, the process of 510(k) approvals is still a lengthy one. Changes in FDA policy can also have drastic consequences for manufacturers. For example, in April 1996, the FDA issued new regulations to govern products that are derived from cells and tissues. Over a three-year period, the FDA will institute new rules to prevent unwitting use, processing or handling of contaminated tissue that could carry and transmit infectious disease. According to the FDA, the three-tiered approach effects an appropriate level of control that is equal to the perceived risk for the materials. Products that are considered novel or are extensively processed require FDA approval before they are marketed. All tissue processing facilities will be required to register with the FDA and to list their products. The policy does not impact cells or tissue removed from and transplanted to the same person in a single surgical procedure. Further, minimally processed conventional and reproductive tissue would not be subject to FDA concern in areas of handling and ensuring they are not contaminated. But for certain tissues, controlled clinical trials and premarket approval will be required to demonstrate safety and efficacy of the matter. ©1997, Medtech Insight, LLC 1-15 #RP-181303 Chapter 2: Clinical Issues 2. CLINICAL ISSUES Understanding the wound healing market must start with a thorough understanding of the anatomy and physiology of skin, types of wounds and healing processes. This section of the report covers the clinical side of the wound care marketplace. 2.1 Anatomy and Physiology of Soft Tissue To correctly treat acute and chronic wounds, it is necessary to understand normal skin, its structures, functions, and changes, both intrinsic and extrinsic, throughout life. In many ways, the skin is the mirror of the body. It reflects disease, trauma, nutrition, metabolism, perfusion, oxygenation and emotional status. The skin is the largest organ of the body, covering over 20 square feet in the average American adult. It weighs approximately 12 pounds (in a 150 pound person). The complexity of the skin is demonstrated when one considers that 1cm 2 of skin contains 15 sebaceous glands, 1 yard of blood vessels, 100 sweat glands, 3,000 sensory cells, 4 yards of nerves, 300,000 epidermal cells and 10 hairs. Skin thickness varies, from the thinnest covering the eyelids to the thickest covering the hands and the soles of the feet. The skin can harden to form fingernails, and it can elongate to form hair. The skin is not a passive structure that holds the inner organs, but rather, it is an active organ that continually undergoes biological and biochemical activity. The skin has several functions: 1) it provides the interface between the body and the environment (protection from micro-organisms and traumatic injury to bones, muscles and other organs); 2) it transmits sensation of touch, pain and pressure endured from the environment; 3) it regulates the body temperature, assisting in fluid excretion as well as retention of fluid; and, 4) it assists in vitamin D production, in the presence of sunlight. The skin has three distinct layers, each with their own functions, but all are interrelated and interdependent upon each other. The skin is comprised of the epidermis (outer layer), the dermis (middle layer) and the subcutaneous tissue (inner layer). ©1997, Medtech Insight, LLC 2-1 #RP-181303 Chapter 2: Clinical Issues 2.1.1 Epidermis There are five layers in the epidermis, starting from the skin layer closest to the environment: • Stratum corneum is the tough acidic layer which retards certain fungal and bacterial growth; • Stratum lucidum is found only in the palms and soles and is a dense, translucent layer of flat cells (this layer may be minimal or not present at all in thin, old or fragile skin); • Stratum granulosum is a granular layer consisting of macrophage cells which affect the immune reactions and inflammatory phases of wound healing; • Stratum spinosum is a wavy layer that contains spine-like extensions of the basal layer; and, • Stratum germinativum, also called basal stratum; is the only layer that has the ability to regenerate new cells through mitosis. Although there are five layers in epidermis, it is relatively thin and avascular. The epidermis proliferates rapidly, continually pushing new cells from the basal layer to the surface. Cells produced by the basal layer migrate upward, losing their nucleus and transforming via keratinization into a flat, tough, nonliving layer of cells that becomes part of the stratum corneum or horny layer. The epidermis is replaced with new cells every 4-6 weeks. Melanocytes are contained in the epidermal layer, releasing granules of melanin pigment, which provide skin tone colors and protect the body from solar radiation. Darkly pigmented skin has increased number of melanocytes, and hypopigmentation of wounds and ulcers frequently occurs in dark-skinned persons. Although these wounds appear to be healed, time is often required for the melanin to reach the stratum corneum layer and return skin to its normal color. 2.1.2 Dermis The dermis consists of two layers. The papillary dermis is closest to the epidermis, consists of collagen and reticular fibers, and is integrated with capillaries. It provides nourishment and oxygenation to the epidermal layer and appendages, such as the nails, hair and skin glands. The reticular dermis is a thick layer of large collagen fibers organized into bundles. This layer anchors the skin to the subcutaneous tissue and provides for elasticity of the skin. The dermis provides the skin with the necessary elasticity and structural and mechanical strength. It is integrated with capillary blood vessels, nerves and appendages. A superficial ©1997, Medtech Insight, LLC 2-2 #RP-181303 Chapter 2: Clinical Issues burn will stimulate nerve endings in this layer and generate an acute sensation of pain. Deeper burns will destroy nerve endings and make the wound insensitive to pain. The most predominant cells in the dermis are fibroblasts which produce collagen. Collagen gives the skin strength and elastic stretch. At the microscopic level, collagen consists of three identical polypeptide chains that form a helix. There are more than 11 identified forms of collagen protein which are made by fibroblasts. Four types of collagen have been identified and are associated with body tissue. Type I is found in bone, skin and tendons; type II is found in cartilage; type III is associated with healing and embryonic tissue and type IV is found in certain membranes. Although newly formed collagen is type III in the proliferative phase, during the maturation phase it is remodeled into type I collagen. 2.1.3 Subcutaneous Tissue The subcutaneous tissue consists of dense connective and adipose tissue. Its functions are to house major blood vessels, lymphatics and nerves; serve as a heat insulator and shock absorber; relinquish its nutritional storage during periods of illness or starvation; provide a cushioning effect; and to facilitate mobility of the skin over underlying structures. 2.1.4 Normal Skin Changes Associated with Aging The impact of aging is more noticeable on the skin than on any other organ or structure in the body. Aging causes atrophy and thinning of both epithelial and fatty layers. Only small amounts of subcutaneous fat are present on the legs and forearms of the elderly. Fat atrophy causes noticeable bony prominences in the thorax, scapulae, trochanters, knees, ankles and toes. It is this loss of fatty padding which can predispose elderly people to pressure ulcers. Other changes include the shrinkage of collagen and elastic fibers, and depletion of sweat glands, resulting in dry, thin and inelastic skin. The attachment of the epidermis to the dermis weakens and predisposes the epidermis to slide over the dermis. Even minor friction and shearing force can result in a skin tear for the elderly. Both friction and shear contribute to the mechanical destruction of tissue. Shear, which primarily effects deep tissue; occurs when tissues attached to bones are pulled in one direction as a result of body weight, while surface skin remains stationary. Friction occurs when two surfaces move across one another, wearing away the outer layer of the skin, ultimately causing skin abrasion and tissue damage. The elderly frequently complain about dry and itchy skin, as well as being cold. This results from a depletion of insulating subcutaneous fat and smaller cutaneous blood vessels. Cellular ©1997, Medtech Insight, LLC 2-3 #RP-181303 Chapter 2: Clinical Issues changes include the depletion of melanocytes, causing the graying of hair, increased whitening of Caucasian skin and the loss of body hair. 2.2 Types of Wound There are three methods to classify wounds, using either wound severity, morphology or etiology. As shown in Exhibit 2-1, classification by severity identifies wounds as either tidy, untidy, wounds with tissue loss, or infected. Tidy wounds are the most common, including surgical incisions and simple cuts; untidy wounds and wounds with tissue loss are the next most common forms and are usually the result of an accident or burn injury. Infected wounds are the smallest category and include infections in the form of abscesses, cellulitis, or those so contaminated by foreign materials that they will certainly become infected. As presented in Exhibit 2-2, classification by morphology identifies wounds as either partialthickness or full-thickness. This classification has displaced the classification of first-, second- and third-degree wound ranking. Classification by etiology identifies wounds by origin which includes surgery, trauma, burns, pressure, venous and diabetic ulcers, radiation and HIV patients. Exhibit 2-3 outlines the classifications of wounds by etiology, while Exhibit 2-4 presents the wound incidence by etiology. Exhibit 2-5 lists the incidence of wound care procedures by ICD-9 code. In 1995, the National Center for Health Statistics reported the average life expectancy at 75.8 years, a record high. As life expectancy grows and the number of elderly persons increase, patients with chronic wounds is expected to grow by 6% from 1996 to 2000. In addition, the cost associated with treating chronic wounds was estimated at $12-$14 billion in 1996. 2.2.1 Surgical Wounds As shown in Exhibit 2-4, 24 million patients had surgical operations that resulted in skin and tissue incision. These types of wounds will grow at an annual rate of approximately 3%, but surgical wounds will likely be smaller as a result of the increase in minimally invasive surgical techniques. The surgical wound category can be divided into either inpatient or outpatient surgeries. In many instances, the wound closure method and wound care covering will be determined by whether the patient will be treated on an inpatient or outpatient basis. The majority of acute wounds are treated initially in an acute care facility, while most chronic wounds and ulcers are treated through physicians’ offices, outpatient clinics, nursing homes and home health care. ©1997, Medtech Insight, LLC 2-4 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-1: Classification of Wounds by Severity Classification Wound Characteristics Wound Etiology Tidy Wound Clean wound with edges only minimally damaged; minimal tissue loss; no infection apparent Surgical incisions; accidental, simple lacerations Untidy wound Significant tissue damage or destruction (crushed, torn); disruption of neurovascular, muscle or bony structures; foreign materials often present Crushing injuries, abrasions and traumatic vehicle injuries Wounds with tissue loss Loss or severe damage of tissue, including subcutaneous tissue, neurovascular components, muscles, tendons or bony structures Excisions, burns and ulcerations Infected wounds Any wound that is infected, such as a tidy wound that shows signs of infection or an untidy wound free of infection initially, yet so contaminated with foreign matter that infection is likely Wounds with cellulitis, lymphangitis, abscesses, burns and contamination Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 2-5 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-2: Type Classification of Wounds by Morphology Cellular Characteristics Common Cause Prognosis for Healing Partial Thickness Involves entire epidermis and portions of dermis. Very severe sun burns, contact with hot liquids and flash burns from gasoline flames. Healing within 10-18 days, epidermal element germinates and migrates up to the epithelial layer. Heals without significant scarring or functional impairment. Deep PartialThickness Involves entire epidermis and almost entire dermis. Fire and thermal burns, car injuries. Healing within 20-35 days, may produce unacceptable scarring. Full-Thickness Involves epidermis, dermis; may extend into subcutaneous tissue. Sweat glands and hair follicles are destroyed. Fourth-degree or complete burns Considered more extensive than fullthickness wounds. Involves subcutaneous tissue, muscle, fascia and bone. Extremely small wounds may be allowed to heal through wound border epithelialization. Electrical burns and certain thermal burns, such as molten metal or severe scalding. Complete debridement of wound to viable, bleeding tissue, removing all necrotic tissue, bone. Systemic antibiotic therapy and grafts/flap skin replacement. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 2-6 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-3: Classification of Wounds by Etiology • Surgical Wounds • Traumatic Wounds • Burn Wounds • Proliferative Scars • Ulcerations, including venous, arterial/diabetic and pressure • Immunosuppressive Wounds • Pharmacological Therapeutics • Disease-Associated • Radiation Wounds • Keloids • Hypertrophic Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 2-7 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-4: 1996, Wound Incidence by Etiology in the United States Wound Type Incidence Surgical wounds 24,370,000 Traumatic wounds 725,000 Percentage of Total Annual Growth Rate 44.3% 3.0% 1.3 1.2 Burn wounds(non-hospitalized) 1,200,000 Burn wounds (hospitalized) 680,000 2.2 1.2 1.0 1.0 Pressure ulcers Venous ulcers Arterial/diabetic ulcers 2,900,000 1,250,000 2,350,000 5.3 2.3 4.3 5.0 6.0 14.0 Amputations 530,000 1.0 0.8 Procedure-based wounds 21,000,000 38.2 3.0 Total 55,005,000 100% 3.5% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 2-8 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-5: ICD-9 Code Incidence of Wound Care Procedures, 1994 Description Number of Procedures 86.01 Aspiration of skin and subcutaneous 10,000 86.04 Other skin and subcutaneous 96,000 86.05 Skin incision/foreign body removal 20,000 86.09 Skin and subcutaneous incision 28,000 86.11 Skin and subcutaneous biopsy 26,000 86.22 Wound debridement 261,000 86.27 Debridement of nail 22,000 86.28 Non excision, debridement of wound 66,000 86.3 Other local skin destruction 77,000 86.4 Radical excision of skin lesion 16,000 86.69 Free skin graft 58,000 86.72 Pedicle graft advancement 86.74 Attach pedicle graft 86.89 Skin repair and plasty 7,000 14,000 7,000 Total 708,000 Source: National Center for Health Statistics, National Hospital Discharge Survey, 1994 (latest available year) ©1997, Medtech Insight, LLC 2-9 #RP-181303 Chapter 2: Clinical Issues 2.2.2 Trauma-Induced Injuries The National Center for Health Statistics reported traumatic injury is the fifth leading cause of death in the United States in 1995 (the latest year available). In 1996, there were approximately 725,000 traumatic wounds, and the incidence of these types of wounds is expected to increase by 1.2% annually. Traumatic wounds have a classification all their own and are described as either abrasions, simple lacerations, lacerated wounds with tissue loss or contusion-sustaining injuries. Abrasions usually result from a shearing type of injury, such as a traffic accident victim being thrown across the road surface. This injury usually results in a partial-thickness wound. A simple laceration usually results from an object that penetrates the skin and is classified as a full-thickness wound. A laceration with tissue loss could involve amputation of the digits or even a limb. A contused wound ranges from minor bruising to severe tissue destruction, such as a crushing injury or a bullet wound. 2.2.3 Burns More than 1.8 million Americans sustain burns which must be treated in the hospital or physician’s office each year. Burn wounds cost approximately $70 million per year, with some individual costs reaching as high as $60,000. More than 35% of all fire/burn injuries and deaths occur to children. However, burns are known to be one of the most common accidental injuries, occurring in any environment to victims of all ages. Approximately 680,000 people will sustain major burns that are serious and life-threatening, requiring hospitalization. These burns are unquestionably among the most devastating types of injury known to man. Burns are a total physical assault to the body. Emergency techniques include resuscitation, hemodynamic stabilization, nutritional and oxygen support, ventilation, patient comfort, accelerated proper healing, and prevention against infection and secondary complications. Burn patients not only have dramatic physiological dysfunctions that are multi-system, but also psychological and psychosocial alterations that challenge and require the expertise of a burn team, often in a comprehensive burn center. The types of burns that are referred to a burn center are listed in Exhibit 2-6. Patients that do survive require rehabilitation that is a minimum of seven times longer than their stay in the hospital, and they may require years of psychological intervention. The average length of stay for a hospital burn patient is 24 days, although it can be months for the severely burned patient. In the past ten years the length of stay has declined by 50%. ©1997, Medtech Insight, LLC 2-10 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-6: Types of Burns Referred to Burn Centers • Full-thickness burns covering more than 10% of body surface area (BSA) • Partial-thickness burns exceeding 20% of BSA and full-thickness burns exceeding 10% of BSA in the adult • Burns involving the face, hands, feet, perianal, genitalia or joints • Circumferential burns of an extremity or chest wall • Chemical burns • Electrical burns • Inhalation burns • Burns complicated with another major injury Source: American Burn Association, Medtech Insight, LLC ©1997, Medtech Insight, LLC 2-11 #RP-181303 Chapter 2: Clinical Issues There is controversy whether burn centers can be profitable or if they only provide a much needed community service. Some reports conclude hospitals that market their product well, maintain full occupancy, efficiently utilize staff and market a payer-mix having a large number of commercially covered patients, can reap a profit. Other reports suggest that burn units can sometimes cause institutions to lose hundreds of millions of dollars annually. 2.2.3.1 Classification of Burns Burns are classified according to the extent of body surface involved and the depth of injury to the skin. Data collected from these scoring systems can assist in determining whether the burn can be categorized as major, moderate or minor for identification of treatment and facility needed for proper care. One commonly used guide in determining extent of injury is the Rule of Nines and Nineteen. The Rule of Nine is used for adults, while the Rules of Nineteen are used for pediatric patients. These systems divide the body into sections by percentage. The Rule of Nines provides the quickest assessment of total body surface injury and is used for initial emergency patient status. Another guide for determining the extent of injury is The Lund and Browder Chart. This guide is presented in Exhibit 2-7. The Lund and Browder Chart is a more specific and accurate estimate in determining what percentage of body surface has been injured as it assesses hands, feet and upper arms separately. The Lund and Browder Chart is retained as a permanent patient record after treatment is well established. The depth (degree) of a burn was classically coined as first, second, third and fourth degree and has now been superseded by the classification of partial-thickness, full-thickness and complete burn wounds. First-degree burns are not included in the current evaluation of extent-of-burn-injury unless they comprise over 30% total body surface (TBS). In these wounds, the skin is fiery red, very painful and not blistered. First-degree burns usually heal in 3-5 days. Partial-thickness wounds (formerly second-degree) involve destruction of all epidermal layers with destruction of various layers of the dermis. Full-thickness (formerly third-degree) denotes destruction of all dermal and epidermal layers and can extend into the subcutaneous tissue. The sweat gland and hair follicles that foster re-epithelialization are completely destroyed; therefore, any healing must now occur through epithelial migration from the ©1997, Medtech Insight, LLC 2-12 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-7: Lund and Browder Chart for Measuring Extent of Burn Wounds Age 0-1 Years Age 1-4 Years 19% 2% 13% 13% 2.5% 17% 2% 17% 13% 2.5% 13% 2% 13% 13% 2.5% 10% 2% 13% 13% 2.5% 7% 2% 13% 13% 2.5% Left Buttocks Genitalia Right Upper Arm Left Upper Arm Right Lower Arm Left Lower Arm Right Hand Left Hand Right Thigh Left Thigh Right Leg 2.5% 1% 4% 4% 3% 3% 2.5% 2.5% 5.5% 5.5% 5% 2.5% 1% 4% 4% 3% 3% 2.5% 2.5% 5.5% 5.5% 5% 2.5% 1% 4% 4% 3% 3% 2.5% 2.5% 5.5% 5.5% 5% 2.5% 1% 4% 4% 3% 3% 2.5% 2.5% 5.5% 5.5% 5% 2.5% 1% 4% 4% 3% 3% 2.5% 2.5% 5.5% 5.5% 5% Left Leg Right Foot Left Foot 5% 3.5% 3.5% 5% 3.5% 3.5% 5% 3.5% 3.5% 5% 3.5% 3.5% 5% 3.5% 3.5% Area Head Neck Anterior Trunk Posterior Trunk Right Buttocks Age 5-9 Years Age 10-15 Years Adult Source: American Burn Association ©1997, Medtech Insight, LLC 2-13 #RP-181303 Chapter 2: Clinical Issues periphery and from wound contracture. Grafting is required if the wound is extensive. There is also a complete (fourth-degree) burn classification, which denotes extension into the subcutaneous tissue, muscle, fascia and even the bone. Although such a burn on the surface may appear at first inspection to be a full-thickness wound (third-degree), if improperly diagnosed, it can result in severe systemic toxicity or systemic infection/sepsis. Between 44 degrees C and 51 degrees C, the rate of cellular destruction doubles with each degree increase in temperature. Above 51 degrees C, brief exposure produces rapid tissue destruction; while 70 degrees C and above provides full-thickness burns with a one-second exposure. As shown in Exhibit 2-8, burns may also be categorized according to the primary mechanism for injury: thermal, electrical, radiation and chemical. 2.2.3.2 Therapeutic Intervention for Burns Accurate assessment of burn depth usually requires one to three days of observation. It is critical that the clinician treat burns differently than other traumatic injury. Differences in the two types of injuries are: • Burns are rapidly infiltrated by bacteria; • Burns frequently have large portions of nonviable tissue; • Burns excrete large quantities of water, serum and blood; and, • Burns frequently require tissue grafts or flaps for permanent closure. Although a surgical wound heals by primary intention (sutured incision), a burn wound heals by secondary intention (filling the tissue defect through new connective tissue, blood vasculature and epithelium). Secondary intention increases repair time, causes greater scarring and increased susceptibility to infection. Although burn wounds are generally sterile following the initial burn, bacterial contamination will result within 48 hours if topical antibacterial therapy is not promptly initiated. Bacterial counts greater than 100,000 or 10 5 per gram of tissue, will result in a predictable course of gram positive bacterial invasion followed by gram-negative bacterial invasions. Contamination can be caused by endogenous flora (from the patient's own skin or respiratory tract) or from exogenous flora (in the environment or on the hands of healthcare workers). ©1997, Medtech Insight, LLC 2-14 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-8: Mechanism of Injury Classification of Burns According to Mechanisms of Injury Probable Cause Thermal Steam, scalding liquids, flames, semi-solids and hot metal Electrical Direct electrical current traveling through the body, arcing of electrical current, or the effects of electrical current combined with flames from clothing ignition. Most often associated with industrial injuries. Electrical injuries are frequently fatal. Radiation Industrial use of ionizing radiation or from therapeutic radiation sources (for example, in treatment of oncology patients). Chemical Strong acids and alkalis cause tissue destruction by denaturing tissue proteins and/or interfering with normal cellular metabolism. Alkali burns are more serious than acid burns because alkali penetrates deeper and burns longer. Source: American Burn Association ©1997, Medtech Insight, LLC 2-15 #RP-181303 Chapter 2: Clinical Issues Although the major goal of burn management is to close the wound as soon as possible, several objectives must be met for optimal wound closure. These objectives include the prevention of wound infection through meticulous cleansing and debridement, promoting the development of granulation tissue and re-epithelialization, preparing the wound for grafting, providing for patient pain comfort, and reducing the amount of scarring and contractures. Clinical experiences at burn centers reveal that the removal or debridement of eschar as quickly as possible reduces the likelihood of bacterial infection and other iatrogenic problems. Debridement provides for removal of devitalized tissue or burn eschar, and removes bacterial and foreign-body contaminated tissue as a means to further protect against bacterial infection. Debridement can be accomplished through mechanical, surgical or enzymatic procedures. Mechanical debridement involves the use of scissors and forceps to encourage separation of eschar from wound. These procedures are usually performed in conjunction with daily wound cleansing and dressing activity. Mechanical debridement can also be achieved through the use of coarse “mesh” dressings applied via either “dry” or “wet-to-dry” technique. As the wound begins to develop granulation tissue and epithelial budding, this method should be avoided, to protect granulation formation. Surgical debridement involves primary excision of full-thickness skin or tangential excision of thin layers of the dermis until freely bleeding viable tissue is achieved. It usually is initiated a few days after the burning or as soon as the patient is hemodynamically stable and can undergo anesthesia. The wound is grafted immediately by either temporary or permanent grafting techniques. Risks include prolonged anesthesia and excessive blood loss. Surgical debridement is the procedure of choice for large burns, reducing the likelihood of wound sepsis. Enzymatic debridement occurs when topically applied proteolytic and fibrinolytic enzymes are used to debride the wound. It is a slower method, a major disadvantage. It is not antibacterial, so topical antibacterial agents should be used in conjunction. Enzymatic action softens the eschar and dissolves devitalized tissue; however, these enzymes can produce pain and bleeding when necrotic vessels are digested. In addition, wounds can not be immediately grafted after enzymatic debridement because of the possibility of skin graft rejection. Some enzymatic products are used for maintenance cleansing and cannot debride eschar. ©1997, Medtech Insight, LLC 2-16 #RP-181303 Chapter 2: Clinical Issues Topical antibacterial agents are preferred over systemic antibiotic agents. Topical antibacterial agents reduce the number of bacteria present, keeping the bacterial population to less than 100,000 or 105 per gram of tissue, and allowing the body's own defense mechanism to fight off invasion. Systemic antibiotics are used when systemic sepsis is likely or the body's own defense mechanism is compromised. The use of topical antibacterial agents on burn patients gives the clinician the necessary time to remove devitalized tissue, promote spontaneous wound healing and to keep the wound in low bacterial population counts so grafting can be accomplished. The indications for grafting burn wounds is determined by the depth of the wound (fullthickness), the anatomical site of the wound and the extent of body surface that the wound covers. If re-epithelialization is not achievable, a skin transplant is necessary. Priority areas for skin grafting are the face (for cosmetic and psychological perception), the hands (for increased patient activity and self-esteem), and the feet (to encourage quicker mobility and reduce the possibility of contractures). However, when burns are extensive, the chest and the abdomen are usually grafted first to reduce the wound surface area, superseding cosmetic and functional considerations. 2.2.4 Proliferative Scars Improper wound healing can result in abnormal formation or excessive formation of scar tissue. Proliferative scars can be classified as keloids or hypertrophic scars. The primary differentiation between these two is that hypertrophic scars remain in the wound circumference or borders, whereas keloid scars extend beyond the wound borders. Hypertrophic scars are more likely to occur when the injury has gone to or beyond the level of the deep dermis, replacing normal integumentary tissue with metabolically highly active tissue lacking the normal architecture of the skin. In hypertrophic scars, collagen bundles are laid down in random, tight, wavy patterns, and resemble a supercoiled appearance. The hypertrophic scar is red, raised and hardened. Most keloids appear in darkly-pigmented skin, and may grow for years after injury. Keloids are also prone to reoccur even after surgical excision of the initial keloid. Keloids can form on any part of the body, but the most common sites are the neck, face, ear lobes, sternum and upper back. Therapies for keloids include laser surgery, cryotherapy and surgical excision. Minor scratches and vaccinations have been documented as keloid-producing. Keloids of the earlobes are a common problem of Afro-American women and multiple holes in the ear ©1997, Medtech Insight, LLC 2-17 #RP-181303 Chapter 2: Clinical Issues increase the likelihood of keloid formation. Young children and older adults rarely produce keloids. 2.2.5 Pressure Ulcers The US Public Health Service through its Agency for Health Care Policy and Research has published a series of Clinical Practice Guidelines for Pressure Ulcer Treatment. In its 1994 Quick Reference Guide for Clinicians (#15), this agency defines a pressure ulcer as “any lesion caused by unrelieved pressure resulting in damage of underlying tissue.” Stated another way, pressure ulcers are localized necrotic areas of tissue as a result of vascular insufficiency in an area under continuous pressure. The term pressure ulcer has now displaced the common historical terms of bedsore, decubitus ulcer and pressure sore. Pressure sufficient enough to close a capillary (25-32 mm Hg) is thought to be the primary cause of pressure ulcers. There is an inverse relationship between the amount of pressure exerted and the time before tissue damage. Pressure ulcers are more likely to evolve from low pressure for long periods of time, rather than high pressure for short periods. There are two other factors that also contribute to the development of pressure ulcers: friction and shear. An example of friction is when a patient's feet are dragged across the bed. Shear injuries result when the head of the patient's bed is elevated, the skin stays in place but the internal tissues and skeleton slide downward, ripping the skin away from its underlying blood supply. 2.2.5.1 Staging of Pressure Ulcers Usually pressure ulcers are located over bony prominences and are graded or staged to classify the degree of tissue damage observed; however, pressure ulcers do not necessarily progress from Stage I to Stage IV or heal from Stage IV to Stage I. Staging of pressure ulcers in order to define the best treatment protocol is recommended by the Pressure Ulcer Advisory Panel Consensus Development Conference. Stage I is defined when there is non-blanchable erythema of intact skin. In individuals with darker skin, discoloration of the skin, warmth, edema, induration or hardness may also be indicators. Stage II defines those ulcers where there is partial-thickness skin loss involving epidermis, dermis or both. The ulcer is superficial and presents clinically as an abrasion, blister or shallow crater. A Stage III ulcer is diagnosed with there is full-thickness skin loss involving damage to or necrosis of subcutaneous tissue which may extend down to, but not ©1997, Medtech Insight, LLC 2-18 #RP-181303 Chapter 2: Clinical Issues through, underlying fascia. The ulcer presents clinically as a deep crater with or without undermining of adjacent tissue. A Stage IV ulcer is defined as a full-thickness skin loss with extensive destruction, tissue necrosis or damage to muscle, bone or supporting structures. These staging definitions recognize a number of limitations. Stage I ulcers may be superficial, or they may be a sign of deeper tissue damage. Stage I pressure ulcers are not always reliably assessed, especially in patients with darkly pigmented skin. When eschar is present, a pressure ulcer cannot be accurately staged until the eschar is removed. Pressure ulcer assessment in patients with casts, other orthopedic devices, or support stockings is difficult.. Extra vigilance is required to assess ulcers under these circumstances. Pressure ulcers usually occur over bony prominences and are scored, staged or classified according to the degree of damage observed. However, there are many clinicians who oppose this staging system, indicating that a pressure ulcer much like an iceberg, with just the top of the pressure ulcer actually observed. Many clinicians and researchers would like to use a classifying system that would graphically detail the damage from the bottom of the iceberg and which would portray the actual tissue damage. Stage I ulcers may be superficial, or they may be a sign of deeper tissue damage. Stage I pressure ulcers are not always reliably assessed, especially in patients with darkly pigmented skin. When eschar is present, a pressure ulcer cannot be accurately staged until the eschar is removed. It may be difficult to assess pressure ulcers in patients with casts, other orthopedic devices, or support stockings. Extra vigilance is required to assess ulcers under these circumstances. Source: Pressure Ulcer Treatment, Clinical Practice Guideline, US Department of Health and Human Services, Agency for Health Care Policy and Research, 1994 2.2.5.2 Incidence of Pressure Ulcers Pressure ulcers are an all-too-familiar problem in medical history and, in particular, nursing experience. Pressure ulcers and diabetic ulcers constitute the two largest categories of chronic non-healing wounds. In 1996, there were approximately 2.9 million pressure ulcers in the ©1997, Medtech Insight, LLC 2-19 #RP-181303 Chapter 2: Clinical Issues United States, and annual costs for these types of wounds were approximately $3 billion. In its Quick Reference Guide for Clinicians, # 15 Pressure Ulcer Treatment, the U.S. Department of Health and Human Services (1994) states that pressure ulcers are a serious problem that affects approximately 9% of all hospitalized patients and 23% of all nursing home patients. Many sources indicate that approximately 2 million people per year develop pressure ulcers that, for the most part, are preventable. Patients especially at risk for pressure ulcers include hospitalized quadriplegic patients, elderly patients admitted for femoral fracture and the critically ill patients. Other high-risk patients include the entire elderly population and all orthopedic fracture patients. The most common sites for pressure ulcer to develop are the sacrum, coccyx, ischial tuberosities, greater trochanters, elbows, scapulae, heels, occipital skull bones, iliac crests, knees and ankles. The majority of pressure ulcers occur in the lower half of the body, which absorbs more of the body's weight. The incidence of pressure ulcers in extended-care facilities is expected to increase, primarily attributable to increased acuity of the patients. This increased acuity in extended-care facilities is the result of shorter hospital stays, use of nursing homes for intermediate care and an increasingly aged population with more associated multi-system diseases. The elderly suffer 50% of the total tabulated number of pressure ulcers because of the higher prevalence of debilitating conditions such as immobility, incontinence, poor nutritional status and other high-risk conditions. Although the prevalence of pressure ulcers will continue to grow, it is not expected to be proportional to the increased growth of the aged population, primarily as a result of aggressive prevention and early treatment programs. As pressure ulcer prevalence is increases in the acute and chronic healthcare setting, morbidity and mortality secondary to pressure ulcer formation is also increasing. Bedfast and chairfast patients, because of injury, surgical operation or disease/illness, are at a much higher risk than their healthy counterparts, and can develop ulcers in as little as one to two hours, depending on individual risk factors. The risk of pressure ulcers further increase with immobility, nutritional deficiencies, lower mental awareness and moisture caused by incontinence, perspiration, or wound drainage. 2.2.5.3 Therapeutic Intervention for Pressure Ulcers Therapeutic intervention presents a significant problem for healthcare workers. Some pressure ulcers will completely heal with a certain product while other pressure ulcers on ©1997, Medtech Insight, LLC 2-20 #RP-181303 Chapter 2: Clinical Issues either the same or different individual will not heal completely, or will not heal at all using the same product. Just as no single technology will be therapeutic for all types of wounds, no one product will be able to irradiate all pressure ulcers. This dilemma could possibly explain the existence of so many wound care products available in today's marketplace. These choices are confusing to the patient, caregiver, clinician, researcher and to medical product manufacturers. The treatment for pressure ulcers will be diverse, depending upon: 1) the patient's long-term health (a terminally ill patient should not undergo aggressive and painful treatment, but rather supportive care through positioning, oxygen delivery, nutritional supplementation, and pain medication); 2) nutritional status; 3) perfusion and oxygenation status; 4) age; 5) normal skin status; 6) lifestyle status (a recent quadriplegic patient or an elderly patient who has lost his/her caregiver); 7) anatomical site on the body; and, 8) the potential for contamination (pressure ulcers on the sacrum are at higher risk for bacterial contamination than on the scapulae). Pressure ulcers are open, chronic wounds, which require dressings that protect and maintain their physiologic environment. Exhibit 2-9 lists the properties of an ideal wound dressing. The cardinal rule for clinicians is to keep moist tissue moist and dry tissue dry. The condition of the wound bed will predicate which type of dressing to use. Moist, not wet, dressings provide the optimum conditions for re-epithelialization and rapid wound healing. Drying causes scabbing to form, interfering with effective migration of epithelial cells. Drying also causes dehydration and cellular death. 2.2.6 Venous Ulcers Venous disease is described as an alteration in the vein integrity, resulting in decreased venous return or thrombosis. Deep vein thrombosis combined with chronic venous valve insufficiency is thought to be the precipitator for increased pressure in veins and venous stasis. Over a period of time, this higher pressure causes increased stretching and weakening of the veins, and may lead to the development of venous ulcers. However, the pathophysiology and pathogenesis of venous disease and venous ulcer formation is not fully understood. One hypothesis that has received much attention suggests that high venous ©1997, Medtech Insight, LLC 2-21 #RP-181303 Chapter 2: Clinical Issues Exhibit 2-9: An Ideal Dressing Function Rationale Provides moist wound environment Moisture promotes re-epithelialization and cellular migration and reduces cellular death from dehydration. Absorbs excessive fluid Removes excessive drainage to maintain a moist environment but not a “swamp-like” wound environment. Permeable to air Absorbs excessive skin moisture. Provides protection against microbes and further wound trauma Provides a bacterial barrier and supportive wound environment. Removal of dressing without trauma or contamination Protects against tissue destruction during changes and dressing particulate/lint from entering the wound. Provides for a drugdelivery vehicle Able to incorporate, maintain and effectively release drug therapies to the wound. Provides pain relief Provides a cooling sensation and protects against discomfort from circulating air. Provides thermal insulation Prevents heat loss from the wound. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 2-22 #RP-181303 Chapter 2: Clinical Issues pressure (venous hypertension) causes distention and weakening of dermal capillary beds, consequently enlarging the endothelial pores. This allows large molecules, such as fibrinogen, to leak out to the extravascular space and polymerize to form a peripapillary fibrin cuff. This cuff acts as a barrier to the diffusion of oxygen and nutrients, causing cellular death and ultimately ulceration. Precapillary fibrin is present in and around most venous ulcers and persists over time, in spite of documented ulcer healing. Fibrin cuff formations may simply predispose venous ulcer development. These ulcers are irregularly shaped and have brown-colored hemosiderin pigmentation with surrounding edematous tissue. In 1996, there were approximately 1,250,000 venous ulcers, and the rate of increase is approximately 6% per year. For a patient with recurrent venous ulcers, the cost over a lifetime is estimated at $50,000 with higher costs should repeated hospitalizations or amputation be required. 2.2.6.1 Therapeutic Intervention for Venous Ulcers Unna boots, compression dressings and wet-to-dry dressings are the most common modalities of treatment for venous ulcers. Unna boot therapy is the continuous use of a soft cast, applied once a week. It functions to promote venous return and prevent edema of the leg. The main disadvantage of the Unna boot is the technical skill necessary for proper application and fit so as to prevent leg macerations. Other disadvantages include the inability of the patient to observe the skin during treatment and the inability to bathe while wearing the boot. Compression dressing methods use absorbent dressings under compression support stockings. An even heavier support stocking can be used over the compression stocking during periods of activity. The advantages of this treatment modality are that the patient can remove the dressing daily, assess the status of the ulcer and surrounding skin, bathe without concern and wear ordinary shoes. The disadvantages center on the patient’s inability to follow directions and comply with treatment. Wet-to-dry dressing are used for excess drainage from venous ulcers. The application of the Unna boot or compression dressing/stocking are usually initiated once exudate is moderate. 2.2.7 Arterial Ulcers Patients with intermittent claudication and arteriosclerosis are predisposed to arterial leg and foot ulcers resulting from tissue hypoxia in the area of arterial insufficiency. Arterial ulcers are common in diabetic patients who have both arteriosclerotic disease and diabetic ©1997, Medtech Insight, LLC 2-23 #RP-181303 Chapter 2: Clinical Issues peripheral neuropathy. Arterial ulcers are painful, occur most often in the lower legs (especially toes and heels) and have well-defined wound borders. If chronic non-healing arterial ulcers persist, the primary therapeutic focus will be to first correct the underlying arterial insufficiency by vascular reconstructive surgery. Unsuccessful vascular surgery with continued non-healing wounds could result in surgical amputation of the limb or appendage. 2.2.7.1 Diabetic Ulcers Diabetic ulcers are a large and significant subtype of arterial ulcers. In the United States, diabetic ulcer treatment costs approximately $16-$21 billion per year. Diabetic ulcers do not heal as fast as skin ulcers on non-diabetic populations and have increased likelihood of associated infection. Many times these ulcers become infected and traumatized, with amputation being the only medical choice for the patient. 