LIFE SCIENCES Archives

05, Dec 2025by EOS Intelligence EOS Intelligence No Comments

Metal’s New Rival: Why PEEK Knee Implants Have Big Players on Edge

Healthcare providers performed around 3.6 million knee replacement procedures globally in 2023, according to LSI’s Global Procedure Volumes Database, which covers 37 countries. This substantial volume highlights the massive clinical demand and shows a strong opportunity to innovate beyond traditional metal-on-polymer implant technologies. As more people age and joint problems from lifestyle become more common, the orthopedic field is turning to new, improved solutions that better meet what patients and healthcare systems need today. Will all-polymer implant technology drive the next breakthrough in total knee arthroplasty (TKA)?

Breaking the mold: Is metal-on-polymer TKA still the best we can do?

Healthcare community widely regards metal-on-polymer implants as the gold standard in TKA as these implants effectively handle the knee joint’s high load-bearing demands. Compared to all-polymer alternatives, metal-on-polymer designs provide greater mechanical strength, enabling them to withstand daily use and maintain long-term joint stability. According to the American Academy of Orthopaedic Surgeons, ~90% of total knee replacements continue to function effectively 15 years after surgery.

Maxx Orthopedics and Invibio (a Victrex PLC company) are set out to challenge this conventional view with the Freedom Total Knee System using PEEK-OPTIMA femoral component (PEEK standing for Polyether Ether Ketone).

In 2025, a research study (Cowie et al., Bioengineering 2025, 12(3):261) reported that PEEK-OPTIMA polymer-on-UHMWPE (Ultra-High-Molecular-Weight Polyethylene) knee implants showed UHMWPE wear comparable to metal-on-UHMWPE. Researchers based this conclusion on their evaluation of PEEK-OPTIMA and cobalt-chrome femoral components paired with polyethylene lower knee component in a knee simulator mimicking real walking and movement. Findings from this study address the key concern that all-polymer knee implants might wear out too fast.

Another research paper (ORS 2025 Annual Meeting Paper No.275) concluded that the wear behavior (including wear factor, rate, and volume) of PEEK-on-UHMWPE was comparable to cobalt-chrome-on-UHMWPE and met ASTM (Advancing Standards Transforming Markets) wear standards.

Overall, the collective evidence demonstrates that all-polymer PEEK implants could match the wear performance of metal-on-UHMWPE systems over millions of cycles, alleviating concerns about rapid degradation. Further research and clinical trials must still confirm real-world durability.

Beyond metal: could PEEK be the future of knee implants?

PEEK’s practical advantages are vast and include faster manufacturing, onsite customization, lower allergy risk, clearer imaging, and better bone compatibility. This could address longstanding issues with metal-based knee implants and reshape the TKA landscape, potentially becoming the new benchmark for knee implant materials.

Faster, lower-cost production

Studies show that manufacturers can injection-mold PEEK components in about three minutes and can have them ready for use within a week, in contrast to custom cobalt-chrome pieces, which often require months to finish. This rapid production cuts manufacturing costs and reduces hospital inventory requirements, making implants more affordable and improving access for patients facing long waitlists. Surgical centers can also benefit from greater flexibility to adjust designs quickly.

If PEEK adoption grows, patients, healthcare providers, payers, and PEEK producers will surely benefit. However, traditional metal-implant makers would face major disruption, forcing them to adapt or partner with polymer experts to stay relevant.

On-site 3D printing and customization

PEEK’s compatibility with high-temperature 3D printing allows hospitals to create patient-specific implants on demand. Such implants can fit the anatomy more precisely, potentially improving recovery and function. On-site implant printing also eliminates shipping delays and the need for large warehouses for hospitals and solution providers.

However, acquiring industrial-grade PEEK printers and training staff require significant investment, which will likely act as a factor slowing adoption. On the supply side, implant makers will be challenged with additive manufacturing (which they will likely have to bring in-house) and the need to forge partnerships with 3D-printing players. All players, whether established or start-ups, will have to navigate strict and demanding regulatory approval before hospitals adopt these materials.

Minimizing metal-related risks

As PEEK does not release metal ions into surrounding tissue, it eliminates the risks of irritation or hypersensitivity that affect up to 25% of patients with implants. This is a considerable benefit for patients with metal allergies. Hospitals may see fewer allergy-related follow-ups, fewer revision surgeries, and lower long-term costs. This is again challenging metal-implant makers, who will have to address this shift by developing hypoallergenic alternatives or risk losing market share as patients and healthcare professionals move to polymer-based options.

Enhanced imaging transparency

PEEK’s radiolucency produces clear standard imaging (X-rays, CT scans, and MRIs) without metal artifacts, enabling earlier detection of misalignment, loosening, or infection. This means a reduced need for specialized scans, lowers costs and radiation exposure. Change in implant materials will affect radiology solutions vendors, as they may have to adjust protocols to optimize scans for polymer implants.

Bone-friendly mechanics

PEEK is isoelastic and mimics the mechanical properties of natural bone, spreading pressure more naturally through the bone around it. This reduces stress shielding that can cause bone loss around stiffer metal implants. Patients may experience fewer long-term complications and easier revision procedures if needed.

Those bone-friendly mechanics offer a great benefit for several hospitals and payers, thanks to lower costs of managing bone-loss issues. Implant developers must consider whether newer low-modulus metal alloys can match PEEK’s bone-preserving properties at all, as polymer-based solutions can redefine TKA standards.

Considering these benefits, PEEK presents a compelling alternative to metal-based knee implants. Each benefit comes with practical considerations, including upfront equipment costs, regulatory challenges, and strategic shifts for established manufacturers. As clinical trials progress and real-world data accumulate, stakeholders across orthopedics will need to monitor the impact PEEK will have on reshaping the implant market.

Is all-polymer TKA entering the home stretch?

FDA Investigational Device Exemption (IDE) approval, global feasibility trials, and dedicated research funding signal that PEEK-based knee implants are on the verge of commercialization.

FDA approval accelerates clinical testing

In September 2024, the FDA granted an IDA for the Freedom Total Knee System using Invibio’s PEEK-OPTIMA femoral component in partnership with Maxx Orthopedics. This authorization clears the way for systematic safety and efficacy data collection under controlled conditions. IDA gives legitimacy to the solution, and hospitals and surgeons can begin preparing for a polymer-based alternative entering mainstream in the future.

Decades of collaboration accompany ready manufacturing

Invibio recognized PEEK’s medical potential in the early 2000s, and by 2024, over 15 million PEEK-OPTIMA devices were implanted worldwide. Since 2012, Invibio and Maxx Orthopedics have co-developed an all-PEEK femoral component paired with a UHMWPE tibial insert. Invibio can probably consider scaling its existing PEEK production facilities (although it already maintains large-scale PEEK-OPTIMA manufacturing facilities). Similarly, other PEEK producers might follow suit to offer reliable availability and cost predictability once approvals are in place. Incumbent metal-implant manufacturers may need to forge similar partnerships or invest in polymer capabilities to avoid losing market share.

Early trial results build confidence

Feasibility studies in India, Belgium, and Italy, ongoing since 2021, have shown no device-related adverse events with the PEEK-OPTIMA component in small patient cohorts. This suggests strong biocompatibility and mechanical resilience. Healthcare providers will continue watching further study results and might alter their component purchasing decisions. Established TKA suppliers will face renewed pressure to rethink their own implant solutions if studies show continued positive results.

India leads the commercial charge

Maxx Orthopedics plans to file for regulatory approval in India with a 2025 commercial launch target. India’s large patient base and growing demand for joint replacements create an ideal environment for initial commercialization. For players, early market entry here could build clinical experience and generate real-world data to support subsequent approvals in Europe and the USA.