2.2.8 Amputations Amputations are surgical procedures performed for multiple indications including gangrene, peripheral arterial occlusion, non-healing ulcers, severe soft tissue infections, osteomyelitis, trauma, tumors and deformities. In 1996, there were approximately 530,000 amputations in the United States, and treatment costs associated these procedures are about $1.5 billion per year. Amputation, as a result of a non-healing ulcer or wound, represents a significant clinical problem. In addition, the personal and societal costs of an amputation include the time lost from work during hospitalization and rehabilitation, loss of future earning power, increased reliance on social programs and frequently a reduction in the quality of life. Although in many situations, amputation is the most appropriate course of action (chronic, infected, non-healing or gangrenous wounds), unilateral amputations increase the risk of contralateral amputations, particularly in diabetic patients. The unilateral diabetic amputee changes walking and weightbearing patterns, causing the remaining foot to become deformed, and frequently results in pressure points and ulcerations. 2.2.9 Acquired Immune Deficiency Syndrome Acquired Immune Deficiency Syndrome (AIDS) is an immune deficiency acute/chronic disease which will significantly effect the market for wound care products and wound healing services. Due to the immunosuppression of patients with AIDS, even small bug bites can evolve into deep crater-like ulcers. These wounds must be treated aggressively to reduce ©1997, Medtech Insight, LLC 2-24 #RP-181303 Chapter 2: Clinical Issues further involvement and microbial contamination. Skin care products (adhesive dressings, tapes and antiseptics) will need to be modified to protect the often fragile skin of the AIDS patient. Such patients are treated in hospitals, nursing homes and the home care environment. The skin of the AIDS patient becomes drier as the syndrome progresses. As the CD4 positive T-cell count falls below 400 cells/mm3, pruritus and erythematous patches appear on the skin, progressing to ichthyosis, manifested by thick, large, polygonal scales on the skin. Ichthyosis is typically found on lower extremities. Histological changes include hyperkeratosis with a thinner granular layer. Treatment includes application of emollients containing alpha hydroxy acids or urea to improve skin appearance, and topical corticosteroids to heal eczematoid lesions. If pruritus is unresponsive to antihistamines, ultraviolet light phototherapy may reduce the itching. Seborrheic dermatitis is the most common skin disease in AIDS patients at a frequency of 40% to 83% of all cases and is often the initial symptom of HIV infection. From 1981 to the end of 1996, a total of 573,800 persons with AIDS over the age of 13 had been reported to the Centers for Disease Control. Lifetime costs of treating AIDS have increased to greater than $150,000, and it is conservatively expected that lifetime AIDS treatment expenses will exceed $200,000 by the year 2000. From the point of diagnosis, HIV patients are living an average of 15 years, making this disease both a chronic and catastrophic one in description. 2.3 Wound Healing Biological Factors Wound healing is a complex process, with no single factor responsible for normal healing. Understanding of cellular and biochemical events involved for wound healing is incomplete, but knowledge of the wound healing process is mounting. This is an exciting era for wound healing. Much of the current research is devoted to understanding the biochemical interconnections and cascade mechanisms for wound healing and determining at what level in this cascade process intervention will have the greatest impact on wound management. Wound healing begins the moment a wound is made and continues for years. The Wound Healing Society defines a wound as a disruption of normal anatomic structure and function. An ideally healed wound proceeds through an orderly and timely reparative process which results in sustained anatomical restoration and functional integrity. Chronic wounds fail to proceed through this process, resulting in poor anatomical restoration and/or reduced functional integrity. ©1997, Medtech Insight, LLC 2-25 #RP-181303 Chapter 2: Clinical Issues Wounds can be divided into two groups: wounds without tissue loss (primarily surgical wounds which heal by direct union, also referred to as primary intention) and wounds with tissue loss (such as burns and ulcers, which must heal by indirect union or secondary intention). Wound healing has three major phases: inflammatory phase, proliferative phase and maturation phase. 2.3.1 Inflammatory Phase The initial response of the body to wounding is vasoconstriction of the blood vessels, which lasts 5 to 10 minutes. During this process several different types of cells are recruited to the wound area to defend and revitalize traumatized tissue. Platelets first aggregate and promote the deposition of fibrin for clot formation. Although the actual role of platelets in subsequent phases has been debated, it is well accepted that platelets produce many substances that induce other wound healing events. Platelets release collagenase (an enzyme that breaks down/degrades collagen) and a collagenase inhibitor (to stop the degradation of collagen). Platelets are necessary for the ensuing proliferative phase to occur. After the initial vasoconstriction event, the surrounding tissues become ischemic and release chemicals including histamines and kinins to induce vasodilation. Vasodilation increases vascular permeability and results in leakage of elements (proteins, enzymes and fluid) into the wound space and surrounding tissue. Fibrin is deposited into lymphatic systems, which causes lymphatic blockage and subsequent edema and tissue warmth. The classic signs of inflammation swelling, redness and heat are apparent. Next, both leukocytes (neutrophils) and macrophages migrate to the wound area and up the hair shafts. Leukocytes function to digest and transport organic debris from the wound site. Macrophages originate from blood monocytes, and their function is to debride the wound, regulate fibroplasia and to degrade collagen in the healing process. Neutrophils are effective in phagocytizing or destroying bacteria, if the bacterial count is less than 105 per gram of tissue. However, should bacterial contamination occur, the acute inflammation phase will persist and interfere with the next phase of wound healing. In a chronically inflamed wound, neutrophils and wound debris are the chief components of pus. Infection initially is the most important obstacle to alleviate before proper wound healing will begin. Infection can result from endogenous and exogenous bacterial flora. Additionally, macrophages also function to release angiogenic factors stimulating the formation of new blood vessels while releasing growth factors that stimulates cellular growth during the proliferative phase. Macrophages also produce and release enzymes, inhibitors, and ©1997, Medtech Insight, LLC 2-26 #RP-181303 Chapter 2: Clinical Issues complement factors. When experimentally removed from a wound, debridement becomes inhibited and wound repair slows. Experimental removal of neutrophils from a wound does not retard repair but does increase the risk of bacterial invasion. The replacement of dead or damaged tissue by new and healthy tissue begins with a process known as epithelialization. Epithelial cells migrate from the wound's border, moving across the wound from all edges to form a seal over the wound. Migration continues until the epithelial cells from the edges make contact with one another, inducing a process called contact inhibition (prohibiting further cellular migration). Epithelial cells are guided in their migration by scaffolding, which is the formation of a network of fibrin strands. In a primary healing wound, fibrin closes the wound in a few hours, and epithelialization begins within 1 to 2 days. In secondary healing wounds, the epithelialization process is much slower. Once epithelialization is complete, the wound will stop weeping body fluid and electrolytes, and will be protected from bacterial invasion. Exudate contains active leukocytes. It is produced during the inflammatory phase, acts as a culture medium to enhance the migration and mitosis of epithelial cells and protects against bacterial invasion. Moist exudate prevents the wound from dehydration, cellular death and scab formation, and eliminates increased woundborder maceration. The main function of the inflammatory process is to recruit needed cells, remove debris, seal the wound and prepare the wound for the regeneration of new tissue. 2.3.2 Proliferative Phase While wound healing is a cascade process, the steps are not discrete, they overlap one another. The proliferative phase, angiogenesis, begins on the third day following wounding and continues for the next 14 days. The primary function of the proliferative phase is to develop tissue as epithelial cells continue to migrate across the wound. The main cell type in this phase is the fibroblast, a multiplier and synthesizer of collagen. Fibroblasts also synthesize proteoglycans or ground substance, which forms the scaffolding matrix for the migration of cells. Macrophages are still present in the wound site. Collagen, as the principle component of connective tissue, fills the tissue and provides wound strength. Bud-like capillary structures form, penetrating the wound and providing the nutritional support for the newly generated tissue. This tissue appears bright red and granular. Granular tissue is very fragile and produces a difficult terrain for advancing epithelial cells. Granulation tissue contains a dense population of macrophages, fibroblasts and new capillary vasculature embedded in a loose matrix of collagen, fibronectin and hyaluronic acid. Granulation tissue causes the wound edges to contract and begin to form scar tissue. As the ©1997, Medtech Insight, LLC 2-27 #RP-181303 Chapter 2: Clinical Issues production of collagen dissipates, these vascular channels regress, and the wound transforms from a vascular-rich, cellular tissue to avascular, cell-free scar composed of dense collagen bundles. The main functions of the proliferative phase are collagen synthesis and tissue growth. 2.3.3 Maturation Phase During the maturation phase of wound healing , the wound takes on its permanent form. As the wound matures, its collagen undergoes remodeling. This usually begins on day 14, although primary and secondary wounds progress differently in this phase. In the primary wound, maximum collagen synthesis is at day 42, establishing an equilibrium between collagen synthesis and collagen degradation. During this time, the collagen fibrils and fibers become dehydrated and re-weave into a tight pattern, and the scar fades to silvery white This color results from the regression of capillary beds and fibroblasts. The scar becomes less bulky and continues to gain tensile strength, although no wound will ever regain the full strength found in the original tissue. Most wounds will reach a maximum of 70% of the original tissue’s tensile strength within two years after injury. Secondary wounds may not begin to differentiate collagen for months or years after injury because they heal by wound contraction. Myofibroblasts are specialized cells that appear in contracting wounds, functioning to provide collagen synthesis and contractility. Contraction begins on the fifth day after wounding, overlapping both the proliferative and maturation phases. The contraction process occurs by the movement of the surrounding skin to the center of the wound. The main functions of the maturation phase in both primary and secondary wounds is the growth and development of new tissue and the strengthening of scar tissue. 2.4 Complications Affecting Wound Healing Factors that inhibit or prevent proper wound healing can be categorized as local or systemic factors. The local environment of the wound needs to have optimal conditions of temperature, hydration, nutrients, oxygenation and waste removal for mechanism of wound healing to progress. These mechanisms include epithelialization, collagen formation, angiogenesis and wound contracture. Systemic factors that inhibit proper wound healing include patient age, nutrition status, pharmacological medications, other disease conditions and emotional stress. ©1997, Medtech Insight, LLC 2-28 #RP-181303 Chapter 2: Clinical Issues 2.4.1 Local Factors Local factors affecting wound healing include surgical technique, blood supply, hypoxia, infection and radiation. Each of these are discussed in the sections below. 2.4.1.1 Surgical Technique Good surgical technique is more than just proper handling of the tissue; it also involves meticulous hemostasis, eliminating dead space between tissue layers when closing the surgical wound and preventing collection of serum or formation of hematomas, which are excellent media for bacterial growth. If sutures are too tightly tied, wound tension will be increased, leading to decreased blood flow and necrosis of the tissue. 2.4.1.2 Blood Supply Adequate blood circulation to the wound controls wound healing. Blood supplies the wound with oxygen, cells and nutrients for wound repair. Decreased blood supply, due to disease, anatomical location of wound or the amount of circulating blood, affects the ability and the length of time for wounds to heal. If blood volume is low, nutrients and tissue oxygenation will be inadequate resulting in impaired wound healing. 2.4.1.3 Hypoxia Adequate tissue oxygenation is vital for the healing process. Hypoxia conditions may result either from inadequate blood flow to the wound site or from decreased blood oxygen. Diseases that provide inadequate oxygen intake or alkalemia states contribute to hypoxia. The most significant wound-tissue hypoxia occurs in surgical patients with radical mastectomy or abdominal, cardiac or vascular wounds because they have not received enough oxygen during surgery. 2.4.1.4 Infection Infection is the root of most “evils” that occur in the wound healing process; it leads to serious complications, prolonged healing and increased healthcare costs. Acute wounds such as surgical incisions require vigilant care. Many surgical wound infections result from poor aseptic technique. Proper cleansing of the skin prior to incision and regular cleaning of the site and areas surrounding the wound will assist to reduce bacterial invasion of acute wounds. The cost of infections acquired while the patient is hospitalized, nosocomial infections, are not reimbursed to the hospital. The added hospital stay to treat a surgical wound infection ©1997, Medtech Insight, LLC 2-29 #RP-181303 Chapter 2: Clinical Issues averages 7 extra days, with the maximum at 68 days. The additional cost to treat the surgical wound infection averages $2,800, with the maximum at $28,000. An average 250-bed acute care hospital accounts for $1 million in non-reimbursed expenses to treat nosocomial infections. When an infection is diagnosed, the wound must be debrided before normal wound healing can occur. Care should be exercised in the prescribing of antibiotics; rampant or indiscriminate use of antibiotics on wounds increases the proliferation of antibiotic-resistant bacteria. Both hypoxic conditions and poor blood circulation in the wound increase the risk for tissue necrosis and infection. Systemic antibiotics are recommended for cellulitis, sepsis or osteomyelitis. 2.4.1.5 Radiation Side effects from radiation treatments include suppression of leukocyte production, which increases the risk of infection in ulcers. Radiation for treatment of cancer causes secondary complications to the skin and underlying tissue. Early signs of radiation side effects include acute inflammation (redness, heat and pain), exudation (skin weeping) and scabbing. Later signs, four to six months after radiation, includes woody, fibrous and edematous skin. Advanced radiated skin appearances can include avascular tissue and ulcerations in the circumscribed area of the original radiation. The radiated wound may not manifest until 1020 years after the termination of radiation therapy. 2.4.2 Systemic Factors A number of systemic factors can influence the rate of wound healing. This section of the report considers the most important of these factors: age, nutrition, pharmacologic influences, diabetes and other diseases, and emotional stress. 2.4.2.1 Advanced Age The physiologic changes occurring with advanced age generally cause the elderly to heal more slowly than younger persons. Wound healing in the elderly occurs at a much slower pace and wound separation or dehiscence occurs up to three times more often in people over the age of 60. This slower rate of wound healing is attributable to the aging process itself, multiple medical conditions, frequent surgical procedures, inadequate hydration and poor nutritional status. The elderly experience decreased epidermal turnover for new skin replacement, increased skin fragility and decreased tissue tensile strength. In addition, the ©1997, Medtech Insight, LLC 2-30 #RP-181303 Chapter 2: Clinical Issues number of dermal blood vessels is diminished with advanced aged, making the elderly more susceptible to injury. Most of the elderly have at least one chronic condition and many have multiple conditions. The most frequent diseases or conditions for the elderly are: arthritis (48%); hypertension (38%); hearing impairment (29%); heart disease (28%); cataracts and orthopedic impairment (16% each); sinusitis (15%); diabetes (9%); and visual impairment and varicose veins (8% each). The elderly account for 33% of all hospital stays and 45% of all days of care in hospitals. With the baby boomer generation nearing age 65 and over, these statistics are expected to increase. By the year 2030, it is estimated that the over 65 population will represent 20% of the entire population (60 million senior citizens). 2.4.2.2 Nutritional Status A critical role in the wound healing process is attributed to nutrition. Malnutrition, often present in critically ill patients, can develop from a variety of factors and can lead to harmful effects, including poor wound healing. Malnutrition in patients with wounds can be caused by inadequate intake, absorption and or utilization difficulties with nutrients, particularly protein and calories, in relation to increased metabolic demands that may occur with concurrent disease states. Caregivers must be concerned with appropriate physical assessment and intervention related to nutrition to improve the patient’s wound healing process while minimizing the potential for related complications such as infection. Nutritional support in a patient with a wound includes adequate intake provided by a balance of carbohydrates, fat, protein, electrolytes, vitamins (especially Vitamin C) and trace elements (especially zinc). Specific nutrient needs in the critically ill or elderly patient with a wound are different from those in patients who are younger and less ill. Caloric energy needs are increased in these patients 2.4.2.3 Pharmacological Medications The inflammatory phase is inhibited by steroid therapy causing prolonged healing time. Topically applied vitamin A may counteract the effect of steroid therapy on wound healing; therefore, it may be a useful adjunct therapy for patients requiring steroid therapy during wound healing. Other drugs, such as anticoagulants, phenytoin, anti-neoplastic agents, ©1997, Medtech Insight, LLC 2-31 #RP-181303 Chapter 2: Clinical Issues penicillamine and nonsteroidal anti-inflammatory drugs delay or impair the wound healing process. 2.4.2.4 Diabetes and Other Diseases Diabetics suffer from impaired circulation and neuropathy, which can result in trauma and hypoxia of the skin. Insulin deficiency impairs leukocyte function, increasing the risk of infection and reduced cellular proliferation in both acute and chronic wounds. Therefore, diabetics have more difficulty resisting wound infections and heal more slowly than patients without diabetes. Diabetics have a five-fold greater risk of developing infection than nondiabetic persons. Patients with hemophilia, hepatic disease, thrombocytopenia and clotting factor deficiencies are predisposed to prolonged bleeding and delayed wound healing. Uremic patients have increased risk of infection, delayed granulation, faulty collagen deposition and increased wound dehiscence; therefore, patients in renal failure will have delayed or impaired wound healing. 2.4.2.5 Emotional Stress Although the exact mechanism is not fully understood, emotional stress is thought to slow wound healing. During times of increased negative stress, increased adrenaline is produced and released in the body, resulting in decreased rate of epidermal cell division and maturation. When sleep and relaxation are enhanced, there is a decreased production of adrenaline and increased rates of epidermal cell division and maturation. ©1997, Medtech Insight, LLC 2-32 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents 3. CLEANSING, DEBRIDEMENT AND GRANULATION AGENTS Prior to any invasive intervention, and as an adjunct to any therapeutic management of wounds and ulcers, the skin and wound must be cleansed. In addition, debridement of devitalized tissue, especially in traumatic injuries, must be completed before wound closure and healing can occur. Several different types of products are used to accomplish these goals, including cleansing, debridement, and granulation agents. Each of these products are discussed in the sections below. 3.1 Cleansing Agents Before most wounds can be permanently closed, the clinician must meticulously cleanse the wound or ulcer. However, open wounds have delicate wound beds and must be handled with care. A variety of appropriate methods and cleaning agents are available, and the clinician must take care in the choice of these agents, as the very act of cleaning the wound could cause harm. The caregiver must weigh the potential for traumatizing the wound bed by cleaning it against the benefits of a clean wound. In its December 1994 clinical practice guideline for treating pressure ulcers, the Agency for Health Care Policy and Research (AHCPR) tried to settle this issue, as recommendations are supplied in Exhibit 3-1. Soap and water cleansing is often used in conjunction with a saline solution irrigant. The combination of the detergent/surfactant and flushing mechanism provides adequate cleaning of non-infected wounds as well as skin cleansing. Wounds should be cleaned on first encounter and at each dressing change. Normal saline is generally the best cleaning solution, and the use of topical antiseptics such as iodine or povidone-iodine are discouraged. Irrigation of the wound is recommended to remove debris. When irrigating a wound, flushing with a bulb syringe delivers only two pounds per square inch (psi) of pressure, which is an insufficient amount of pressure for wound cleansing. Water-Piks, on the other hand, can introduce 50-70 psi, which traumatize wound beds. The ideal pressure for wound cleansing is 8 psi, which can be achieved with a 35 cc syringe and a 19-gauge needle (or 19-gauge angio-catheter) with the tip at one to two inches from the wound surface. Exhibit 3-2 illustrates various mechanisms used to irrigate wounds. ©1997, Medtech Insight, LLC 3-1 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-1: Recommendations for Wound Cleaning • Clean a wound initially and at each dressing change. If cleaning with gauze, cloth or sponges, use minimal mechanical force—traumatized wounds are more susceptible to infection and are slower to heal. Also, aggressive mechanical force can disrupt the growth of new granulation tissue. Coarse wound-cleaning materials can cause greater friction and trauma, so choose the least-coarse product available. • Normal saline is generally the best cleaning solution because it is physiologic, will not harm tissue, and will adequately clean most pressure ulcers. Do not use skin cleansers or antiseptic agents such as povidone-iodine, sodium hypochlorite solution, hydrogen peroxide, or acetic acid. These solutions are cytotoxic. However, consider a wound cleanser without these harmful chemicals if normal saline cannot adequately clean the wound. • Irrigate the wound with enough pressure to enhance wound cleaning without traumatizing the wound bed. This is generally between 4 and 15 pounds per square inch (psi). Pressures below 4 psi might not adequately clean the wound; pressures greater than 15 psi may cause trauma and drive bacteria into the tissue. Irrigation devices that deliver 8 psi of pressure are significantly more effective than a bulb syringe in removing bacteria and preventing infection. • Consider whirlpool treatments to clean a pressure ulcer (or wound) containing thick exudate, slough, or necrotic tissue. Be careful; the high-pressure water jets can traumatize the wound if they are too close to the wound. Discontinue the whirlpool when the wound is clean. Source: Quick Reference Guide for Clinicians, Clinical Practice Guideline, Pressure Ulcer Treatment, US Department of Health and Human Services, December 1994 ©1997, Medtech Insight, LLC 3-2 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-2: Evaluation of Irrigation Device Irrigation Impact Pressure Adequacy Device Not enough pressure Spray bottle 1.2 Bulb syringe 2.0 Piston irrigation syringe (60 ml) with catheter tip 4.2 Saline squeeze bottle (250 ml) with irrigation cap 4.5 Adequate pressure Water Pik at lowest setting 6.0 35 ml syringe with 10 gauge needle or angio-catheter 8.0 Too much pressure Water Pik at middle setting 42.0 Water Pik at highest setting >50.0 Note: Irrigation impact pressures are reported in pounds per square inch. Source: Beltran, K., Thacker, J. and Rodeheaver, G., “Impact Pressures Generated by Commercial Wound Irrigation Devices,” unpublished research report, Charlottesville, VA, University of Virginia Health Sciences Center, 1994 ©1997, Medtech Insight, LLC 3-3 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Mild cleansers consisting of liquid preparations of surfactants are also used to remove wound debris. These cleansers may also contain antiseptic (which inhibits bacterial growth) or antimicrobial (which destroy and suppress microorganisms) ingredients. 3.1.1 Common Cleansing Agents There are three categories of cleaning agents: soap and water, mild skin cleansers, and topical antiseptic and antibiotic agents. Antiseptics include products such as povidone-iodine, hydrogen peroxide, Dakin's solution (sodium hypochlorite), acetic acid, and boric acid. Povidone-iodine is a broad-spectrum drug, with microbiocidal action on gram-positive, gram-negative, yeast, virus, and protozoa bacteria. However, full-strength povidone-iodine has a deleterious effect on wounds and healing tissues. In addition, high concentrations of acetic acid, hydrogen peroxide and Dakin's solution are 100% cytotoxic to fibroblasts: these solutions interact with the cell membrane causing cellular death. While indiscriminate use of antiseptics on wounds can delay wound healing, topical antibiotics appear to better prevent bacterial contamination. Antibiotics should be applied to wounds only after cleansing with an irrigant used for specific treatment regimens and only for a short period of time. Antibiotics are biologically derived products that inhibit microbial function, and full-strength use of bacitracin, neomycin, and kanamycin are not cytotoxic to human fibroblasts. Neomycin absorption from deep wounds, however, may lead to cytotoxicity and nephrotoxicity: this antibiotic should be used in superficial wounds only. Fladyl (metronidazole), a bactericidal agent, is used for anaerobic infections. 3.1.2 Drug-Resistant Bacteria and the Effects of Wound Cleaners With the increasing threat of drug-resistant bacteria, many clinicians are concerned with the possibility of the development of pathogens resistant to all available drugs in the near future. For instance, the incidence of vancomycin-resistant enterococci (VRE) infections have grown dramatically in hospitals over the last several years, and treatment options are often limited to experimental antimicrobial compounds because many strains of VRE are also resistant to penicillin and other antibiotics. In response to this growing problem, wound care experts are adhering to stringent infection control measures and exercising judicious use of antibiotics. These clinicians are returning to a regime that stresses the basics, such as hand washing, restrained use of antibiotics, proper cleansing and debridement of wounds, and the use of gloves and gowns. ©1997, Medtech Insight, LLC 3-4 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Of primary concern with wound care professionals are VRE and methicillin-resistant Staphylococcus aureus (MRSA). These bacteria can be found on equipment and other surfaces, and can be spread from the unwashed hands of healthcare workers to the patients in their care. S. aureus, the most common cause of postoperative wound and skin infections, was treated with antibiotics until the 1980s when strains resistant to methicillin and other antibiotics began to appear. Today, MRSA can be treated successfully with vancomycin; however, scientists are predicting that a resistance to vancomycin may be imminent. Epidemiologists theorize that VRE may transfer its vancomycin resistance genetically to S. aureus, creating vancomycin-resistant Staphylococcus aureus (VRSA). 3.1.3 Competitors and Products ConvaTec’s SAF-Clens is a dual surface surfactant system for cleansing wounds with moderate- to high-foaming capabilities, while Bard’s Biolex provides an acidic pH and a moist environment to promote wound healing. Carrington Laboratories has several types of wound cleansers for use on intact skin and for cleansing stage I-IV ulcers. The first product, Carra-Klenz, has aloe for removing necrotic tissue, while their second product, Ultra-Klenz, is a gentle cleanser with physiological pH and osmolality. Carrington also has a antimicrobial cleanser called MicroKlenz which is used for infected wounds. In addition, the company has products for treating radiation dermatitis: RadiaCare Klenz and RadiaCare Oral Wound Cleanser. The latter product is a freeze-dried powder with aloe vera gel extract and acemannan hydrogel which relieves pain in the mouth by adhering to tissue and protecting against further irritation. These competitors and other manufacturers in the wound care cleanser market (excluding antibiotics and antiseptics) are presented in Exhibit 3-3. 3.1.4 Market Analysis Wound cleansers are likely to experience significant growth over the next several years due to more advanced products being introduced to the market. As the cytotoxicity of traditional cleansers becomes more evident and the restrained use of antiseptics is encouraged, the market for specialized cleansers will increase, fueling overall wound cleanser growth. In addition, as the use of hydrogels and hydrocolloids increase, specialized wound cleansers may be required for their removal, thus boosting demand for these wound cleansers. Managed care, however, will take a critical look at pricing and efficacy. Providers in this environment may begin to substitute cheaper, self-made saline products instead of using the ready-made, more costly cleansers. Exhibit 3-4 presents the forecast for the wound cleanser ©1997, Medtech Insight, LLC 3-5 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-3: Selected Manufacturers of Wound Cleansers Company Product Bard Biolex Carrington Laboratories CarraKlenz, Ultra-Klenz, RadiaCare Klenz, and DiaB Klenz Coloplast Sea Clens ConvaTec SAF-Clens; Shure-Clens DermaRx DermaMend Derma Sciences Dermagran Gentell Gentell Wound Cleanser Healthpoint Curasol Kendall Curaklense MPM MPM Wound & Skin Cleanser Sherwood/Davis & Geck Constant-Clens Dermal Wound Cleanser Swiss America Elta Dermal Note: Exhibit excludes antiseptics and antibiotics. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 3-6 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-4: U.S. Wound Cleanser Market Forecast, 1996-2002 Year Sales Growth 1996 $16.4M — 1997 18.5 12.8% 1998 21.2 14.6 1999 24.6 16.0 2000 28.1 14.2 2001 31.5 12.1 2002 35.0 11.1 CAGR 1997-2002 13.6% Note: Exhibit excludes antiseptics and antibiotics. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 3-7 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents market from 1996 to 2002. This forecast assumes an increased prevalence in MRSAs and possibly VRSAs, thereby increasing the need to reduce bacteria colonization by using wound cleansers. In 1996, approximately 61% of wound cleansers were used in the hospital environment, while 39% were applied in non-hospital sites. In the non-hospital sites, 39% of cleansers were used in subacute and long-term care facilities, 31% were administered in the home and 30% were applied in physicians’ offices and ambulatory clinics. By the year 2002, the nonhospital mix is expected to grow to 42%, while the hospital segment will decrease to 58%. Within the non-hospital mix in 2002, 27% will be used in subacute and long-term facilities, 36% will be applied in physicians’ offices and ambulatory clinics and 37% will be administered in the home environment. 3.1.5 Competitive Analysis Most of the competitors in this arena have products in other segments of the wound care market; for example, ConvaTec competes in the dressing market as well. The largest competitors in this market include ConvaTec with 31% of the market and Carrington Laboratories with 19% of the market. Due to Carrington’s expansion of its product line in 1996, this company is expected to increase in market share over the next year. Specific products that will help boost Carrington’s market share include RadiaCare Klenz and the DiaB Klenz. The company estimates that DiaB Klenz will target a market of 1.2 million diabetics who suffer with lower extremity skin ulcers. As shown in Exhibit 3-5, other competitors in the market include Bard, Sherwood-Davis & Geck and Coloplast. 3.2 Debridement and Granulation Agents Traumatic injuries are frequently associated with dirt and foreign debris in a wound bed, and chronic wounds are likely to have necrotic tissue in the wound. There are various methods for debridement, but all can be classified as either mechanical, autolytic or chemical/ enzymatic. 3.2.1 Mechanical Debridement Mechanical debridement can be achieved using surgical instruments, lasers, moist-to-dry dressings, maggot therapy, vigorous irrigation of wound beds or hydrotherapy. Moist-to-dry dressings, the most common method, use sterile gauze which is dampened with normal saline and placed in the wound. As the gauze dries, the necrotic tissue sticks to the gauze. When the gauze is removed, usually eight hours later, the necrotic tissue is removed with the gauze. ©1997, Medtech Insight, LLC 3-8 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-5: 1996 Wound Cleanser Market, Share by Supplier Supplier ConvaTec Carrington Laboratories Sales Market Share $5.1M 3.1 31% 19 Bard Sherwood/Davis & Geck 1.6 10 0.8 5 Coloplast 0.8 5 Other* 5.0 30 Total $16.4M 100% *Other includes DermaRx, Derma Sciences, Gentell, Healthpoint, Kendall, MPM and Swiss America. Note: Exhibit excludes antiseptics and antibiotics. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 3-9 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Mechanical debridement is usually used when necrotic tissue must be removed faster than autolytic or chemical debridement. Moist-to-dry debridement can be painful, and it can also remove both nonviable and viable tissues. Maggot therapy is used by some clinicians for debriding necrotic wounds because it is usually painless and is selective for necrotic tissue. The larvae of blowflies is put into the wound, and usually within one week, the larvae have cleared the wound of necrotic tissue. In addition to eating necrotic tissue, the maggots secrete antibacterial enzymes and stimulate the growth of granulation tissue through their movement. The disadvantage of hydrotherapy or irrigation of wound beds is that they debride nonselectively and may injure or remove new epithelial tissue along with the necrotic tissue. In addition, some experts believe that hydrotherapy drives organisms deeper into tissues. Therefore, hydrotherapy and irrigation are contraindicated in hard eschar wounds and should be discontinued once granulation tissue is apparent. There are various types of devices used for mechanical debridement with irrigation solutions. Ackrad Laboratories manufacturers the Irriject DS Wound Irrigation System. This device provides mechanical debridement by using a syringe device with tubing, replaceable tips and splash guard for the irrigation solution. Stryker Instruments offers the SurgiLav Plus Hydro Debridement System which provides a variety of tips, all under 15 psi, and splash shields in different sizes. Sharp debridement or surgical debridement is the most effective method to remove grossly necrotic tissue. The wound is removed in layers until viable, bleeding tissue is obtained. Surgical debridement (forceps/scissors or tangential excision) is a relatively long surgical procedure, necessitating general anesthesia for the intense pain involved and results in considerable blood loss. Often a patient is hemodynamically weak and unable to immediately undergo such surgical debridement. 3.2.2 Autolytic Debridement Autolytic debridement is performed with semi-occlusive and occlusive dressings, usually hydrocolloids, hydrogels and transparent films. These dressings provide the medium for the body's own wound exudate enzymes to liquefy necrotic tissue. They also provide a painless debridement for degradation of thin eschar. Autolytic debridement does not damage the surrounding skin, but may stimulate anaerobic growth when hydrocolloids are used. ©1997, Medtech Insight, LLC 3-10 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents This type of debridement process uses the patient’s own phagocytic cells and proteinase enzymes in the wound tissue. The autolytic process requires moisture so that phagocytic cells can move freely and to promote the digesting function of the proteinases. Flushing of large wounds on a periodic basis is also required to eliminate the inhibitory by-products of the phagocytic cells and proteinases. Autolytic debridement is a slow process and is used where there is minimal necrotic tissue and a low risk of infection. Horizon Medical offers Stericare glycerin hydrogel which is formulated for partial- and fullthickness ulcers, first- and second-degree burns and venous leg ulcers. In December 1996, the FDA approved Derma Sciences’ Dermagran Hydrophilic Wound Dressing for marketing a new indication, as a debriding product. Prior to the approval, the dressing was used to accelerate the healing process after surgical incisions, skin ulcerations, stage I-IV pressure ulcers, minor lacerations, diabetic ulcers, partial-thickness burns and hypothermia burns. Other autolytic dressing are discussed in the wound dressing chapter in this report. 3.2.3 Enzymatic/Chemical Debridement Chemical or enzymatic debridement is achieved through non-prescriptive chemical agents or topical prescriptive enzymes. Chemical agents are used to absorb exudate, maintain a moist wound environment, prevent eschar formation and promote epithelialization. These types of agents are used primarily in exudating or secreting wounds. Enzymatic agents attack denatured collagen and liquefy necrotic tissue and usually take effect in 3-30 days. Enzymatic debridement can be problematic because the agents are slow acting, can cause pain, and are not tissue-specific for necrotic tissue. These agents must be discontinued as soon as debridement is achieved, so as not to damage newly formed granulation tissue. Enzymatic debriding agents are generally supplied in ointment or powder form. Most common is the ointment form applied 1-3 times per day for a period of 3 to 15 days. Examples of enzymatic debridement agents include papain, which is a proteolytic agent, and fibrinolysin-deoxyribonuclease, which dissolves fibrin clots and hydrolyses proteinaceous exudate. Collagenase and streptokinase-streptodornase digest collagen and denatured protein. 3.2.3.1 Competitors and Products Granulex (Dow Hickam) is a vasodilating, lubricating spray applied to wound beds to enhance tissue granulation. This topical spray also contains trypsin, which results in a mild ©1997, Medtech Insight, LLC 3-11 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents debriding action. Granulex is a prescription drug and is marketed as a wound stimulant, not specifically as a debridement agent. The product is unable to debride thick eschar or hard necrotic tissue; however, it stimulates the blood supply and maintains a moist environment for optimum healing. Some companies in this market, however, consider Granulex a debriding agent. Dow Hickam also markets Proderm, which has many of the therapeutic properties of Granulex, but this product is an over-the-counter aerosol. Parke-Davis (Warner Lambert) manufacturers Elase ointment and Elase-Chloromycetin ointment; both of these products are marketed by Fujisawa USA. Elase contains fibrinolysin which debrides the fibrin of blood clots and fibrinous exudates, while the deoxyribonuclease digests DNA. Healthpoint Medical manufactures a papain-urea debriding ointment called Accuzyme. Papain is a proteolytic enzyme which debrides over a wide pH range of 3 to 12, but it becomes inactive in the presence of heavy metal salts, such as lead, silver and mercury. Contact with these substances, therefore, needs to be avoided. In addition to papain, Accuzyme contains urea which is a protein solvent that helps in the debriding action by exposing protein substrates to complete proteolysis. The product also contains purified water, emulsifying wax, glycerin, isopropyl palmitate, potassium phosphate monobasic, methylparaben and propylparaben. Pharmacia Upjohn manufacturers Debrisan for Johnson & Johnson which has licensed the marketing rights. Debrisan is offered as beads or paste, and is used on necrotic tissue, infected surgical incisions and infected foot ulcers. This product debrides the wound by absorbing bacteria and exudate. Knoll Pharmaceutical offers Collagenase Santyl, which is the only enzymatic debridement agent that specifically attacks collagen. This product is mentioned in the AHCPR Clinical Practice Guideline for the Treatment of Pressure Ulcers and is usually applied once per day. Introduced by Rystan in 1956, Panafil consists of papain, urea and chlorophyllin-copper complex . The latter ingredient promotes healing and deodorizes the wound. The company also makes Panafil White which does not contain chlorophyllin copper complex. Exhibit 3-6 summarizes the chemical/enzymatic debridement manufacturers and product brand names. ©1997, Medtech Insight, LLC 3-12 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-6: Chemical/Enzymatic Debridement Agents Company Product Brand Name Chemical/Enzymatic Ingredient Dow Hickam Granulex Trypsin Fujisawa USA/Parke Davis Elase Fibrinolysin/deoxyribonuclease Healthpoint Accuzyme Papain/urea Johnson & Johnson/Pharmacia Upjohn Debrisan Dextranomer hydrophilic beads Knoll Pharmaceuticals Santyl Collagenase Rystan Panafil Papain/urea/chlorophyll Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 3-13 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents 3.2.3.2 Enzymatic/Chemical Debridement Development Status Genzyme Corporation has been developing Vianain, an enzymatic debridement agent. Vianain consists of two proprietary enzymes, ananain and comosain, derived from two pineapple stem proteases and formulated into a hydrophilic cream. Vianain rapidly removes non-viable tissue from burn sites, minimizes blood loss and reduces the number or duration of surgical debridement procedures. The hydrophilic-based product promotes hydration of the burn eschar, provides efficient enzyme delivery and facilitates post-treatment cleansing. Genzyme received an orphan drug designation for Vianain, and licensed the product to Neozyme Corporation prior to Genzyme’s acquisition of Neozyme in late 1996. Genzyme does not plan to commercialize the product, and is exploring licensing the product. 