Academic funding fuels long-term validation

In 2023, Invibio and academic partners, including the University of Leeds, secured a £1.7 million UK EPSRC grant for TKA patient outcome research. This funding will support ongoing research into wear patterns, revision rates, and other outcomes. Robust academic data will likely affect clinical decisions and payer coverage, while boosting evidence for PEEK implant solutions makers.

The momentum around all-polymer TKA continues to grow, thanks to regulatory milestones, scientific studies, strategic manufacturing alliances, and academic validation.

EOS Perspective

The ongoing developments from Invibio and Maxx Orthopedics mark a potentially transformative era in TKA, moving beyond conventional metal-on-polymer implants. However, all-polymer implants have yet to reach a point where they can directly compete with metal implants, which have demonstrated reliable durability over five decades. Although PEEK shows promise as a metal-free alternative, additional real-world studies are needed to validate its long-term effectiveness.

Nevertheless, the emergence of all-polymer knee implants will likely prompt a counter-response from incumbent players, further accelerating innovation in the field. The stakes are high, as LSI’s Global Market Analysis & Projections database shows that Zimmer Biomet, Stryker, and DePuy Synthes still dominated the TKA market in 2023, collectively accounting for about 80% of the overall market.

Zimmer Biomet, for instance, in March 2025 secured FDA clearance of Persona Revision SoluTion Femur, a revision knee implant component made of Tivanium (Ti-6Al-4V) alloy, offering an alternative for patients with metal sensitivities. This development reflects their strategic effort to address concerns around metal allergies and to strengthen their trusted metal implant offerings to stay competitive.

Most established market players have the know-how and infrastructure to drive R&D in all-polymer implants for TKA, given their experience with implant polymer technologies and the inclusion of PEEK-based implants within their broader portfolios and other applications. For instance, both Zimmer Biomet and Stryker successfully commercialized customized solutions for PEEK-based cranial implants. Their existing R&D pipelines and clinics networks position them to act fast. With this, they might be able to considerably stifle disruption from startups or niche players. The challenge for these large companies will likely be the execution.

Smaller competitors often innovate faster, while established players can be slowed by internal processes or reliance on existing metal implant revenue streams and supply chains. How they handle this transition will shape the future of knee replacements, either reinforcing their market leadership or allowing newer companies to gain a foothold.

24, Oct 2025by EOS Intelligence EOS Intelligence No Comments

EHR Vendors Turn to Gen AI to Ease the Load and Stay in the Game

Generative AI is breathing new life into Electronic Health Records (EHR) management, transforming them from cumbersome systems into dynamic, intelligent platforms. By automating tasks such as clinical documentation and patient communication, Gen AI is tackling the administrative overload that plagues healthcare providers. While industry leaders such as Epic and Oracle race to integrate these innovations, challenges around reliability and privacy remain. The promise is a seamless, efficient EHR experience, but only if the technology can rise to the task.

Gen AI’s early stage prompts EHR players to focus on critical use cases

Gen AI boom in the EHR industry began in early 2022. By 2024, the US healthcare industry witnessed a dynamic growth in investment in AI projects. As per a report by Silicon Valley Bank, investors directed over US$6.6 billion towards developing administrative and clinical AI use cases in 2024. Global AI-enhanced EHR market reached US$5.3 billion in 2023, with a forecast of 28.8% CAGR during 2024-2031 to reach US$37.50 billion by 2031.

With a high pace of growth, we can expect EHR solutions to center on Gen AI capabilities within the next 5-6 years. However, Gen AI technology in EHR is still in its early stages of development and needs further work to mature and ensure reliability. As a result, companies are streamlining their spending by identifying and prioritizing use cases that address the most pressing challenges in EHR systems, primarily reducing labor-intensive tasks.

Gen AI has matured from adolescence to young adulthood, but it still has a lot to learn to become reliable.” – Suhas Uliyar, Senior Vice President of Product Management at Oracle Health for Healthcare IT Today, 2024

Medical professionals are not seeking AI to replace their clinical expertise but rather to reduce the growing administrative demands that detract them from patient care. Recognizing this need, EHR companies are focusing on developing AI-driven solutions to automate repetitive tasks such as documentation, scheduling, and patient communication. By addressing these pain points, the industry aims to enhance efficiency and allow healthcare professionals to concentrate on their primary role.

Doctors are not looking for AI to act as a doctor, to step in their place, but they want help with administrative burdens.” – Leigh Burchell, chair of the EHR Association for Healthcare Dive, 2025

EHR giants compete closely using similar Gen AI strategies

Leading players in EHR solutions, such as Epic Systems and Oracle Health (formerly Cerner), are competing head-on for their space in the market. In 2023, both companies introduced Gen AI solutions to their offering.

Epic Systems and Oracle Health dominate the EHR market with 38% and 22% share in the acute care EHR market, respectively, and 44% and 25% share in the ambulatory EHR market, respectively, in 2024. Considering the Gen AI features and use cases they are developing, these two companies are at the forefront and take comparable approaches to developing Gen AI solutions.

For instance, Epic integrated ambient listening software in collaboration with a startup called Abridge in 2024 to transcribe patient visits in real time. Partnering with Microsoft, the company has integrated the latter’s digital assistant, Dax Copilot, which captures patient-clinician conversations and creates clinical documentation in real time. The company is also developing clinical assistants that can summarize information, interact with patients, and schedule follow-ups.

Similarly, Oracle developed a clinical agent and integrated it with its EHR solution. The agent can record and transcribe patient visits and draft notes for the clinician’s approval. The solution leverages ambient voice technology and a multi-modal interface, allowing physicians to interact with the EHR system seamlessly. This integration effectively eliminates the need for manual clicks, thereby streamlining data input, whether by keyboard or voice.

Epic is currently advancing its AI capabilities with 125 use cases either in development or live. Meanwhile, Oracle is set to release a next-generation EHR platform in 2025, featuring many Gen AI functionalities such as conversational search, voice-activated navigation, multimodal search capabilities, and automatic summarization of patient charts. Additionally, the platform integrates a clinical AI agent, which automates documentation, coding, and order management. The platform also incorporates Oracle Health Command Center, which provides real-time insights into patient throughput and staff allocation.

As of March 2025, Epic led significantly over Oracle in Gen AI adoption, with approximately 2,000 hospitals using its Gen AI features compared to Oracle’s clinical agent, which is deployed in only about 30 hospitals.

This gap stems from Epic’s higher implementation and larger existing user base of pre-Gen AI solutions, and its head start in developing and integrating Gen AI in its EHR products.

Additionally, Epic adopted a more focused strategy in navigating the market. As a result, Epic’s market presence is growing quickly, while Oracle’s progress is slower due to its broader, more complex approach.

Oracle plans to trounce Epic by targeting a broader customer base long term

Epic’s market share has been increasing while Oracle’s decreasing (Epic’s share in the market rose to 39% while Oracle’s fell to 23% in 2023, compared to 2022).

Epic has followed a hospital-focused strategy that has helped it gain rapid traction and widespread adoption among healthcare providers.

In contrast, Oracle is pursuing a long-term strategy of targeting payers, governments, and hospitals to build a connected healthcare ecosystem. Leveraging Gen AI and advanced analytics, it aims to offer solutions that optimize reimbursement processes and implement large-scale EHR solutions for population health management and public health reporting. This approach, however, means slower market share growth, as it requires systems capable of handling diverse data sources and complying with local regulations.

Epic appears committed to a hospital-focused approach and makes the Gen AI capabilities more effective. The company is leveraging its data lake, Cosmos, which consists of data from more than 1,415 hospitals, 33,000 clinics, and 11.4 billion patient encounters, to provide more targeted and reliable insights into treatments and outcomes. Epic is also integrating OpenAI’s GPT-4 technology for inbox management, which helps respond to patient queries with minimal human interference.