3.2.3.3 Market Analysis With greater frequency, acute care hospitals are using autolytic debridement with semiocclusive and occlusive dressings for noninfected wounds, or these institutions use faster surgical debridement because they are pressured to decrease patient length of stay. Nursing homes and home healthcare, however, continue to use enzymatic debridement because of the lower cost of these products. In 1996, approximately 33% of the $74.2 million chemical/enzymatic debridement market’s products were used by hospitals, while alternate care facilities used products in the remaining 67% of the market. Subacute and long-term care facilities, including nursing homes and hospices, composed 60% of the non-hospital market; physicians’ offices and ambulatory clinics were 15% of the non-hospital market; and home healthcare was 25% of the market. The enzymatic/chemical debridement market is forecasted to grow at an average annual growth rate of 3.6% to $91 million in 2002. The market is being driven primarily by an increase in the elderly population, especially those in nursing homes and in home healthcare, whose increased acuity and need to debride wounds increase the overall debridement agent volume. In addition, an increase in the prevalence of diabetes, along with diabetes ulcers, is helping to boost this market. In the hospital enzymatic debridement market, some manufacturers are marketing their enzymatic debridement agents as an adjunct to surgical debridement. After surgical debridement is performed, the enzymatic debridement agent can be used to clean out non-viable tissue that was missed during surgery and aid in the healing process. While discount pricing will continue to be a limiter in this market, a more important trend will be the influence of managed care. In this environment, providers are quickly determining ©1997, Medtech Insight, LLC 3-14 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents which products only require application once per day. Nursing homes must reduce the time allocated for skilled care, while home health agencies will adopt care paths that will focus on the ability of a home caregiver to reduce the number of skilled visits. Capitation will drive the re-engineering of traditional home health as well as in other sites. Of the total market in 2002, approximately 27% of debridement agents will be sold to the hospital market, while 73% will compose the non-hospital market. Within the non-hospital market, approximately 46% of products will be sold to subacute and long-term care facilities, 21% will be marketed to physicians’ offices and ambulatory clinics and 33% will be bought by home health care. Exhibit 3-7 provides a forecast to the year 2002 for this market. 3.2.3.4 Competitive Analysis Knoll Pharmaceutical is the market leader with 38% of the market in 1996. This leadership position is due in part to the inclusion of the company’s product, Santyl, in the guidelines published by the Agency for Health Care Policy and Research. In addition, other national wound care organizations have been positive in their support of this product’s debriding agent, collagenase, in certain applications. This product is usually only applied every 24 hours, which has also helped boost its market share. Parke-Davis/Fujisawa is in the second-place position with 27% of the market; however, their market share is likely to be eroded due clinicians needing to use this product every 6 hours instead of every 24 hours. Dow Hickam’s third-place position with 21% of the market is due in part to their traditional strong presence in home healthcare and nursing homes. In particular, nursing homes remain loyal to Dow Hickam due to this company’s continued support through the years. Healthpoint has been aggressively marketing their new enzymatic debridement agent, Accuzyme, which contains papain and urea. In addition, clinicians who were interviewed as part of this report consider this company’s quality control and clinical study results to be exceptional. Healthpoint is likely to gain market share because of its efforts, but there is also an interest in papain with clinicians due to its “natural” focus. Rystan, which has a papain/urea/chlorophyll product called Panafil, has benefited from the recent interest in papain compounds. Traditionally a small competitor, Rystan hopes that more clinicians will return to using their papain debridement agent which has been on the market since 1956. Exhibit 3-8 provides a breakdown of the market by suplier. ©1997, Medtech Insight, LLC 3-15 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-7: U.S. Chemical/Enzymatic Debridement Market Forecast, 1996-2002 Year Sales Growth 1996 $74.2 — 1997 76.4 3.0% 1998 79.0 3.4 1999 81.9 3.7 2000 85.1 3.9 2001 88.1 3.5 2002 91.0 3.3 CAGR 1997-2002 3.6% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 3-16 #RP-181303 Chapter 3: Cleansing, Debridement and Granulation Agents Exhibit 3-8: 1996 Chemical/Enzymatic Debridement Market, Share by Supplier Supplier Knoll Pharmaceuticals Sales Market Share $28.4M 38% Fujisawa USA/Parke Davis 20.2 27 Dow Hickam 15.8 21 Other* 9.8 14% Total $74.2M 100% *Other includes Healthpoint, Johnson & Johnson/Pharmacia Upjohn and Rystan Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 3-17 #RP-181303 Chapter 4: Wound Closure Devices 4. WOUND CLOSURE DEVICES The primary goal for any wound closure device is to bring the edges of the wound together within the shortest period of time, and without further tissue traumatization. Wounds may close by either primary intention, delayed primary intention, or by secondary intention. Primary intention wounds are sutured immediately, and are not knowingly infected. Delayed primary intention wounds are those that are contaminated or are at risk of becoming infected. Closure of these wounds is delayed to allow for frequent dressing changes, for drainage of exudate, and to observe and culture the wound bed prior to permanent closure. These wounds are usually treated by antibiotics, locally and systematically. Secondary intention wounds are purposefully left open allowing the cavity to fill with granulation tissue, then to contract, and eventually to epithelialize. Wound closure devices have undergone remarkable advances in the past 10 years. This market segment was once completely dominated by sutures, but now includes a variety products, including tissue glues. Most of these products are applied in the operating room, with secondary use in delivery sites such as the emergency room and physician offices. 4.1 Needled and Non-Needled Sutures Sutures represent one of the oldest medical products in the world. Sutures are still used in abundance; however, they are considered a commodity item which are being replaced by advanced technologies. Needled and non-needled suture products can be categorized by the various materials used as the “thread” and by the inherent characteristics of those threads: absorbable versus nonabsorbable, coated versus non-coated, amount of tissue drag, tensile strength, and tying ability. Most sutures have needles swedged on, that is, attached to the suture by the manufacturer. Absorbable sutures include synthetic and non-synthetic suture material. Synthetic biodegradable polymers have replaced traditional absorbable catgut suture. Synthetic absorbable sutures are now replacing nonabsorbable sutures for many surgical applications because of their increased tensile strength over an extended period of time and because of their improved knotting features. 1997, Medtech Insight, LLC 4-1 #RP-181303 Chapter 4: Wound Closure Devices Surgical specialties, such as ophthalmology and cardiovascular, plastic and reconstructive surgery, demand modified needles to meet the specific surgical goals of the discipline. Many of these needs focus on needles that are strong enough to penetrate tissue without bending/breaking, and with diameters small enough to reduce tissue damage. An ideal needle requires low penetration force to pierce the intended tissues and maintains its sharpness without dulling during multiple passes. The needle should bend without breaking and not damage the tissue as it passes through. In addition, the needle diameter should closely approximate the diameter of the suture material. Many patient care departments are demanding needles with blunted taper-points to reduce the risk of accidental needle stick. The development of laser drilling and induction annealing has allowed metallurgists to provide a much stronger needle. These blunt needles slide through tissue adequately, and when using 300-series stainless steel, replace the older carbon steel materials. 4.1.1 Competitors and Products Sherwood-Davis & Geck and Ethicon are the major players in the suture market; together these companies monopolize over 80% of the market. The largest competitor in the suture market is Ethicon with over 2,000 different types of sutures. The company’s product line consists of three suture groups: absorbable sutures, non-absorbable sutures and specialty sutures. The absorbable suture group includes plain and chromic surgical gut as well as sutures made from polyglactin (Vicryl Rapide and coated Vicryl), poliglecaprone (Monocryl) and polydioxanone (PDS II). Non-absorbable sutures are also made from a variety of materials, including polypropylene (Prolene), polyester (Ethibond), nylon (Ethilon and Nurolon), silk (Perma-Hand) and stainless steel. Specialty sutures include products for a variety of applications, such as endosutures and sutures for cardiovascular surgery. U.S. Surgical has increased its sales over the last several years through offering technologically advanced products. One of these products, the Endo Stitch, allows the surgeon to suture laparoscopically by using the company’s proprietary needle and suture material between a jaw at the end of the endoscopic shaft. Endo Stitch can also be used in open procedures for difficult surgical locations. U.S. Surgical also introduced the Biosyn suture in 1995, which is a synthetic, absorbable suture. This suture combines the benefits of both monofilament and braided sutures, namely, ease of handling and knot holding capability. 1997, Medtech Insight, LLC 4-2 #RP-181303 Chapter 4: Wound Closure Devices Deknatel Snowden Pencer, a smaller competitor in the suture industry, was acquired by Genzyme in June 1996 for approximately $250 million in cash. The acquisition of Deknatel will help Genzyme create a platform for building a specialty surgery business, increasing Genzyme’s annual revenues by $50 million. Deknatel’s surgical sutures are the oldest products in its product line. The company developed the Tevdek suture in 1950, followed by the first coated Dacron-based suture and Silky Polydek, a softer suture which facilitated tying. Deknatel specializes in sutures for cardiovascular and plastic surgeries. 4.1.2 Development Status Lukens Medical received FDA approval in February 1997 to market its synthetic absorbable suture material. The suture, called PGA, is made of polyglycolic acid and features a patented coating technology to enhance performance. The suture is for use in most surgical procedures, and is heavily used in gynecology, orthopedics and general surgery. Lukens projected the worldwide market for synthetic absorbable sutures to exceed one-half billion annually. Perclose develops and markets suture-based percutaneous vascular surgery systems targeted at the 6.9 million diagnostic and therapeutic catheterization procedures performed each year worldwide. These systems are used to close arterial access sites following therapeutic catheterization procedures, including angioplasty and stenting. The company’s proprietary Prostar, Prostar Plus, Techstar and Techstar XL systems offer less invasive, cost-effective treatment alternatives, providing the patient with significant clinical benefits including rapid hemostasis, earlier ambulation and improved patient comfort. The Prostar Plus 9F and 11F systems are marketed in the United States, and the Prostar Plus 8F and 10F, the Techstar 6F and 7F and Techstar 6F XL systems are marketed internationally. Perclose is planning to introduce the Techstar products at the end of 1997, pending FDA approval. The Sure-Closure system was developed by Life Medical Sciences, Inc. and introduced in the United States in late 1996. After debridement of the wound, two intradermal needle devices are inserted, parallel to each other. The Sure-Closure system is then carefully positioned so that its recurved hooks are centered on the subcuticular tension bars. The edges of the wound are then approximated by repeated tightening of the system, and the edges of the wound are closed with sutures once the system is removed. 1997, Medtech Insight, LLC 4-3 #RP-181303 Chapter 4: Wound Closure Devices 4.1.3 Market Analysis Sutures are another mature market, even though the major manufacturers continue to produce new and different products as line extensions every year. Significant product developments may evolve from research on growth factors because these factors may provide added value to sutures, in both effectiveness and safety. Incorporation of growth factors in suture material may promote even faster wound repair and healing and certainly could greatly reduce the incidence of scars. There is ongoing debate regarding the benefits of suturing versus stapling. Some surgeons prefer suturing over stapling for finer, delicate tissue, and to provide better closure for various tissue planes and surfaces. Laparoscopic surgery favors stapling and clip devices because of the difficulty surgeons have with suturing in a two-dimensional environment. In addition, there are also newer endoscopic staplers and automatic ligating clip appliers which facilitate surgeries using minimally invasive techniques. Although staplers continue to be a substitute for sutures, the U.S. suture market was valued at $668 million in 1996 and is projected to grow at a 1.3% average annual growth rate through the close of the decade. This modest growth is partially due to the substitution of other types of wound closure devices, including staplers and adhesives, and also due to the rise of procedures performed through minimally invasive techniques, which use less suture material to close the wound. In addition, managed care will have its usual price erosion impact, causing intense price competition in this commodity market. As shown in Exhibit 4-1, the total U.S. suture market is projected to reach $731 million in 2002. Although the surgical department will continue to be the primary end user, the product mix of will change toward alternate site users, with the largest growth occurring in physicians’ offices. While overall growth in the suture market will remain low, suture products will still remain one of the largest segments in the wound closure market. 4.1.4 Competitive Analysis Within the suture market, there is intense competition with many individual hospitals or alliances preferring to buy their wound closure products from a single vendor. Ethicon (a Johnson & Johnson company) and Sherwood-Davis & Geck have a variety of wound closure products which enables them to compete effectively within the entire wound closure market. Ethicon and Sherwood- Davis & Geck offer sutures, staplers and clip appliers, and Ethicon 1997, Medtech Insight, LLC 4-4 #RP-181303 Chapter 4: Wound Closure Devices Exhibit 4-1: U.S. Suture Market Forecast, 1996-2002 Year Sales Growth 1996 $668M — 1997 685 2.5% 1998 698 1.9 1999 708 1.4 2000 717 1.2 2001 724 1.0 2002 731 0.9 CAGR 1997-2002 1.3% Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 4-5 #RP-181303 Chapter 4: Wound Closure Devices dominates the suture segment with a 71% market share. Sherwood-Davis &Geck competes in the second place position with 12% of the market. U.S. Surgical, with 8% of the market, has made inroads in the last several years due to marketing agreements with large providers. For example, in mid 1997, U.S. Surgical established supply agreements with AmeriNet as well as Health Services Corporation of America. The company also hopes that its marketing efforts and competitive pricing will enable it to gain market share at the expense of the larger players. The rest of the market, with a 9% share, consists of numerous small players. Some of these companies are broadening their product lines in an attempt to gain market share. For example, Lukens Medical now offers a complete line of sutures, including its new, absorbable polyglycolic acid suture. Exhibit 4-2 presents the competitors and their market shares in the suture market. 4.2 Tissue Glues Surgical sealants or fibrin glues are biologic sealants used during surgeries to aid clot formation. These tissue adhesives form a temporary wound closure, and they assist in neovascularization and fibroblast proliferation. These adhesives are made from blood proteins which cause clotting and scabbing. Fibrin glues can be made from autologous or multiple-donor sources. The glues are created by combining two blood-clotting factors: fibrinogen and thrombin. Included in the fibrinogen is Factor XIII which initiates clotting when combined with the thrombin at the time of surgery. The fibrin glue is delivered to the wound by using a doublebarrel syringe which allows mixing of the two components at the tip before being applied to the site by a blunt-tipped cannula or spray. Once combined, the sealant assumes a viscous consistency, readily adheres to the wound site, and sets up a fibrin network to control hemostasis or augment the strength of the incision. The major indications for surgical glues and sealants include hemostasis, adhesion, sealing, and reinforcement. Scientists first tried to create biological glue in the 1940s, but it was 1974 before an Austrian doctor separated the useful proteins from blood, freeze dried them, and mixed then into an adhesive. Fibrin glues and surgical sealants have long been stymied in the U.S. by the FDA's uncertainty regarding the regulation of fibrin-based products. The agency has been particularly sensitive to approving fibrin sealants based on the concerns of disease 1997, Medtech Insight, LLC 4-6 #RP-181303 Chapter 4: Wound Closure Devices Exhibit 4-2: 1996 Suture Market, Share by Supplier Supplier Sales Market Share Ethicon $475M 71% Sherwood-Davis & Geck 76 12 U. S. Surgical 55 8 $62 9 $668M 100% Others* Total *Others includes Alcon, Anchor Products Company, Cottrell, Deknatel (Genzyme), Lukens Medical, S. Jackson, Surgical Specialties, W.L. Gore, among numerous others. Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 4-7 #RP-181303 Chapter 4: Wound Closure Devices transmission, consistency of product formulation, and the lack of defined clinical end-points to assess clinical efficacy. Fibrin glues were commercially available in the U.S., but were withdrawn in 1978, due to the possibility of viral infectivity, although they continued to be used in the European market. The European manufacturers, Behringwerke and Immuno International, addressed these concerns by developing viral inactivation processes, which were achieved by subjecting the fibrin glue products to heat. Introduction of these European-derived fibrin glue preparations in the U.S. was again precluded by the FDA, in part due to the inclusion of aprotinin (a bovine-derived product) in the sealant formulation to reduce fibrinolytic degradation of the sealant after application. The FDA required data showing that the addition of this agent significantly increased clinical efficacy was needed before the licensing to market could be obtained. Faced with these challenges, manufacturers were unwilling to undergo the long and arduous approval process. With more research and development dollars being spent on fibrin sealants, the FDA seems ready to proceed with regulatory approval. Although the FDA appears to be satisfied with the viral safety of fibrin glue products, regulations continue to evolve regarding product efficacy, making time frames for product approvals uncertain and difficult to predict. The FDA has established different criteria for evaluating homologous- versus autologous-sourced products. For homologous products, the FDA is evaluating performance issues such as tensile strength and time to hemostasis as clinical endpoints. In the case of autologous-derived products, the FDA is examining process controls to ensure reliability and consistency of the product formulation. Another obstacle set forth by the FDA is the requirement that companies justify the addition of exogenous materials, such as Factor XIII, into their fibrin preparations. Most companies are performing clinical studies designed to show the clinical benefit of their sealant or glue. This has not worked in Baxter’s favor; the FDA has turned down the company’s application for the use of Sealagen for controlling bleeding from donor sites in burn patients. Commercial glues have been used extensively in Europe since the 1970s with beneficial results. Wound adhesives have also been marketed in Canada, the Middle East, South America, and Japan. In these countries, surgical sealants appear to have no tissue toxicity, are readily absorbed, and assist in wound healing and repair. In addition, wound infection is minimized because there is no suture or staple on the skin. 1997, Medtech Insight, LLC 4-8 #RP-181303 Chapter 4: Wound Closure Devices Outside the United States, more than 30 companies compete in a market estimated at about $250-$280 million. Approximately 60% of the market consists of Asian/Pacific countries, while 30% and 10% of the market is European countries and the rest of the world, respectively. The worldwide leader is Centeon, which has offered a fibrin sealant, Beriplast, since 1983. This product is used for hemostasis, tissue adhesion, suture support, sealing of body cavities, and controlling leakage to cerebral spinal fluid. Other companies with glues or sealants include 3M, Cryolife, Immuno International, Research Medical, Johnson & Johnson, and U.S. Surgical. Manufacturers are marketing or investigating several different types of sealants or glues, including pooled plasma-derived sealants, autologous processed sealants, collagen-based composite sealants, cyanoacrylate-based sealants, polymer-based sealants, recombinant sealants, and genetically engineered sealants. Each of these different types of glues are discussed in the following sections. 4.2.1 Pooled Plasma-Derived Sealants From the FDA’s standpoint, homologous adhesives may be easier to regulate than other types of adhesives because the extensive manufacturing process can be evaluated using standard investigational protocols. Due to research that ensures the viral safety of homologous glues, the FDA finally appears to be ready to give clearance by end of the decade. The FDA’s main concern appears to be the efficacy of tissue glues for a given indication, specifically, whether the glue is used for hemostasis or for sealing a duct or air leak in the lung. In a joint effort, Baxter and the American Red Cross (ARC) have completed studies on their fibrinogen-based hemostatic agent. Examples include using the adhesive for dental extraction in hemophilia patients, total joint replacement, circumcision, and as a topical hemostat in infants undergoing extracorporeal membrane oxygenation. A biosafety study was also completed on patients having skin excision and in patients with second-degree burns who needed grafting. In this study, there was no evidence of viral antibodies to hepatitis or HIV from the fibrin sealants. Baxter and the ARC will market the sealants under different names: Baxter’s adhesive will be called Sealagen and the ARC’s product will be known as Fibriseal. U.S. Surgical has entered into a worldwide distribution agreement with Vitex for this company’s doubly virally inactivated fibrin sealant, ViGuard. Vitex, formerly Melville Biologics, Inc., was created in 1995 as a spin-off from the New York Blood Center. Vitex will receive financial payments from U.S. Surgical for clinical trials and regulatory costs 1997, Medtech Insight, LLC 4-9 #RP-181303 Chapter 4: Wound Closure Devices while maintaining manufacturing rights. U.S. Surgical also gained rights to product improvements and an option on other wound-healing products in development by Vitex. To eliminate the risk of virus transmission in ViGuard’s human fibrinogen and thrombin, two complementary viral inactivation procedures are performed. The two-stage procedure treats each component with a solvent detergent developed by Vitex which inactivates lipidenveloped viruses such as HIV and hepatitis B and C. The components are then subjected to short wavelength ultraviolet light which eliminates both enveloped and non-enveloped viruses such as hepatitis A and parvovirus. Vitex has also licensed this two-stage inactivation procedure to other fibrin glue suppliers. Vitex has completed Phase II trials of ViGuard for wound closure after mastectomy or lumpectomy and has received investigational new drug (IND) approval which covers the product at five clinical sites in the United States. Vitex hopes to submit a product licensing agreement to the FDA at the end of 1997. Cryolife is developing two surgical bioadhesives, FibRx and BioGlue. FibRx is a fibrinogen and thrombin adhesive and indicated for patients undergoing skin grafting for second-degree and third-degree burns. Unlike other fibrin adhesives, this product is frozen, and after being thawed, are delivered in a single lumen syringe or spray. BioGlue is a plasma protein-based bioadhesive which has ten times the adhesive power of FibRx. This product is being developed to replace suturing or stapling in some surgical procedures and is under evaluation for artery attachment and gluing bone fragments. Haemacure has three U.S. patents for the manufacturing of its Hemaseel technology, which is a human-based, liquid fibrin sealant with hemostatic and adhesive properties. The product is absorbable and contains fibrinogen and thrombin which has been isolated from human plasma by the company’s patented processes. Haemacure is also developing a solid fibrin sealant, Hemaseel Dressing. This product is also absorbable and has been designed to arrest bleeding in emergency and surgical situations. 4.2.2 Autologous-Processed Sealants Several companies are developing techniques for using the patients’ blood on a individual basis to make an autologous sealant at the time of surgery. Biosurgical is one company that is developing a system for processing autologous fibrin sealants, while ConvaTec has developed Vivostat which is an automated, computerized system for centrifuging and 1997, Medtech Insight, LLC 4-10 #RP-181303 Chapter 4: Wound Closure Devices processing the sample of the patient’s blood. The unit centrifuges the blood for 25 minutes, separates the plasma, and the resultant sealant is dispensed into a vial for spraying onto the wound site. Thermogenesis has developed the CryoSeal system which is an automated method for processing the blood component, cryoprecipitate AHF. This component is approved by the FDA for the treatment of blood clotting in protein-deficient patients. The system can also be used to make cryoprecipitate for use as a tissue adhesive and hemostatic agent. Thermogenesis has filed for 510(k) clearance for the system; however, its specific use as tissue adhesive in surgical procedures will require an additional FDA approval. Plasmaseal is developing a technology for making concentrated plasma for use as a tissue sealant during surgery. This product, Plasma Concentrate Sealant (PCS), can be made in less than 10 minutes from the patient’s own blood. The sealant is similar in strength to other adhesives, and the product is easy to use. Once the blood is taken from the patient, it is injected into a single-use, disposable cartridge. The clinician pushes a button and waits 10 minutes until the plasma concentrate is ready to use. 4.2.3 Collagen-Based Sealants Collagen, the protein that makes skin elastic, appears to strengthen the cohesive ability glues. The French manufacturer, Saduc-Imedex, is developing a collagen-composite product called Collagen Gel Sealant (CGS). This adhesive consists of collagen treated with periodic acid as an oxidating agent. A solid gel at lower temperatures, CGS readily transforms into a viscous fluid when subjected to body temperature. In August 1996, Centeon formed a strategic alliance with Nycomed for this company’s TachoComb adhesive. Nycomed will receive contributions toward the development of TachoComb in the United States, while Centeon’s rights to the product will include other countries other than Europe and Japan. TachoComb consists of equine collagen fleece coated with purified human fibrinogen, bovine thrombin, and bovine aprotinin. The product is used instead of suture for hemostasis and for controlling intraoperative bleeding on parenchymal structures which are too fragile for cautery. When the fleece contacts bleeding structures and pressure is applied for several minutes, the clotting factors dissolve and a glue is formed which adheres the collagen fleece to the wound’s surface. 1997, Medtech Insight, LLC 4-11 #RP-181303 Chapter 4: Wound Closure Devices Fusion Medical Technologies is developing wound closure products for a variety of surgical procedures, including minimally invasive surgery. The company already offers RapiSeal, which received clearance from the FDA in June 1996 for use in lung surgery. RapiSeal, a biodegradable collagen patch, also received 510(k) clearance in February 1997 for the treatment of bleeding organs, such as the spleen or liver. The patch is used in conjunction with an energy source and closes wounds in solid organs, resulting in complete cessation of bleeding at the wound site. In March 1997, the company submitted its 510(k) application for the SilverBullet electrode to the FDA. This technology was developed with the focus on enhancing the performance of the RapiSeal Patch and making the sealant easier for surgeons to use. Fusion is also planning to begin European and Canadian trials of its Flowable Gel surgical sealant for cardiovascular and general surgical applications. Flowable Gel is a biodegradable, collagen-based liquid that can stop active bleeding in about one minute. The product is applied with a syringe, can be used to seal vessels during coronary artery bypass procedures as well as to reinforce suture and staple lines. As part of a project to develop adhesion and anti-adhesion products, Collagen Corporation acquired an 80% interest in Cohesion in June 1996. Cohesion is a private company which develops tissue adhesives, hemostats, biosealants and adhesion-prevention products. 4.2.4 Cyanoacrylate-Based Sealants In the late 1950s, cyanoacrylate adhesives were developed for both commercial and medical use. These adhesives consist of low-viscosity molecules, which under certain conditions, such as the presence of moisture, form simple compounds, or polymers, with unique adhesive properties. The most common type of this adhesive is the household product, “Super Glue,” but some forms are used for surgical purposes because the glue polymerizes on contact with blood to form a tight bond. The first glue developed was methyl cyanoacrylate, but this adhesive proved to be toxic to tissues. In 1966, cyanoacrylate adhesives were used in Vietnam to stop bleeding until conventional surgery could be performed in overloaded combat surgical units. Since the 1970s, cyanoacrylate glues have been used in Europe for many surgical applications, including bone and cartilage grafts, middle ear surgery, and skin closure. Manufacturers of cyanoacrylate adhesives outside the United States include B. Braun and Loctite. In Canada, Histoacryl Blue (n-butyl cyanoacrylate, manufactured by B. Braun in Germany and 1997, Medtech Insight, LLC 4-12 #RP-181303 Chapter 4: Wound Closure Devices distributed by Davis & Geck Canada) and Tissu-Glu (Medi-West Pharmaceuticals) are used for a variety of applications, including episiotomy repair. Ethicon (Johnson & Johnson) has formed a worldwide distribution agreement with Closure Medical, formerly Tri-Point Medical, for Closure Medical’s proprietary cyanoacrylate glue technology. This adhesive is designed to be a substitute for sutures in internal and topical wound care. The topical product, Dermabond, has been evaluated in clinical trials for sealing wounds after the removal of trocars in laparoscopy and for skin lacerations in plastic surgery. In January 1997, Closure Medical filed a PMA with the FDA which granted expedited processing to the product. The company believes that Dermabond’s adhesive technology promises a revolution in wound closure through the decreases expected in overall treatment costs. These reductions are predicted to come through shorter procedure times, rapid patient recovery and elimination of follow-up visits. With traditional sutures, topical anesthesia is normally necessary. This not only heightens the patient’s anxiety, particularly if the patient is a child or an adult with a fear of needles, but also increases the risk of needle-stick injuries to caregivers. A return visit is often necessary for removal of sutures. With Dermabond, the adhesive is applied in a painless procedure. No anesthesia is necessary and the procedure time is minimal. Delivered in single-use, disposable applicators which do not require refrigeration, Dermabond protects the wound from infection by forming a flexible barrier. 4.2.5 Polymer-Based Sealants In January 1997, Ethicon (Johnson & Johnson) and Focal (Lexington, MA) announced a reciprocal agreement to bring Focal’s polymer-based sealants to the worldwide market. Ethicon will distribute outside the United States, while both companies will share the responsibility of securing regulatory approval in the various countries. Focal’s unique polymer technology includes a cross-linkable hydrogel that is being developed to seal air and fluid leaks during lung surgeries. The company’s initial absorbable product, FocalSeal, is in clinical trials to evaluate the product’s ability to create a leak-proof seal over sutures, staples, and other sites during lung surgery. In April 1997, the U.S. Patent and Trademark Office awarded a patent to Focal covering its delivery system for delivery of the company’s synthetic absorbable materials to precise surgical locations. 1997, Medtech Insight, LLC 4-13 #RP-181303 Chapter 4: Wound Closure Devices 4.2.6 Recombinant and Genetically Engineered Sealants The ARC and other research institutions, including the New York Blood Center, Zymogenetics, and PPL Therapeutics, are developing new methods for producing human fibrinogen. Some of these methods include recombinant techniques, placental extraction, and transgeneic sources. In addition, Johnson & Johnson’s Ethicon division has formed a worldwide marketing and distribution agreement with Protein Polymer Technologies for a genetically engineered sealant. Protein Polymer Technologies sealant is a bioengineered protein system designed to set quickly, provide high bond strength and then be absorbed by the body. 4.3 Delivery of Fibrin Glue A number of systems are being developed by various manufacturers for the delivery of fibrin glues. Resorbable wound dressings lined with fibrin glue have been developed by firms such as ARC/Baxter, Nycomed and Cohesion. In addition, other manufacturers are developing powder sprays, blunt-nosed cannulas, self-expanding foams and collagen or cellulose carriers. With the collagen or cellulose carriers, a sponge is soaked with fibrinogen, and the thrombin is placed on one side to activate the glue. Other new delivery systems permit the application of fibrin sealants through a catheter, for use in closing fistula or percutaneously eliminating air leaks under CT guidance. 4.4 Market Potential of Tissue Glues In a study published in The Journal of the American Medical Association in May 1997, Dr. Alexander Trott, a professor of emergency medicine at the University of Cincinnati College of Medicine, predicted that glues will cause a revolution in the care of lacerations. With training anyone will be able to use the medical glue properly. He envisions a day when coaches will apply it to wounded sports players on the field and families would take it on camping trips. In addition, developers of tissue adhesive and glues are claiming that glues could replace sutures for one-third of the 11 million wounds seen in emergency rooms across the United States. As a result of this positive outlook, the potential market for glues and adhesives is estimated at $400 million to $600 million worldwide. In the United States, the potential market for tissue glues and adhesives is estimated at approximately $300 million, and some manufacturers have stated that the U.S. market potential could be realized within five years. In June 1996, Fusion Medical Technologies received clearance for its surgical sealant used in lung surgery, RapiSeal Patch. As of the last quarter in 1996, sales of the RapiSeal Patch were 1997, Medtech Insight, LLC 4-14 #RP-181303 Chapter 4: Wound Closure Devices approximately $23,000. In February 1997, RapiSeal received 510(k) clearance for the control of bleeding during abdominal surgeries for solid organs, such as the liver and spleen. Sales of RapiSeal, with its specific clinical applications, are forecasted to reach over $100,000 in 1997. Other glues or adhesives with broader applications are expected to be approved in approximately 1998, and sales in that year are forecasted at $10 million, increasing to $30M in 1999. Compound annual growth thereafter is forecasted in excess of 100% until some degree of maturity is achieved. Tissue glues will primarily be used in the hospital setting; however, by 2000, approximately 10% of tissue glue sales will be distributed among alternate site locations. Physician offices and ambulatory clinics will be the largest user of tissue adhesives with approximately 75% of sales in the total alternate site market, while subacute and long-term care facilities will be a secondary user with the remaining 25% of sales. 1997, Medtech Insight, LLC 4-15 #RP-181303 Chapter 5: Wound Dressings 5. WOUND DRESSINGS Most surgical incisions, ulcers, or traumatic wounds require some type of wound dressing or covering. The specific type is determined by anatomical location, exudate characteristics, the skill of the healthcare provider, the healthcare setting/environment, the protection requirements against physical re-injury, pain control characteristics, and patient prognosis. Wound healing is a dynamic process; therefore, wound dressings that optimize wounds in one development stage may not be the dressing of choice during another development stage. The wound changes its characteristics through various phases of the wound repair cycle. In the past, companies with leadership positions in wound dressing markets have relied on low to minimally advanced technology and have focused primarily on treating the symptoms of wound care (that is, exudate absorption and physical and bacterial protection), rather than making products that actively participate in wound healing. The last ten years have brought about a new understanding of the healing process, providing the manufacturers of wound dressings with an opportunity to become more sophisticated and active in the treatment of wounds. Dressings are being modified to become the vehicle for the delivery of growth factors, biochemicals, induced oxygenation, timed drug releases, and even serve as temporary replacements for natural skin. Wound dressings are less passive today; they absorb wound exudate, prevent the drying of wounds and protect against microorganism contamination and physical assault. Dressings are active participants in wound management. Although dressings will continue to maintain passive therapy attributes, they also have added features which simulate skin replacement barriers, provide autolytic debridement, and/or stimulate wound healing by acting as vehicles for the delivery of drugs and oxygen to wound beds. Of the 24 million surgical wounds estimated for 1996, most are closed by primary intention, covered, and heal uneventfully. However, of the growing number of hard to heal wounds like chronic ulcers, half respond poorly to existing treatments. It is this wound type, in particular, which has contributed to the $12-$14 billion dollar healthcare cost for treatment of dermal ulcers. With the numerous wound dressings and wound care products currently in the marketplace, no one single dressing or type of dressing composition can provide the optimum environment for all wounds. Important features for the ideal dressing include tissue compatibility, adherence to the skin around the wound but not to the wound itself, and durability without excessive cost. The array of wound dressing products in the marketplace is ©1997, Medtech Insight, LLC 5-1 #RP-181303 Chapter 5: Wound Dressings confusing to even the most sophisticated user; however, dressings can usually be classified into two general categories: non-occlusive and occlusive. Gauze is classified as non-occlusive, allowing air to pass and causing dehydration of the wound bed. Occlusive dressings have moisture-retentive properties; the adequacy of occlusion is measured by the moisture vapor transport rate (grams of moisture vapor passing through the dressing per square meter of dressing surface per hour). The lower the moisture vapor transport rate, the higher the occlusion ability of the dressing, and therefore, the greater the moisture-retentive nature of the dressing. Moisture is important for increasing the rate of wound healing; a moist wound environment facilitates migration of epithelial cells and increases wound closure. When epithelial resurfacing is accelerated, collagen production is greater, granulation tissue growth is rapid, and angiogenesis is stimulated under occlusion. In all, occlusive wound management can lead to lower cost of management for wounds. Occlusive dressings can include a variety of different coverings such as film dressings, hydrogel dressings, hydrocolloid dressings, foam dressings and calcium alginates. These dressing can be fully occlusive or semi-occlusive. Occlusive dressings prevent the penetration of liquid, moisture vapor, oxygen, and bacteria to or from the wound site. Semiocclusive dressings are vapor-permeable, but do not allow liquids or bacteria to penetrate. The following sections review each composition type separately, but combinations of two or even three dressing types appear to have the greatest potential in the future of wound management. The rule of thumb for clinicians in wound management is to often adopt a “wait and see” stance, trying a product for two weeks, then, if there are no positive results, a switch is made to some other product. Manufacturers in the wound care product industry are working to change this type of approach, so that the clinician’s first choice of dressing is the most optimum dressing for the patient’s wounds/ulcers. Clinical Practice Guidelines such as those issued by the Agency for Health Care Policy and Research (December 1994) are helping clinicians in their decisions, but research proving the efficacy of different types of wound dressings is needed. Manufacturers’ outcomes studies will be a great assistance in this decision process. ©1997, Medtech Insight, LLC 5-2 #RP-181303 Chapter 5: Wound Dressings 5.1 Non-Occlusive Dressings These products were in popular clinical use until the first arrival of the more advanced wound products. Use of gauze and impregnated gauze is still quite common, although limited mainly to primary surgical incisions and uncomplicated wounds. Dry dressings are commodity products, and, expected to experience little change in size. The 1996 market was estimated at $150 million, and is projected to grow only about 1.5-2% per year through the end of the decade. 5.1.1 Competitors and Products Gauze and impregnated gauze are commonly used to cover a surgical wound site. These dressings excel in absorbing wound exudate, supporting wound cavities, and providing for mechanical debridement to remove necrotic tissue, in a moist-to-dry dressing protocol. Gauze is difficult to keep moist, does not provide a bacterial barrier, and if left on the wound to dry, can dislodge viable granulation tissue from the wound surface during dressing removal. Impregnated gauze dressings reduce the likelihood of inadvertent drying out of the gauze through petroleum-based coatings, providing easier removal and less adherence to the wound site. Both gauze and impregnated gauze need secondary dressings with a good seal to prevent the wound or incision from drying out. Numerous manufacturers compete in the gauze and impregnated gauze market. Johnson & Johnson offers a full line of gauze dressings, such as their Steri product line, which includes the popular Steri-Pad. Sherwood-Davis & Geck markets Vaseline petrolatum gauze, which is a sterile, non-irritating dressing of fine mesh gauze impregnated with white petrolatum. This dressing conforms to body contours and is available in four sizes. The leaders in gauze and impregnated gauze dressing market are Johnson & Johnson, Kendall Healthcare, and Sherwood-Davis & Geck. Johnson & Johnson is the traditional market leader; however, Kendall, in second place, has recently gained market share due to its acquisition of Professional Medical Products in early 1996. Professional Medical Products had a particularly strong position in the home care market. Exhibit 5-1 reviews selected products from this market. ©1997, Medtech Insight, LLC 5-3 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-1: Selected Manufacturers of Gauze and Impregnated Gauze Dressings Manufacturer Acme United Product Tubifast and Tubegauze Beiersdorf-Jobst Aquaphor gauze Derma Sciences Dermagran (zinc-saline) wet dressing and Dermagran (saline) wet dressing DeRoyal Covaderm adhesive wound dressing, Multipad, Dermanet, Sofsorb, and Fluftex Horizon DermAssist oil emulsion and DermAssist petrolatum Johnson & Johnson Nu-Brede, Nu-Gauze, Steri-Pad, J&J gauze sponges, Adaptic Non-Adhering Dressing, Band-Aid Surgical Dressing, and Kling Kendall Healthcare Curity and Kerlix brand products Molnlycke Medpore Sherwood-Davis & Geck Intersorb, Vaseline petrolatum gauze, Vaseline oil emulsion dressing, Xeroform petrolatum gauze, Xeroflo, and scarlet red ointment dressing Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-4 #RP-181303 Chapter 5: Wound Dressings 5.2 Occlusive Dressings The variety of occlusive dressings is extensive, and new combinations of products/technologies are entering the market on a monthly basis. This section of the report considers the most commonly used semi-occlusive and occlusive dressings including film dressings, hydrogel dressings, hydrocolloid dressings, foam dressings and calcium alginates. 