Even though Epic is creating more Gen AI use cases, Oracle’s strength lies in strong cloud computing capabilities and its ability to provide interoperable, integrated, Gen AI-driven solutions for diverse healthcare stakeholders and their ecosystems. This will keep Oracle competitive in the long term, despite Epic’s lead in Gen AI development.

At the same time, while Oracle’s approach holds promise for the future, it involves more complexity and coordination, which has slowed Oracle’s current progress in the acute care market compared to Epic’s swift and targeted advancements.

Epic and Oracle’s digital assistants outperform other solutions

Apart from Epic and Oracle, smaller companies, such as Meditech and eClinicalWorks, have also integrated clinical assistants into their EHR systems.

Meditech has partnered with Suki AI, Inc., a company that developed a Suki clinical assistant, which performs ambient documentation, dictation, ICD-10/HCC coding, and answers questions. Meditech also plans to partner with Microsoft to integrate its latest clinical assistant, Dragon Copilot, in 2025. eClinicalWorks has also integrated Suki clinical assistant into its platform.

Although third-party clinical assistants can integrate with various EHR platforms, Epic and Oracle have developed clinical assistants that are specifically tailored for their own EHR systems. This bespoke integration ensures tight and seamless task automation, leading to a more cohesive user experience in comparison to third-party solutions.

For instance, Epic’s close integration with Microsoft Dax Copilot digital assistant allows physicians to use the documentation template they already use in Epic. The template format is auto-populated with accurate information from the patient-physician interaction, regardless of the conversation’s flow.

Dax Copilot allows physicians to use the documentation templates that they already use in Epic, which have a number of sections (…). There is very tight integration between Dax Copilot and Epic, which enables highly accurate clinical documentation that takes advantage of the existing template structure, so it feels very smooth for the physicians.” – Peter Durlach, Chief Strategy Officer at Microsoft Health and Life Sciences for Healthcare IT Today, 2024

Oracle’s health digital assistant provides real-time surfacing of critical patient information, such as medical history and vital reports. This allows physicians to quickly retrieve necessary data during patient visits, eliminating the need for 35-40 manual clicks typically required to access this information.

Real-time information surfacing feature is also a feature in Dax Copilot, and is not available in other digital assistants such as Suki AI and DeepScribe. Additionally, Suki and DeepScribe assistants have several limitations in comparison to those from Epic and Oracle, including a lack of clinical task automation, real-time task competition, and comprehensive workflow optimization.

Small companies’ narrow focus on addressing documentation challenges

As a first step in leveraging Gen AI, small companies are focusing on developing Gen AI capabilities around ambient listening tools and clinical documentation automation.

Altera (formerly Allscripts) began working on ambient listening tools in 2025 that can detect multiple voices in the exam room, capture conversations between patients and providers, and summarize them in a note.

In November 2024, Veradigm launched an AI-powered ambient scribe platform that actively listens to doctor-patient conversations, records them, and automatically transforms them into organized clinical notes.

While smaller companies’ focus is narrowed to developing solutions that primarily address basic documentation challenges for physicians, bigger players such as Epic and Oracle are enhancing these solutions with advanced features such as patient chart auto-summarization and task automation. The fact that small companies typically target clinics or small health centers that cannot afford complex software solutions leads them to focus on basic solutions.

EOS Perspective

For years, the burden of documentation has weighed heavily on clinicians. On average, they spend 2.3 hours documenting for every 8 hours of scheduled clinical time. Gen AI-powered ambient scribing and clinical documentation automation tools address this long-standing pain point by freeing clinicians from a large part of tedious paperwork. These solutions are quickly becoming a standard feature in clinical environments.

Large health systems prioritize solutions that integrate seamlessly with their enterprise EHR systems to meet strict regulations and security standards. In acute care, Epic, Oracle, and Meditech dominate as leaders, partnering with AI firms such as Microsoft, Suki, Abridge, and iScribe. These collaborations allow for integration of ambient scribing, digital assistants, and documentation automation, streamlining workflows and improving patient care.

Significant funding fuels these AI companies’ success. For example, Suki raised US$168 million, including a US$70 million Series D round in October 2024. Such investments drive the development of advanced Gen AI capabilities, fostering innovation.

As the EHR giants capture the majority of the AI-enhanced EHR market, small companies will continue to concentrate on the ambulatory care segment, especially small clinics. This market segment remains fragmented, with numerous smaller players providing AI solutions with limited functionalities. Small clinics are not only sensitive to upfront costs but also to ongoing maintenance and support fees. Therefore, these AI vendors will follow a product-led growth strategy, allowing clinicians to use a light version of the solution for free, with the goal of converting them into long-term paying customers over time.

To differentiate themselves, these smaller AI vendors will continue to tailor their solutions to specific practice types, such as physical therapy or behavioral health, which larger providers may not be willing or able to cater to effectively. However, these solutions may face challenges in integrating with existing EHR systems.

EHR giants are far ahead and continue to solidify their leadership in the Gen AI space, continuously building diverse AI capabilities and specialized solutions to optimize clinical workflows. Partnerships with other players have a crucial role in this strategy. For instance, Abridge partnered with Epic to launch a Gen AI ambient documentation workflow for nurses in July 2023. This partnership strengthened Epic’s already solid position and showed that the market can be challenging for smaller Gen AI companies to compete against integrated solutions by larger players.

Given the intense competition from big companies, it is unclear whether smaller or newer players can deliver enough in terms of product features, usability, or cost advantages to gain significant traction as standalone solutions as against integrated solutions offered by larger players.

China's Medtech Volume-Based Procurement Big Savings, Bigger Challenges by EOS Intelligence

23, Aug 2025by EOS Intelligence EOS Intelligence No Comments

China VBP: Turning Down the Volume on MedTech Margins

China’s phased rollout of Volume-Based Procurement (VBP), which started in the pharmaceutical industry in 2018, quickly expanded to the medical devices market in 2019. VBP standardizes medical device prices in China, fosters medtech innovation, makes medical consumables more accessible, and reduces healthcare expenses for both patients and the government. The program is doing this by granting high-volume sales to medical device manufacturers, offering the lowest prices across the city, province, or country level, depending on the tender type.

VBP policy follows the Healthy China strategy

In September 2021, the National Healthcare Security Administration, a governmental body responsible for funding public healthcare in China, made its 14^th five-year plan (FYP), including the years from 2021 to 2025. China’s 14^th FYP has laid down a Healthy China strategy that aims to improve social conditions, including healthcare in the country.

China has struggled with costly and uneven healthcare access between urban and rural areas, contributing to poverty, primarily in rural regions. Poverty due to illness affected around 20 million people, or 44.1% of the poor population in 2015, according to the National Health Commission. Other challenges include a hike in noninfectious diseases due to poor lifestyle habits and an increasingly aging population.

The 14^th FYP aims to mitigate these challenges by improving the affordability and accessibility of healthcare services in China by 2025. China will achieve this through various policies, including public hospital reform and equal access to essential public healthcare services.

The Chinese government rolled out VBP, or competitive tendering of medical consumables, to achieve the 2025 target of 80% of hospitals’ expenditure to go through the provincial tendering process across several device categories.

China’s Medtech Volume-Based Procurement Big Savings, Bigger Challenges by EOS Intelligence

VBP has had a tremendous impact on many medtech players in China

Between 2019 and 2021, the top 10 producers of high-value medical consumables in the Chinese market participated in VBP tenders at the provincial level with a nearly 70% median reduction in the prices the manufacturers offer under the tender.

The average price reductions on medical devices such as coronary stents, joint replacement systems, spinal and orthopedic products, and total knee replacement systems were cut by 95%, 82%, 84%, and 84%, respectively.

With these significant price reductions, VBP rippled through the medtech sector, affecting companies in many ways and forcing them to rethink their strategies to compete more effectively in China.

Declining revenues

The introduction of VBP has adversely affected some of the leading medtech companies, resulting in a downturn in their revenues in China. These medtech companies aimed to mitigate the impact by reducing costs and discounts. The impact of VBP on the world’s largest medical device maker, Medtronic, caught the attention of the medtech community due to the company’s considerable presence in China. The company’s Q3 2022-2023 earnings call reported that sales declined drastically due to VBP. Medtronic’s most impacted business lines included the surgical division, cardiac ablation solutions, and neurovascular lines. According to estimates, VBP affected 80% of Medtronic’s product portfolio in China. As a response, the company reduced its marketing, selling, administrative costs, and discounts. However, by Q2 2023-2024, the company said it would work through the impact due to China VBP by the end of FY 2024.

VBP has also negatively affected other foreign medtech companies, such as Alcon in China. Alcon’s exposure to China is about 5% of the company’s sales, predominantly in the surgical division. Alcon is likely to witness the impact of VBP in FY2024, ending in March 2025. Since the rollout of VBP takes place on a province-by-province basis, an abrupt fall in sales is highly unlikely in Alcon’s implants segment.d

The introduction of VBP has unfavorably impacted domestic medtech companies manufacturing intraocular lenses (IOLs) in China. Local player Airui Technology decreased its price of IOLs by as much as 65%.

Pressure on resource availability

National-level VBP tenders in China are usually finalized and awarded quickly. For instance, a temporary alliance of 22 (out of 23) provinces issued a competitive tender for liver function tests (LFTs) in November 2022. This tender’s result was published on December 30, 2022.

Compared to biopharma players, an idiosyncratic challenge for medtech companies is the need for a considerable amount of resources to be readily available when tenders occur. These resources must be strategically deployed to facilitate responses to tenders that are issued on short notice and awarded quickly and frequently. This is particularly challenging when bidding for regional or provincial VBP tenders that occur more frequently than national tenders, as many provinces in the country award contracts at different times.

Market exits

Although in the minority, some companies opted for more extreme measures. A few of them decided to withdraw from the Chinese market. For example, in March 2023, US-based Zimvie disclosed its intention to withdraw its spine business from the Chinese market following the challenges caused by the VBP roll-out.

Medtech companies have adapted amidst tough market conditions

Medtech companies faced pressure to lower prices, adjust their market and segment entry strategies, and optimize their workforce. These strategic changes aimed at mitigating the impact of lower revenue and profit margins on their existing product lines.

Staffing and organizational changes

Many medical device manufacturers that have encountered significant price reductions have responded by either reducing their workforce to manage expenses or by maintaining only managerial roles to focus on distribution in markets outside of VBP. Similarly, some medtech companies that witnessed moderate price cuts streamlined their field force to better align with the future servicing needs of their customers, including hospitals.

Other staffing and organizational changes include freezing hiring, outsourcing technical service jobs to third-party providers, and consolidating multiple product-focused teams into a single team.

Business model alterations

Some MNCs, including in-vitro diagnostics (IVD) companies, have changed their business model and leveraged partnerships with local medtech players to develop products. This strategic move will likely attenuate margin pressure by utilizing the local medtech partner’s cost advantage. Another advantage is that in-licenses or combined medical device development will likely counteract revenue stream losses.

IVD players are increasingly partnering with local medtech players to minimize the risk to their business model due to VBP, increase profit margins, expand their revenue streams, and continue to have sustainable relationships with hospitals. For example, Roche Diagnostics partnered with Fapon Biotech in November 2022 to improve its cost advantage by outsourcing its non-core reagent materials. Similarly, Danaher partnered with China Resources to outsource portfolios to national distributors or contract sales organizations in 2022.

VBP brought a mixed bag of consequences to other medtech industry stakeholders

Impact on the Chinese government spending

The Chinese government made considerable savings through the VBP program, thanks to curbing certain healthcare costs, and could potentially shift these savings to the sector’s other segments. The estimated annual savings based on the intended purchase volume was 10.9 billion yuan (US$1.6 billion) for coronary stents, 16 billion yuan (US$2.3 billion) for artificial hip and knee joints, and 26 billion yuan (USD$3.7 billion) for spinal and orthopedic products.

To put these numbers into perspective, the total savings from these three categories alone make up nearly 2.2% of China’s total public medical insurance spending of US$372.6 billion in 2021. These savings stem from VBP’s aim to reduce healthcare expenditures for the Chinese government by providing reasonably priced medical devices and implementing standardized pricing nationwide.

Impact on medtech distributors

One of the primary reasons for the high costs of medical devices for hospitals and patients in China is the unreasonably elevated profit margins of medtech distributors. The introduction of VBP has negatively impacted these margins.

At the same time, medtech companies are likely to pivot from a distributor-driven model to a direct distribution strategy to regain their own margins lost due to the increasing price pressures imposed by VBP. This transition is likely to limit the role of distributors to logistics functions, as seen in many other markets. At the same time, medtech companies will take ownership of commercial responsibilities and execute them through various channels.

The focus of VBP has expanded to specialized medical device categories

While the initial focus of VBP was on commoditized products with strong local alternatives, VBP has now ventured into medical device categories earlier perceived as not feasible for VBP tenders, such as electrophysiology for cardiology and immunoassays for IVD.

With VBP causing a radical change in commoditized products, medtech companies must now speed up registration and commercialization of products from specialized (non-commoditized) medical device categories that are in the pipeline. Pharmaceutical companies have already embraced this shift in strategy, while the change is gradually gaining steam among medtech players.

EOS Perspective

VBP is not a win-win strategy for all medtech stakeholders. Clear winners of VBP are patients and the Chinese healthcare system, while medtech companies, both domestic and foreign, and medtech distributors might get the shorter end of the stick.

VBP has made it difficult for all medtech companies operating in China to earn profits as high as in the past and has forced them to navigate in a more challenging environment.

At the same time, VBP is not entirely synonymous with foreign medtech players not succeeding in China. Chinese patients tend to prefer medical devices made by Western producers over those from domestic companies, provided that the imported devices are available at affordable prices. This preference is mainly due to the perception that foreign products are of higher quality than local options.

VBP will likely foster innovation in technology as companies will need to develop and design the best quality products to have an edge over their competition in tenders. Due to lowered prices, the bargaining power of medtech companies has decreased. Therefore, to differentiate themselves from their competition, they will need to prioritize innovation.

Although VBP has increased headwinds on the prices of medical devices, it has fueled strategic partnerships of MNCs with local medtech players. Local partnerships are likely a good move for all involved stakeholders, potentially also driving the overall growth of the medtech industry in China.

With China’s intention to pay 80% of its medtech expenditure through VBP by 2025, it will not be surprising to see VBP’s rollout in new categories of medical devices in the country.

The introduction of VBP will also have global repercussions, including a decline in small to medium medtech players’ interest in entering the Chinese market. However, the undeniable advantage of VBP’s introduction is that medtech companies will strive to innovate at lower costs, which will be a long-term driver for the market.

16, Jul 2025by EOS Intelligence EOS Intelligence No Comments

Anti-Obesity Drugs – Pharma Companies Race to Grab a Bite of the Pie

For many years, bariatric surgery has been the go-to option for people struggling with obesity and obesity-induced conditions. However, for the last couple of years, another easier option has become available in the form of GLP-1-based weight loss drugs. This class of medicine mimics a hormone that helps reduce food intake and control appetite. These drugs have revolutionized the weight loss market, which was previously dominated by gimmicky and fad-based OTC solutions. Due to GLP-1’s proven effectiveness, there is soaring demand for these drugs, outstripping its current supply capacity. While only two players operate in this market, several leading drugmakers have been racing to develop their own version of the drug. Moreover, with additional proven merits of the drug beyond just weight loss, it has become more appealing for pharma players to invest in.