5.2.1 Film Dressings Film dressings are made of versatile polymers which can be synthesized into a varying range of surface hardnesses. Depending upon molecular structure, these dressings possess many positive physical and chemical characteristics such as flexibility, resiliency, absorbency, and elasticity. Film dressings are synthetic, semi-occlusive, adhesive, waterproof, and usually transparent (exudate may obscure this transparency). Although film dressings allow the free flow of oxygen through the pores of the dressing and water to pass from the wound to the air, bacteria cannot enter through the film pores. These products maintain a physiological environment and provide for autolytic debridement. Epithelialization is enhanced by preventing scabs from forming on the wound/ulcer. Film dressings do have disadvantages; they are difficult to apply and they lack the ability to conform to the wound crater, this resulting space under the dressing provides opportunity for bacterial invasion. Exudate accumulation under the dressing can cause leakage of exudate, and this action compromises the bacterial barrier property of the film. Occlusive properties differ between products, causing confusion among clinicians. Secondary gauze dressings may be applied to absorb the exudate, but transparency is sacrificed. When removing film dressings, extreme caution must be taken to prevent the inadvertent removal of new epithelium by the adhesive backing on the film dressing. Film dressings are used for superficial wounds, burns, and shallow ulcerations. Many times they are used prophylactically, to decrease the risk of abrasion or ulceration by decreasing the friction between a patient’s skin and bed surface, or by keeping the skin dry from urinary or fecal incontinence. ©1997, Medtech Insight, LLC 5-5 #RP-181303 Chapter 5: Wound Dressings 5.2.1.1 Market Analysis Considered a mature product market, these dressings are approximately 30% of the overall occlusive dressing market, which was about $241 million in 1996, this segment's 1996 sales were estimated at $73.3 million. Film dressings remain popular as covers for I.V. drips, allowing the clinician to document the starting date and time directly on the dressing. In addition, film dressings are used as secondary coverings, which help to boost its overall volume usage. However, as the length of stay decreases in acute care sites, I.V. therapy is being less utilized, and patients are receiving their medications orally at home. Clinicians often complain that films are difficult to use, and Medicare does not reimburse for these dressings, both of which help limit their market growth potential. Thus, growth in this market is relatively limited at an annual rate of 6.2% per year with the market growing to $106.2 million in 2002, as shown in Exhibit 5-2. 5.2.1.2 Competitive Analysis A variety of suppliers compete in the film dressing market, with 3M, Johnson & Johnson, and Smith & Nephew current market leaders. 3M has a product line called Tegaderm, which is offered in different sizes and shapes, including a film with an absorbent pad which absorbs exudate. Johnson and Johnson makes Bioclusive, a vapor-permeable film, which lets the skin breathe, thereby reducing the risk of maceration. Smith & Nephew offers the Opsite Flexigrid with a flexible carrier grid which allows the clinician to trace the border of the wound once the dressing is in place. Then, the grid can be removed and put in the patient’s chart. Smith & Nephew also offers the OpSite Post-Op with a absorbent non-adhering pad for use in postoperative wound care. Exhibit 5-3 reviews product selections by manufacturer. Carrington Laboratories is a relatively new participant in the film dressing market with their Carra Film, launched in early 1996, and CarraSmart Film, introduced in March 1997. Carra Film is designed to be used with the company’s Carrasyn hydrogel dressing or low exudating wounds, such as superficial pressure ulcers, skin grafts, donor sites, and closed surgical wounds. Sherwood-Davis & Geck’s Blisterfilm transparent dressing has a unique adhesive border which prevents the adhesive from touching the wound, thus it avoids re-injury when removed. ©1997, Medtech Insight, LLC 5-6 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-2: U.S. Film Dressing Market Forecast, 1996-2002 Year Sales Growth 1996 $73.3M — 1997 78.5 7.1% 1998 83.8 6.8 1999 89.3 6.5 2000 94.8 6.2 2001 100.5 6.0 2002 106.2 5.7 CAGR 1997-2002 6.2% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-7 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-3: Selected Manufacturers of Film Dressings Manufacturer Product 3M Tegaderm Acme United ACU-derm Carrington Laboratories Carra Film and CarraSmart film ConvaTec Pro-Clude DeRoyal Transeal Horizon DermAssist film Johnson & Johnson Bioclusive Kendall Polyskin II Molnlycke Alldress ProCyte ProCyte film Sherwood-Davis & Geck Viasorb and Blisterfilm Smith & Nephew OpSite Flexigrid, OpSite Flexifix, and OpSite Post-Op Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-8 #RP-181303 Chapter 5: Wound Dressings 3M monopolizes the market with $40M or a 55% market share. 3M’s leadership position is a reflection of its dominance in both the acute care and alternate sites. Johnson & Johnson and Smith & Nephew follow with 20% and 16% of the market, respectively. These other two companies have strength in only one of these markets: Johnson & Johnson’s is effective in its marketing to acute care sites, while Smith & Nephew is especially aggressive in alternate sites. Exhibit 5-4 depicts market competition. 5.2.2 Hydrogel Dressings Hydrogel dressings provide immediate cooling effects on painful wounds, cooling the wound as much as five degrees. Hydrogels contain water- or glycerin-based amorphous gels, which help to maintain a moist wound bed. Hydrogels range from transparent to translucent and may obscure the wound when exudate accumulates. These dressings are permeable when the backing is removed and require a secondary dressing to avoid spreading of the hydrogel and to ensure contact with the wound bed. Hydrogels can be squeezed onto the wound and smoothed down or may be supplied on a patch with a semi-occlusive film. Evaporation occurs through the gel surface. Hydrogels are fairly easy to remove through irrigation. The advantages of hydrogels are many. They are biocompatible, non irritating, provide for pain relief, will not macerate wound borders, can be used in conjunction with topical drugs, and are cost effective. However, these dressings usually are not able to absorb large amounts of exudate because of their high concentration of water, and they are difficult to keep in place on superficial wounds. Clinical indications include donor sites, superficial burns, tattoo removal, fragile skin, skin susceptible to allergies, and chronic wounds/ulcers. 5.2.2.1 Market Analysis The market forecast for hydrogel dressings is presented in Exhibit 5-5. Hydrogel dressings are approximately 13% of the $241 million occlusive dressing market, with approximately $32 million in sales in 1996. This market experienced a major setback due to changes in Medicare reimbursement in the fourth quarter of 1995. Specifically, the reimbursement rate for hydrogels was reduced from one ounce per day to three ounces per month, causing a slowing of unit growth in this market. As a result of this change as well as cost containment measures by hospitals and acute care providers, this market became increasingly cost conscious, causing major manufacturers to cut prices and offer greater discounts to maintain customers. For example, Carrington cut their pricing to distributors by 19.1% in 1996. As a result, dollar sales in this market plunged in 1996; however, the market is expected to slowly ©1997, Medtech Insight, LLC 5-9 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-4: Supplier 3M 1996 Film Dressings, Share by Supplier Sales Market Share $40.3M 55% Johnson & Johnson 14.7 20 Smith & Nephew 11.7 16 Other* 6.6 9 Total $73.3M 100% *Other includes Acme United, Carrington, ConvaTec, DeRoyal, Horizon, Kendall, Molnlycke and Sherwood-Davis & Geck. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-10 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-5: U.S. Hydrogel Dressing Market Forecast, 1996-2002 Year Sales Growth 1996 $32.1M 1997 33.4 4.0% 1998 34.7 3.8 1999 35.9 3.6 2000 37.2 3.4 2001 38.3 3.2 2002 39.5 3.0 — CAGR 1997-2002 3.4% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-11 #RP-181303 Chapter 5: Wound Dressings increase to over $39 million in the year 2002, as competitors introduce new products, perhaps using hydrogels as delivery system with liposomes. Competitors are also expected to more actively pursue the alternate and home care markets. However, because hydrogels need to be changed more often than other dressings, use of this dressing could increase labor costs, which is a significant disadvantage in nursing homes and alternate care sites. 5.2.2.2 Competitive Analysis Carrington Laboratories, the first competitor in the market with a primary hydrogel which used complex carbohydrates, has a broad product line based on products derived from the Aloe vera plant. Carrasyn hydrogel wound dressing is used for the management of Stage I-IV pressure ulcers, stasis ulcers and first- and second-degree burns. The company also offers other hydrogel products such as CarraGauze Strips, CarraGauze Pads, and Carrasyn Spray Gel. In January 1996, Carrington launched its new, freeze-dried hydrogel wound dressing called CarraSorb M. This product is made with an Aloe vera extract containing acemannan which absorbs wound exudate, up to 20 times its own weight. Indications for CarraSorb include pressure ulcers, diabetic ulcers, foot ulcers, post-surgical incisions, radiation dermatitis, and abrasions. In November 1996, Carrington launched a new acemannan product called RadiaCare Gel which is used in radiation therapy for the treatment of radiation induced dermatitis. The company also introduced its DiaB Gel which is formulated for diabetic and foot ulcer care. This hydrogel is composed primarily of water, plasticizer/humectant, and propylene glycol. In July 1996, ProCyte introduced its Iamin hydrating gel, a patented tripeptide complexed with copper. This product attracts macrophages and monocytes as well as increases angiogenesis and collagen synthesis. In March 1997, the FDA granted marketing clearance via a 510(k) for ProCyte’s GraftCyte moist dressing, which also uses the company’s copper peptide technology in a gel-impregnated gauze for use in hair restoration procedures. In October 1996, AcryMed received FDA approval for their AcryDerm Advanced Wound dressing for the management of cavitated acute and chronic wounds with moderate to heavy exudate. This product enhances autolytic debridement and is offered in a hydrogel sheet format as well as a bound, strand-like format. This strand format, which received 510(k) clearance from the FDA in November 1996 and was launched in the United States in March 1997, is called AcryDerm Strand. This product is classified as a wound filler and has the flexibility to be placed deeply into a wound. ©1997, Medtech Insight, LLC 5-12 #RP-181303 Chapter 5: Wound Dressings New Dimensions in Medicine (NDM), which was acquired by ConMed in 1996, offers a hydrogel called ClearSite. Other hydrogel products are outlined in Exhibit 5-6. Carrington Laboratories, with a 36% market share, is the traditional market leader with its natural Aloe vera product line. There is a preference in today’s market for natural products; however, for Carrington to remain market leader, it will need to become more aggressively in making purchasing agreements with larger providers. ConMed/NDM follows in second place with 18% of the market due partly to its success in making these types of national purchasing agreements. Healthpoint’s third-place position with 14% of the market is due to its recent aggressive marketing, while Molnlycke is especially strong in the home market. DeRoyal, although a minor competitor at present in this market, is actively marketing its hydrogel product along with other dressings in its product line to large, national providers. Other hydrogel competitors are included in Exhibit 5-7. 5.2.3 Hydrocolloid Dressings Hydrocolloid dressings are waterproof and provide a bacterial barrier. These dressings have been derived from the same materials commonly used for ostomy barriers. Hydrocolloids consist of hydrophilic particles (that is, gum, karaya, gelatin, pectin, carboxymethylcellulose), that interact with wound moisture to form a gel. The wound is in constant contact with the gel, providing a continuous wound bath. Infected wounds are diagnosed by classical symptoms and supportive microbiology. The likelihood of infection occurring with the use of occlusive dressings compared to nonocclusive dressings has been studied and results indicate that occlusive dressings are less likely to become infected than their nonocclusive counterpart. Hydrocolloids are an effective bacterial barrier, and they do not allow for the transmission of oxygen, carbon dioxide, or significant amounts of moisture vapor. Although hydrocolloids are highly absorbent, they have the ability to conform to difficult anatomical sites. On the wound bed, the hydrocolloid forms a soft gel as it absorbs exudate and simultaneously provides moisture to the wound. Caution is advised when removing hydrocolloid dressings so as not to disrupt newly formed granulation tissue. ©1997, Medtech Insight, LLC 5-13 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-6: Selected Manufacturers of Hydrogel Dressings Manufacturer AcryMed Bard Carrington Laboratories Coloplast/Sween ConMed/New Dimensions in Medicine ConvaTec DermaRx Derma Sciences DeRoyal Dow Hickam Gentell Healthpoint Medical Hollister Horizon Medical Johnson & Johnson Kendall Medi-Tech International Molnlycke ProCyte Smith & Nephew Southwest Technologies Swiss-American Products Product AcryDerm Advanced Wound Dressing Biolex wound gel and Vigilon primary wound dressing Carrasyn hydrogel wound dressing, CarraGauze Strips, CarraGauze Pads, Carrasyn spray gel, CarraSorb M, RadiCare, and DiaB Woun’Dress natural collagen hydrogel wound dressing ClearSite Gel and ClearSite HydroGauze dressing DuoDerm hydroactive gel and SAF-Gel DermaMed Dermagran Hydrophilic and Dermagran (zinc-saline) hydrogel Aquasorb Flexderm Gentell Hydrogel Curasol, Iodosorb and Iodoflex Restore Hydrogel Stericare glycerin hydrogel Nu-Gel Curafil and Curagel Spand-gel Hypergel and Normlgel Iamin hydrating gel and GraftCyte TransiGel, SoloSite, and IntraSite Elasto-Gel Elta Dermal Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-14 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-7: Supplier Carrington 1996 Hydrogel Dressings, Share by Supplier Sales Market Share $11.4M 36% ConMed/NDM 5.8 18 Healthpoint 4.6 14 Molnlycke 3.1 10 Other* 7.2 22 Total $32.1M 100% *Other includes Bard, Coloplast/Sween, ConvaTec, DermaRx, Derma Sciences, DeRoyal, Dow Hickman, Gentell, Hollister, Horizon Medical, Johnson & Johnson, Kendall, MediTech International, ProCyte, Smith & Nephew, Southwest Technologies and Swiss-American Products. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-15 #RP-181303 Chapter 5: Wound Dressings Hydrocolloid dressings are generally not indicated for heavily exudating wounds/ulcers or fistulas. Fowl-smelling exudate, in conjunction with hydrocolloid dressings or bacterial build-up in the exudate on the wound surface, can result in malodorous fluids. This will require frequent dressing changes. However, the adhesive backing on the hydrocolloid dressings is designed to stay in place for up to five days, thus frequent dressing changes may indicate the use of another type of dressing for a patient so as not to injure newly forming granulation tissue. Hydrocolloid dressings are opaque; therefore, the caregiver is unable to observe the healing process without first removing the dressing. Another disadvantage is the relative thickness of the dressing; however, some manufacturers have significantly reduced the thickness of hydrocolloids in recent years. In addition, the hydrocolloid material may dissolve into the wound bed, making cleansing more difficult. 5.2.3.1 Market Analysis The hydrocolloid dressing market is about 35% of the $241 million occlusive dressing market, with $83 million in sales in 1996. Due to this dressing’s ability to stay on the wound for up to 5 days, it has high-volume use in long-term care sites, which helps make hydrocolloids the largest market within the occlusive dressing category. However, hydrocolloids are losing product volume to alginates, causing its growth to begin to slow in recent years. As a result, the overall market is forecasted to grow at an average annual growth rate of 7.9% to $133 million in the year 2002. Exhibit 5-8 presents the market forecast for hydrocolloid dressings. ©1997, Medtech Insight, LLC 5-16 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-8: U.S. Hydrocolloid Dressing Market Forecast, 1996-2002 Year Sales Growth 1996 $83.4M 1997 90.9 9.0% 1998 98.8 8.7 1999 107.0 8.3 2000 115.3 7.8 2001 124.0 7.5 2002 133.0 7.3 — CAGR 1997-2002 7.9% Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-17 #RP-181303 Chapter 5: Wound Dressings 5.2.3.2 Competitive Analysis As presented in Exhibit 5-9, competitors in the hydrocolloid dressing market include ConvaTec, Hollister and other prominent dressing manufacturers. ConvaTec manufacturers several hydrocolloids including DuoDerm CGF, the company’s key hydrocolloid dressing, as well as SignaDress for the home care market. DuoDerm CGF creates an acidic environment and promotes anti-infective effective in the wound. SignaDress is an easy-to-use dressing because of its tear drop in the center of the dressing which allows for easy centering of the dressing on the wound. As the dressing absorbs exudate, a bubble is formed in the tear drop. When the bubble reaches a visible indication line, the dressing is ready to be changed. Hollister also offers several hydrocolloids, including Restore Wound Dressing, Restore Cx and Restore Extra Thin. The latter dressing is a unique hydrocolloid with a flexible film backing which is resistant to urine and other contaminants. In April 1995, Brennen Medical began marketing their B-G-C Matrix wound dressing which is a beta-glucan and hydrocolloid matrix combined with multifilament mesh. This mesh is applied to a smooth, gas permeable polymeric layer. This dressing is available in various sizes and can be held in place with flexible net or gauze. The dressing may remain on the wound for as long as three days. If the wound appears to be re-epithelializing, it may remain on the patient longer as a simple barrier or protective dressing. Market shares for the hydrocolloid dressing market are shown in Exhibit 5-10. ConvaTec is by the far the industry leader with 76% of the market, mainly to due its well-known DuoDerm hydrocolloid. All other players in this market compete with under a 10% market share; some companies, like Kendall, compete in the bottom part of the market due primarily to their concentration in the non-hospital market. ©1997, Medtech Insight, LLC 5-18 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-9: Selected Manufacturers of Hydrocolloid Dressings Manufacturer 3M Product Tegasorb and Tegasorb Thin Beiersdorf-Jobst Cutinova Brennen BGC Matrix Coloplast/Sween Comfeel Plus ConvaTec DuoDerm CGF,CombiDerm and SignaDress Dow Hickam Hydrocol Gentell Dermatell and Dermatell Secure Hollister Restore Wound Care Dressing, Restore Extra Thin and Restore Cx Horizon DermAssist hydrocolloid Kendall Curaderm Sherwood-Davis & Geck Ultec and Ultec Thin Smith & Nephew RepliCare Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-19 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-10: 1996 Hydrocolloid Dressing Market, Share by Supplier Supplier Sales Market Share ConvaTec $63.4M 76% Smith & Nephew 6.7 8 3M 5.0 6 Other* 8.3 10 Total $83.4M 100% *Other includes Beiersdorf-Jobst, Brennen, Coloplast/Sween, Dow Hickman, Gentell, Hollister, Horizon, Kendall and Sherwood-Davis & Geck. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-20 #RP-181303 Chapter 5: Wound Dressings 5.2.4 Foam Dressings Foams are semi-occlusive, made from inert ingredients such as polyurethane, and have a high degree of thermal insulation. In addition, foams provide controlled moisture to the wound bed while absorbing exudate. Foams consist of one hydrophilic side, which is placed on the wound while the other untreated side provides a barrier for bacteria. Foam dressings allow oxygen and vapor permeability which help to reduce the risk of infections. These dressings require a secondary dressing and a sealed edge in order to maintain wound moisture. Foam dressings are used for heavily exudating wounds, especially during the inflammatory phase. They are also used for wounds with deep cavities to prevent premature closure while keeping the wound moist and absorbing exudate. Other advantages to these dressings include increased patient comfort, nonadherence to the wound, and decreased maceration due to the dressing holding the exudate away from the wound and surrounding tissue. Foams can be drying if there is not enough drainage. 5.2.4.1 Market Analysis Foam dressing are one of the fastest growing segments of the occlusive and semi-occlusive dressing market, with an average 8.6% annual growth rate through the end of the decade. Although foams are starting to reach maturity, they may be one of the first dressings used with growth factors because they are easy to impregnate. However, their growth is not as solid as alginates, partly because they are difficult to use; they sometimes dislodge and do not contour to the wound as well as other dressings. Regardless, the market is expected to grow from $18 million in 1996 to $29.5 million in 2002, as shown in Exhibit 5-11. ©1997, Medtech Insight, LLC 5-21 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-11: U.S. Foam Dressing Market Forecast, 1996-2002 Year Sales Growth 1996 $18.0M 1997 19.5 8.5% 1998 21.3 9.1 1999 23.2 8.9 2000 25.2 8.6 2001 27.3 8.3 2002 29.5 8.1 CAGR 8.6% 1997-2002 Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-22 #RP-181303 Chapter 5: Wound Dressings 5.2.4.2 Competitive Analysis Johnson & Johnson, a major competitor in the foam dressing market, offers Tielle hydropolymer dressing which absorbs up to 15 times its own weight and requires no secondary dressing. This company also offers Biopatch, an antimicrobial dressing consisting of a hydrophilic polyurethane foam with chlorhexidine, which has antimicrobial and antifungal properties. Dow Hickman offers Flexzan, a ultra-thin, highly conformable foam dressing with an opencell foam and a closed-cell outer surface. This dressing is indicated for skin tears, early-stage pressure ulcers, and dermatologic and plastic surgery procedures. Carrington Laboratories introduced its new CarraSmart foam dressing in 1996 which is made up of three layers. The first layer consists of a hydrophilic polyurethane to maintain moisture in the wound, while the second layer is a hydrophilic, open-cell foam which also helps to manage moisture. The last layer is a porous, pressure-sensitive adhesive. CarraSmart is indicated for venous stasis ulcers, diabetic ulcers, pressure sores, partial-thickness and fullthickness wounds, first- and second-degree burns, and donor sites. Exhibit 5-12 summarizes these competitors and others in the foam dressing market. Market shares for the foam dressing market are shown in Exhibit 5-13. One factor in this segment of the market is the increased use of advanced dressings, such as Smith & Nephew’s Allevyn Cavity dressing. This dressing is a matrix of absorbent hydrocellular foam chips which are kept separate from the wound by a perforated film sack. Smith & Nephew is the market leader with 32% of the market, followed by ConvaTec with 21% of the market. ConvaTec promises to be an even stronger competitor in this market, especially after its purchase of the rights to Lyofoam from Acme United in July 1997. Johnson & Johnson, currently a smaller player in the market, may become a major competitor if it can combine its research in growth factors with its foam dressings. ©1997, Medtech Insight, LLC 5-23 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-12: Selected Manufacturers of Foam Dressings Manufacturer Acme United Product Lyofoam Carrington Laboratories CarraSmart Foam ConvaTec Mitraflex and Hydrasorb DeRoyal Polyderm Border DermaRx DermaMend Foam Dow Hickman Flexzan Ferris PolyMem Gentell Low Profile foam dressing Johnson & Johnson Sof-foam, Biopatch and Tielle Kendall CuraFoam Smith & Nephew Allevyn Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-24 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-13: 1996 Foam Dressings, Share by Supplier Supplier Sales Market Share Smith & Nephew $5.7M 32% ConvaTec 3.7 21 Dow Hickam 3.3 18 Acme United 1.4 8 Ferris 1.3 7 Other* 2.6 14 Total $18M 100% *Other includes, Carrington, DeRoyal, DermaRx, Gentell, Johnson & Johnson and Kendall. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-25 #RP-181303 Chapter 5: Wound Dressings 5.2.5 Calcium Alginates Calcium alginate contains naturally occurring polysaccharide salts of alginic acid, a carbohydrate which occurs in brown seaweed. This non-woven twisted fiber is placed into the wound and absorbs 20 times it own weight in exudate fluid. It is the dressing of choice for heavily exudating wounds. However, like most other wound filler and absorptive products, it needs a secondary dressing for wound covering. Calcium alginates are very comfortable for patients, absorb without pathology to healthy surrounding tissue, are easy to use, and are especially useful for packing exudating wounds. Alginate dressings are also a very poor medium for microbial growth and can be easily removed from the wound site with saline irrigation to the area. Calcium alginate dressings are used on chronic wounds, partialthickness burns, skin graft donor sites, dermabrasion, acute wounds, and dermal ulcers. 5.2.5.1 Market Analysis Alginates, the fastest growing segment in the occlusive and semi-occlusive dressing market, are expected to increase from $34 million in 1996 to $64.4 million by 2000. The 11.7% average annual growth rate is being driven by a number of factors. First, these dressings are popular in home and long-term care, and they have an ability to conform to the wound while absorbing and containing drainage better than foam dressings. Second, their inclusion as part of nation-wide contracts with large providers with fuel growth until the end of the decade, when this market is expected to begin to reach maturity. The forecast for alginates is presented in Exhibit 5-14. ©1997, Medtech Insight, LLC 5-26 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-14: U.S. Alginate Market Forecast, 1996-2002 Year Sales Growth 1996 $34.0M 1997 37.0 8.8% 1998 40.5 9.5 1999 45.0 11.1 2000 51.6 14.7 2001 58.0 12.4 2002 64.4 11.0 — CAGR 11.7% 1997-2002 Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-27 #RP-181303 Chapter 5: Wound Dressings 5.2.5.2 Competitive Analysis In 1989, Dow Hickman introduced the first calcium alginate dressing called Sorbsan. Through sodium ion exchange, this dressing transforms into an absorbent, conformable sodium alginate gel when the dressing contacts the sodium-rich exudate in the wound bed. Sorbsan is indicated for all wet wounds, including those that are infected. Another major competitor is ConvaTec, with their Kaltostat product, which is available as a wound dressing or wound packing. Kaltostat offers the advantages of an alginate as well as the structural support of collagen. In 1995, DeRoyal purchased the rights to the Kalginate dressing from Chem/Orbital, Inc. and subsequently introduced the dressing in November 1995. According to DeRoyal, Kalginate is made with heavier fibers which help to absorb more exudate and hold the dressing together when it is removed. The company is also able to manufacture the fibers in their own textile mills while most other competitors rely on fibers that are manufactured in England and France. In January 1996, Carrington Laboratories introduced its first calcium alginate product, CarraSorb H. This dressing is made for wounds with heavy exudate, and the corresponding indications include pressure ulcers, stasis ulcers, diabetic ulcers, arterial and venous ulcers, foot ulcers, post-surgical incisions, radiation dermatitis, donor sites, trauma wounds, dermal lesions, and abrasions. Exhibit 5-15 summarizes the major competitors and their products in the alginate market. Market shares for the alginate market are shown in Exhibit 5-16. Dow Hickam, with the first alginate dressing in the industry, still enjoys market leadership with a 44% market share. However, ConvaTec may gain market share in the next several years due to its contracting agreement with national providers; currently, ConvaTec holds a 34% market share. ©1997, Medtech Insight, LLC 5-28 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-15: Selected Manufacturers of Alginates Manufacturer Product 3M Tegagen HI and Tegagen HG Bard Algiderm Carrington CarraSorb H Coloplast/Sween Comfeel SeaSorb and Comfeel SeaSorb filler ConvaTec Kaltostat DeRoyal Kalginate Dow Hickam Sorbsan Hollister Restore CalciCare Horizon DermAssist alginate Kendall Curasorb Sherwood-Davis & Geck Dermacea alginate Smith & Nephew AlgiSite Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-29 #RP-181303 Chapter 5: Wound Dressings Exhibit 5-16: 1996 Alginate Dressing Market, Share by Supplier Supplier Dow Hickman ConvaTec Sales Market Share $15.0M 44% 11.5 34 Kendall 1.6 5 Other* 5.9 17 Totals $34.0M 100.% *Other includes 3M, Bard, Carrington, Coloplast/Sween, DeRoyal, Hollister, Horizon, Sherwood-Davis & Geck, and Smith & Nephew. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 5-30 #RP-181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements 6. SYNTHETIC/BIOSYNTHETIC DRESSINGS AND SKIN REPLACEMENTS Much of the current wound healing research and clinical investigation is concentrated on biosynthetic dressings and skin replacements. Large venture capital investment indicates that expectations are high for these products. There is much controversy over indications for use, efficacy, effectiveness in wound healing and cost/benefit ratios. While traditional skin coverings have included skin grafts and flaps, the newer products range from synthetic and biosynthetic coverings to in vitro cultured tissue for epidermal and dermal replacement. These skin coverings can be applied for temporary or permanent skin replacement, or a combination of both. Although the primary market focus of skin replacement is for severe burn patients, these products are also being considered for the chronic skin ulceration marketplace. 6.1 Autologous Skin Grafts and Flaps The autograft (a patient's own skin) includes split-thickness grafts and full-thickness pedicle flaps and free flaps. Split-thickness grafting is most common and is used in the early stages of burn injury for wound closure. Split-thickness grafts can be applied in sheets or meshed for greater wound coverage. Although meshed grafts cling to wound beds easier and prevent accumulation of blood, serum or purulent material under grafts, the meshed-look pattern may remain. The patterned look results from the lack of the epidermal basal layer for regeneration of epithelial cells, causing scar tissue to develop. Full-thickness pedicle flaps and free flaps are commonly used later (months to years after injury) and are usually reserved for reconstructive purposes. A pedicle flap is a section of the patient's skin (epidermis, dermis and subcutaneous layers) moved from one area to another while maintaining a vascular attachment to the original location. Free flaps contain various tissue types which are disconnected from their original vasculature and reconnected to blood vessels at wound injury sites via micro-surgery techniques. The advantages of flaps are that they maintain their own blood supply, provide superior facial cosmesis and are superior in repairing poorly vascularized defects and covering bony prominences. 6.2 Synthetic and Biosynthetic Dressings In the past, synthetic and biosynthetic dressing have been used as temporary coverings for burns until autograft is feasible or until allograft skin or cultured skin is available. These 1997, Medtech Insight, LLC 6-1 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements dressings are now used for partial-thickness wounds, donor sites, decubitus ulcers and abrasions. They are used as a barrier which protects the wound from infection and allows healing to progress naturally. In order to further reduce the likelihood of infection, some temporary dressings have been introduced with silver sulfadiazine cream. Porcine skin with silver sulfadiazine cream is commercially available, as well as amniotic membranes incorporating silver nitrate. 6.2.1 Competitors and Products Biobrane, a dressing offered by Dow Hickam, is intended for meshed autografts, donor sites and partial-thickness wounds. This dressing is translucent, allowing for easy wound visualization, and is a nylon-knit fabric bonded to a silicone-plastic membrane. Collagen peptides are also bonded to the surface. Biobrane is non-toxic, non-antigenic and permeable to anti-bacterial creams. This dressing has many small pores in its silicone membrane for exudate drainage, but with infected wounds, there can be fluid build-up beneath the dressing. Regardless, Biobrane is a temporary dressing, ultimately subject to immune rejection. Brigham and Women's Hospital in Boston has been using Biobrane for seven years reported that Biobrane adheres well to scald burns. According to the Regional Burn Center at the University of California, San Diego Medical Center, the combination of Biobrane and airflow specialty beds can enable successful treatment of posterior donor site wounds. Ormed, a division of Synthes-Hug-Straumann Group of Germany, is the U.S. distributor of the Epigard dressing which has been sold in the United States since 1992. This dressing was developed by Becton-Dickinson in France which sold the marketing rights to Synthes-HugStraumann. Epigard is a synthetic skin substitute for temporary coverage, debridement and conditioning of soft tissue wounds. The dressing consists of a double-layered textile, which is microporous and non-medicated. The 2.5 micron upper layer is a polytetrafluoroethylene (PTFE) membrane with a controlled microporosity which permits ventilation but not bacterial penetration. The lower layer is an open matrix of reticulated polyurethane. These two layers are laminated together without the use of adhesives or solvents; lamination is achieved by a polyethylene net bonded together by heat and pressure. The foam side of the Epigard dressing produces intimate thrombogenic adhesion to the plasma-wet surface of the wound’s viable tissue. This inhibits any further loss of plasma and binds the necrotic debris to the foam. By changing the dressing every 24 hours, there is selective debridement of necrotic tissue, inducing a highly vascularized granulation tissue. 1997, Medtech Insight, LLC 6-2 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Removal of Epigard just prior to grafting leaves a viable capillary bed suitable for reception of the homograft. Epigard is not categorized as a traditional dressing and is included in the synthetic/biosynthetic category because it has been recognized as a substitute for temporary wound coverage. This product is particularly well suited as a temporary covering in preparing wounds prior to skin grafting and as a primary covering of burn wounds after surgical debridement. A traditional competitor in the synthetic/biosynthetic dressing market, Brennen Medical offers several different dressings. The company manufactures E-Z Derm, a biosynthetic wound dressing which is a porcine-derived xenograft. With this dressing, the collagen has been chemically crosslinked with an aldehyde to provide strength, durability and convenient storage at room temperature. This product can be used on partial-thickness wounds, donor sites and as a test graft to ensure a proper wound bed for autografting. E-Z Derm also protects the interstices when used on meshed autografts and can be used for treatment of skin loss injuries such as abrasion, scalds and avulsions on an outpatient basis. Mediskin Porcine Biological Dressing is another Brennen Medical product; this dressing is immediately soothing and adheres to a clean, eschar-free wound surface, protecting sensitive nerve endings. Mediskin also eliminates daily painful dressing changes because it is left in place until it sloughs off. Mediskin can be stored in any freezer and will thaw at room temperature in 1 to 2 hours. BioMed Sciences' biosynthetic dressing, Silon-TSR, consists of network of silicone and polytetrafluoroethylene. This dressing is "self-clinging," but non-adhering; therefore, it requires a secondary gauze dressing which may need to be changed while leaving Silon-TSR in place as the wound heals. Silon-TSR is indicated for laser resurfacing, dermabrasion wounds, second-degree burns and skin tears. Another manufacturer in this category is Sherwood-Davis & Geck. This company offers Inerpan which incorporates amino acids, L-leucine and methyl L-glutamate. 6.2.2 Synthetic/Biosynthetic Dressing Market Analysis In the past, synthetic/biosynthetic dressings like Dow Hickam’s Biobrane have been in a class of their own because their use as a covering on critically burned patients was vital to 1997, Medtech Insight, LLC 6-3 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements keep the patient’s electrolytes in balance and to stabilize the patient. The growth in this $47.8 million market is expected to begin to slow due to the introduction of skin replacements and skin substitutes. Not all patients will require skin replacement products, which will help to keep this market growing in the future. As shown in Exhibit 6-1, the market will continue to increase at 5.5% average annual growth rate to $38.6 million in 2002. As shown in Exhibit 6-2, Dow Hickam is the leader in this segment of the dressing market, with a 46% market share. Ormed is in second place with 29% of the market, followed by other smaller players with 25% of the market. 1997, Medtech Insight, LLC 6-4 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Exhibit 6-1: U.S. Synthetic/Biosynthetic Dressing Market Forecast, 1996-2002 Year Sales Growth 1996 $27.8M — 1997 29.6 6.3% 1998 31.4 6.1 1999 33.2 5.8 2000 35.0 5.5 2001 36.8 5.1 2002 38.6 .9 CAGR 1997-2002 5.5% Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 6-5 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Exhibit 6-2: 1996 Synthetic/Biosynthetic Dressing Market, Share by Supplier Supplier Sales Market Share Dow Hickam $12.8 46% Ormed 8.1 29 Others* 6.9 25 Total $27.8M 100% *Others includes Bio Med Sciences, Brennen and Sherwood-Davis & Geck. Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 6-6 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements 6.3 Skin Replacements and Substitutes Skin replacements and skin substitutes are mainly used for severe burn patients; however, these products are also gaining momentum for the treatment of dermal ulcerations, in particular venous stasis and diabetic ulcers. Manufacturers are focusing on these market segments in order to expand their market scope. Although more expensive than conservative wound therapy, there are numerous advantages to these products, including reduced need for donor sites in burn patients, faster closure for larger wounds and better dermal quality and less risk of scarring. Manufactures will need to justify the increased costs of these products by outcomes studies which substantiate these advantages as well as document faster healing rates and improved overall cost effectiveness. Indirect costs, such as nursing time and improvement in the quality of life, will also need to be considered. In addition, to maximize cost effectiveness, these products must be able to accelerate healing in chronic lesions. At the present time, manufacturers of this unique technology are racing to either get FDA approval or a better share of the market. Participants in the current market and those in development include: LifeCell Corporation, Advanced Tissue Sciences, Genzyme Tissue Repair, Organogenesis and Integra LifeSciences. 6.3.1 Regulatory Status In April 1996, FDA Commissioner David Kessler issued new regulations to govern products which are derived from cells and tissues. Over a three-year period, the FDA will institute new rules to prevent unwitting use, processing or handling of contaminated tissue which could carry and transmit infectious disease. These rules are designed to ensure clinical safety and effectiveness for certain cells and tissues and vary in their application depending on the potential risk involved. "Human tissues have wide uses in medicine, including skin replacement after severe burns, tendons and ligaments to repair injuries, and corneas to restore eyesight," said Health and Human Service Secretary Donna E. Shalala. "Now that science is providing even more new ways of using tissues, FDA has developed an innovative regulatory approach to allow these novel products to benefit patients as soon as possible." According to the FDA, the three-tiered approach effects an appropriate level of control that is equal to the perceived risk for the materials. Products that are considered novel or are 1997, Medtech Insight, LLC 6-7 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements extensively processed require FDA approval before they are marketed. All tissue processing facilities will be required to register with the FDA and to list their products. The policy puts in place requirements for infectious disease testing, donor screening and processing controls for tissue that is transplanted from one patient to another. All such tissues would be handled according to "good tissue practices" which would include testing tissue for infectious agents and donor screening for exposure to disease agents. The policy does not impact cells or tissue removed from and transplanted to the same person in a single surgical procedure. Further, minimally processed conventional and reproductive tissue would not be subject to FDA concern in areas of handling and contamination. But for certain tissues, controlled clinical trials and premarket approval will be required to demonstrate safety and efficacy of the material. Such requirements will apply to tissues and cells in which characteristics have been altered biologically or functionally. Labeling would also be required for tissue containers to protect healthcare workers and advise handlers of the potential biohazard. 6.3.2 Competitors and Products When considering skin replacements and substitutes, current products and investigational therapies can be categorized by the following: • Epidermal replacements - keratinocytes grown on tissue culture or on a carrier, such as bioresorbable matrix; • Dermal replacements - fibroblasts or endothelial cells grown on a support structure to aid in proliferation; and, • Skin substitutes - a combination of epidermal and dermal replacements which are able to support both the dermal and epidermal components. Competitors with skin replacement and skin substitute products include Advanced Tissue Sciences, Genzyme Tissue Repair, Integra LifeSciences and LifeCell. Each of these companies and their products are discussed in the following sections. 6.3.2.1 Advanced Tissue Sciences In March 1997, Advanced Tissue Sciences received approval from the FDA to market its Dermagraft product. Dermagraft is a bioengineered human dermal tissue replacement product and designed to provide permanent replacement of the inner layer of skin. Advanced Tissue 1997, Medtech Insight, LLC 6-8 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Sciences has been working in conjunction with Smith & Nephew on a joint venture to develop the product. Dermagraft is engineered human dermal tissue combined with a synthetic epidermal layer which is designed to treat patients with third-degree burns on more than 20% of the body’s surface. The product also provides a protective cover for burn patients to help retain fluids and reduce the risk of infection until a sufficient amount of the patient's own skin becomes available for grafting. Dermagraft production begins by culturing human dermal fibroblasts onto a semipermeable membrane which is bonded to nylon mesh. The nylon mesh provides structure as a threedimensional scaffold for the growth of dermal tissue, and the membrane forms the synthetic epidermis. As the dermal fibroblasts grow on the mesh, they secrete growth factors and structural components. The resultant product is then frozen which kills the cells, but leaves the tissue matrix and cell growth factors intact. Later in the operating room, the surgeon unfreezes the dermal patch as a temporary skin replacement for the patient’s destroyed dermis. This product uses living human tissue, namely neonatal foreskin, which does not elicit an allergic or immune response because the basic component has not developed antibodies to cause a reaction. Clinical trial data demonstrated that Dermagraft successfully reached its primary endpoint, which was the ability to adequately prepare the burn wound bed for successful autografting and performing equal to or better than the cadaver allograft control. In addition, Dermagraft performed significantly better than the control with respect to important secondary endpoints such as ease of removal, amount of excision required, amount of bleeding upon excision and overall satisfaction ratings as a temporary covering among investigators. 