GLP-1 anti-obesity drugs make big waves in the pharmaceutical sector

Over the past few years, anti-obesity drugs have received immense attention from healthcare professionals, pharmaceutical companies, and the general public. A new class of medication that stands out is glucagon-like peptide-1 (GLP-1) agonists, traditionally used for treating Type 2 diabetes. But along with managing diabetes, these drugs also suppress appetite and lower calorie intake by mimicking the GLP-1 hormone (a gastrointestinal hormone), which causes the patient to feel fuller longer and thereby prevents overconsumption. Regular intake of such drugs is deemed to result in a weight loss of about 15-25% of body weight in obese people.

GLP-1 agonists received FDA approval as anti-obesity drugs in 2021. Given their promising results, the demand for these drugs has increased immensely. However, despite the patient’s high out-of-pocket price of US$1,000 plus, there are severe shortages in the market.

Anti-Obesity Drugs – Pharma Companies Race to Grab a Bite of the Pie by EOS Intelligence

Only two players operate in this highly-coveted market

The GLP-1-based medication is now marketed in two categories – one for managing diabetes and blood sugar levels and the other as a weight loss drug. The GLP-1-based weight loss drug market is highly consolidated, as only two players operate in this space. These are Denmark-based Novo Nordisk and US-based Eli Lilly.

Novo Nordisk, the market leader, received FDA approval for its weight loss injectable, Wegovy, in June 2021. This drug uses the same active ingredient as Novo Nordisk’s diabetes drugs, Ozempic and Rybelsus (oral); however, it has a different dosage and can also be used for weight loss in patients who do not have diabetes. That being said, Ozempic has also been used off-label for weight loss.

On the other hand, Eli Lilly’s injectable drug for weight loss, Zepbound, received FDA approval in November 2023. Eli Lilly’s glucose-dependent insulinotropic polypeptide – GIP/GLP-1 injectable drug for diabetes, Mounjaro, has the same composition and dosage as Zepbound and is often prescribed off-label for weight loss as well.

While Novo Nordisk’s drugs, which use semaglutide as an active ingredient, result in weight loss of about 13 to 22 lbs, the drugs by Eli Lilly have tirzepatide as an active ingredient. They are stated to result in a weight loss ranging between 15 and 28 lbs.

From a price-point perspective, Wegovy has an out-of-pocket cost of US$1,349 per month, compared to Zepbound, which has an out-of-pocket cost of US$1,060 per month. Thus, while Novo Nordisk’s Wegovy has the first-mover advantage, Eli Lilly’s Zepbound is considered more effective and better priced.

Currently, both weight loss drugs by Novo Nordisk and Eli Lilly come in the form of injectables. However, both companies are developing oral versions of the drug as they are easier to administer and more convenient to prescribe. They may also help ease supply constraints currently impacting the injectables. In June 2023, Novo Nordisk conducted Phase 3 trials for its once-daily oral Wegovy drug, according to which the drug helped obese adults lose about 15% of their body weight. Similarly, in June 2023, Eli Lilly conducted Phase 2 trials for its oral GLP-1 receptor for weight loss. The drug helped obese adults lose up to 14.7% of their body weight. Both companies are optimistic about the outcomes of their trials; however, the expected launch timelines for these drugs have yet to be determined.

Leading drugmakers race to compete in the growing anti-obesity drug market

Currently, Novo Nordisk and Eli Lilly are the only two players operating in this market. However, several other leading pharmaceutical players have joined the race and are working towards developing their own version of the drug, either through in-house R&D or through strategic acquisitions.

Moreover, they are targeting their research towards developing and marketing a new generation of GLP-1-based medications that are administered orally, are longer lasting, and have additional health benefits and limited side effects.

In February 2024, US-based biopharmaceutical company Amgen successfully completed a Phase 1 clinical trial for its GLP-1 agonist drug, MariTide. As per the trials, the drug produced a 14.5% weight loss in patients administered the highest dose. Moreover, the company claims that the trial indicates that patients may need to take less frequent doses of MariTide (compared with current competition), and the weight loss achieved stays significantly longer. The company has begun its Phase 2 trial, with results expected by late 2024.

In December 2023, Swiss-pharmaceutical giant Roche acquired US-based Carmot for US$3.1 billion (US$2.7 billion upfront cash and US$400 million on certain milestones). This acquisition has helped put Roche on the map for obesity drug development. Carmot has two GLP-1 agonist molecules for weight loss, which are currently being tested in the mid to advanced stages of clinical trials. The first drug, CT-388, is a once-weekly injectable and has completed Phase 1 clinical trial, while the other drug, CT-996, is an oral drug currently undergoing Phase 1 trials.

In November 2023, UK drugmaker AstraZeneca entered into an agreement with Shanghai-based Eccogene, wherein the former licensed an oral once-daily GLP-1 receptor agonist called ECC5004 for the treatment of obesity, Type 2 diabetes, and other cardiometabolic conditions. For this, AstraZeneca agreed to pay Eccogene an upfront fee of US$185 million for the drug and a further payment of US$1.83 billion in future clinical, regulatory, and commercial milestones and tiered royalties. The drug is currently in Phase 1 development, and the company hopes to enter Phase 2 of clinical studies by the end of 2024. In the past, AstraZeneca stopped the development of two GLP-1 agonist drugs that were being developed in-house. The development of an injectable called Cotadutide was halted in April 2023, and an oral drug called AZD0186 was halted in June 2023 after their respective Phase 2b and Phase 1 clinical trials did not yield the desired results.

Pfizer, one of the most active companies in this regard, has faced multiple failures in their endeavor to develop a competitive obesity drug. In 2020, it started a clinical trial for its GLP-1 agonist weight loss drug, Lotiglipron. However, in June 2023, the company stopped developing the drug after its Phase 1 and Phase 2 drug interaction studies indicated a rise in liver enzymes in patients who took the drug once a day. In 2021, the company simultaneously began working on another GLP-1 receptor agonist, Danuglipron, which was to be taken twice daily. While the Phase 2a trial for the drug in June 2023 showed promise, the company halted the development of the drug post its Phase 2b trial in December 2023. The drug was scrapped as, despite significant weight loss, the trial patients experienced high rates of common gastrointestinal and mechanism-based adverse side effects. The company is now conducting a pharmacokinetic study with a once-daily version of the Danuglipron drug that will provide guidance on future development plans.

Pfizer’s failure with these two drugs demonstrates the struggle the leading pharma companies face to develop a safe, effective, and tolerable GLP-1 agonist for weight loss.

GLP-1 agonist drugs have benefits beyond diabetes and weight loss

Despite multiple setbacks, leading pharma companies are investing heavily in this space, as they understand the potential of these drugs. While currently, GLP-1 agonists are poised as diabetes and weight loss drugs, they have far more benefits. Data from ongoing clinical trials and independent studies suggest that GLP-1 agonists also help improve cardiovascular health and kidney function and help treat addiction and dementia.

In March 2024, Novo Nordisk’s Wegovy received FDA approval for reducing the risk of serious cardiovascular complications in adults with obesity and heart disease. This is based on the results shared from the company’s three-phase trial SELECT, which indicated that Wegovy reduced patients’ risk of major cardiovascular problems by about 20% during the five-year trial period.

Similarly, in 2019, the company started another clinical trial, FLOW, to determine the impact of GLP-1 agonists on kidney function. As per the interim results in October 2023, the trial displayed that Ozempic (Wegovy’s diabetes counterpart) reduced the risk of kidney disease progression and kidney and cardiovascular death in diabetes patients by 24%. Given its success, the company has halted the trial at the interim stage.

An initial study conducted on animals in March 2023 reportedly showed positive results for curbing addictive tendencies, such as drinking and smoking, with Ozempic. Currently, two trials are being undertaken to validate the use of GLP-1 agonists in humans to manage drug and alcohol addiction. Given the testimonies from current users of the drug, it is indicative that the drug has been helping users curb their addictions.

In addition to this, several researchers are also suggesting that GLP-1 could be used in the treatment of dementia and other cognitive disorders. This is based on the claim that GLP-1 agonists reduce the build-up of two proteins, amyloid, and tau, in the brain. These two proteins are known to be responsible for Alzheimer’s disease, which is the most common form of dementia. In February 2022, a new trial at the University of Oxford was initiated to test people with high levels of amyloid and tau and at risk of developing dementia to determine if the use of GLP-1 agonists would result in a reduction in tau accumulation and brain inflammation. The interim results from the study have not yet been disclosed.

High prices and limited coverage pose as speedbumps for obesity drug adoption

While these obesity drugs have exploded in popularity in recent times and are only expected to grow further as their case use increases, they do have certain shortcomings and challenges that are important to address.

These drugs are known to cause several side effects, such as nausea, diarrhea, vomiting, constipation, and ulcers. They can also lead to severe complications, such as pancreatitis, in some extreme cases. While most of the common side effects of the drugs are manageable and justifiable given the risk-benefit ratio, one of the key issues with the drugs is that they need to be taken in perpetuity to keep the weight off. In other words, once a patient stops taking the drugs, the weight comes back. Given that these drugs are priced at more than US$1,000 per month at the moment, taking them constantly becomes a considerable challenge for patients.

Moreover, considered as ‘vanity-use’, these drugs are currently not covered by most medical insurance policies, and thus, patients have to pay for them out-of-pocket. While several employers in the USA are considering including these drugs in their health plans, they are still debating their merit. Employers acknowledge the benefits of these drugs as they help employees who battle with obesity improve their health and, in turn, improve overall performance and employee satisfaction. However, high costs and long-term use act as definite barriers, which make both employers and insurers reluctant to cover these drugs.

Insurers are slowly warming up to the inclusion of GLP-1 drugs in their plans

In March 2024, leading insurance company Cigna stated that it would expand insurance coverage to include weight loss drugs but would limit how much health plans and employers spend on the drug each year. As per Cigna’s benefits management unit, Evernorth Health Services, spending increases for these weight loss and diabetes drugs would be limited to a maximum of 15% annually. The plan offers a financial guarantee and enables employers and health plans to have greater predictability and control over their GLP-1 spending by offering clients (employers) a guarantee that the cost of weight loss and diabetes drugs would not increase by more than 15% annually.

As a part of the effort to limit how much employers spend on GLP-1-based drugs annually, Evernorth has entered into an agreement with Novo Nordisk and Eli Lilly. However, the details of the agreement have not been disclosed.

While this is a good start, the drug would need better coverage by many other insurance players to reach a wider audience.

EOS Perspective

Given that about 12% of the global population and more than 40% of the American population grapple with obesity (as per WHO and 2022 statistics by the National Institute of Diabetes and Digestive and Kidney Diseases, USA, respectively), weight loss drug manufacturers Novo Nordisk and Eli Lilly are sitting on pharma goldmines. The weight loss drugs market, expected to reach US$100 billion by 2030, is poised as one of the most promising sectors for the pharma sector. Thus, it is no surprise that several leading players are investing heavily to join Novo Nordisk and Eli Lilly at the top, either through in-house R&D or through acquisitions.

However, developing these drugs proves to be challenging for drugmakers, as evidenced by the failures of several companies in creating their own versions. We can expect the sector to consolidate further as larger pharma companies look to acquire niche players with their trials being in advanced stages.

Moreover, in a bid to find their footing in this promising sector, pharma players are trying to develop advanced versions of the drug that have benefits beyond just weight loss and offer long-term benefits. This is also because, at the moment, these drugs are not approved by most insurance companies, which makes them extremely expensive for the wider population to afford. This, in turn, is withholding these drugs from becoming mainstream and is thereby preventing them from tapping into their true growth potential. That being said, Wegovy’s recent FDA approval for reducing cardiac complications in people with obesity and heart disease will likely tip the insurers’ coverage scales. Insurance companies are likely to cover the drug in the near future.

Since no other drug in the market offers proven cardiac benefits along with weight loss (including Eli Lilly’s), it is safe to say that Novo Nordisk is way ahead in the race and will dominate the market for the foreseeable future. Thus, to be able to compete in the market, it is not enough for drugmakers to develop obesity drugs offering just weight benefits. They would need to develop drugs that offer higher efficiency or additional therapeutic benefits along with weight loss and price them competitively.

29, May 2025by EOS Intelligence EOS Intelligence No Comments

Metaverse Meets Medicine: Spatial Computing’s Game-Changing Potential

Spatial computing, sometimes called the metaverse, will revolutionize healthcare by seamlessly merging the digital and physical worlds. Leveraging technologies such as augmented reality (AR) and virtual reality (VR), it offers exciting transformative possibilities, from enhanced surgical training and improved diagnostics to personalized treatment plans and remote care solutions. As the technology matures, it presents both opportunities and challenges for technology solution providers.

AR, VR, and Extended Reality solutions offer an immersive healthcare experience

Spatial computing uses technologies such as virtual, augmented, and mixed reality to interact with digital information in 3D space, fundamentally changing how healthcare is delivered. It is gradually finding applications across the industry. For example, surgeons can practice complex procedures in realistic, risk-free VR environments, improving their skills and preparedness. Doctors can visualize medical images in 3D for more accurate diagnoses.

Patients also become more engaged in their care through interactive tools that explain their conditions and treatment options. Holographic images expand the scope of remote care, providing patients with a stronger sense of connection to their doctors. VR can even be used for immersive therapy sessions, helping patients manage anxiety or PTSD in a safe, controlled setting.

The potential applications are vast. AR solutions can overlay medical imaging data (CT scans, MRIs) onto a patient’s body for improved diagnosis. Virtual patient models can simulate treatment scenarios for optimized treatment planning. Tools such as EnVisio provide continuous 3D surgical awareness, enabling surgeons to plan approaches from any angle for increased precision.

Virtual clinics promise to reshape care delivery models, while live surgeries can also benefit from this technology. Within six months of Apple Vision Pro’s launch in February 2024, surgeons at UC San Diego Health successfully performed minimally invasive operations using Apple Vision Pro headsets, which offered significant cost advantages over traditional surgical monitoring systems.

Surgery-specific applications and AI integration drive innovation

The field is attracting significant innovation. Companies such as Medivis and Osso VR are pioneering the development of spatial computing solutions for surgical planning and medical training. There are several solutions (such as Medivis’s Surgical AR and Surgical Theater) available that use real-time camera images to project 3D models in a surgeon’s headset for both surgical planning and rehearsal before the procedure. Other solutions include AR and VR to help surgeons and health professionals in their medical training.

Since the launch of Apple Vision Pro, several large solution providers and startups started developing software solutions that leverage Apple’s advanced capabilities, specifically for applications in the healthcare sector. Siemens Healthineers developed its ‘Cinematic Reality’ app in March 2024, which offers advanced imaging and visualization solutions, including 3D reconstruction and VR tools for surgical planning.