6.3.2.2 Genzyme Tissue Repair Genzyme Tissue Repair is the only company in the world to successfully provide cultured tissue technology as a commercial service, delivering therapeutically viable cells to a large number of patients on a reproducible basis. The Epicel service was developed at BioSurface and consists of a sheet of proliferative cultured autologous keratinocytes, ranging from 2 to 8 cell layers thick. The autologous keratinocytes are harvested from the patients’ own skin tissue and are processed to isolate specific cell types for epidermal autografts. Each cultured epidermal autograft is approximately 30 cm2 in size and is individually packaged with a small amount of buffered serum-free nutrient medium. The company has processed more 1997, Medtech Insight, LLC 6-9 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements than 1,500 individuals patient biopsies, treated over 800 burn patients with Epicel skin grafts in more than 120 cities around the world. Epicel lies outside of FDA regulations because it is an autologous therapy which does not involve manipulation of cells in such a way as to significantly change their biological properties. However, Genzyme employs rigorous quality standards and all processing procedures are controlled to ensure safety and tractability of operations. An article by in the Annals of Surgery in 1996 by A.M. Munster MD, reported the results of a controlled trial which compared the outcome of therapy in patients with massive burns, with and without cultured autologous epithelial autografts . During a 5-year period, 22 patients with an average burn size of 71.8% were treated with cultured keratinocytes and compared with a group of 42 controls with an average burn size of 61.6%. The results showed a reduction in mortality in the cultured epithelial autograft group compared with controls, from 48% to 14%. There was no difference between the two groups in other major complications, or in readmission for breakdown. Acticel is a wound dressing that is intended to limit infection and promote healing of severe burns. It is composed of living epidermal tissue grown in laboratories that is then attached to a synthetic dressing. The company announced that the results of a 77-patient study of Acticel in the treatment of partial-thickness burns were significant enough for marketing this application. Acticel's potential is being reviewed by the company, thus casting doubt as to whether the product will ever reach the U.S. market. An earlier study using Acticel in treating skin graft donor sites was also halted following an interim analysis because it had only borderline efficacy compared to the placebo. 6.3.2.3 LifeCell LifeCell employs a patented process to manufacture a cryopreserved allograft skin for temporary burns called AlloDerm. This product has been on the market since June 1995. Using donated cadaveric skin grafts, the patented process removes all cells while preserving the dermal matrix. The cells of these grafts normally maintain the matrix which are also the targets of the body's immune response. The end result is a totally intact, acellular matrix. The matrix contains all the facilities for cell residence and function so that when the nonviable processed matrix is transplanted, the patient's own cells repopulate it and create a permanently integrated living tissue graft. The grafts are effective in helping skin heal and 1997, Medtech Insight, LLC 6-10 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements promoting the growth of fibroblasts which are the key maintenance cells of dermis. By using AlloDerm, integrated living tissue grafts can be formed which are invisible to the immune system. A porcine equivalent called XenoDerm is being developed, and a number of universities and burn centers have shown that XenoDerm decreases wound contraction and improves cosmesis compared to conventional treatment. By using an immune-deficient mouse reconstituted with human immune system cells, LifeCell is evaluating the immune response to XenoDerm. If successful, human clinical applications will then take place. LifeCell is also developing a composite, bi-layered AlloDerm graft for burn wound treatment in order to eliminate the need for self-donated skin to graft burn wounds. Also, the National Science Foundation has provided LifeCell with the funding to develop a composite skin by combining AlloDerm and the cells of the epidermis. This program focuses on using stem cells in skin to create the readily available composite skin from AlloDerm and a patient's own epidermal cells, eliminating patient autograft requirements. In January 1997, the company announced the award of over $1 million from the U.S. Army Medical Research and Material Command in order to fund the development of new tissue transplant products for use in neurological, dermatological and cardiovascular surgery. Investigation of AlloDerm grafts to repair dura mater and the membrane lining of the brain, as well as investigation of its use in conjunction with micro-skin grafting to cover large wound surfaces with small, biopsy-sized skin grafts, will be the focus of this two-year cooperative agreement. Results from a study conducted by David J. Wainwright M.D. of the University of Texas Health Science Center, were published in the June, 1995 issue of Burns. The study compared test sites using AlloDerm to control sites using the patient's own skin or autografts. AlloDerm sites demonstrated high "take rates" and results indicated that AlloDerm would reduce the amount of donor skin required for split-thickness autografts in full-thickness burn injuries. Only a single application of AlloDerm was required, and was considered a major treatment benefit. At 1997 Annual Meeting of the American Burn Association, AlloDerm was presented as beneficial in treating wound contracture complications for reconstruction of burn wounds previously grafted with the patient's own skin. The product also was shown to offer benefits in initial permanent dermal graft in elderly persons. 1997, Medtech Insight, LLC 6-11 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements 6.3.2.4 Integra LifeScience Integra LifeSciences received PMA approval for its Integra Artificial Skin in March 1996. This product is designed to grow new skin and permanently replace damaged skin on severe burn victims. The product is a dermal composite which consists of a porous lattice of fibers of a cross-linked bovine collagen and glycosaminoglycan (GAG), and a synthetic epidermal layer of polysiloxane polymer (silicone). The GAG that is used is chondroitin-6-sulfate. The product was originally approved by the FDA to be manufactured in 4" by 10" sheets. The company applied to the FDA and was granted a PMA approval supplement to manufacture additional sizes of 4" x 5" and 8" x 10". This will accommodate physicians' requirement to use the product in more applications. The product is manufactured in the United States and has been marketed domestically as well as internationally to such countries as Denmark, Hong Kong, Singapore, Switzerland, Ireland and parts of Germany. The product is sold only after medical professionals have been trained in the use of the product. Specialized registered nurses are employed to provide in-hospital training for operating room and burn unit personnel. By early 1997, more than 300 surgeons had been trained in the United States and Canada, as well as an additional 300 in Europe and Asia in the use of Integra Artificial Skin. 6.3.3 Development Status Other companies are moving swiftly to develop and commercialize additional skin replacements and substitutes. Investigational products from Organogenesis, Ortec and Purdue University are discussed in the following sections. 6.3.3.1 Organogenesis Apligraf, being developed by Organogenesis, is a full-thickness living skin substitute which contains both dermal and epidermal layers. The product is intended for the treatment of wounds, including chronic wounds, skin surgery wounds and burns. In 1996, Organogenesis launched a clinical trial to assess the efficacy and safety of Apligraf for the treatment of diabetic ulcers. The FDA has granted expedited review status of the company's PMA for the product's use in diabetic ulcers. A PMA for the treatment of venous ulcers was also given expedited review status by the FDA. Apligraf is a organotypic tissue product which consists of complex tissue with living cells organized like native tissue. The upper layer of Apligraf is composed of living human 1997, Medtech Insight, LLC 6-12 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements epidermal cells (keratinocytes), and the lower layer consists of living human dermal cells (fibroblasts) in an organized dermal matrix. These cells can interact with the wound bed and directly contribute to the wound healing process. Among the fundamental raw materials needed to manufacture Apligraf are keratinocytes and fibroblasts which are derived from donated infant foreskins. The lab separates the different cell types and keeps them growing so that a dozen donations could provide enough material to treat the world. One postage stamp-sized piece of human foreskin can produce 200,000 (approximately four acres) of Apligraf. Organogenesis entered into a marketing agreement with Sandoz (Novartis) in January 1996. The agreement entered into with Sandoz Ltd. grants the company global marketing rights to Apligraf in exchange for bearing all sales and marketing costs and giving Organogenesis per unit manufacturing payments as well as royalties on all Apligraf sales. Sandoz also contributes strong representation in key markets as well as extensive expertise in marketing breakthrough medical products. In April 1997, Apligraf was approved in Canada, and Novartis is preparing to launch the product in this country. 6.3.3.2 Ortec In April 1996, Australian physician, Mark Eisenberg, MD, reported findings on a new cultured skin technology to the National Conference of the Australian Wound Management Association. The study showed that an experimental skin replacement technology, Composite Cultured Skin (CCS), is a promising treatment for children suffering from recessive dystrophic epidermolysis bullosa, a congenital skin conditional characterized by painful ulceration and widespread permanent scarring resulting in deformity of the hands and feet. The results suggested that CCS can be an effective addition to the surgical management of the disease’s deformities, and it can reduce the need for autografts. In addition, CCS also helped restore the functioning and appearance of the children's fingers. Ortec holds exclusive worldwide rights to the CCS technology under a licensing agreement with Dr. Eisenberg, who is the developer of CCS. In the United States, CCS is being evaluated in a clinical trial for treatment of burns, under an Investigational Device Exemption (IDE) granted by the FDA. This product will also be evaluated in patients with chronic dermal ulcers at Rockerfeller University Hospital in New 1997, Medtech Insight, LLC 6-13 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements York. Enrollment of patients in that trial is targeted for completion by the end of the third quarter 1997. The product is derived from human dermal and epidermal cells (infant foreskins), which can be grown in large quantities and cryopreserved. After thawing, the two cell types are cultured on a proprietary collagen matrix, forming a "biologically active dressing." The dressing is then applied directly on a wound site. According to Ortec, CCS differs from Organogenesis' Apligraf in its collagen matrices and the methods used in culture and cells onto the collagen matrices. 6.3.3.3 Purdue University In a study that is being conducted at Purdue University, a biomaterial derived from small intestinal submucosa (SIS) is being used to induce the healing of recalcitrant skin wounds resulting from the use of prosthetic devices. Treatment options for these patients are limited, and repeat reconstructive surgical procedures are often necessary. Since continued use of the prosthetic device is a necessity for these patients, a suitable exogenous material that could fill subcutaneous spaces, promote vascularization in ischemic tissues, and serve as a skin covering would be a significant benefit. Small intestinal submucosa has the ability to stimulate or induce host tissue to proliferate, remodel and even regenerate into a type of connective tissue that is appropriate for the particular location in the body where the material is placed. SIS supports epithelial growth, neovascularization and infection resistance. The implanted SIS is resorbed within 60 to 90 days leaving no material against which the host can mount an inflammatory response. The study aims to optimize these properties for the local treatment of skin wounds caused by prosthetic devices. Various forms of xenogeneic SIS will be used to treat these wounds, including SIS with attached growth factors EGF, FGF and PDGF. Measured variables will include wound contraction, vascularization, epithelialization, infection resistance and mechanical properties of the remodeled tissue. 6.3.4 Skin Replacement and Substitute Market Analysis Skin replacements and skin substitutes compete mainly in a discrete section of the overall burn market, namely, the severe burn segment. These innovative products will have a marketing edge over the next few years; however, their rapid growth is bound to be somewhat impeded by the introduction of growth factors, possibly as soon as 1998 or 1999. 1997, Medtech Insight, LLC 6-14 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Although these skin replacements and growth factors will compete in the same market segments, they can also be used to complement one another. For example, growth factors could be used on replacement skin to enhance angiogenesis, skin replacement acceptance, and remodeling using patient's own cells. As shown in Exhibit 6-3, the skin replacement and substitute market is expected to increase from $10 million in 1996 to $15 million in 2002 at an average annual rate of 6.9%. As shown in Exhibit 6-4, there were three competitors in the market in 1996: Genzyme Tissue Repair, Integra LifeSciences and LifeCell. Genzyme Tissue Repair was the market leader with a 50% share, while Integra and LifeCell composed the remaining half of the market with 30% and 20% of the market, respectively. These market positions are bound to change over the next several years as new products, such as Advanced Tissue Sciences and Organogenesis, are used for both burn and ulcer applications. 1997, Medtech Insight, LLC 6-15 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Exhibit 6-3: U.S. Skin Replacement and Substitute Market Forecast, 1996-2002 Year Sales Growth 1996 $10M — 1997 11 6.7% 1998 12 7.5 1999 13 8.0 2000 14 7.1 2001 14 6.4 2002 15 5.6 CAGR 1997-2002 6.9% Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 6-16 #RP 181303 Chapter 6: Synthetic/Biosynthetic Dressings and Skin Replacements Exhibit 6-4: 1996 Skin Replacement and Substitute Market, Share by Supplier Supplier Sales Market Share Genzyme Tissue Repair $5.1 50% Integra LifeSciences 3.1 30 LifeCell 2.0 20 $10.2M 100% Total Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 6-17 #RP 181303 Chapter 7: Growth Factors 7. GROWTH FACTORS The process of wound healing is orchestrated in part by the release of and response to peptide mediators. These macro-molecules are released at the time of original injury by platelets, leukocytes and local tissue to stimulate the proliferation of new connective tissue, blood vessels and epithelium in the injury site. As inflammation proceeds to tissue replacement, local expression of these growth factors controls the rate and extent of repair. Since these proteins are all distinct gene products, elaborate regulation can occur at the cellular level. In addition, many growth factors are produced in latent forms or linked to carrier molecules. Growth factors can be released from the extracellular matrix during its turnover, and they can be sequestered by the newly deposited tissue matrix. These potent molecules are involved in normal and pathologic healing, and there are substantial experimental data demonstrating their ability to alter the rate of repair. Despite the knowledge gained through experimental data, much needs to be learned about delivering and combining growth factors as well as protecting them from degradation to obtain clinically effective results. New modalities such as gene therapy, use of anti-proteases and wound pretreatment could improve the utility of these potent molecules. Growth factors have caused a good deal of clinical and manufacturing interest. Some observers feel that too much attention has been devoted to a technology that may never be fully realized. They note that growth factors may not reduce hospital costs, may not heal all wounds or ulcers, cannot prevent wound/ulcer reoccurrence, and may, in fact, be harmful because of their close interrelationship with carcinogenic cell stimulation. Many also think the advantages of growth factors are exaggerated due to the body's own miraculous ability to heal itself by natural pathways. Others believe the time is right and growth factor technology will change not only how chronic wounds are healed, but speed the healing of normal incisions and wounds and possibly eliminate proliferative scarring (that is, keloid and hypertrophic scar formations). Although numerous growth factors have been identified, this chapter will be limited to those that have been established in the wound healing literature. These growth factors include fibroblast growth factors (aFGF and bFGF), transforming growth factors (TGF-alpha and TGF-beta), epidermal growth factor (EGF), platelet-derived growth factors (PDGF), insulinlike growth factors (IGF-I and IGF-II) and interleukins (IL-1 and IL-2). 1997, Medtech Insight, LLC 7-1 #RP-181303 Chapter 7: Growth Factors 7.1 Normal Effects of Growth Factors Normal wound healing progresses through a series of specific growth factor secretions and specific cell stimulations. At injury, platelets degranulate at the site and release their alpha granules into the wound. Platelet-derived growth factor, TGF-alpha and EGF are then released. After arriving at the wound site, neutrophils are attracted to these cytokines and produce TGF-beta and interleukins. Macrophages appear and secrete large quantities of TGFs, PDGF, FGFs, interleukins and macrophage angiogenesis factors throughout the wound healing process. This combination of factors produces the granulation tissue which fills the wound cavity. Fibroblasts and endothelia produce IGFs and endothelins. Additionally, PDGF stimulates wound contraction, and both EGF and PDGF stimulate epidermal cells to cover the granulation tissue with epithelium. Exhibit 7-1 presents a summary of the biological events in the repair of soft tissues. Recombinant growth factors are exact copies of cloned peptides; however, recombinant growth factors may have subtle biochemical differences. Human recombinant PDGF is a homodimer of two B chains, whereas in the natural state in the body (in vivo), it is found as a three-dimeric chain. Additionally, in the natural state some peptides are heavily glycosylated peptides, whereas in the recombinant state they are nonglycosylated, such as with granulocyte macrophage colony stimulating factor (GM-CSF). Recombinant growth factor manufacturers are aware of these differences and strive to make growth factors of the same or greater bioactivity. As more manufacturers enter this market and more growth factors are produced for future commercialization, the ability to maintain the correct bioactivity to achieve specific therapeutic results will be an issue. 1997, Medtech Insight, LLC 7-2 #RP-181303 Chapter 7: Growth Factors Exhibit 7-1: Sequence of Biological Events in the Repair of Soft Tissues Phase Amount of Time Following Injury Mechanisms Coagulation Immediate Release of growth factors to initiate healing cascade Acute inflammatory 0-4 days Macrophages clear wound of debris; release of growth factors Collagen synthesis 3-30 days First phase of collagen repair with fibroblasts producing scar collagen; mediated by growth factors Remodeling 14 days-1 year Second phase of collagen repair; remodeling and crosslinking of collagen fibrils Completion of repair Beyond 1 year Unknown mechanisms Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 7-3 #RP-181303 Chapter 7: Growth Factors 7.2 Categorization of Growth Factors There are many different types of growth factors. Initially, these proteins were named for their tissue of origin, target cell specificity or activity in cell cultures. Unfortunately, much confusion has occurred as research revealed that growth factors have multiple functions, target cells, and tissue and cellular origins. As with transforming factors alpha and beta, the proteins have similar names but do not share the same molecular homology and are chemically distinct. In fact, TGF-alpha shares a similar homology with EGF. As more products emerge from clinical trials and approach commercialization, the nomenclature will need to be standardized. Growth factors are small polypeptide molecules (that is, proteins) which are secreted by a group of cells through autocrine (produced and utilized by the same cell, such as EGF), paracrine (produced by one cell and utilized by another, such as TGF and PDGF) or endocrine (delivered through the blood system, such as IGF I and IGF II) control. Unlike blood-borne hormones (that is, insulin or epinephrine), growth factors act locally or near their point of secretion. Growth factors do not cross cell membranes because they are proteins, and therefore, these polypeptide bind to receptors on the outer surface of the cells. The bound growth factor activates the receptor to transmit a message to the intracellular components. Based on the message, a biochemical response causes the stimulation or inhibition of cell growth. Growth factors perform one or more of the following functions: stimulating cells to proliferate, attracting cells to move and proliferate or altering the phenotypic state of the cell. Mitogen activity, regulating cell division/proliferation, can be further classified into competence or progressive factors. Before a cell can divide, it must be stimulated to move from a resting stage (GO) to a state of readiness to replicate DNA and divide (G1). Competence factors stimulate cells to transform from the GO to G1 state. Once the cells enter the G1 state, progressive factors are needed to complete the cellular division cycle. Plateletderived growth factor and EGF are competence factors which stimulate cells in the GO state. IGF-I is a progressive factor, stimulating cells to divide once they have achieved the G1 state. Factors that alter the phenotypic state of the cell are called transforming factors. Chemoattractants make cells move, by either chemotactic or chemokinetic factors. Chemotactic factors work through cell receptors on the surface or cell membrane. Higher concentrations on one side of the cell cause a target cell to move in a given direction. Chemokinetic factors increase the rate of movement. 1997, Medtech Insight, LLC 7-4 #RP-181303 Chapter 7: Growth Factors Most knowledge of growth factors has been learned through isolated in vitro cellular cultures and in vivo animal models. Animal models provide the most significant data regarding the complex interaction of growth factors with systemic functions of the body. Performance of growth factors may differ between in vitro and in vivo studies, indicating that another growth factor or cellular presence may be needed to stimulate certain growth factors. Additionally, in the presence of some other peptides, growth factors may exhibit stimulatory or inhibitory activities. For example, TGF-beta stimulates the growth of fibroblasts in the presence of PDGF, but inhibits the growth of fibroblasts in the presence of EGF. In vitro studies reveal that control of growth factor effects depends on the concentration of growth factors as well as receptor sensitivity. For example, FGF and PDGF are stimulatory at low concentrations but are inhibitory at higher concentrations. While recombinant growth factors are not commercially available, a number of companies are developing specific growth factors which promise to impact all phases of wound repair. These growth factors include FGFs, TGF-alpha and TGF-beta, EGF, PDGF, IGF-I and IGFII and interleukins. 7.2.1 Fibroblast Growth Factors Fibroblast growth factors (FGFs) were one of the first growth factors to be isolated and identified. FGF is a term that describes a number of heparin-binding growth factors. In 1985, the amino acid structures and molecular weights for FGFs were determined. The amino acid polypeptides for basic FGF (bFGF) was 146, and the molecular weight was 18,000 daltons. The amino acid polypeptides for acidic FGF (aFGF) is 140, and the molecular weight was 16,000 daltons. The structural homology of the two FGFs share 50-55% homology. The bFGF gene is located on human chromosome 4, and aFGF is on chromosome 5. The homology likeness and close chromosomal approximation indicate that they share a common ancestral gene and possibly became separate gene products through the process of gene duplication and evolutionary divergence. The broad specificity of both aFGF and bFGF for a number of target cells, such as endothelial and connective tissue cells, coupled with their widespread distribution within the body, suggests that they have reparative functions. However, aFGF appears to be 30-100 times less potent than bFGF. It is not known how FGF reaches the cell exterior because neither the bFGF or aFGF gene codes for a typical single polypeptide sequence. Current 1997, Medtech Insight, LLC 7-5 #RP-181303 Chapter 7: Growth Factors hypotheses are that FGF may be released during cell lysis after tissue injury or during cellular death. If FGF is primarily released in accordance with either one of these two hypotheses, it further substantiates the factors’ role in tissue repair and wound healing. bFGF stimulates various cell types, including endothelial (endocardium, capillaries and large blood vessels) cells, vascular smooth muscles, fibroblasts, myoblasts, chondrocytes, osteoblasts, melanocytes and mesothelial cells, to either proliferate and migrate or be inhibited and repressed. Of all the growth factors currently under investigation, only bFGF can trigger all of the phenomena associated with angiogenesis. FGFs are potent mitogens for endothelial cells and have been used to create autogenous endothelial cell linings for vascular prostheses. FGF is bound strongly by heparin-related matrix components and has been identified in significant amounts in the extracellular matrix. This widespread inactive pooling of FGF suggests that it is ready to be released at any site of injury in the body. Such widespread cell stimulation or inhibition may indicate that FGF is a primary stimulating factor in early embryonic development. Recombinant bFGF used on full-thickness wounds stimulates significant dermal healing, increased granulation tissue thickness, capillary formation and increased tensile strength. bFGF is mitogenic for epidermal cells as well as connective tissue cells and has been used for culturing human epidermal keratinocytes by adhering bFGF to a collagen matrix in order to formulate a collagen-based dermal skin replacement. Scios scientists were first to clone and produce recombinant human bFGF. Scios holds patents in the United States and Europe covering the manufacture, use and sale of recombinant human bFGF. In October 1996, Scios Inc. and Wyeth-Ayerst, the pharmaceutical division of American Home Products Corporation, announced the signing of a collaboration agreement for the joint development and commercialization of Scios' Fiblast (bFGF), for the treatment of neurological and cardiovascular disorders. Fiblast is in Phase I/II clinical trials for stroke and coronary artery disease (CAD) and in preclinical studies for peripheral vascular disease (PVD). Under the terms of the agreement, Wyeth-Ayerst and Scios will collaborate in the development and commercialization of Fiblast in North America, where the companies will share development costs and profits. Scios has granted Wyeth-Ayerst exclusive marketing rights outside of North America and certain Pacific Rim countries and will receive royalties on sales outside of North America and payments for bulk drug supply worldwide. 1997, Medtech Insight, LLC 7-6 #RP-181303 Chapter 7: Growth Factors Wyeth-Ayerst will make a $12 million upfront payment in cash and will also pay Scios milestone payments upon achievement of all key development events. In addition, WyethAyerst will provide a $12 million line of credit that Scios may draw upon from time to time to fund expansion of its manufacturing facility for Fiblast. The total of all payments including the line of credit could reach $56 million. 7.2.2 Transforming Growth Factors Transforming growth factors (TGFs) have the ability to alter the phenotype of some cells into transformed cells. Although TGFs have the ability for angiogenesis in vivo, TGF-alpha and TGF-beta are structurally distinct. TGF-alpha is synthesized as a transmembrane protein precursor. It is a 50-amino-acid polypeptide with a molecular weight of 5,700 daltons. Although structurally different than TGF-beta, it does share a 35-42% homology to EGF and binds to the EGF receptor. It also shares a 30 percent homology to the vaccinia growth factor and can bind to the same cell surface receptor. The gene for TGF-alpha is located on chromosome 2. TGF-alpha is produced by keratinocytes, activated macrophages and degranulating platelets. TGF-alpha has mitogenic, angiogenic and chemotactic influences on endothelial and epidermal cells. TGF-alpha also accelerates the healing of burns, and increases the area of regenerated epithelium. TGF-beta is a 112-amino-acid polypeptide with a molecular weight of 25,000 daltons. TGFbeta stimulates the production of fibronectin and collagen by fibroblasts. This function suggests that its role is in the latter stages of wound repair, for strengthening and remodeling of the wound. In the presence of other growth factors, it has either mitogenic or inhibitory actions. For example, TGF-beta, in vitro, stimulates the growth of fibroblasts in the presence of PDGF, but inhibits their growth if EGF is present. Genzyme Tissue Repair has licensed recombinant TGF-beta-2 from Celtrix Pharmaceuticals for use in the treatment of chronic skin ulcers. Genzyme Tissue Repair is collaborating with Celtrix on the use of this growth factor, which supplements the body’s own production of TGF-beta-2. Using a collagen sponge as a delivery vehicle, a consistent dose of the growth factor is released into the wound over time. Genzyme Tissue Repair will manufacture the required amount of growth factor needed for Phase III clinicals, and after market introduction, the company will provide Celtrix with royalty payments based on cumulative sales. 1997, Medtech Insight, LLC 7-7 #RP-181303 Chapter 7: Growth Factors 7.2.3 Epidermal Growth Factor In 1986, Levi-Monthalcini and Cohen were awarded the Nobel prize for their work in unraveling the role of EGF and other growth factors. EGF is synthesized as a transmembrane protein precursor. It is a 53-amino-acid polypeptide with a molecular weight of 6,000 daltons. The EGF gene is located on chromosome 4 and was first detected in 1962, when Dr. Stanley Cohen injected rodent salivary gland extract into newborn mice. He found that the eyes of the EGF-treated mice opened earlier than those of the control group. Having noted that most animals tended to lick their wounds and EGF is present in significant quantities in the saliva, researchers in 1979 investigated the effects of EGF on open wounds. Removing the submandibular glands of mice, resulted in a reduced rate of spontaneous wound closures. Repeated application of EGF further substantiated EGF's role in wound closure because the wounds healed at a faster rate. EGF is a competence factor that stimulates epithelial and mesenchymal cells to replicate DNA. EGF is angiogenic and chemotactic for endothelial cells and has mitogenic influences over epithelialization and keratinization. EGF apparently affects mesenchymal cells by stimulating proliferation of the dermis in partial-thickness wounds and increasing tensile strength of surgical incisions. EGF may also affect wound healing indirectly by enhancing the production of several growth factors, such as TGF-alpha, or by modulating the activity of growth factors delivered to the wound. EGF appears to promote the rate of migration in structures of the skin which do not normally undergo rapid proliferation, such as the hair follicles, sweat glands, and arrectores pilorum muscles. This characteristic may lead to further investigation of this growth factor for conditions such as male baldness. A major concern regarding EGF use is the possibility that abnormal cell transformations will be permanently induced, and therefore, continually regenerated. Growth control mechanisms in cutaneous wound healing using EGF are the central focus of a study being conducted at Vanderbilt University. EGF and EGF-like ligands, their common receptor (EGF-r tyrosinekinase), and subsequent phosphorylated substrates are being studied within unique wound healing environments. To define epidermal wounding responses, the EGF signaling cascade are being compared in migrating and proliferating populations of wound keratinocytes, both in vitro and in vivo superficial trauma (mouse tail tape stripping). Deeper wound environments (excisional porcine wounds, human burns and human chronic 1997, Medtech Insight, LLC 7-8 #RP-181303 Chapter 7: Growth Factors wounds) are being used to define and contrast cytokine mechanisms which control the extracellular matrix proteins. 7.2.4 Platelet-Derived Growth Factors Platelet-derived growth factor (PDGF) is primarily a human serum growth factor. It is a 124amino-acid, cationic glycoprotein with a molecular weight of 30,000 to 32,000 daltons. Although originally discovered in platelets, it is also found in monocytes, macrophages, endothelial cells, smooth muscle cells and various transformed cells. PDGF has mitogenic, chemotactic and angiogenic activity; however, the mitogenic activity is dependent on the presence of other growth factors in the serum, whereas its chemotactic activity is not dependent on other growth factors. Studies indicate that PDGF is a potent mitogen for fibroblasts, glial cells and smooth muscle cells. It is also a significantly strong chemoattractant for neutrophils and macrophages. A combination of growth factors, such as PDGF and the IGFs, stimulates greater collagen deposition in the wound chamber than does PDGF alone. This suggests that PDGF requires progressive factors such as the IGFs in order to complete cellular replication. PDGF has no effect on the growth of epithelial cells or endothelial cells; these cells have no receptors for PDGF. Regranex, a wound healing agent manufactured by Chiron and in clinical development by Johnson & Johnson, is showing promising results. Regranex (becaplermin) is a formulation containing recombinant human platelet-derived growth factor (rhPDGF-B). Its development is being fostered by a partnering in which Chiron manufactures the growth factor and Johnson & Johnson conducts the trials and is responsible for regulation, marketing and sales. Chiron and Johnson & Johnson filed Biologics Licensing Applications (BLAs) with FDA for Regranex Gel in early 1997. In September 1996, preliminary Phase III trial results showed promise for the wound healing agent. 7.2.5 Platelet-Derived Wound Healing Formula Platelet-derived wound healing formula is a mixture of growth factors obtained specifically from platelets. This mixture stimulates rapid formation of capillary-dense granulation tissue which covers exposed soft tissue and bone. After granulation tissue forms, rapid reepithelization occurs, followed by epithelial maturation and function. 1997, Medtech Insight, LLC 7-9 #RP-181303 Chapter 7: Growth Factors Curative Health Services, formerly known as Curative Technologies, Inc. prescribes its platelet-derived wound healing formula, Procuren, as part of its own wound care center treatment protocols. Procuren contains at least five locally acting growth factors from the alpha granules of platelets: PDGF, PDAF, platelet-derived EGF, TGF-beta and platelet factor 4 (PF-4). Procuren does not require FDA approval because it is an autologous treatment using the patient's own platelets. Approximately two ounces of the patient’s blood is drawn and sent to Curative’s laboratory where a special process is used to extract the platelets from the blood. The growth factors are then prepared in a colorless liquid which protects them from damage. This serum is used for a patient's own treatment, thus, eliminating transmission of disease from other human blood products. 7.2.6 Insulin-like Growth Factors Insulin-like growth factor (IGF) is a somatomedin, an anabolic polypeptide with a molecular weight of 7,500 daltons. Somatomedins circulate in the plasma in an inactive state bound to a larger protein. No other tissue growth factor is found in such significant quantities in the bloodstream. Somatomedins function in the synthesis of glycogen, protein and glycoaminoglycans as well as promote the transport of glucose and amino acids across the cell membrane. Fibroblasts and endothelial receptors have a high affinity for somatomedins. This has resulted in further investigation for its possible role in wound repair. Somatomedins appear to stimulate collagen synthesis in cultured fibroblasts, and therefore, they may be a primary factor in the development of proliferative scar formation such as keloid and hypertrophic scar formation. Somatomedins appear to play a significant role in fetal development. Clinical studies indicate that they are present in amniotic fluid and have receptors in a variety of fetal tissues. Furthermore, there is a positive correlation between IGF levels in fetal blood and the birth weight of the baby. IGF earned its name because of its 50% homology to proinsulin and because it exhibits insulin-like activity: it can bind to and react with insulin receptors. IGF-I, which is identical to Somatomedin-C, is known to be a mitogen for bone cells (osteoblasts), smooth muscle cells, fibroblasts and other cell types. IGF-II, another insulin-like growth factor, is a neutral somatomedin. 1997, Medtech Insight, LLC 7-10 #RP-181303 Chapter 7: Growth Factors In July 1997, Celtrix Pharmaceuticals, Inc. initiated a Phase II clinical trial for the treatment of burns by using SomatoKine, a novel IGF-BP3 complex. The product is designed for use in regenerating lost muscle, bone and other tissues. SomatoKine targets acute traumatic injuries, such as severe burns and hip fractures in the elderly. Other potential indications include severe osteoporosis and protein-wasting diseases associated with cancer and AIDS. The primary objectives in the burn study are to speed the patients’ recovery time and reduce their hospital stay. The length of time spent in a burn trauma center is directly related to the time required for sufficient healthy tissue to be harvested and then grafted at burn sites. With the trauma of severe burns, key metabolic processes are impaired, and the patient's body is unable to properly utilize nutrients essential for tissue repair and regeneration. As a result, graft harvesting is limited, and healing is slow. An associated loss of muscle mass further reduces the patient's strength and mobility. Research suggests that low blood levels of IGF-I may contribute significantly to these problems and that supplementation may restore healthy metabolic processes required for healing. SomatoKine is the recombinant equivalent of the naturally occurring complex formed in bloodstream by IGF-I and its major binding protein, BP3. Celtrix's Phase II clinical feasibility study for burns is being conducted in the United States and is expected to involve up to 40 severely burned patients, including adults and children. Participants will be randomized to receive either SomatoKine therapy or a placebo during standard burn care, and they will be evaluated through two graft cycles. The primary clinical target is faster healing of the donor site which could shorten the length of hospitalization. The study is expected to be completed during the first half of 1998. In January 1997, the FDA gave approval for GeneMedicine Inc. to begin Phase I clinicals of its IGF-I product. In a series of animal models, GeneMedicine has shown that its IGF-I Gene Medicine product promotes nerve and muscle growth and provides sustained expression of the IGF-I protein for several weeks. IGF-I Gene Medicine incorporates the human IGF-I gene with a proprietary gene delivery system, the polymeric PINC (Protective, Interactive, NonCondensing) system, which enables gene delivery to skeletal muscle. This product is designed to provide sustained, localized expression of the IGF-I protein after direct intramuscular injection to repair nerves and restore muscle mass and strength. The company's non-viral approach to gene therapy is intended to reduce the likelihood of an immunogenic response and thereby allows for repeat administration over a prolonged period of time. 1997, Medtech Insight, LLC 7-11 #RP-181303 Chapter 7: Growth Factors 7.2.7 Interleukins Interleukins are monokines that have fibroblastic stimulating activity in vitro. They appear to have a role in tendon, cartilage and bone remodeling, as they stimulate the production of synovial cells. Interleukins also have pyrogenic activity and may regulate fibroblast proliferation and fibrosis in chronic inflammatory states. Interleukin-2 is a 15.5-kilodalton protein. It is produced by activated T-lymphocytes and is known to enhance the T cellmediated immune response. 7.2.8 Other Growth Factors Regeneron is a drug-discovery firm engaged in researching protein growth factors, their receptors and mechanisms of action for the treatment of neurodegenerative disease, nerve injury and peripheral neuropathy. The U.S. Patent and Trademark Office has granted U.S. Patent No. 5,521,073 to Regeneron which covers a gene that encodes the human Tie-2 ligand protein and the method of using that gene to make the Tie-2 ligand protein. The Tie-2 ligand protein is a growth factor involved in the formation of blood vessels, and its receptor is present on hemopoietic stem cells. Regeneron scientists have identified the first member of the second family of growth factors specific for blood vessels, following exploration of a class of receptors expressed on blood vessels known as the Tie receptors. Researchers then developed a technology allowing them to molecularly clone the growth factors that bind to the receptors. Regeneron reported that evidence demonstrated the vascular endothelial growth factor (VEGF) family and the Tie growth factors are central to vessel formation and that they work together. Further, the Tie receptors are expressed on hemopoietic stem cells which are precursors of many different blood cells, and could be important in regulating blood cell formation in the hemopoiesis process. In September 1996, Human Genome Sciences unveiled six new therapeutic proteins, and by the end of 1997, the company plans to bring one or two of these proteins into clinical trials. One of the compounds, a keratinocyte growth factor, may be capable of repairing skin as well as spur hair growth. The other compounds include a macrophage colony inhibition factor and two myeloid progenitor inhibitory proteins. The macrophage or immune cell inhibitor regulates the development of cells involved in inflammation and could be used to treat autoimmune diseases like rheumatoid arthritis and lupus. In addition, this factor may inhibit tissue destruction due to wounds and other injuries. The progenitor inhibitory proteins seem to protect bone marrow cells from chemotherapy drugs, without hurting the drugs’ 1997, Medtech Insight, LLC 7-12 #RP-181303 Chapter 7: Growth Factors performance, perhaps allowing for greater doses. Besides these, the company also is developing a motor neuron growth factor and an antiviral protein. A major goal of research being done at the University of Texas is to identify factors that enhance the healing of chronic pressure ulcers. In recent reports, recombinant human growth hormone (rhGH) when administered systematically improved wound healing and whole body protein synthesis in severely burned patients and increased plasma pre-albumin and retinolbinding protein concentration in malnourished surgical patients. In addition, it is hypothesized that rhGH may increase the healing of chronic pressure ulcers in paraplegic patients. 