Several large surgical players are also developing solutions that help optimize the processes, making surgeries more efficient and cost-effective. For example, Stryker‘s Mako SmartRobotics app for Apple Vision Pro (launched in March 2024) enables surgeons to review and visualize patients’ surgical plans. Zeiss‘s Surgery Optimizer (launched in April 2024), an AI-powered app for cataract surgery preparation using the Artevo 850 microscope and Apple Vision Pro, is another example of this trend.

Epic‘s Spatial Computing Concept for Apple Vision Pro aims to streamline charting, lab review, and secure communication for physicians. This also enables real-time updating of patient information on the hospital’s EHR systems. Integration of AI with spatial computing is a likely next step, promising optimized procedures with spatial computing overlays. AI is also likely to aid in better processing and analysis of spatial data.

Growth in spatial computing is also likely to bring in further investments from venture capital and existing healthcare giants. Spatial computing startup XRHealth raised US$6 million in funding in January 2024, while Medivis raised US$20 million in Series A funding that would enable it to develop advanced surgical solutions that integrate AR technology.

Apple Vision Pro is a key enabler for startups to develop healthcare solutions

The competitive landscape is dynamic, with various players vying for market share. Established medical technology giants such as Siemens Healthineers, GE Healthcare, and Philips are integrating spatial computing into their existing platforms. Meanwhile, startups such as Osso VR, Surgical Theater, and Medivis are disrupting the market with innovative solutions.

Software and hardware specialists, including Microsoft (HoloLens) and Apple (Vision Pro), are crucial enablers. While Apple Vision Pro is currently prominent, other hardware and platform developers are likely to emerge.

We can anticipate mergers and acquisitions as larger companies acquire promising startups. There is an increasing focus on user experience and integration with existing healthcare systems. Apple’s launch of the Vision Pro has spurred interest in spatial computing, with startups developing for the mixed reality environment offered by AR/VR headsets such as the Vision Pro and Meta Quest.

Dependence on limited hardware ecosystems is a key challenge for developers

Solution developers face several key challenges. Dependence on hardware companies, including Apple and Meta, creates vulnerabilities. These companies have their own ecosystems for developing supported applications that limit the possibilities and options for startups.

Data privacy and security, particularly compliance with regulations such as HIPAA and GDPR, are paramount, especially as AI integration becomes more prevalent. Compatibility with legacy systems, including imaging systems and EHRs, is also essential to be successful.

Maintaining cost-effectiveness is crucial, as the high prices of devices like the Vision Pro and HoloLens pose a barrier. Funding, particularly for startups, remains a challenge, although recent successful funding rounds offer encouragement.

EOS Perspective

The spatial computing market in healthcare is poised for substantial growth, driven by the increasing demand for immersive technologies, the rise of AR/VR in medical training, and the growing need for remote healthcare solutions.

Spatial computing advancements are transforming areas such as clinical education, surgical planning, training, medical imaging, and behavioral health. We can expect even more applications to emerge, improving care delivery and surgical outcomes. Imaging data will become more interactive, detailed, and accessible. Increased deployment in surgical settings will drive further growth in the development of supporting software and hardware. We may also witness an increase in hardware companies developing spatial computing systems suitable for application in the healthcare sector.

As the technology matures and costs decrease, spatial computing is expected to become an integral part of the healthcare ecosystem, transforming patient care and revolutionizing how medical professionals work.

11, Apr 2025by EOS Intelligence EOS Intelligence No Comments

Feeding the Future: How Plant-Based Pet Food Is Shaping a Greener Bowl

Over the past few years, the plant-based pet food market has been witnessing rapid growth due to pet humanization. As the market becomes increasingly competitive with many new brands and larger players, companies compete using innovative differentiation strategies to secure market share. By leveraging novel protein sources and innovative product formulations, brands look to enhance their product quality to gain an edge. Some brands focus on eco-friendly and sustainable practices to align their products with ethically-driven consumers. Others strive to optimize production processes to reduce costs and stay price-competitive.

According to Future Market Insights, the global plant-based pet food market was US$27 billion in 2024, with a growth forecast of a CAGR of 7.5% from 2024 to 2034. Vegan dog foods are some of the most common plant-based pet foods.

American and British companies overwhelmingly dominate the market. The leading players in this segment include Petaluma (USA), V-Dog (USA), Wild Earth (USA), PawCo Foods (USA), Omni (UK), The Pack (UK), and Benevo (UK). Other large players include Halo (USA), Nestlé Purina (USA), Mars Petcare (USA), and Hill’s Pet Nutrition (USA).

Plant-based dog food brands innovate with new protein sources

Creating products from protein-rich plants

One of the most critical components of a dog’s diet is protein. To compete with traditional animal-based dog foods, many vegan dog food brands focus on creating protein-rich formulas that match the nutritional profile of meat proteins. These products compete by combining and utilizing various plant proteins from sources such as peas, potatoes, lentils, and chickpeas.

Addressing the taurine deficiency in legume proteins

However, these plant proteins are often legume-based and deficient in taurine, an essential amino acid that dogs need in their diet. Some research studies claim that taurine deficiency increases the risk of dilated cardiomyopathy (DCM), a heart disease in dogs.

As more companies enter the vegan dog food market, brands try to differentiate their offerings by introducing more non-legume protein sources to offer a complete amino acid profile and address DCM issues in dogs. More and more vegan dog food formulations use ingredients such as quinoa, chia seeds, yeast, algae, and hemp. For example, US-based Wild Earth uses yeast-based plant proteins in its products such as Wild Earth Maintenance Formula and Performance Formula to create a more balanced dog diet.

However, incorporating these specialized ingredients raises costs due to complex production processes, and this results in products’ high-end prices. For instance, an 18-pound (about 8.2kg) bag of Wild Earth’s performance formula food costs the consumer US$99, about US$5.50 per pound. On the other hand, a 20-pound (about 9.1 kg) bag of US-based Open Farm’s Kind Earth formula, which does not use a special protein source, costs only US$72.99, about US$3.65 per pound.

Feeding the Future: How Plant-Based Pet Food Is Shaping a Greener Bowl by EOS Intelligence

Innovation beyond protein sources also drives competition

Along with high-protein formulation, players compete through various advancements, including product formulation, ingredient sourcing, and catering to specific dietary needs.

Formulating nutritionally complete products

To ensure nutritionally complete offerings, companies are enhancing their plant-based dog foods with high-quality proteins, vitamins, minerals, and fatty acids. For example, the American company Natural Balance utilizes brown rice, oats, barley, peas, and potatoes as the primary sources of protein and carbohydrates in its Vegetarian Formula. The product is enriched with taurine and l-carnitine amino acids, along with antioxidants from spinach, cranberries, and dried kelp.

Innovating in more appealing flavors and textures

In an attempt to make their products stand out, many plant-based pet food companies incorporate enriching flavors such as peanut butter, carrots, berries, and quinoa to make their products appealing to dogs. For instance, Open Farm’s Kind Earth plant-based kibble includes ingredients such as barley and fava beans, aiming to provide a nutrient-dense and palatable meal.

Apart from diverse flavors, texture innovation is an important competitive factor. Companies attempt to develop products with a meaty and fibrous texture that carnivore pets prefer. For instance, US-based Petaluma introduced Sweet Potato Jerky treats, a plant-based alternative to traditional meat jerky, made from sweet potatoes.

Addressing specific health concerns

Many vegan dog food brands also incorporate more functional ingredients to target specific health issues in dogs. Some vegan dog food brands offer grain-free and gluten-free options for dogs with allergies or grain sensitivity. An example of this is the British Benevo Adult Dog Food brand that offers wheat-free products catering to dogs with grain sensitivity.