7.3 Development Status Studies of growth factors are an outgrowth of cancer research to find the biochemical mechanism for controlling malignant cell proliferation. Understanding pathogenic proliferation meant first understanding normal proliferation at the cellular and biochemical level. New therapies for wound healing, require a deeper understanding of wound healing at the cellular level. The same growth factors that stimulate carcinogenic proliferation also trigger wound inflammation and repair. Availability of the technology to isolate, purify and manufacture recombinant growth factors, enabling production of large quantities for commercialization, further promulgated growth factor research. Despite the relationship between normal and malignant cellular growth, researchers believe that the dosage window for efficacy may not overlap the dosage window for safety. When commercialization of growth factors is achieved, it will have a profound clinical impact for surgical procedures and chronic wounds, ulcers or burns. Although initially they would be used on the most chronic wounds and ulcers, as product costs decline, they could be preoperatively on the surgical incisions site to promote rapid wound healing. 7.3.1 Concerns about Growth Factors There are drawbacks with the current state of growth factor technology that may inhibit broad usage. First, growth factors are polypeptides, which are inherently chemically unstable. This is a significant issue for transportation and handling. Second, growth factors also have short half-lives (most are active for only a few hours), making repeated applications necessary as well as costly, with unused amounts discarded. Third, the wound environment contains 1997, Medtech Insight, LLC 7-13 #RP-181303 Chapter 7: Growth Factors significant quantities of proteolytic enzymes, which can degrade growth factors, ultimately neutralizing their therapeutic effect. Fourth, the dosage level to achieve specific results will need to be standardized. Both the science of wound healing and diagnostic assessment tools will also need to be further developed. Accurate assessment of the status of each wound will be necessary to ensure growth factor therapy will be complementary. Specifically, the early stages of wounds will need early stage growth factors; and later stage wounds will need end stage growth factors. Finally, the cost of the growth factors will need to be reduced to capture wider markets and increase the likelihood of third-party reimbursement. 7.4 Growth Factor Market Potential Considerable time, effort and money have been devoted to growth factors in hopes that the technology can yield high returns, both clinically and financially. Growth factor technology will impact all areas of medicine, with a potential dollar market volume exceeding $4-5 billion. Industry experts predict that the potential market for IGF-I alone is $1 billion in the United States. Many believe recombinant growth factors will not be commercially available until 1998. The commercialization of growth factors could have a profound impact on existing wound care products such as cleansing agents, debridement agents, wound closure devices and wound coverings, including biological skin replacements. Cleansing agents could incorporate growth factors (if biochemically stable for long periods) to promote granulation of the wound bed. Sutures with growth factors could enhance surgical incision repair, providing earlier closure, stronger tensile strength and decreased scar formation. In addition, wound dressings could provide the vehicle for growth factor therapy, providing a stable environment. Due to the vast applications of growth factors in wound management, the revenue potential for these unique products is difficult to forecast; however, a conservative projection is that this market could generate revenues of over $1 billion. Its revenue potential hinges upon the efficacy of growth factors and their long-term effects, which are being researched in clinical trials. 1997, Medtech Insight, LLC 7-14 #RP-181303 Chapter 8: Instrumented Wound Healing 8. INSTRUMENTED WOUND HEALING The methods of improving wound healing can involve instrumented and physical modality technologies. These products include compression devices, whirlpool, mechanically assisted devices and hyperbaric oxygen, some of which are in current use or are in the process of being evaluated. Exhibit 8-1 summarizes the estimated sales of these products for the years 1996 and 2002, and the expected compound annual growth rate (CAGR) from 1997-2002. 8.1 Compression Devices There are three classifications of compression devices: passive compression bandages, active sequential/mechanical leg compression devices and dynamic foot compression devices. Passive dressings are applied to leg and foot ulcerations, while the other two classifications are used for deep vein thrombosis (DVT). Sequential and dynamic compression pumps are not used extensively for chronic wounds because their use is reimbursable only when lymphedema is involved. Most venous ulcers, therefore, are treated with passive compression bandages such as the Unna boot-type bandaging; this and other devices are described in the following subsections. 8.1.1 Passive Compression The most common passive compression devices are elastic stockings, elastic/ace wraps, selfadherent leg dressings and multi-layered bandages. One multi-layered bandage is know as the Unna boot and consists of several layers of vertical bandage strips covered with various types of elastic and inelastic wrappings. These bandages are usually made by the clinician and involve layers of padding, non-elastic or self-adhering wrap, and protective bandaging of variable elasticity. The Profore bandage, manufactured by Smith & Nephew, consists of a wound contact layer and a four-layer bandage system which is used to provide greater pressure at the ankle, decreasing to the calf. This dressing may be left in place for up to a week after the first few weeks, when excessive exudate may be present and more frequent changing is required. There are several products of this type manufactured by Beiersdorf-Jobst, a German company with a U.S. branch in North Carolina. The UlcerCARE Compression Liner (10 mm Hg) used in conjunction with the UlcerCARE Therapeutic Stocking with Zipper (30 mm Hg) provides the clinically recommended level of graduated compression. The Gelocast Unna boot consists of nonraveling gauze that is impregnated with a zinc oxide formula and may be worn for five ©1997, Medtech Insight, LLC 8-1 #RP-181303 Chapter 8: Instrumented Wound Healing Exhibit 8-1: U.S. Market for Instrumented Wound Healing Devices, 1996 and 2002 Physical Modality 1996 Sales 2002 Sales CAGR Compression Bandages $231.0M $298.0M 5.2% Sequential Compression 23.0 28.4 4.3 Dynamic Compression 12.0 15.3 5.0 Hyperbaric Oxygen 12.0 5.8 -13.5 Whirlpool 6.0 3.1 -12.4 Lavage 5.6 9.8 11.8 Electrical Stimulation 6.1 11.9 14.3 Electromagnetic Stimulation 4.0 15.1 30.4 Ultraviolet 0.74 Mechanically Assisted Devices 0.57 28.5 118.7 Thermography 0.3 3.7 65.3 Lasers — — — Ultrasound — — — $301.3M $420.4M Total 0.79 1.3 6.9% Notes: The growth rates shown in this exhibit are for the years 1997-2002. Ultrasonic healing devices and lasers for use in wound care are not expected to be available in the forecast period. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 8-2 #RP-181303 Chapter 8: Instrumented Wound Healing to seven days. The Compriform is a custom vascular support, and the Fast-Fit is a graduated compression stocking. Acme United markets the Setopress, a high compression bandage that provides graduated compression starting at over 4 mm Hg at the ankle. The correct level of compression is maintained due to a visual extension guide, in which brown rectangles on the bandage become squares as the correct extension is reached, thus ensuring optimal compression each time the bandage is applied. This dressing is manufactured by Seton Healthcare Group in the United Kingdom. ConvaTec offers the washable SurePress High Compression Bandage and its SurePress Absorbent Padding to be worn underneath the bandage. This product is designed to treat a full range of veno-lymphanic disorders. Another manufacturer in this category, Sigvaris, offers therapeutic medical compression stockings which vary according to material used and compression category. Prizm Medical is focusing on electrotherapy combined with mild passive compression, which involves blanketing the affected area while increasing blood supply and vascular return. Electro-Mesh gloves, socks and sleeves are electrodes that facilitate electrotherapy to the extremities due to their specific configurations for these parts of the body. The neuromuscular stimulators, the portable Z-Tim II and the wearable Micro-Z, cause stimulation to the Electro-Mesh electrodes. The Electro-Mesh sock is in clinical trials and has been effective in the treatment of diabetic foot ulcers. Chronic and acute pain relief and rapid recovery from soft tissue injuries are conditions being treated by these products. Other products and competitors in the passive compression market are the T.E.D. Embolism Stockings and Flex Wrap Cohesive Bandage Roll manufactured by Kendall Healthcare, the Coban Elastic Wrap Bandage manufactured by 3M, the Sof-Kling manufactured by Johnson & Johnson, and the Expandover Elastic Adhesive Tape manufactured by Sherwood-Davis & Geck. Another competitor, Medi USA, L.P., is the U.S. marketing subsidiary of Weihermuller & Voigtmann from Germany. The total market for passive compression devices was $231 million in 1996: $35 million to elastic/ace wraps, $15 million to self-adherent leg dressings, $16 million to multi-layered bandages and $165 million to elastic stockings/T.E.D.s. The total market is expected to grow to $298 million in the year 2002, representing a 5.2% average annual growth rate. ©1997, Medtech Insight, LLC 8-3 #RP-181303 Chapter 8: Instrumented Wound Healing 8.1.2 Sequential Compression Devices A mechanical or sequential compression device (SCD), or compression pump, provides intermittent pneumatic compression which sequentially compresses the leg and thigh in order to cause more blood to go up the leg. Phlebitis, therefore, can be prevented and the leg muscle is moved to prevent ulceration. Several companies produce and market SCD devices which may be employed early in the treatment phase to reduce edema. Beiersdorf-Jobst offers the Jobst Extremity Pump System 7500 (SCD) with pneumatic sleeves. The device consists of three independent chambers with sequential inflation, distally to proximally, to eliminate excess fluid from the extremity. Physiological pressure on the tissue and venous systems are corrected to help reduce edema and venous hypertension. Another product, the Comprilan low-stretch compression bandage, is made of 100% cotton and is recommended for wear between pumping sessions for as long as 10 days. It exerts low pressure when the patient is immobile and provides high resistance to the muscle when the patient is active. Primarily used for patients with DVT, the products are prescribed by physicians and used by nurses in wound care clinics, long-term care facilities and in home care. Employing both hose and wraps together, the leg or thigh is completely covered, therefore, the product cannot be used on patients with casts, pins or high temperatures. In addition, since the wraps are heavy, motion is limited. The wrapping and unwrapping is also labor intensive, and it is difficult to monitor the extremity for color and temperature. The compression pump market totaled approximately $23 million in 1996 and is expected to grow at an average annual rate of 4.3%, to reach $28.4 million by the year 2002. Kendall Healthcare is a leader in this market (48% market share), with their SCD Sequel Compression System. The product is manufactured by Novamedix Ltd. Other competitors are HNE (formerly Huntleigh), Venodyne, Beiersdorf-Jobst, and several other small companies. 8.1.3 Dynamic Compression Devices Dynamic compression devices, also known as foot compression devices, are used primarily for DVT and have been in the marketplace for about five years. Using a surge technique to apply pressure intermittently to the venous plexuses, the blood is moved up the leg from the foot in order to mimic walking. While some patients find the device disturbing at first, after the initial onset of therapy, they tend to find this device less confining. ©1997, Medtech Insight, LLC 8-4 #RP-181303 Chapter 8: Instrumented Wound Healing This newer technology is more cost effective than other types of compression devices, and the wrap is placed around the foot, giving access and visibility to the toes and leg. It can be used on legs with casts, pins and traction. The 1996 market for dynamic compression devices is estimated at $12 million, and is expected to grow at an average rate of 5% to approximately $15.3 million in the year 2002. The primary competitors in this market are Nutech (a division of Kinetic Concepts) and Novamedix (A-V Impulse System; Kendall distributes the product in the United States). 8.2 Whirlpool Therapy Devices Whirlpool therapy has been used in extensively in the past; however, it is no longer popular for the treatment of chronic wounds. Although whirlpool therapy is not thought to enhance the healing of wounds, it is sometimes used to cleanse and debride wounds. There is active concern, however, that wounds could be contaminated by fecal or other contamination in the tanks. The treatment, when it is used, takes place in a physical therapy department of an acute care facility, physical therapy office or long-term care facility. One advancement in the field is the Banks Hydro-Therapy Chair, offered by Keith Products. The product was patented in March 1995 and can be used at home. The Bank Hydro-Therapy Chair is a combined lift chair and whirlpool device which is designed for patients with open wounds or injuries on the lower half of their bodies, such as bed sores or open abscesses. The device is a chair that fits in a bathtub and uses an air blower motor to create a whirlpool which helps to clean and soothe wounds. There are adjustable settings so the patient can be elevated to protect wounds from being irritated against surfaces. The chair costs $1,100 and can be rented for $25 to $50 a week, depending on the geographic location. The companies presently supplying hydrotherapy tanks are Arjo, Burch Manufacturing, Ferno-Washington, Fox Pool, Grand Traverse Technologies, Lumex, Samadhi Tank and Whitehall Manufacturing. The 1996 U.S. market for these products was estimated at $6 million, with an expected average annual decrease of 12.4%. By the year 2002, the market is forecast to decline to $3.1 million. ©1997, Medtech Insight, LLC 8-5 #RP-181303 Chapter 8: Instrumented Wound Healing 8.3 Lavage Devices Pulsed lavage devices have been on the market for more than 10 years. These Class I devices have been used by operating rooms and emergency departments for the irrigation of traumatic wounds. Several have already received 510(k) clearance. These portable, disposable, hand-held lavage products are also known as focused or "local" hydrotherapy devices. A pulsed lavage irrigator for hydrotherapy, which includes a disposable section with a nozzle and hose, can be saved for repeated use on one patient. These units are used by nurses and physical therapists as a bedside or home care alternative to total immersion hydrotherapy. These products avoid the cytotoxic agents which are frequently used in immersion hydrotherapy, such as disinfectants and/or bacteriostatic agents. Although used in the alternate and home environments, they must still be used by skilled healthcare workers and are not yet available for self-care. One such product is the Surgi-Lav by Stryker, Inc., which employs controlled pressure that does not cause trauma at the cellular level. Lavage hydrotherapy continues to increase in popularity. At the 1996 Symposium for Advanced Wound Care, Diane Morgan, BSN, RNC presented the results of a study which demonstrated the efficacy of hydrotherapy/hydrodebridement in the home environment to remove necrotic tissue from the wound bed. With the bio-burden on the wound decreased, the treatment stimulated circulation and healing. A complete line of pulsed lavage irrigation systems is manufactured by Davol, which is a subsidiary of C.R. Bard. The Simpulse PLUS System is nitrogen/compressed and airpowered irrigator and has a VariCare retractable splash shield wound tip with suction tubing and dual spike adapter. The Simpulse SOLO System is a battery-powered irrigator, and the Simpulse VariCare System is battery-powered with three-speed variable control and continuous variable control. Zimmer manufactures the lightweight and mobile Pulsavac III Wound Debridement System, which ranges from a gentle lavage to a forceful debridement of up to 60 pounds per square inch (PSI) for bone cleaning. The Pulsavac is a handgun set with tips and is designed for single use, so there is no risk of cross contamination. The company also sells the Var-A-Pulse Wound Debridement System, which is more portable and has six variable pressure settings capable of handling a variety of wound cleaning applications. With batteries in the handgun, there is also a speed dial at its base which enables quick and easy pressure adjustment. The ©1997, Medtech Insight, LLC 8-6 #RP-181303 Chapter 8: Instrumented Wound Healing Var-A-Pulse requires a standard irrigation source and suction source, and the entire unit is disposable. Selected manufacturers of pulsed lavage systems are presented in Exhibit 8-2. The current market for lavage products is estimated at $5.6 million, and will continue to grow as more units are used in the home and in long-term care. Also, as simpler and less expensive units are designed specifically for wound care use, it is expected that the need for whirlpool therapy will continue to decrease as lavage hydrotherapy increases. Thus, the market is expected to increase at an average annual rate of 11.8% to $9.8 million in the year 2002. 8.4 Electrical Stimulation Products High-volt stimulating devices with settings for pulse frequency and polarity are used for electrostimulation. The amplitude is set to a level that produces a constant number of pulses, and a monophasic-pulsed current with a low charge of about 10-15 micro ohms per phase. This creates a comfortable tingling sensation for the wound care patient. An electrode is placed on top of or inside gauze which has been fluffed and placed on the wound. An alligator clip is attached to the electrode, and the gauze is moistened in order to create a pathway for the flow of current. Each treatment lasts for approximately 30-60 minutes, and the clinician may choose to move the electrode to other places on the wound. Treatment usually consists of one hour per day, five to seven days a week. The Agency for Health Care Policy and Research (AHCPR) guidelines recognize electrotherapy as the only useful physical modality for wound care patients, and all other physical modalities are considered experimental. Electrostimulation therapy for chronic wounds is reimbursable under Medicare and private payers as therapy for edema or pain, but not for wound care. This therapy, therefore, is considered an off-label product in wound management. No electrical stimulation device is approved for use in chronic wounds at this time; however, many physical therapists are using the products with some success. Their involvement is necessary in order to set polarity, waveform, and length of exposure. So far, the devices are used in physical therapy departments, and they are not generally used by nurses or physicians. The potential exists, however, to make these devices more portable and more user-friendly so that patients should eventually be able to apply their own therapy at home. ©1997, Medtech Insight, LLC 8-7 #RP-181303 Chapter 8: Instrumented Wound Healing Exhibit 8-2: Selected Manufacturers of Pulsed Lavage Systems Baxter Healthcare Bedcolab Cabot Medical Circon Davol/C.R. Bard Ethicare Products Meditron Devices/BEI Medical Systems Micro-Aire Surgical Instruments Palisades Dental Stryker Tava Surgical Instruments Valley Forge Scientific Howmedica/Pfizer Zimmer/Bristol-Myers Squibb Note: The typical price for lavage units = $1,895 to $2,250. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 8-8 #RP-181303 Chapter 8: Instrumented Wound Healing Other difficulties with electrical stimulation for wound management is that some research studies have indicated success for patient populations and/or healthcare facilities, while other studies have resulted in negative outcomes. There can also be problems with reimbursement which is usually billed under pain management for edema of the extremity, and not specifically for wound healing. Staodyn has developed a proprietary pulsed technology which has not yet been approved by the FDA after seven years. Furthermore, the FDA is requiring more clinical studies for another Staodyn product, Dermapulse, a wound healing bandage. The company does not have the $l million required to accomplish the studies, but the product is being sold in Germany and may be released in England, Canada and France in 1997. The current market for these products is estimated at $6.1 million, with the average rental cost of $170 per patient for an average of two months of use. The market is expected to grow at an average an rate of 14.3% to $11.9 million in the year 2002. Equipment rental is common in the United States, and the products are usually rented to the attending physician or therapist. Manufacturers, manufacturer dealers and/or manufacturer's distributors are the typical suppliers of these physical modality products. Durable medical equipment (DME) rental companies are used to a lesser extent; approximately 5% in the United States. 8.5 Electromagnetic Stimulation Devices Unlike electrical stimulation devices, the removal of compression or other dressings is not necessary with electromagnetic stimulation, and the devices are used in a physician's office, wound care clinic or physical therapy department. There is even one product, made by Electropharmacology, Inc., which is portable and can be used in a long-term care facility or at home. Staodyn has a device for outpatient and home use, but the size of the unit and requirement for professional administration may limit its penetration in the home or at wound centers. The product is currently only sold internationally. The Smart Magnatherm (Magnatherm 1000), made by International Medical Electronics (IME), is an electromagnetic stimulation device that has been on the market since 1970. FDA approval was not necessary in 1970; however, the product was later approved by the FDA for producing heat in 1973. The heat causes a reduction or elimination of inflammation, exudate and debris in cells. The metabolic rate and blood flow are also increased, which further stimulates healing. Furthermore, oxygenation is increased, and cells are theoretically re-polarized by putting negative ions into the body. The Magnatherm 1000 is a ©1997, Medtech Insight, LLC 8-9 #RP-181303 Chapter 8: Instrumented Wound Healing hospital/ physician's office unit, and the Magnatherm SSP is a mobile/portable unit which was developed in 1974 and cleared by the FDA in 1996. With approximately 10,000 units currently in use, many of these are found in Army, Navy and veteran administration hospitals. The market for electromagnetic devices is estimated at $4 million in 1996. Each 15-minute treatment costs $14, and each patient averages 30 minutes of treatment, three times a week, for approximately eight weeks. The machines are placed on consignment, not sold to physical therapy departments. Although several are on the market with 510(k) approval for pain and edema, none have been approved for chronic wound healing. 8.6 Ultraviolet Wound Healing Devices Ultraviolet (UV) light has been used for the purification of air against such airborne organisms such as tuberculosis. Hand-held devices for the application of UV to wounds have been in existence for more than a decade; however, little research has been done concerning the use of UV on chronic wounds. Even though some physical therapists use UV-C to treat infected chronic wounds to retard or kill bacteria or viruses, the drying effects of UV on the healing wound bed prevent widespread use. There are a limited number of companies involved in this market. Birtcher manufactured a device but discontinued the line when it merged with ConMed. Only two companies are currently involved in the manufacture and distribution of a UV device for wound care: Medfaxx and American Ultraviolet Company. The units are manufactured by American Ultraviolet Company and marketed by Medfaxx. Although the device is being marketed for the treatment of infected wounds, it has not received FDA approval for the treatment of chronic wounds. The market for ultraviolet light therapy is small, and was estimated at $740,000 in 1996. The market is projected to grow at a modest average annual rate of 1.3% to $790,000 in the year 2002. 8.7 Hyperbaric Oxygen Chambers Hyperbaric oxygen therapy is a primary therapy for air or gas embolism, decompression sickness and carbon monoxide poisoning. It is also an important adjunctive therapy for wounds, including radiation tissue damage, compromised skin grafts, necrotizing soft tissue and non-healing wounds. Hyperbaric oxygen decreases the amount of edema, and also ©1997, Medtech Insight, LLC 8-10 #RP-181303 Chapter 8: Instrumented Wound Healing reduces the progression of infection by increasing phagocytic capabilities. In addition, this therapy also increases revascularization which brings more nutrients to the cells. Epithelialization and wound tensile strength are also increased. Hyperbaric oxygen therapy is administered in an air-filled, multi-place (multiple patient) chamber in which patients breathe 100% oxygen at greater than one atmosphere of pressure using a mask or hood. This increases the level of oxygen delivered to the tissues and augments wound healing and repair. The Institute for Exercise and Environmental Medicine at Presbyterian Hospital in Dallas, Texas, enables complex medical care to be provided for more than one patient at one time, thus increasing efficiency. Selected manufacturers of hyperbaric oxygen chambers are presented in Exhibit 8-3. The chambers are large and unwieldy, therefore limiting their usefulness to specialty clinics such as wound centers or special care delivery organizations. Unless significant new research emerges, the use of hyperbaric oxygen therapy for the treatment of chronic wounds is not likely to increase. The hyperbaric oxygen market in 1996 totaled approximately $12 million. The chambers are expensive, and treatment costs average $1,500-$2,000 per patient, fueling a decrease in the market to $5.8 million by the year 2002. 8.8 Mechanically Assisted Wound Healing Devices Two new devices have been developed for use in wounds where the available skin is inadequate to cover the wound. Each product has a slightly different mechanism, but each is considered a mechanically assisted wound healing device. In 1995, Kinetic Concepts introduced the V.A.C. device in the United States after receiving FDA approval. The product, initially launched in Europe in 1994, is a device consisting of a pressure-distributing wound packing, which applies a continuous negative pressure of 50-175 Hg. The device is placed in the wound, and the wound is sealed with an adhesive occlusive dressing. The device has been used at the Bowman Gray School of Medicine at Wake Forest University. V.A.C. was used to treat 150 wounds in 106 patients with a variety of pressure ulcers, statis ulcers, dehisced incisions and other chronic, non-responsive wounds. All of the patients improved with the treatment and did not show any significant wound or systemic complications. This device can be rearranged and reapplied by nursing personnel. ©1997, Medtech Insight, LLC 8-11 #RP-181303 Chapter 8: Instrumented Wound Healing Exhibit 8-3: Selected Manufacturers of Hyperbaric Oxygen Chambers Canty Associates GWR Medical Marine Dynamics Perry Baromedical Reimers Engineering Reneau Sechrist Industries Stephenson Industries Note: The typical price for hyperbaric chambers = $15,000 to $1,000,000. Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 8-12 #RP-181303 Chapter 8: Instrumented Wound Healing The second product, Proxiderm, has been developed by Progressive Surgical Products for the healing of chronic ulcerative wounds. By using Proxiderm over a period of days to a few weeks, it is possible to heal open chronic wounds that have refused to heal for as long as nine years. The process involves a more active approach to the treatment of ulcerative wounds, as opposed to the passive approach of natural methods or growth factors. The method recruits healthy skin to the wound and covers the wound with full-thickness healthy skin. Proxiderm consists of two tissue hooks which move along a path inside a frame of plastic material. The hooks are inserted into viable tissue adjacent to the wound margins and apply a sustained, constant force of 460 grams to the wound edges. Multiple devices are used depending upon the length and contour of the wound. The shape of the devices varies from slightly curved for relatively flat surfaces, to right-angled for lesions near the borders of the foot. The device accommodates curved surfaces such as the heel and borders of the foot, and the underside of the device is padded to avoid pressure effects on the wound. Over a period of time, usually four to 10 days, these two tissue hooks near the opposing wound margins slowly approach each other and follow the contour of the body part being treated. As these tissue hooks approach each other, there is a continuous process of tissue approximation supplemented by increased skin growth and tissue expansion. The constant force that is applied by the device to the wound edges encourages angiogenesis and tissue generation, as well as epidermal multiplication. The low-grade force and gradual closure of the chronic wound reduces the risk of ischemia and diminishes the risk of entrapment of contaminated material and subsequent sepsis. The wound closes in a minimally stressed environment resulting in a sutureless closure of the ulcerative wound. This product has been on the market since 1996, and it is approved for pressure ulcers. The device is used with local anesthesia, and the procedure can be performed at a skilled nursing home. The sales of these novel devices were estimated at $570,000 in 1996. This market has excellent potential and is expected to grow to $28.5 million by the year 2002. 8.9 Thermography Thermography systems can be liquid crystal or infrared, and the infrared devices’ average price in the United States ranges between $22,400 and $60,000. Liquid-crystal thermography devices average between $4,000 to $8,500. Even though few thermographic devices were ©1997, Medtech Insight, LLC 8-13 #RP-181303 Chapter 8: Instrumented Wound Healing used in the United States prior to 1997, there were some that had FDA approval. Selected manufacturers of thermography systems in the United States are presented in Exhibit 8-4. Ashwin Systems International is one of the medical thermography systems selling to private physicians and research clinics in the United States. Although their product, the Teletherm Mark/1026, was cleared by the FDA in 1987 as a Class I device, the company believes the technology is underutilized. The company’s product is used by hospitals in Japan for the profiling of wounds, which involves evaluating the physiological condition and changes that have occurred to wounds. The product is also well received in Eastern Europe. With proper positioning and marketing for the diagnosis of chronic wounds, a device like Ashwin's infrared system could reach a level of $3.7 million by the year 2002 (74,000 patients at $50 per image). Ideally, home health care nurses could transmit images via computer file transfer over the Internet. The standard procedure would involve a nurse to take the image and a physician to interpret it. The delivery site for contact thermography could be a physician's office, long-term care facility, clinic or a home. Use in an acute care setting is unlikely; however, managed care organizations could be shown that use of thermography reduces costs due to more exact diagnosis and more precise prescription of treatment protocols. 8.10 Emerging Technologies Two promising instrumented technologies that have great potential in the wound treatment market are ultrasonic devices and laser-based devices. Both technologies are not expected on the U.S. market until after the forecast period; however, growth of these markets once products become available is expected to be rapid. The following subsections describe these technologies. 8.10.1 Ultrasonic Wound Healing Devices Ultrasound is the high-frequency mechanical vibration created by the conversion of electrical energy to a sound wave, that is beyond the range of human hearing. When these ultrasonic waves are transmitted through a conductive medium such as water or gel, they can be applied to soft tissue and serve as a source of absorbable energy. Thus, the absorption by various components of tissue can initiate a variety of physiologic effects classified as either thermal or non-thermal. Wound healing is primarily a non-thermal response. ©1997, Medtech Insight, LLC 8-14 #RP-181303 Chapter 8: Instrumented Wound Healing Exhibit 8-4: Selected Manufacturers of Thermography Systems Liquid Crystal Devices Infrared Devices Biosynergy Canadian Medical Products Clark Research & Development Davis Liquid Crystals Flexi Therm Hallcrest Products Medical Products of America Seven C’s Trademark Ashwin Systems Bales Scientific Dorex Flir Systems Inframetrics Temptek Texas Medical Instruments Source: Medtech Insight, LLC ©1997, Medtech Insight, LLC 8-15 #RP-181303 Chapter 8: Instrumented Wound Healing A clinical study, which investigated ultrasonic therapy in wound healing, was conducted by Drs. Young and Dyson of Guy's Hospital in London, England. The researchers concluded that ultrasound can affect an early phase of the wound repair process, such as the inflammatory phase. During the early phase of inflammation, the wound and/or intact tissue surrounding the wound contains a component receptive to ultrasound. This component, the macrophage, is present in large numbers in the wound bed and contains factors which stimulate blood vessel formation. A hand-held ultrasonic healing device is currently being developed by Exogen, which will be similar to the company's current device being used to heal fresh fractured bone. The product, however, is being designed for use by the patient at home, eliminating the need for a licensed caregiver. The hand-held device is also intended to be used by physical therapists and will be used in acute care hospitals, long-term care facilities and outpatient clinics. The hand-held ultrasonic healing device is expected on the market after the year 2002. The device is estimated to gain significant momentum following its release, with sales of $46 million expected by the year 2006. 8.10.2 Laser-Based Wound Healing Devices Lasers stimulate wound healing by increasing leukocyte phagocytosis and collagen production. Laser welding of tissues is also possible at low radiances, circumventing the need for sutures. Low-level lasers are being extensively researched in Russia and Israel, and one American company, The Chattanooga Group, offers low-level lasers for export. Low-intensity lasers are used in Europe; however, these products are not being used in the United States for the treatment of chronic wounds. These devices have 1-150 mW of power; a 632.8 nm to 950 nm wavelength; gallium, aluminum and arsenide (GaAIA) diode lasers; and some devices use a pulsing action to enhance their therapeutic effect. Lasermedics has a laser product for use in treating carpal tunnel syndrome, and more than 2,000 units are used in the United Kingdom by physiotherapists who treat sports injuries. Industry experts predict that a laser device for use in wound care will be approved by the FDA by the year 2006. The market potential for this type of device could be as high as $40-$45 million. ©1997, Medtech Insight, LLC 8-16 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment 9. PRESSURE RELIEF AND PRESSURE REDUCTION EQUIPMENT Specialty beds, mattress replacements and overlays are the primary products currently available for pressure relief and pressure reduction. Suppliers in these markets offer low, medium and high-tech products, and purchasers are understandably confused in making the difficult decisions concerning the correct support surfaces for patients. Additionally, specialty bed, mattress replacement and overlay manufacturers are aggressively marketing their products, and are in continual debate over the best product for treatment and prevention of pressure ulcers. For the consumer, the appropriate use must be balanced with the costs involved. Costs, ease of use, reduced hospital waste/disposal and reduced labor-intensity are issues to be considered when deciding hospital purchases and/or rental agreements. Pressure ulcers, either as a primary diagnosis or noted as a secondary diagnosis upon hospital admission, will continue to justify third-party reimbursement for treatment for specialty beds and other pressure relief equipment. However, third-party payers do not reimburse for the costs associated with prophylactic use of pressure ulcer equipment. The end result in such cases is the at-risk patient develops pressure ulcers while hospitalized, and the hospital then must bear the cost for healing. As a result, hospitals are focusing on using pressure relief equipment to reduce the incidence of hospital acquired pressure ulcers as well as the associated costs and morbidity. The increasing incidence of pressure ulcers and the lack of reimbursement for hospitalacquired pressure ulcers forces a more stringent physical assessment of the patient’s skin by both nurses and physicians, for all patients admitted to hospitals. The focus is to catch and document pre-existing ulcerations so that they become reimbursable to hospitals and to identify at-risk patients so that aggressive preventative therapy can be implemented before patients develop pressure ulcers. Hospitals can no longer afford the exorbitant costs for pressure ulcer treatment, particularly the costs associated with pressure ulcer litigation, which can reach as high as $4 million. An extensive investigation by the Agency for Health Care Policy and Research (AHCPR) has provided guidelines for clinicians to assess at-risk patients, adequately identify pressure ulcer stages and implement preventive skin care programs and early treatment procedures. This agency also provides guidelines instructing clinicians on the proper use of mechanical loading and support devices. The AHCPR published their guidelines for the treatment of stage II, III and IV pressure ulcers in December 1994. These established protocols and 1997, Medtech Insight, LLC 9-1 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment procedures for pressure ulcer prevention and treatment include requirements for continuous repositioning of patients every two hours, and caregivers frequently find this schedule difficult to maintain. The requirement for repositioning patients has drawn an influx of highend products designed to assist in turning patients, thus helping manufacturers increase sales and diversify their product lines. 9.1 Developmental Considerations A number of factors contribute to ulceration: nutritional status, level of continence, physical condition, mental awareness, level of activity/immobility and patient exposure to shear and friction forces. The primary factor in tissue damage is continuous, unrelieved pressure. Without the relief of localized pressure, no healing is possible and all other treatment procedures will be rendered ineffective. The mattress and bed can help prevent ulcerations or can significantly affect the ongoing treatment of ulcerations and wounds. Historically, the purchasing of mattresses and beds was relegated to purchasing agents or to housekeeping services. With a more detailed clinical understanding of mattress and bed effects, hospitals now recognize that mattress selection must be made with a clinical focus on therapy and treatment. Mattresses that are at the lower end of the cost spectrum typically are not as clinically effective as more advanced models. Many support surfaces are available, each with advantages and drawbacks; all claim to relieve or reduce the external forces contributing to the development of pressure ulcers. These forces, pressure and shear, must be considered in choosing the best patient support surface. 9.1.1 Pressure Historically, pressure-relieving product purchases have been made by comparing the interface pressures of products. In today's market this is still a major factor; however, clinicians are becoming more experienced purchasers, interpreting interface pressure cautiously, because of the difficulty of obtaining measurements on patient populations in a controlled environment. Interface pressure is not the perfect predictor of product performance; rather, it is an assessment tool for defining the lowest peak pressure points and best pressure distribution of the tissue for each product. Various types of patients, such as burn, comatose or wound care patients, will require lower interface pressures at specific pressure points because internal pressures are often three to five times greater than the pressures at the skin surface. 1997, Medtech Insight, LLC 9-2 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Pressure on the recumbent body is a vertical force caused by the patient’s weight being pulled by gravity onto the support surface. This weight causes pressure to be applied to the body tissue, compressing it between the support surface and the patient’s bony prominences. The most common bony prominences that contact the support surface during recumbency are the sacrum, heels, trochanters, scapulae, elbows, and head. Breakdown at the coccyx or ischial tuberosities is usually caused during sitting. Pressure shuts off capillary bloodflow, causing tissue damage from lack of oxygen. Although it is often accepted that capillary occlusion occurs above 32 mm Hg , this can be misleading when one considers the multidimensional nature of tissue breakdown. In addition, patients with compromised nutrition and health can have capillary pressures significantly lower than 32 mm Hg. 9.1.2 Shear Shear is the horizontal force perpendicular to pressure. It is caused by a combination of friction and movement: friction occurs because the skin is grabbed by the sheet or support surface, and then movement of the patient or support surface causes the bony prominence to literally move across the tissue as the skin is held in place. Shear significantly increases the effect of pressure in reducing blood flow through the capillaries. Prolonged shear is the primary reason why the tissue of the heel often breaks down on support surfaces which deliver interface pressures below capillary closure. Shear is introduced on a support surface in several ways, including patient movement, nurse movement of the patient and bed movement. Each of these factors is discussed below. 9.1.2.1 Patient Movement When the patient turns over, the sacrum and other bony prominence move against the support surface. This is a relatively short stroke of movement, meaning the skin is being moved a short distance against the support surface. A more severe situation occurs when the patient pulls his heels up, causing the skin to be dragged a long distance on the bed surface. The result is friction on the heels, with secondary shear effects. 9.1.2.2 Nurse Movement of Patient When a nurse turns a patient, it is important that the patient is lifted, then turned, to avoid the shearing effect which occurs on the sacrum and other bony prominences. Another instance that produces shear against bony prominences is when the nurse finds the patient near the 1997, Medtech Insight, LLC 9-3 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment foot of the bed, and the patient is pulled up the bed. In this case, the movement has an additional negative effect because the stroke of shear is extremely long. 9.1.2.3 Bed Movement This movement may be the least recognized source of shear. When the head of the bed is raised, the movement drives the patient toward the foot of the bed, shearing the bony prominences that are in contact with the bed surface. This can be particularly destructive at the heel which tends to dig into the support surface. The greater the distance between the bed frame and the patient’s hips, the longer the driving or shearing effect. This driving force is noticeable especially when using overlays, which distance the hips further from the bed frame. 9.1.3 Support Surface Requirements There are some basic requirements for any support surface when relief is sought from the forces of pressure and shear. There are seven basic requirements for a support surface to prevent pressure and shear. The surface must: • conform to bony prominences without resistance; • not have significant memory; • allow patient immersion; • not bottom out; • relieve shear caused by patient movement; • prevent skin maceration; and, • provide patient comfort. The first requirement to conform to bony prominences is important because most tissue breakdown occurs over these structures. The highest interface pressures occur on the thinnest patients or on patients with muscle atrophy caused by lack of movement and whose bony prominences are not well padded by tissue. To relieve pressure, a surface must conform to a bony prominence without resistance. Many materials provide surface tension or resistance because the materials used cannot conform. This tension is often called hammocking because the surface material, like a tight sheet, acts as a hammock to prevent conformation to a bony prominence. The resulting pressure can cause capillary closure over that bony prominence. There are two ways to eliminate this surface tension or resistance. The first is to have no surface material present at all, such as floating in a pool of water. The second way is to keep 1997, Medtech Insight, LLC 9-4 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment the surface material very flexible and loose, or even wrinkled. This technique causes some consternation among caregivers because it runs counter to conventional hospital bed-making wisdom where the tighter sheet is preferred. Traditionally, caregivers assumed that wrinkles in the bed sheets could cause pressure ulcers. This can be true if the wrinkle in the sheet is over a conventional hospital mattress that pushes the wrinkle into the patient’s skin. This issue is moot if the wrinkle is over a fluid medium such as air, water or a viscous fluid. In this case, the wrinkle is absorbed into the fluid, leaving barely a pattern on the patient’s skin. If the sheet is not kept loose or wrinkled over a properly designed support surface, then the surface tension or hammocking created may prevent the surface from conforming to a bony prominence. The support surface also must not have significant memory. Memory is the “desire” of a surface, when compressed, to return to its original shape. Compressing a foam cushion causes fatigue to the hand because of the foam’s desire to return to its original shape. These memory forces prevent the surface from evenly distributing pressure over the entire body. In comparison, if properly designed, surfaces using a fluid medium, such as air, water or a viscous fluid, can flow to equalize pressure and reduce the forces of memory. The support surface must allow patient immersion, and the greater this immersion, the lower the peak interface pressures. If a person weighs 150 pounds and all body weight is put on a surface area of five square inches at the sacrum, the pressure per square inch (psi) would be 150/5, or 30 psi. Double the surface area to 10 square inches, and the average psi is lowered to 15. By increasing the surface area, peak pressures are decreased. To maximize the surface area, there must be maximum immersion into the support surface without resistance. A surface delivering six inches of immersion will provide lower peak interface pressures than a surface that provides only one or two inches of immersion. In addition, the support surface must not bottom out. This action occurs when a bony prominence has pushed down the support surface so that the patient’s body is resting on the hard surface below. If the support surface is not thick enough, or does not provide enough support when the head of the bed is raised, bottoming out may occur at the sacrum or other bony prominences. This situation can be dangerous as pressures can quickly move to 100 mm Hg or more and can cause skin breakdown within hours. Much attention has been devoted to whether a given support surface has a few millimeters more or less pressure than another support surface. These differences are minor when compared to the dangers of a surface bottoming out. Clinicians must be particularly alert to this issue. 1997, Medtech Insight, LLC 9-5 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment The support surface must relieve the shear forces caused by patient movement. This is particularly important for patients with skin flaps; shear can lead to flap failure. As the patient moves, the ideal surface moves with the patient’s body. The shear forces are then absorbed into the support surface. Relieving shear forces is further complicated by the length of stroke present when the patient moves his heels or when the head of the bed is raised. The majority of support surfaces do not accommodate for such a long stroke of movement. One answer to long shear forces is to introduce a lubricated slip layer over the support surface at the patient’s heels and scapulae. This slip layer slides to absorb shear forces; however, it is best not to use a slip layer under the sacrum. This allows the pelvis to remain in place when the head of the bed is raised. The support surface should prevent skin maceration. Wet or macerated skin is more susceptible to breakdown than dry skin. Preventing excessive wetness and maceration is as important as preventing the adverse effects of pressure and shear. Wetness comes from two major sources: urine and perspiration. Urine must be drained away or absorbed into an incontinence pad; evaporation alone will not suffice. Even with enhanced airflow, urine may dry and crystallize on the skin, causing tissue irritation. When using incontinence pads on a pressure relieving surface, care must be taken to keep the pad loose to prevent the pad from causing increased surface tension or hammocking. Accumulation of perspiration can be avoided by laying the patient on a breathable surface which permits vapor transmission and allows moisture to dissipate from the skin. Coverings for support systems should have pores large enough to allow vapor transmission, yet small enough to prevent the transmission of bacteria. Vinyl or other relatively impervious membranes are usually poor choices for coverings because they encourage sweating and potential skin maceration. Lastly, the support surface must provide patient comfort. Comfort itself does not directly affect wound healing. If patients can be kept more comfortable, however, the more accepting they will be of the support surface. Thus, excessive noise, heat or instability should be avoided with any support surface in order to maximize patient acceptance. 9.1.4 Pressure Relief versus Pressure Reduction Support surfaces used in wound care can be categorized as either pressure-relieving or pressure-reducing devices. Pressure-relieving devices can provide interface pressure below 1997, Medtech Insight, LLC 9-6 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment capillary closure. These devices are used for patients who are incapacitated and are unable to self turn in bed. Specialty beds are such devices. Pressure-reduction devices, on the other hand, reduce pressure but do not consistently keep the skin and tissue below capillary closing pressure. Mattress overlays and mattress replacements are usually considered pressurereduction devices. 9.2 Specialty Beds Most specialty beds are used for treating patients as a result of a condition, as opposed to preventive treatment applications. This is primarily due to the cost of specialty beds and the lack of third-party reimbursement for preventative skin care. Specialty beds are used in conjunction with wound care management of burns, Stage III and IV pressure ulcers, venous and arterial ulcers, reconstructive skin grafts and flaps. They relieve and minimize external pressure on the skin and bony prominences as well as provide for rotation capabilities. These features for rotation increase the likelihood that patients will be repositioned when necessary, as many clinicians are able to turn the patient without assistance. The two most common types of specialty beds are air-fluidized and low-air-loss beds. These beds are used for a majority of wound care management conditions, although they can also be used in other applications. 9.2.1 Air-Fluidized Beds Air-fluidized beds consist of 1,800 to 2,000 pounds of silicone-coated beads placed within a mattress enclosure and activated by low-pressure, heated airflow. A filtered sheet of woven polyester covers the mattress and provides an optimal healing environment by allowing airflow from the mattress to gravitate upward toward the patient’s skin and bodily fluids/exudate to be absorbed by the filtered sheet. Air-fluidized beds are used primarily in the acute care hospitals, with only a small portion of alternate site locations using this bed. These beds are expensive to purchase or rent. Air-fluidized beds have gradually declined in the marketplace as a result of the market introduction of the low airloss bed. 1997, Medtech Insight, LLC 9-7 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment 9.2.2 Low Airloss Beds The low airloss bed consists of air distributed through a cushion structure. Some of the air within the cushion is able to slowly escape and then be refilled. This bed has become the preferred choice over the air-fluidized bed, because it allows for easier patient transfer both in and out of bed, and the bed itself can be raised or lowered. The head of the bed can also be raised, allowing patients to sit up without being propped up by pillows. The beds are primarily used in acute care hospitals; however, a growing number are being utilized in nursing homes and in home healthcare settings. This type of bed is expensive, and most are rented rather than purchased. They are commonly used for patients with severe burns and pressure ulcers, as well as for the relief of pain. 9.3 Mattress Replacements The mattress replacement is a concept introduced in 1983 by an orthopedic technician, replacing the hospital standard mattress with a specialty mattress that had a foam core and foam cubes, which could be removed beneath bony prominences for pressure reduction. Today’s mattress replacements incorporate various technologies for pressure reduction, including air floatation and alternating air as well as the traditional static technologies. Air floatation mattresses consist of interconnected fabric pillows which can be variably inflated, while alternating air mattresses have interconnecting air cells which cyclically inflate and deflate to produce high and low pressure intervals. Mattress replacements often provide less than the accepted pressure relief for sacrum, heel and trochanter. Thus, mattress replacements are an alternative to expensive specialty beds for at-risk patients with Stage I and II dermal ulcers, but the patient must still be aggressively turned and their skin vigilantly monitored. Even with these reservations, mattress replacements do perform better than standard hospital bed mattresses, and cost much less than the daily rate for a specialty bed. 9.4 Mattress Overlays Many hospital patients request mattress overlays because they experienced an uncomfortable hospital mattress during a former hospitalization. Nurses, too, tend toward indiscriminate use of two-inch overlays believing they aid in relieving pressure and provide for additional mattress comfort. Although these overlays provide patient comfort, they should not be utilized for therapeutic purposes. Their primary use is as a preventative device; however, only three- to four-inch foam overlays should be considered for extended use. 1997, Medtech Insight, LLC 9-8 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Overlays are placed over the mattress, reducing the need for specialty beds and mattress replacements. Overlays have been used indiscriminately in the past, and their predominant usage has increased hospital waste costs. An overlay is usually a single-patient item that is purchased and can be taken home with the patient. The foam mattress overlay is made of convoluted foam in various thicknesses. Foam overlays eventually become dense through the compression of the foam under the body's weight, negating their benefits. Specialty foam overlays were developed to address the drawbacks of convoluted foam products as well as reduce the amount of body heat retention and perspiration, which were common by-products of standard foam overlays. Another type of overlay uses air to cushion the patient, and the technologies are similar as those used in specialty beds and mattress replacements: static, air floatation, low airloss and alternating air. All types of air-mattress overlays are rented or purchased for hospital and nursing home care as well as for home healthcare. Gel overlays are infrequently used as mattress overlays, because they are expensive, cumbersome, and heavy to lift. Many of the gel products are used as overlays on smaller surfaces, such as wheelchair seats. 9.5 Market Analyses Due to changes in Medicare reimbursement for the home care market in 1996, the manufacturers in pressure-relief and pressure-reduction products have had to review their product and marketing strategies. Specifically, Group 2 reimbursement was changed to add non-airloss forms of air floatation devices, which allowed these manufacturers to be reimbursed at high rates. However, for manufacturers of low airloss products, this meant more competition in the home market and loss of reimbursement for pressure ulcer treatment. In some cases, this change caused low airloss manufacturers’ sales to significantly decrease. However, for some low-air loss manufacturers, the home market continued to grow due to the introduction of new products and marketing strategies which were specifically targeted at the home care environment. Regardless, in order to effectively compete in this market, all manufacturers will need to focus on clinical research to justify higher Medicare reimbursement rates. 1997, Medtech Insight, LLC 9-9 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment 9.5.1 Specialty Bed Market Analysis For the purpose of market segmentation, specialty beds are defined as full-framed beds with mattresses, usually with some advanced technology such as the low airloss and air fluidized systems. Although acute care settings have purchased most pressure relieving equipment in the past, much of the durable equipment is now rented. Suppliers may sell direct to the consumer (as is the case with some large suppliers), or sell through distributive dealer networks. In 1996, the market for specialty beds was estimated at $520 million. Pricing has become a significant factor in the use of these beds. Suppliers of specialty beds must not only compete with other suppliers in the market, but also with alternative products such as overlays and hospital mattress replacements. This direct and indirect competition is keeping rental prices for specialty beds lower than anticipated. A few suppliers in the specialty bed arena have developed their own overlays and mattress products so as to continue an upward revenue incline and compete with a much broader product mix. This is especially favorable in the current marketplace of national accounts and long-term contracts. In addition, major manufacturers, such as Hill-Rom, are actively marketing to alternate sites, which is helping to offset pricing pressures. Overall, this market is projected to increase at a modest 2.6%, reaching $610 million by 2002. This market is represented in Exhibit 9-1. 1997, Medtech Insight, LLC 9-10 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-1: U.S. Specialty Bed Market Forecast, 1996-2002 Year Sales 1996 $520.1M 1997 536.0 3.1% 1998 551.5 2.9 1999 567.2 2.8 2000 582.4 2.7 2001 596.7 2.5 2002 610.8 2.4 CAGR 1997-2002 Growth — 2.6% Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-11 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment 9.5.2 Specialty Bed Competitive Analysis Hill-Rom offers a complete line of specialty beds, including the Clinitron At-Home, an air fluidized therapy system specifically for home use. Other air fluidized beds include the Clinitron Elexis, Clinitron Up-Lift and Clinitron II. The company’s line of beds includes the Clinitron Rite Hite which is targeted at the long-term care market. Hill-Rom also offers low airloss beds, such as the Clensicair and Flexicair beds, as well as lateral rotation therapy. Kinetic Concepts Inc. (KCI) also manufacturers an extensive line of specialty beds, including TriaDyne, which is designed for severely injured patients in the acute care environment. This bed features the company’s Kinetic Therapy technology which rotates the patient laterally, at least 40 degrees to each side. The company also manufacturers bed products for the extended and home care environments, such as the HomeKair DMS. As shown in Exhibit 9-2, other manufacturers in the specialty bed market include Cardio Systems and Gaymar. The two market leaders, Hill-Rom and KCI, have products in all three pressure relief and reduction segments: beds, mattress replacements and overlays. This broad product line has made them more competitive throughout all the segments in this market. Hill-Rom is the leader with 67% of the market due to its broad product line at competitive prices and effective, direct marketing which actively targets the alternate site environments. Kinetic Concepts must rely on their independent dealers to market its products; however, the company increased its sales in 1996 due to the success of the TriaDyne specialty bed which was introduced in May 1995. In addition, KCI acquired H.F. Systems in February 1997, which will enhance its product line and geographic reach, especially in California where H.F. Systems is based. Exhibit 9-3 presents the market shares of the manufacturers in the specialty bed market. 1997, Medtech Insight, LLC 9-12 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-2: Selected Manufacturers of Specialty Beds Manufacturer Product Cardio Systems Model 600 ICU Bed Gaymar Clini-Care Hill-Rom Clinitron II, Clinitron At-Home, Clinitron Elexis, Clinitron Up-Lift, Clinitron Rite Hite, Efica CC, Pulmonex, Clensicair Flexicair MC3, Flexicair Eclipse and Flexicair II Kinetic Concepts Inc. TriaDyne, TheraPulse, FirstStep Plus, KinAir III, DynaPulse and HomeKair DMS Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-13 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-3: 1996 Specialty Bed Market, Share by Supplier Supplier Sales Market Share Hill-Rom $346.8M 67% Kinetic Concepts Inc. Other* Total 163.2 31 10.1 2 $520.1M 100% *Other includes Cardio Systems and Gaymar. Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-14 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment 9.5.3 Mattress Replacement Market Analysis Mattress replacements have experienced higher growth than other segments in this market because the powered devices are a cost-effective alternative for specialty beds. In addition, these products generally require less nursing time than overlays because the patient does not have to be turned as much to prevent bottoming out on the support surface. Manufacturers are aggressively marketing these products, which is helping to fuel a 5.7% annual increase in sales, from $135 million in 1996 to $187 million in 2002. The market forecast for mattress replacements is presented in Exhibit 9-4. 9.5.4 Mattress Replacement Competitive Analysis There are more than 20 companies in the mattress replacement market, and many of these companies have strong ties in the mattress overlay and specialty bed segments. These manufacturers have recognized the steady erosion of their existing product segments and have offered mattress replacements to broaden their product line and maintain market share and dollar volume. Bio Clinic has products in both the mattress replacement and overlay segments, and products in the mattress replacement segment include Orthoderm HC, which is a low airloss mattress designed for the home market. Exhibit 9-5 presents selected manufacturers of mattress replacements. B.G. Industries was the first company to introduce mattress replacements, and the company’s current products, including Maxifloat series, Maxiflex and Model 200 Mattresses, are considered high quality products by many clinicians. B.G. Industries specializes in marketing to hospitals and nursing homes. Creative Bedding Industries offers its ComFORM series, which is made of high-quality, convoluted foam. The company’s ProFORM series is a line of static mattress replacements, including the ProFORM Choice, ProFORM Maximum, ProFORM Maxim and ProFORM Strata. B.G. Industries is the traditional leader with a 21% market share in 1996 due partly to its consistent effort to improve its non-powered mattress replacement product line. Bio Clinic, with a 16% market share, is in a strong second-place position due to a product line which includes high-end mattress replacements as well as non-powered products. Creative Bedding Technologies began manufacturing their own product line in 1996 after providing private label manufacturing for other suppliers. This company offers high-end 1997, Medtech Insight, LLC 9-15 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment foam mattress replacements which have better conforming characteristics, enabling them to gain market share in a short amount of time. While Creative Bedding competes at the bottom end of the market, this company is expected to gain market share in the foam mattress replacement segment due to its high quality products at a cost-effective price. Other competitors and their market shares are presented in Exhibit 9-6. 9.5.5 Mattress Overlay Market Analysis Unit volume will continue to increase in the overlay market with the aging of the American population and higher acuity of patients. As shown in Exhibit 9-7, the estimated dollar market for mattress overlays was $210 million in 1996, with an anticipated average annual growth rate of 4.3%. The dollar growth is attributed to increasing unit volume of static and dynamic air overlays, as foam products exhibit a slight decline in unit volume. The competitiveness of this market will keep price increases relatively low. As competitors such as Crown, which distributes for Roho, work aggressively with managed care for reimbursement in the home market, the market is projected to begin to experience upward growth in the future. In addition, because the patient can take the overlay with them throughout their course of care in various sites, from the hospital to long-term care, the onetime purchase of overlays may begin to be seen as more cost effective than mattress replacements. Thus, the dollar volume for 2002 is projected to be at $272 million. 1997, Medtech Insight, LLC 9-16 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-4: U.S. Mattress Replacement Market Forecast, 1996-2002 Year Sales 1996 $135.0M 1997 142.1 5.3% 1998 149.9 5.5 1999 158.5 5.7 2000 167.8 5.9 2001 177.5 5.8 2002 187.4 5.6 CAGR 1997-2002 Growth — 5.7% Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-17 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-5: Selected Manufacturers of Mattress Replacements Manufacturer American Health Systems Product UltraForm Therapeutic Mattress and UltraForm DPM B.G. Industries Maxifloat (LFP, VFP, DFP, EF), Comfort Plus, Maxiflex and Model 200 Mattresses Bio Clinic ProAire, Orthoderm, Biotherapy APM and BioMedx Cardio Systems Pneu-Care Plus, Pneu-Care Plus Pulse, Pneu-Care Plus Dynamic and Synergy Comfortex DeCube, NewLife, Silhouette Creative Bedding Technologies ComFORM series and ProFORM series Dermacare Dermaguard Prism and Dermaguard Spectrum Gaymar Top Guard II and SoftMatt (low air loss and alternating pressure mattresse Hill-Rom Acucair Matt, Comfortline, Flexicair Eclipse Low Airloss and Simplimatt Huntleigh Alpha Active, DFS Homecare and AutoExcel Invacare APM Alternating Pressure Mattress and 3500S series KCI TheraRest Lumex ClassicAir Akrotech 4000 and 4000T, AltaDyne Mason Medical Products Phoenix, Falcon and Masonair series Medline Nylex II, Q-Star IV and Q-Star Voyager National Patient Care Systems Alamo HC and Alamo M.R.S. Pegasus Airwave Pegasus Airwave Therapeutic System and Renaissance Therapeutic Mattress Replacement System Progressive Medical Base Deep Cell 1000, Base Large Cell 625, Base Large Cell 700 RIK Medical RIK Fluid Mattress Span America Pressure Guard series Standard Textile Excel All -in-One and Ultimate All-in-One Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-18 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-6: 1996 Mattress Replacement Market, Share by Supplier Supplier Sales B.G. Industries $28.8M Market Share 21% Bio Clinic 21.4 16 Cardio Systems 14.7 11 Comfortex 12.3 9 8.7 7 49.1 36 RIK Medical Other* Total $135M 100% *Other includes American Health Systems, Creative Bedding, Dermacare, Gaymar, HillRom, Huntleigh, Invacare, KCI, Lumex, Mason Medical, Medline, National Patient Care, Pegasus, Progressive Medical, Span America and Standard Textile. Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-19 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-7: U.S. Mattress Overlay Market Forecast, 1996-2002 Year Sales 1996 $210M 1997 220 4.7% 1998 230 4.5 1999 240 4.3 2000 250 4.1 2001 260 4.3 2002 272 4.5 CAGR 1997-2002 Growth 4.3% Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-20 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment 9.5.6 Mattress Overlay Competitive Analysis Bio Clinic’s overlay product line consists of foam overlays in many different widths and sizes. The company’s foam products include eggcrate convoluted overlays, flat foam overlays, Bio Gard, Iris, and BodyWrap. Biotherapy, Biotherapy Plus and BioFlote are the company’s air mattress overlay systems. The Roho Dry Floatation system is a high-end mattress overlay with 720 soft, low pressure air cells that are inteconnected at their base by air passages that evenly support and distribute the patient’s weight. The air cells compress as the body is immersed into the overlay, transferring air from one cell to the other to conform to the patient’s body. Other competitors in the overlay market are presented in Exhibit 9-8. Bio Clinic is the market leader in the overlay market with a 16% market share. This company offers a broad product line in the overlay and mattress replacement segments, enabling it to offer a wide variety of products for acute care, nursing homes and home care. The company makes an extensive line of foam overlays, including its Bio Gard which is used in nursing homes. Gaymar is in second place with a 13% share of the overlay market due to its broad overlay product line, including static air, low airloss and alternating pressure overlays. Gaymar is expected to gain market share as its products expand beyond overlays. The company currently offers mattress replacements and has started to build a line of specialty beds, which will make it more competitive in purchasing contracts with large competitors. Span America is in third place with 10% of the market. This company readily competes in the acute care market with its Geo-Matt foam overlay. Roho/Crown offers the Roho Dry Floatation system, which is now being reimbursed by Medicare under Group 2. This change in Medicare reimbursement has helped boost Roho/Crown’s market share to 9% in 1996. Exhibit 9-9 provides the market shares for the leading suppliers. 1997, Medtech Insight, LLC 9-21 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-8: Selected Manufacturers of Mattress Overlays Manufacturer American Health Systems Product UltraForm Mattress Overlay Bio Clinic Eggcrate convoluted overlays, flat foam overlays, Bio Gard, Iris, BodyWrap, Biotherapy, Biotherapy Plus, BioFlote Cardio Systems Pro 1000 and 2000 EHOB Waffle overlay Gaymar Grant Sof-Care Plus, PAL, Pillo-Pump with Pillo-Pad and Airflo Dyna-Care and Dyna Soft Hill-Rom Huntleigh Frameless Zoneaire Sleep Surface System, Acucair Deltabed, Bubble Pad, Double Bubble Pad and Air-O-Pad Invacare MicroAire Pup 3500S Kinetic Concepts Inc. First-Step, K-Soft and TriCell Lotus Health Care Products DU-care, Lotus Long Life, Lotus PXM 3666, GL 3666, HM 3666, MD3677, High Profile Deep-Air-Care Medline Aerofoam and Hexaguard National Patient Care Systems Prevent-A-Care, Apropos and Alamo Pegasus Bi-Wave, Bi-Wave Plus and Carelight II RIK Medical Roho/Crown RIK Mattress Overlay Roho Dry Floatation Span America Geo-Matt Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-22 #RP-181303 Chapter 9: Pressure Relief and Pressure Reduction Equipment Exhibit 9-9: 1996 Mattress Overlay Market, Share by Supplier Supplier Sales Bio Clinic $33.5M Market Share 16% Gaymar 27.4 13 Span America 19.9 10 Roho/Crown 19.2 9 EHOB 15.8 7 Huntleigh 13.2 6 Other* 81.3 39 Total $210.3M 100% *Other includes American Health Systems, Cardio Systems, Grant, Hill-Rom, Invacare, KCI, Lotus, Medline, National Patient Care, Pegasus and RIK Medical Source: Medtech Insight, LLC 1997, Medtech Insight, LLC 9-23 #RP-181303 Chapter 10: Company Profiles 10. COMPANY PROFILES 10.1 3M Corporation 3M Corporation was founded more than 90 years ago, and the original company has expanded into one of the world's major manufacturing companies. The company's businesses developed from its research and technology in coating and bonding for coated abrasives, the only product in the early years. Beginning with sandpaper in 1904, the company progressed to Scotch Transparent Tape in 1930, nonwoven fabric in 1948, Post-it Notes in 1980 and liquid- crystal display film in the 1990s. The company has operations in 60 countries with products sold in over 200 countries. The company consists of two major sectors: the Industrial and Consumer Sector and the Life Sciences Sector. The first sector consists of industrial markets, automotive and chemical markets, electro and communications markets, and consumer and office markets. The Life Sciences Sector is composed of medical markets, pharmaceuticals, dental markets, traffic and safety markets, diaper closures, commercial graphics markets and advertising markets. Spanning all disciplines of science, the company operates on more than 30 technology platforms to create specialty chemicals and polymers, adhesives, nonwoven fibers, films, optics, filtration and microstructured surfaces. A broad range of supplies, devices and equipment are included in the medical markets businesses. Medical supplies include tapes, dressings, surgical drapes and masks, orthopedic casting materials and electrodes, and biological indicators. Devices and equipment include sterilization equipment, stethoscopes, blood gas monitors, heart-lung machines and powered orthopedic instruments. Clinical information systems are also developed by these businesses. 3M has operations in 34 states and more than 60 countries. There are 42 international companies with manufacturing operations and 22 companies with laboratories. 3M products are sold in more than 200 countries. The company employs 39,415 people in the United States and 74,289 worldwide. Total research and development expenditure for the last five years was $4.3 billion, $947 million in 1996. Worldwide sales were $14.2 billion in 1996, an increase of 5.8% over the previous year. Net sales in the Life Sciences Sector were $5.2 billion in 1996, an increase of 4.4% from a total of $5 billion the previous year. ©1997, Medtech Insight, LLC 10-1 #RP-181303 Chapter 10: Company Profiles Sales and profits for the first quarter of 1997 were the highest for any quarter in the history of 3M. The total sales of $3.7 billion reflected an increase of 11% in local currencies and 7.1% in U.S. dollars. The 3M Skin Health Program includes the following wound dressings: Tegaderm transparent dressings, Tegagen alginate dressings, and Tegasorb hydrocolloid dressings. Tegaderm Transparent Dressing with Absorbent Pad offers a non-adherent, absorbent pad which absorbs exudate. Tegaderm HP is available in a great variety of shapes and sizes with a shape suited specifically for the sacral area which is particularly hard to dress. It is a primary dressing for Stage I and II pressure ulcers with minimal to moderate amounts of drainage. All of the Tegaderm dressings offer precise and secure dressing placement as the result of 3M's "picture frame" delivery system which is unique to these dressings. Tegagen HG and HI alginate dressings are well-suited to be used with the Tegaderm sacral dressing to treat wounds such as pressure ulcers, arterial and venous ulcers, diabetic ulcers, donor sites, trauma wounds and cancerous lesions. The wounds can be partial thickness to full thickness and moderately exudating to heavily exudating. Tegagen HG alginate dressing contains high-gelling properties which permit gentle removal from fragile tissue. The Tegagen HI dressing allows a fast, trouble-free dressing change by providing high integrity. Finally, Tegasorb hydrocolloid dressing is used on partial and full thickness dermal ulcers. The product enhances healing by providing an optimal moist environment which rapidly absorbs exudate. 3M products are sold directly to users in the United States and in many other countries around the world. They are sold through wholesalers, retailers, jobbers, distributors and dealers in a great variety of trades. There are 286 sales offices and distribution centers; 9 major branch offices and 75 distribution centers are located in the United States. 10.2 Advanced Tissue Sciences, Inc. Advanced Tissue Sciences is a tissue engineering company which develops and manufactures human tissue products for transplantation. The company utilizes biocompatible matrices that are seeded with human cells to produce its products. Advanced Tissue Science’s main applications of its proprietary core technology include skin tissue, cartilage, cardiovascular tissues, bone, tendons and ligaments. ©1997, Medtech Insight, LLC 10-2 #RP-181303 Chapter 10: Company Profiles The company is publicly traded and employs approximately 170 people. Revenues in 1996 were $16.9 million compared to $4.8 million in 1995. The company sustained a net loss of $22.4M in 1996, which was a 3% decrease over the $23.1M loss in 1995. The company’s skin tissue product, Dermagraft, is engineered human dermal tissue combined with a synthetic epidermal layer which is designed to treat patients with thirddegree burns on more than 20% of the body’s surface. The product also provides a protective cover for burn patients to help retain fluids and reduce the risk of infection until a sufficient amount of the patient's own skin becomes available for grafting. After an expedited review process, the FDA approved Dermagraft in March 1997. Dermagraft production begins by culturing human dermal fibroblasts onto a semipermeable membrane which is bonded to nylon mesh. The nylon mesh provides structure as a threedimensional scaffold for the growth of dermal tissue, and the membrane forms the synthetic epidermis. As the dermal fibroblasts grow on the mesh, they secrete growth factors and structural components. The resultant product is then frozen which kills the cells, but leaves the tissue matrix and cell growth factors intact. Later in the operating room, the surgeon unfreezes the dermal patch as a temporary skin replacement for the patient’s destroyed dermis. This product uses living human tissue, namely neonatal foreskin, which does not elicit an allergic or immune response because the basic component has not developed antibodies to cause a reaction. 10.3 Bristol-Myers Squibb Company/ConvaTec Bristol-Myers, a worldwide health and personal care company, was founded in 1887. The company merged with Squibb in 1989 and consists of three major business groups: Worldwide Medicines, Nutritionals and Medical Devices, and Worldwide Beauty Care. The Nutritionals and Medical Devices business groups is composed of Mead Johnson Nutritionals, Zimmer and ConvaTec. ConvaTec was founded in 1978, and the division’s initial products were manufactured for the ostomy market. In 1982, ConvaTec launched a second core business, wound care, by introducing DuoDerm Hydroactive Dressing. This dressing created a moist environment while completely excluding air, thus enhancing the wound healing process. ConvaTec added other dressings to its product line, making it a leader in the occlusive dressing market. In early 1995, ConvaTec joined forces with Calgon Vestal Laboratories, which broadened the scope of its wound care product line. ©1997, Medtech Insight, LLC 10-3 #RP-181303 Chapter 10: Company Profiles ConvaTec employs approximately 3,000 people in over 100 countries around the world. The company offers its products in the United States and Europe as well as Canada, Japan, Australia, New Zealand, and the major markets of Eastern Europe, Asia, Africa, the Middle East and Latin America. Sales for Bristol-Myers Squibb in 1996 were $15.1 billion, a 9% increase from sales of $13.8 billion in 1995. Net income in 1996 was $2.9 billion compared to $1.8 billion in 1995. Bristol-Myers Squibb employs approximately 51,200 persons worldwide. ConvaTec has a broad product line which includes cleansers and wound care dressings. ConvaTec’s SAF-Clens is a dual surface surfactant system for cleansing wounds with moderate- to high-foaming capabilities, while the company’s alginate dressing, Kaltostat, is available as a wound dressing or wound packing. ConvaTec manufacturers several hydrocolloids, including SignaDress for the home care market. This dressing is easy-to-use because of a “tear drop” in the middle which allows easy centering of the dressing on the wound. As the dressing absorbs exudate, a bubble is formed in the tear drop. When the bubble reaches a visible indication line, the dressing is ready to be changed. Convatec also offers DuoDerm CGF which creates an acidic environment and promotes an anti-infective environment. 10.4 Cardio Systems Cardio Systems, a manufacturer of pressure-relief equipment, was founded by Robert Hasty in 1963. The company was called N&H Instruments, and at that time, it only manufactured surgical instruments. In 1968, the son of the founder, Charles Hasty, developed a hydraulic, radiolucent bed for use in intensive care and critical care units. In the 1980s, Cardio Systems diversified into patient support surface technology. In 1988, the company offered the first portable low-air loss mattress which could convert any bed into an air support therapy bed. Cardio Systems has since expanded its pressure-relief product line to include overlays which provide lateral rotation and other full-framed beds. In 1996, sales for Cardio Systems was estimated at $80 million. The company’s product line includes products with its patented micro adjust pressure profiling (MAPP) which allows control of interface pressure in each individual air sac on a low-air loss bed. The company’s frameless air support therapy (FAST) is incorporated into a number of products, including the Synergy mattress replacement with three types of ©1997, Medtech Insight, LLC 10-4 #RP-181303 Chapter 10: Company Profiles therapies: pulsation, low-air loss and lateral rotation. The company has also patented the Pneu Scale, which is a portable weighing system that allows patients to be weighed without being transferred. In 1990, Cardio Systems decided to establish its own offices and service centers with a direct sales and service force. The company has since expanded to over 50 service centers in the United States and actively markets its beds, mattress replacement systems and overlays to hospitals, extended care facilities and home healthcare. In 1996, Cardio Systems began introducing its products to the European market. 10.5 Carrington Laboratories, Inc. Carrington Laboratories is a research-based pharmaceutical and medical device company which develops complex carbohydrate-based therapeutics. The company focuses its research and development activities in three key areas: wound care and skin conditions, consumer products and veterinary products. In 1996, the company posted revenues of $21.3 million, compared to $24.4 in 1995. This decrease in revenues was due to a reduction in wound care product selling prices, which was aimed to enhance the company’s competitive position. Carrington has approximately 230 employees. Carrington Laboratories has a broad product line based on products derived from Aloe vera plant. Carrasyn hydrogel wound dressing is used for the management of stage I-IV pressure ulcers, stasis ulcers and first- and second-degree burns. The company also offers other hydrogel products such as CarraGauze Strips, CarraGauze Pads and Carrasyn Spray Gel. In January 1996, Carrington launched its new, freeze-dried hydrogel wound dressing called CarraSorb M. This product is made with an Aloe vera extract containing acemannan which absorbs wound exudate, up to 20 times its own weight. Indications for CarraSorb include pressure ulcers, diabetic ulcers, foot ulcers, post-surgical incisions, radiation dermatitis and abrasions. In November 1996, Carrington launched a new acemannan product called RadiaCare Gel which is used in radiation therapy for the treatment of radiation induced dermatitis. The company also introduced its DiaB Gel which is formulated for diabetic and foot ulcer care. Carrington Laboratories introduced its new CarraSmart foam dressing in 1996 which is made up of three layers. The first layer consists of a hydrophilic polyurethane to maintain moisture ©1997, Medtech Insight, LLC 10-5 #RP-181303 Chapter 10: Company Profiles in the wound, while the second layer is a hydrophilic, open-cell foam which also helps to manage moisture. The last layer is a porous, pressure-sensitive adhesive. CarraSmart is indicated for venous stasis ulcers, diabetic ulcers, pressure sores, partial-thickness and fullthickness wounds, first- and second-degree burns and donor sites. In January 1996, Carrington Laboratories introduced its first calcium alginate product, CarraSorb H. This dressing is made for wounds with heavy exudate, and the corresponding indications include pressure ulcers, stasis ulcers, diabetic ulcers, arterial and venous ulcers, foot ulcers, post-surgical incisions, radiation dermatitis, donor sites, trauma wounds, dermal lesions and abrasions. Carrington Laboratories is a relatively new participant in the film dressing market with their Carra Film, launched in early 1996, and CarraSmart Film, introduced in March 1997. Carra Film is designed to be used with the company’s Carrasyn hydrogel dressing or low exudating wounds, such as superficial pressure ulcers, skin grafts, donor sites and closed surgical wounds. Carrington’s products are offered in 19 countries worldwide. The company markets its products through a direct sales force and also uses distributors in the United States. Carrington has distribution agreements with large companies in Central and South America, Australia, New Zealand, Canada and China. 10.6 Coloplast Corporation Coloplast Corporation was founded in 1957 by Aage Louis-Hansen after he had entered into a license agreement to produce the world's first disposable ostomy bag in 1955. The company is located in Humlebaek, Denmark and has 18 subsidiaries and numerous worldwide distributors. Production and research facilities are located in Germany, the United States, Puerto Rico and China, as well as Denmark. Sales subsidiaries were established in Sweden and Norway in 1981, Belgium in 1982, Germany and the United States in 1983, Spain in 1984, Holland in 1987, and Japan in 1988. The wound and skin care businesses were established in 1982. Sween Corporation was acquired in 1995, and the merger created a new organization which included breast and skin care with a joint North American sales division. The Sween acquisition added a leading manufacturer of a broad range of skin care products used primarily in hospitals, long-term care facilities, health maintenance organizations and home care. The extensive Sween product line includes products used both for professional ©1997, Medtech Insight, LLC 10-6 #RP-181303 Chapter 10: Company Profiles and personal care, with specific application for ostomy, incontinence, wound care and pediatric care. The largest single product in this line is Sween Cream, first introduced in 1987. The company currently develops, manufactures and markets products for ostomy care, continence care, wound care, skin and breast care, special dressings and consumer products. It is a worldwide leader in the production of disposable medical devices to the healthcare sector. Coloplast is also recognized as a leader in adhesive technology used for wound dressings, advanced urological collection systems, ostomy applications, and in postmastectomy attachable forms. Coloplast Group employs 2,588 people. The company reported a net turnover of nearly DKK 2 billion in 1996 with an operating profit of DKK 260 million.. Net turnover is an increase of 17% from the previous year's total of DKK 1.7 billion. The wound care market continues to grow with sales of the Comfeel wound dressing; however, skin care sales have been disappointing. Coloplast wound care products include hydrocolloid and alginate wound dressings for healing chronic and acute wounds by providing optimal moist wound healing environments with maximum patient comfort. Alginate products include Comfeel SeaSorb and Comfeel SeaSorb filler. Comfeel Plus is the company's hydrocolloid product. These products were launched in 1996 along with Conveen Continence Guard, Conveen EasiCath and the improved Assura/Alterna program. All the products launched in 1996 had a greater impact in Europe than expected, although the turnover rate is not expected to increase at the same rate as when the products were first introduced. Through its acquisition of Sween, Coloplast acquired Woun’Dress, a natural collagen hydrogel that provides a moist wound environment and promotes debridement. Other wound care products include hydrophilic dressings, cleansers, deodorizers and preparations. For personal care, Sween produces creams, shampoos, cleansers, sanitizers, bodywashes, powders, and lotions. For incontinent care, the company produces antifungal-antimicrobial barriers, citric-acid skin paste, and cleansers. New resources were channeled to servicing key customers as part of a restructuring of the U.S. sales functions during 1995-1996. United States marketing and service activities were also merged at this time. Many people were moved to new positions, particularly in the sales division where districts were reorganized and extensive training took place. With the market ©1997, Medtech Insight, LLC 10-7 #RP-181303 Chapter 10: Company Profiles changing and purchasing concentrations increasing, these changes were required in order to meet the increasing demands on the sales force. Since U.S. sales had not met expectations, increased efficiency was an ongoing concern. Sold through a worldwide net of subsidiaries and distributors, the product lines are directed at two particular market segments, hospitals and community healthcare, which serve the following end users: ostomists for colostomy, ileostomy and urostomy; patients with leg ulcers, pressure sores or surgical wounds; paralyzed or immobilized patients who are incontinent; people who suffer from light incontinence due to stress or urge incontinence; and post-mastectomy patients. Consumer products for personal care are marketed through pharmacists and chemists. 10.7 ConMed Corporation ConMed Corporation is a leading provider of advanced electrosurgical systems and ECG electrodes and accessories, as well as being a manufacturer of minimally invasive surgical instruments and products used for therapy and wound care. Incorporated in 1970, the company has employed a strategy of acquiring businesses in order to increase its market share as well as broaden its product offerings. In 1996, the company acquired certain assets of New Dimensions in Medicine, Inc. For a purchase price of approximately $31.6 million and the assumption of $3.3 million in liabilities, ConMed gained businesses relating to the design, manufacture and marketing of a wide range of ECG electrode products, disposable electrosurgical products and various hydrogel wound care products. By acquiring New Dimensions in Medicine, a proprietary hydrogel technology, ClearSite, was ConMed's first expansion into the wound care market. By the end of December 1996, ConMed had 957 employees and had increased its sales to $125.6 million from $99.6 million in 1995, an increase of 26.2%. This increase was primarily attributed to the New Dimensions in Medicine acquisition. ClearSite dressings consist of a saline based, polymer gel designed to absorb and control exudate while staying structurally intact. A flexible, continuous protective polyurethane film covers the gel and allows visualization and moisture vapor transmission. ClearSite is able to absorb 2-1/2 times its weight. ClearSite wound care products are indicated for use on superficial and full-thickness wounds, pressure ulcers, first- and second-degree burns and dermal leg and venous stasis ulcers. ©1997, Medtech Insight, LLC 10-8 #RP-181303 Chapter 10: Company Profiles The wound care technology has resulted in the development of a number of innovative products for clinical markets. One is an island dressing of ClearSite which has a clean, breathable, pliable adhesive polyurethane film border. Another is ClearSite HydroGauze, a gauze-like material that has been impregnated with dehydrated ClearSite which hydrates upon contact with wound exudate. HydroGauze is used on heavier draining wounds, as well as being used to pack wounds or cover burns and donor sites. With a sales force of territory managers located in key metropolitan areas, supervision and support is provided by regional managers. Direction for sales of the company's products is provided by home office sales and marketing management. In addition, there are approximately 20 national and regional hospital distributors and 150 to 250 local distributors. 10.8 C.R. Bard, Inc. C.R. Bard, Inc. was founded in 1907 by Charles Russell Bard. A silk urethral catheter imported from France was one of the company's first medical products. The company was incorporated in 1923 and was distributing urological and surgical products at that time. In 1963, the company became publicly traded and was on the New York Stock Exchange five years later. The company presently designs, manufactures, and distributes medical, surgical, diagnostic and patient care devices. There are three principal product lines: cardiovascular, urological and surgical. The surgical products include specialty access catheters and ports; implantable blood vessel replacements; fabrics and meshes for vessel and hernia repair; surgical suction, irrigation and drainage devices; gastroenterological products; irrigation devices for orthopedic and laparoscopic procedures; laparoscopic accessories; blood management devices; and products for wound management and skin care. Approximately 90% of the company's mostly disposable products are purchased by hospitals, physicians and nursing homes. Worldwide sales in 1996 were $1.2 billion, an increase of 5% from 1995 sales of $1.1 billion. Net income in 1996 was $92.5 million ($1.62 per share), increasing 7% from 1995. The approximate percentage contribution by each of the three principal product lines is as follows: 33% cardiovascular, 29% urological and 38% surgical. Surgical product group sales increased 4% in 1996 to $457.8 million, with international markets increasing slightly more than in the United States. ©1997, Medtech Insight, LLC 10-9 #RP-181303 Chapter 10: Company Profiles The company's four major wound care products are Biolex wound gel, Biolex wound cleanser, AlgiDerm calcium alginate dressing and Vigilon primary wound dressing. Biolex wound gel is clear, non-toxic and non-aerosol. It maintains the slightly acidic, moist environment in the wound bed which is vital to the synthesis of collagen and the growth of fibroblasts. It also maintains the pH range which has been shown most favorable for wound healing. Biolex wound cleanser is a spray with a setting that can help remove slough and debris from the wound. AlgiDerm is the company’s calcium alginate dressing, while Vigilon is an inert, cross-linked polyethylene oxide hydrogel sheet. C.R. Bard distributes its domestic products directly to hospitals and other institutions. The company also has distribution agreements with numerous hospital and surgical supply distributors. International practices vary by country but involve either direct distribution or distributors. Sales to distributors accounted for approximately 8% of the company's sales. The five largest distributors combined represented approximately 21% of these sales. 10.9 Cryolife, Inc. Founded in 1984, CryoLife developed a new technology for ultra-low temperature tissue preservation for subsequent transplantation that allowed long-term storage with little damage to cells. CryoLife, which went public in 1993, became a leader in the development and commercialization of techniques for the cryopreservation of tissues. In addition to U.S. and Canadian tissue sales, CryoLife also distributes stentless pig heart valves in the European Community. After initial success with cryopreservation of aortic and pulmonary human heart valves, the technique was expanded in 1986 to preservation of veins for coronary bypass surgery and peripheral bypass vascular surgery, and in 1990 to connective tissue for orthopedic surgery. The successful preservation of aortic and pulmonary heart valves has given patients an alternative to the use of porcine valves, and replacement of damaged meniscal tissue holds the promise of a return to normal knee function. After collection, the tissues are disinfected and frozen until matched with patients. There is early indication of human heart valves have survived for some 15 years. In 1996, revenues totaled $37.2 million, compared to $29.2 million in 1995. Net income for 1996 was $3.9 million, which was a 77% increase over $2.2 the previous year. The company employs approximately 160 people. ©1997, Medtech Insight, LLC 10-10 #RP-181303 Chapter 10: Company Profiles CryoLife is developing two surgical bioadhesives, FibRx and BioGlue. FibRx is an adhesive, designed to control bleeding, and based on the blood clotting factors fibrinogen and thrombin. BioGlue, which has a stronger adhesive power than FibRx, is being developed to replace suturing or stapling in some surgical procedures and is being evaluated for artery attachment and gluing bone fractures. CryoLife is also working on the development of technology to bioengineer an animal tissue to human transplant that would not activate an immune reaction. The SynerGraft program is attempting to develop a “human” heart valve using a porcine heart valve collagen matrix which is seeded with autograft human cells. CryoLife continues to strengthen its position through management’s efforts to increase sales. CryoLife plans to expand its customer base by making other types of tissues available. Cryopreserved mitral valves will be made available, in addition to the presently available aortic and pulmonary heart valves. Because the company is virtually debt free, it has the financial flexibility to capitalize on new market opportunities. The company’s core business and its research and development efforts are completely financed by operations. 10.10 Curative Health Services, Inc. Curative Health Services is a disease management company specializing in chronic wound care. The company provides a range of service to healthcare providers through a nationwide network of programs that offer wound care in 109 centers. Curative is of interest to manufacturers in the wound care product industry because of its focus as a profitable wound management company incorporating both comprehensive wound care services and proprietary treatment technologies. The firms’ wound care centers are a growing network of outpatient treatment centers that represent the core of the company’s business. These innovative centers are managed by the company on behalf of acute care hospitals throughout the country. The company is currently expanding its market opportunities by developing new types of wound care service models for subacute care facilities and other market niches. Curative is seeking to integrate this range of service by establishing comprehensive managed care capabilities and by contracting directly with managed care organizations. Historically, it has been difficult for patients to receive treatment for wounds unless they consulted separate medical specialists for each aspect of their treatment. The company’s ©1997, Medtech Insight, LLC 10-11 #RP-181303 Chapter 10: Company Profiles wound care centers develop comprehensive therapeutic protocols which are tailored to the individualized needs of patients. This includes the use of Procuren solution, a novel therapy developed by Curative. Procuren is a naturally occurring complex mixture of several growth factors contained within platelets in a patient’s own blood. The company applies a case management approach to wound treatment. A customized database maintains all of the relevant clinical data on patients, and provides clinicians with an effective means of managing wound patients on an ongoing basis, adjusting their treatment programs when necessary. This case management approach minimizes waste and saves money by ensuring that patients do not receive unnecessary treatments. The involved programs include administration, training for hospital physicians and other clinical personnel, management of quality assurance programs, and reimbursement and strategic marketing support. Revenues in 1996 increased 29% to $67.4 million compared to $52.4 million in 1995. The net income for 1996 was $10.7 million compared to $4.2 million for 1995. Curative, a publicly traded company, employs over 400 people. 10.11 Genzyme Tissue Repair Genzyme Tissue Repair is a division of the Genzyme Corporation, which was formed in December, 1994, after Genzyme Corporation acquired BioSurface Technology and combined it with existing Genzyme tissue repair programs. At that time, BioSurface Technology developed and supplied tissues grown from normal human cells. The division is divided into three major segments: cartilage repair, skin repair, and other tissue repair technologies for multiple sclerosis and bone repair. In addition, during the third quarter of 1996, Genzyme Tissue Repair and Diacrin Inc. announced a joint venture to develop and commercialize NeuroCell-PD for Parkinson’s disease and NeuroCell-HD for Huntington’s disease. In July 1996, Genzyme Corporation acquired Deknatel Snowden Pencer which manufactures cardiovascular surgical sutures, chest drainage devices and other surgical products for operating room and intensive care use. Service revenues for Genzyme Tissue Repair in 1996 were $7.3 million as compared to $5.2 million in 1995. Genzyme Tissue Repair employs 135 persons, including a 60-person, direct sales force in the United States. ©1997, Medtech Insight, LLC 10-12 #RP-181303 Chapter 10: Company Profiles The main products in the skin repair segment include the Epicel service (for the treatment of burns) and the TGF-Beta2 and Vianain debriding product development programs. The Epicel service was developed at BioSurface and consists of a sheet of proliferative cultured autologous keratinocytes, ranging from 2 to 8 cell layers thick. The autologous keratinocytes are harvested from human skin tissue and are processed to isolate specific cell types for future epidermal autografts. While Genzyme Tissue Repair still continues to develop TGFBeta2 in collaboration with Celtrix to promote wound healing, the company has begun to explore the possibility of licensing Vianain to a undisclosed third party. Genzyme Tissue Repair markets its Epicel service in the United States and Europe with its own direct sales representatives. The company provides a 24-hour customer support service as well as on-site clinical support and availability to reimbursement specialists. As of 1996, Genzyme Tissue Repair had treated more than 800 patients with Epicel worldwide. 10.12 Haemacure Corporation Haemacure Corporation is a research and development company with products that target the surgical wound care market. The company is developing a fibrin sealant called Hemaseel and is also researching an artificial collagen which could replace bovine collagen products in the clinical and consumer markets. Revenues for 1996 totaled $652,000, compared to $41,000 in 1995. A net loss of $4.5 million was reported in 1996, compared to a $2.8 million loss in 1995. This increase in net loss was due to the development of a worldwide clinical program for Hemaseel and to update the product’s manufacturing processes. The company employs 33 people. Haemacure has three U.S. patents for the manufacturing of its Hemaseel technology, which is a human-based, liquid fibrin sealant with hemostatic and adhesive properties. One product in liquid form, called Hemaseel HMN, is absorbable and contains fibrinogen and thrombin which has been isolated from human plasma by the company’s patented processes. Haemacure is also developing a solid fibrin sealant, Hemaseel Dressing. This product is also absorbable and has been designed to arrest bleeding in emergency and surgical situations. The company has begun Phase III clinical trials for Hemaseel HMN and Phase I clinical trials for Hemaseel Dressing. Haemacure plans to be completed with the regulatory process for both of these products by late 1998 or early 1999. ©1997, Medtech Insight, LLC 10-13 #RP-181303 Chapter 10: Company Profiles Haemacure has a manufacturing agreement with the Central Laboratory of the Swiss Red Cross, which will manufacture components of the Hemaseel technology. Both parties shared the costs of improving the manufacturing process, and as a result, the up-scaled manufacturing processes for fibrinogen and thrombin were finalized at the end of 1996. Cohesion Corporation, an affiliate of Collagen Corporation, is another strategic partner which is adding more funding for Haemacure’s product development. 10.13 Hillenbrand Industries/Hill-Rom Hillenbrand Industries, Inc. is a public company with four diversified and wholly owned subsidiaries in two industry segments, funeral services and health care. These subsidiaries are Batesville, Forethought, Medeco and Hill-Rom. The latter two subsidiaries form Hillenbrand’s health care segment, and Hill-Rom is a leading manufacturer in the pressurerelief market. In 1985, Hillenbrand acquired SSI Medical Services, a specialized therapy bed company, which was fully integrated in Hill-Rom in 1994. Hill-Rom manufactures patient care products and is a leading provider of specialized rental therapy products. The company’s products are designed to manage the complications of patient immobility, and the products include medical-surgical beds, critical care beds, stretchers, birthing beds and radiant infant warmers. Hill-Rom also manufacturers patient room furniture, modular headwall systems, power columns, nurse communication systems and patient voice-activated systems. In addition, the company rents patient support surfaces and beds for wound and pulmonary therapy. Net revenues for 1996 were $1.7 billion, which was an 4% increase compared to $1.6 billion in 1995. The health care segment had sales revenues of $568 million, compared to $556 million in 1995. Health care rental revenues were $373 million in 1996. Net income was $140 million in 1996, up from $90 million in 1995. Hillenbrand employs approximately 10,000 persons worldwide. Hill-Rom has a complete line of pressure-relief products, namely, beds, mattress replacements and overlays. The company’s extensive line of beds includes the Resident LTC bed which is targeted at the long-term care market. This product is fully electric and the sleep surface can be lowered to just over a foot from the floor. In late 1995, Hill-Rom introduced the Flexicair Eclipse Low Airloss Therapy Unit, which is a portable mattress replacement designed to prevent and treat pressure ulcers in moderate- to high-risk patients. ©1997, Medtech Insight, LLC 10-14 #RP-181303 Chapter 10: Company Profiles 10.14 Integra LifeSciences Corporation Formed in 1990, Integra LifeSciences Corporation (ILC) is currently engaged in the development and use of proprietary biomaterials technology which enables the body to create functional substitutes to replace damaged and diseased body tissues. The company is focusing this technology on the creation of functional substitutes for dermal skin, articular cartilage and peripheral nerves. Its product, Integra Artificial Skin, is designed to grow new skin and permanently replace damaged skin on severe burn victims After receiving PMA approval from the FDA on March 1, 1996, this artificial skin became the first tissue regeneration product on the market. Integra Corporation was founded in 1991 to acquire patent rights for a collagen-based skin replacement technology from Massachusetts Institute of Technology and to acquire clinical data on the product from Marion Merrell Dow, Inc. In May 1993, the company acquired Vitaphore Corporation from Union Carbide Chemical and Plastics Company. Vitaphore is a developer and manufacturer of collagen-based products involved in hemostasis, infection and ophthalmic surgery. Its subsidiary, Colla-Tec, Inc., develops and manufactures surgical, medical and dental collagen-based products based on a proprietary process used to purify insoluble collagen fibrils from bovine flexor tendon. Integra LifeSciences purchased Telios Pharmaceuticals in 1995 resulting in further development of proprietary core technology to apply RGD peptides to promote cell directed behavior. The RGD peptide products under current development include a cell-adhesive coating designed to improve the performance of implantable devices and the body's acceptance of them. ABS LifeSciences, Inc. and Biomat Corporation are two other companies that are included within Integra LifeSciences. In 1996, Integra LifeSciences revenues were $13.1 million which included $3.1 million in sales of Integra Artificial Skin. This was a 29% increase over the 1995 revenues of $10.2 million. Sales of Integra Artificial Skin continued to increase by over $500,000 per month in both January and February 1997. By the end of January alone, more than 160 patients had received treatment with the product. Integra Artificial Skin may be used to stabilize a patient until the silastic film can be replaced by autograft. The product is a dermal composite which consists of a porous lattice of fibers of a cross-linked bovine collagen and glycosaminoglycan (GAG), and a synthetic epidermal layer of polysiloxane polymer (silicone). The GAG that is used is chondroitin-6-sulfate. The product was originally approved by the FDA to be manufactured in 4" by 10" sheets. The ©1997, Medtech Insight, LLC 10-15 #RP-181303 Chapter 10: Company Profiles company applied to the FDA and was granted a PMA approval supplement to manufacture additional sizes of 4" x 5" and 8" x 10". This will accommodate physicians' requirement to use the product in more applications. By early 1997, more than 300 surgeons had been trained in the United States and Canada, as well as an additional 300 in Europe and Asia in the use of Integra Artificial Skin. More than 12 national and regional training sessions have been held in Orlando, Phoenix, Dallas, Chicago, Pittsburgh, Philadelphia, San Francisco, Omaha, Birmingham, and St. Paul. Furthermore, the company's marketing program recently produced and distributes a newsletter for clinicians. The product is manufactured in the United States and has been marketed directly by experienced area managers in the United States since March 1996. It has been marketed internationally to such countries as Denmark, Hong Kong, Singapore, Switzerland, Ireland and parts of Germany since 1995. The managers support the nurses, as well as the physicians who use the product in the treatment of severe burns. The product is sold only after medical professionals have been trained in the used of the product. Specialized registered nurses are employed to provide in-hospital training for operating room and burn unit personnel. The company also markets the product through individual distributors in some foreign markets. Integra LifeSciences Corporation manufactures and sells several medical products and devices which are based on biomaterials. They are used in wound care, surgery, infection control, ophthalmology, and dentistry. VitaCuff, which is implanted, and BioPatch, which is topical, are used in percutaneous infection control. Other products include Helistat and Helitene (surgical hemostasis), Collagen Corneal Shield (ophthalmic treatment), Biomend (periodontal surgery), and Chronicure (wound dressing). These products are used both domestically and internationally and are sold either directly or through the previously described supply and distribution arrangements. 10.15 Invacare Corporation Invacare Corporation is one of the only companies that designs, manufactures, markets and distributes products in the following major home health and extended care medical equipment categories: power and manual wheelchairs, patient aids, home care beds, home respiratory products, low-air loss therapy products, seating and positioning products and ambulatory infusion pumps. The company's origins can be traced to Worthington and Company, founded in 1885 as a producer of vehicles designed for the disabled. By the early ©1997, Medtech Insight, LLC 10-16 #RP-181303 Chapter 10: Company Profiles 1970s, this wheelchair company was known as Invacare, a relatively obscure subsidiary of Technicare Corporation which at the time was a major player in the field of diagnostic imaging. Technicare was purchased by Johnson & Johnson in 1978, and Johnson and Johnson then put the Invacare subsidiary up for sale. The following year, after being purchased by a group of investors which included former Technicare management, the company began a dramatic turnaround. By 1980, earnings had increased to $1.4 million from pro-forma earnings of $100,000 in 1979. In 1981, the company entered its first new market, home care beds, through a small acquisition. Thus began a series of successful strategic acquisitions which included GSI, Inc. in 1993, a manufacturer of low-air loss therapy systems for home and institutional use, and Healthtech Products, Inc. in 1996, a manufacturer of extended care beds and patient furniture. During 1996, the company made a total of five acquisitions costing $24.9 million which extended or added new product lines while expanding distribution capabilities. Thus, the company has grown from a small U.S. company with 350 employees and $19 million in annual sales, to an international company of over 24 product lines in more than 80 countries with 4,200 employees and $619 million in sales in 1996. The net sales growth represents a 22.5% compound average sales growth since 1979. The company's products now include manual wheelchairs, motorized and lightweight prescription wheelchairs, motorized scooters, patient aids such as crutches and walkers, home care beds, home respiratory care products, seating and positioning products, mattress replacements and overlays. Net sales for the first quarter of 1997 were $151.5 million compared to $134.5 million during the first quarter of 1996, a 13% increase. Net sales for 1996 were $619.5, up 23% from $504 million in 1995, 11% of this being the net effect of acquisitions and foreign currency translation. North American sales increased 17% with 9% of this due to acquisitions. Net income rose to $38.9 million in 1996, 21% over net sales of $32.2 million in 1995. Invacare manufactures and distributes a wide range of home care beds which are manual, semi-electric, and fully-electric beds. Bed accessories include bed side rails, overbed tables, trapeze bars, traction equipment and mattresses. The Geo-Mattress HC is a therapeutic foam mattress which provides pressure reduction and comfort. The APM Alternating Pressure Mattress is a full-depth powered air mattress replacement system which reduces interface pressure for the treatment of Stage I through Stage IV pressure ulcers. In alternating mode, the APM's 22 adjacent air cells alternately inflate and deflate at five-minute intervals which periodically redistribute the pressure against the skin to promote capillary circulation. The ©1997, Medtech Insight, LLC 10-17 #RP-181303 Chapter 10: Company Profiles Turn-Q Plus Mattress is a MicroAIR product which combines the benefits of lateral rotation, true low-air loss and pressure relief in a single portable system. The company's low-air loss products include a complete line of mattress overlays and replacement products which use air flotation to redistribute weight and moisture away from patients who are immobile. The MicroAIR PUP is an advanced pressure reduction overlay which uses true low-air loss to arrest skin breakdown before Stage III and IV levels. The MicroAIR 3500S Portable Low Air Loss Therapy System is a portable unit which provides the comfort of pressure relief with skin moisture management by using continuous air flow to remove excess moisture. This product serves as an institutional quality mattress replacement unit and attaches to any standard medical bed. Invacare's products are sold primarily to over 10,00 healthcare and medical equipment provider locations in the United States, Australia, Canada, New Zealand and Europe. The remainder of its sales are primarily to government agencies and distributors. The products are sold through a worldwide distribution network by the company's sales force, telemarketers and some independent manufacturers’ representatives. The company also distributes medical equipment and related supplies manufactured by others through its extensive dealer network. In the United States, the company markets primarily to the home medical equipment providers who in turn sell or rent them directly to the users or to healthcare institutions such as hospitals and nursing facilities. In the past, the company's primary customers have been the providers, but Invacare also markets its home healthcare products using the "pull through" method where medical professionals such as doctors, physical therapists and occupational therapists refer their patients to the providers for their equipment needs. The company continues to focus on its home care market while managing the extended and acute care market with separate sales and distribution. It considers its "one stop shopping" program a major contributor to superior service and the resultant increase in business. This program offers the HME provider the broadest range of products and services at the lowest total cost. The products of this program include HME retail merchandising, a dedicated territory business manager with specialist support; and account services. The intention is to increase sales at a rate of 50% more than the overall market growth rate, reaching $1 billion in sales by 2000. ©1997, Medtech Insight, LLC 10-18 #RP-181303 Chapter 10: Company Profiles 10.16 Johnson & Johnson Johnson & Johnson was founded as a partnership in 1885 between Robert Wood Johnson and his two brothers, James and Edward, and incorporated under the name Johnson & Johnson two years later. The company has great historic significance as one of the first companies to apply the then new theory of antiseptic wound treatment by developing and marketing readymade, ready-to-use surgical dressings. Johnson & Johnson is divided into three business segments: consumer, pharmaceutical and professional. The consumer segment includes non prescription drugs, hygienic products, sanitary protection products, adult incontinence products and first-aid products. The pharmaceutical segment includes antifungals and biotech products as well as products related to dermatology, allergies, contraception, gastrointestinal concerns, immunobiology and the central nervous system. The professional segment includes equipment, devices and other products related to diagnostics, wound management, eye care, infection prevention and surgery. The products in the professional segment are used by physicians, dentists, nurses, therapists, hospitals, diagnostic labs and clinics.. Among the most prominent of the products are sutures and mechanical wound closure devices, minimally-invasive surgical instruments, disposable contact lenses and joint replacement devices. In 1941, Johnson & Johnson formed a separate division for the suture business which became Ethicon, Inc. in 1949. This division manufactured surgical sutures and other related ethical surgical products. Ethicon, Inc. became two separate companies in 1992. Ethicon EndoSurgery manufactures and markets endoscopic procedure products and mechanical wound closure devices, and Ethicon, Inc. has products which include sutures, adhesion prevention and newly-developed pharmacology products. One of Ethicon’s numerous suture products is Vicryl Rapide, a faster absorbing skin suture which enhances cost effectiveness. Worldwide sales have increased for the sixty-fourth consecutive year with record sales of $21.6 billion in 1996. With a minimal price increase of 1%, sales increased by 14.7% compared to $18.8 billion in 1995. This breaks down to $10.9 billion domestically and $10.7 internationally. The Professional sector increased 19.8% from $6.7 billion in 1995 to $8.1 billion in 1996. Approximately 54% of this amount was domestic, and 46% was international sales. In the first quarter of 1997, the company reported record sales of $5.7 billion and record net earnings of $909 million. This reflects increases of 7.1% and 15.1% respectively over the first quarter of the previous year. In the Professional sector, worldwide sales of $2.1 billion ©1997, Medtech Insight, LLC 10-19 #RP-181303 Chapter 10: Company Profiles were reported which represent a 6.9% increase over the first quarter of 1996. Domestic grow was 11.6% and international growth was 1.6%. Vistakon's disposable contact lenses, Ethicon Endo Surgery's minimally invasive surgical instruments, Lifescan's blood glucose monitoring systems and the Cordis interventional cardiology franchise are the major factors influencing this growth. The company employs 89,300 people worldwide. Distribution is done directly, through surgical suppliers, and through other dealers. 10.17 Kinetic Concepts, Inc. Kinetic Concepts, Inc. (KCI) develops and markets therapeutic healing systems which help to prevent skin breakdown associated with patient immobility. The company markets its products, including specialty beds and mattress replacements, to the hospital, long-term care and home care markets. In February 1997, KCI acquired H.F. Systems Inc. which KCI hopes will strengthen the company’s position in California’s high-growth extended care market. Revenues for 1996 totaled $269.9 million, an increase of 11% from $243.4 million the previous year. Net income was nearly $39 million, a 37% increase from $28.4 million in 1995. The strongest growth occurred in the domestic surface and international businesses. Sales from the specialty surface business in the United States was $181.3 million, which was an increase of $18.3 million from 1995. The increase in sales in 1996 was partly due to the success of the TriaDyne specialty bed which was introduced in May 1995. This bed features the company’s Kinetic Therapy technology which rotates the patient laterally, at least 40 degrees to each side. Other specialty beds products include TheraPulse, FirstStep Plus, KinAir III, DynaPulse, HomeKair DMS and BariKare. Overlay products include K-Soft, First-Step and TriCell; the latter overlay is a top-of-the-line product designed for the home care market. 10.18 LifeCell Corporation LifeCell Corporation was formed in 1986 and is developing and commercializing patented technology for processing and preserving transplantable biological tissue grafts and other human cell products. Its first product, AlloDerm, is a universal tissue graft used to permanently graft third-degree burn wounds. AlloDerm is also used as soft tissue augmentation in plastic and periodontal surgery, as well as guided tissue regeneration in periodontal surgery. ©1997, Medtech Insight, LLC 10-20 #RP-181303 Chapter 10: Company Profiles LifeCell is a public company and employs 75 people. The company has incurred substantial losses since it was formed, but industry experts predict that the company should begin to show a profit in 1998. LifeCell reported product revenues of over $2 million in 1996 compared to approximately $742,00 in 1995. The company first began shipping AlloDerm, a cryopreserved allograft skin in June 1995 to be used as a temporary burn dressing. Using donated cadaveric skin grafts, the patented process removes all cells while preserving the dermal matrix. The cells of these grafts normally maintain the matrix which are also the targets of the body's immune response. The end result is a totally intact, acellular matrix. The matrix contains all the facilities for cell residence and function so that when the nonviable processed matrix is transplanted, the patient's own cells repopulate it and create a permanently integrated living tissue graft. The grafts are effective in helping skin heal, promoting the growth of fibroblasts which are the key maintenance cells of dermis. By using AlloDerm, integrated living tissue grafts can be formed which are invisible to the immune system. In September 1996, the FDA has classified AlloDerm as a "banked human tissue" and not a medical device. A porcine equivalent called XenoDerm is being developed, and a number of universities and burn centers have shown that XenoDerm decreases wound contraction and improves cosmesis compared to conventional treatment. By using an immune-deficient mouse reconstituted with human immune system cells, LifeCell is evaluating the immune response to XenoDerm. If successful, human clinical applications will then take place. LifeCell is also developing a composite, bi-layered AlloDerm graft for burn wound treatment in order to eliminate the need for self-donated skin to graft burn wounds. Also, the National Science Foundation has provided LifeCell with the funding to develop a composite skin by combining AlloDerm and the cells of the epidermis. This program focuses on using stem cells in skin to create the readily available composite skin from AlloDerm and a patient's own epidermal cells, eliminating patient autograft requirements. In January 1997, the company announced the award of over $1 million from the U.S. Army Medical Research and Material Command in order to fund the development of new tissue transplant products for use in neurological, dermatological and cardiovascular surgery. Investigation of AlloDerm grafts to repair dura mater and the membrane lining of the brain, as well as investigation of its use in conjunction with micro-skin grafting to cover large wound surfaces with small, biopsy-sized skin grafts, will be the focus of this two-year cooperative agreement. ©1997, Medtech Insight, LLC 10-21 #RP-181303 Chapter 10: Company Profiles LifeCell's aggressive marketing program began during the second half of 1994 when the company expanded its sales force from two to five people. Numerous quantities of AlloDerm were shipped at reduced cost or free of charge. By 1996, the company began to set up a nationwide network of regional distributors to market AlloDerm to the plastic surgery market. Sun Medical of Dallas, Texas, was the first distributor selected since it carries a sophisticated line of products used by plastic surgeons. The company's territory was Texas, Oklahoma, New Mexico and Arkansas. During the third quarter of 1996, Dentsply International formally launched a promotional program for AlloDerm in periodontal surgery after it was signed as the exclusive worldwide distributor of the product. The market for AlloDerm tissue in burn treatment continued to expand by means of the company's direct sales force with over 60 representatives servicing the U.S. plastic surgery market. By the second half of 1996, representatives were selling to the nation's burn units and signing distribution agreements aimed at reaching the nation's periodontists, plastics surgeons and reconstructive surgeons. 10.19 Mylan Laboratories, Inc./Dow Hickam Pharmaceuticals Mylan Laboratories is engaged in the development, licensing, manufacturing, and marketing of generic and proprietary pharmaceutical and wound care products. Dow Hickam Pharmaceuticals was acquired by Mylan in 1991, and this division specializes in the manufacturing and marketing of wound care products for hospitals, nursing homes, and home health care. Mylan Pharmaceutical’s net sales for fiscal 1997 (ended March 31) were $440.2 million, compared to $392.9 million for fiscal 1996. Net income for fiscal 1997 was $63.1 million, compared to $102.3 million during the same period in 1996. This decrease in net income was partly due to extreme pricing pressure in their generic drug sales. Dow Hickam has a variety of wound care products, including a debriding agent and numerous wound dressings. Granulex is a vasodilating, lubricating ointment applied to wound beds to enhance tissue granulation. However, it also contains trypsin, which results in a mild debriding action. As a prescription drug, it is marketed as a maintenance debridement agent, cleansing the wound bed after eschar has been removed. Granulex is unable to debride thick eschar or hard necrotic tissue; however, it stimulates the blood supply and maintains a moist environment for optimum healing. ©1997, Medtech Insight, LLC 10-22 #RP-181303 Chapter 10: Company Profiles Dow Hickam offers Flexzan, a ultra-thin, highly conformable foam dressing with an opencell foam and a closed-cell outer surface. This dressing is indicated for skin tears, early-stage pressure ulcers, and dermatologic and plastic surgery procedures. The company also offers Hydrocol, a hydrocolloid wound dressing, which is available in three different types: square shaped with rounded corners, sacral, and a thin construction product which is semi-transparent. In addition, Dow Hickam markets a biosynthetic dressing called Biobrane which is a 1/100th of an inch thick, nylon-knit fabric bonded to a siliconeplastic membrane. Collagen peptides are also bonded to the surface. In 1989, Dow Hickam introduced the first calcium alginate dressing called Sorbsan. Through sodium ion exchange, this dressing transforms into an absorbent, conformable sodium alginate gel when the dressing contacts the sodium-rich exudate in the wound bed. Sorbsan is indicated for all wet wounds, including those that are infected. The company employs a sales force of approximately 80 people in the United States who sell to distributors, corporate healthcare providers, plastic surgeons, and dermatologists. While Dow Hickam has a strong presence in the institutional and alternate care markets, the company plans to focus their marketing on dermatologists in the future. 10.20 Organogenesis, Inc. Formed in 1985, Organogenesis, Inc. develops and manufactures medical therapeutics consisting of living cells and natural connective tissues. These therapeutics are intended to interact with the body to enhance the natural healing process by promoting the establishment of new tissues. The company's products are used in wound care, cardiovascular surgery, general surgery, urology and orthopedics. Apligraf, a full-thickness living skin equivalent which contains both dermal and epidermal layers, was developed for the treatment of wounds, including chronic wounds, skin surgery wounds and burns. Organogenesis employs 124 full-time employees. Total revenues for 1995 were $627,000, which increased to $7.5 million in 1996, due mainly to support payments of $6.5 million received from Sandoz Ltd. in order to carry out research and development. Research and development costs increased from $9.3 million for 1995 to $10.9 million for 1996 due primarily to personnel additions and activities supporting the lead product, Apligraf. These activities included expanding Apligraf operations, initiation of the diabetic ulcer pivotal trial ©1997, Medtech Insight, LLC 10-23 #RP-181303 Chapter 10: Company Profiles and supporting the PMA application for the treatment of venous ulcers, which is pending at the FDA. The agreement entered into with Sandoz Ltd. grants the company global marketing rights to Apligraf in exchange for bearing all sales and marketing costs and giving Organogenesis per unit manufacturing payments as well as royalties on all Apligraf sales. Sandoz also contributes strong representation in key markets as well as extensive expertise in marketing breakthrough medical products. Apligraf is a organotypic tissue product which consists of complex tissue with living cells organized like native tissue. The upper layer of Apligraf is composed of living human epidermal cells (keratinocytes), and the lower layer consists of living human dermal cells (fibroblasts) in an organized dermal matrix. These cells can interact with the wound bed and directly contribute to the wound healing process. Among the fundamental raw materials needed to manufacture Apligraf are keratinocytes and fibroblasts which are derived from donated infant foreskins. The lab separates the different cell types and keeps them growing so that a dozen donations could provide enough material to treat the world. With its proven expertise in organotypic cell culture, Organogenesis has made other tissues for research purposes, one example being the cornea. Also, the company has several programs in research and development which are exploring the application of organotypic cell culture to the development of living tissue for other clinical situations such as in reconstructive surgery. Organogenesis has four patents either issued or pending for tissue cryopreservation which enables the freezing and storage of complex living tissue and its return to ambient temperature so that tissue viability is maintained. The company is also developing products used in the treatment of female urinary incontinence and in cardiovascular surgery. ©1997, Medtech Insight, LLC 10-24 #RP-181303
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