Some companies provide formulas rich in probiotics and fiber to support healthy digestion. For instance, American Halo Holistic enriches its plant-based dog foods with prebiotics, probiotics, and postbiotics for complete digestive health and immune function.

To address dogs’ health concerns and enhance the competitiveness of their products, some companies enrich their foods with targeted ingredients. A case in point is another British brand, Omni, which formulates its vegan dog food with glucosamine, curcumin, and turmeric – ingredients that support joint structure and mobility in dogs.

Some brands also try to add calming ingredients to address stress and anxiety issues in dogs. For instance, Petaluma uses chamomile and lavender to reduce agitation in dogs.

Brands that prioritize pet health distinguish themselves by aligning with owners’ unwavering focus: ensuring their pets’ lifelong well-being. This strategy delivers a measurable competitive edge — reducing long-term veterinary expenses, building durable trust through proactive care, and fostering customer loyalty. Collectively, these outcomes create a self-sustaining advantage, positioning brands as partners in pet care while raising barriers for competitors lacking similar commitment.

Developing hybrid diets for flexitarian consumers’ pets

Recognizing the flexitarian trend among pet owners, companies are exploring hybrid diets that combine plant-based and traditional meat-based foods. This approach caters to consumers seeking to reduce meat consumption without fully committing to a vegan diet for their pets. ProVeg International, a food awareness organization, recommends designing products suitable for flexitarian feeding practices, as a way to attract a broader customer base and increase sales by pet food companies.

Brands differentiate by focusing on fresh, instead of processed, foods

Kibble and canned food are the most prevalent forms of dog food. Currently, most vegan dog brands offer dry foods in the form of kibbles and treats. However, the process of producing kibble involves extruding ingredients at high temperatures, which might destroy essential nutrients in a dog’s diet. These foods can also contain excessive preservatives to extend shelf life and fillers to bulk up to the product, compromising their nutritional value and making them less suitable for a dog’s long-term health.

As awareness of this grows, players are strategically expanding their focus to adopt gentle production methods, offering minimally processed meals from fresh (and sometimes organic) ingredients. For instance, UK-based Bramble and US-based start-up PawCo Foods offer oven-baked fresh meals. The oven-baked slow-cooking process allows easy digestion with better nutrient availability for the dog’s optimal health. A few brands also use organic ingredients in their product formulations to attract consumers. For instance, Petaluma uses about 50% organic ingredients in its dog food.

Plant-based fresh meal options are still not common, thus providing these companies with a competitive advantage in this highly competitive industry.

However, fresh, unprocessed meals and organic ingredients can be considerably more expensive than conventional kibbles and other vegan pet foods. Furthermore, fresh vegan meals are less available in comparison to popular kibbles. Due to the high prices and limited distribution, many consumers may struggle to maintain these pet meals over the long term. Consequently, players pursuing this strategy may face strong competition from other vegan dog food brands that might offer better distribution and price their products more affordably.

Companies use sustainability to attract ethically driven consumers

Several vegan dog brands emphasize their environmental commitment to attract pet owners with ethical and sustainability values. These companies advertise practices such as eco-friendly packaging, ethical sourcing, advanced production processes, and lower carbon footprint.

For instance, Petaluma promotes itself as a green vegan dog food brand, catering to pet parents who prioritize sustainability. The company regularly publishes the products’ lab results and sustainability practices on its website. In addition, it offers its products in attractive compostable packaging with graphics that illustrate dogs and humans working together to achieve a better planet.

While emerging companies and smaller brands use the sustainability approach to gain customers’ attention, more prominent brands might struggle to justify their eco-friendly claims. These popular brands have a broader range of traditional (and cheaper) products that they produce using less sustainable processes. When these companies promote their plant-based pet food products, environmentally conscious pet owners might perceive them as capitalizing on the growing demand without genuine environmental commitment. Consequently, pet owners may view these larger brand products as examples of greenwashing and dismiss their sustainability claims.

Plant-based food brands use diverse strategies for price competitiveness

Plant-based pet foods are mostly pricey due to several factors. These products are still niche and produced primarily by smaller companies with limited sourcing and production capabilities, factors that increase costs.

Additionally, these foods use high-quality, complex plant ingredients, involving extensive research, development, and testing, to ensure nutritional completeness. The high prices may prevent customers from buying these products.

Offering subscription models to make products more affordable

Currently, many companies provide subscription-based purchases associated with discounts to offer more affordable options to customers. These options allow the companies to lock customers for a long time, creating recurring revenue streams.

Using direct-to-consumer models to build trust and loyalty

Vegan dog foods are not mainstream yet. Companies in this space, especially smaller firms, use e-commerce sites and online pet retail platforms to increase their brand visibility and reach. However, over recent years, they have increased the use of direct-to-consumer models where companies sell directly to customers through their websites.

Unlike online retail platforms, this model allows companies to gain more control over product pricing and achieve better profit margins without having any middlemen involved. Several companies offer customized vegan meal plans that they tailor to the dog’s age, health conditions, and dietary preferences. This model allows companies to foster a direct consumer relationship, thus building trust and loyalty.

Introducing process optimization to reduce production costs

There is also an increasing instance of smaller brands collaborating with larger companies to lower production and distribution costs. A few companies have started exploring innovative technologies to increase efficiency and lower production expenses. For instance, PawCo is leveraging AI to test its products’ palatability and to streamline simulation and production processes.

While smaller companies undertake various internal efforts to reduce product costs through process optimization, these companies might still struggle to compete with larger brands to provide affordable plant-based pet foods. Large companies offer vegan pet foods at affordable prices due to their strong brand presence, financial resources, and versatile distribution networks.

Read our related Perspective:

Pet and Animal Health M&A: What’s the Scoop on the Industry’s Latest Shake-ups?

Plant-based food for cats poses greater challenges

While plant-based dog food is becoming more common, developing vegan cat foods is more challenging. Cats are obligate carnivores, meaning their nutrition relies primarily on animal-based meat. Cat owners have been skeptical about the nutritional profile of vegan diets. This makes them less willing to embrace such options for cats compared to dogs.

This creates an opportunity for players to innovate and compete in targeting cat owners. Some companies have been exploring solutions such as cultivated meat as an alternative to plant-based meat foods. For instance, Meatly, a UK-based start-up, has been exploring meat cultivation for cat food using cells from chicken eggs. While costly in R&D, this innovation could tap into a large market segment, offering cat owners more choices.

EOS Perspective

Health and sustainability will drive market growth in the West

While North America currently leads the market, Europe is not far behind and will likely experience significant growth in the coming years. Pet owners in the USA and Europe have been actively looking for plant-based pet foods that offer improved health benefits including oral, skin, joint, digestive and immune health.

Furthermore, there has been a growing demand for sustainable pet food products in these regions. Many pet owners are willing to pay high prices for vegan pet foods that promise minimal environmental impact and improved pet health.

Players in the Western plant-based pet food markets who are most likely to succeed will be those who effectively combine innovation, customization, sustainability, and consumer trust.

Asia-Pacific will be a rising frontier for players with localized strategies

Although the Asia-Pacific region lags behind North America and Europe in demand and availability of such products, it is poised for steady market growth. Key drivers mirroring Western trends, such as heightened pet health awareness, rising disposable incomes, and the growing appeal of veganism, are gaining traction across Asia.

The Asia-Pacific region’s diverse dietary and cultural preferences present both challenges and opportunities.

In recent years, some international plant-based pet food companies have entered Asia-Pacific, often forming partnerships with local retailers and pet food companies. For instance, in 2020, American V-dog launched its first plant-based pet food through Whole Foods, a major wholesale distributor in Japan. Such collaboration with Whole Foods, a reputable distributor, likely provided V-dog with strong market visibility and credibility. This entrance can serve as a strategic blueprint for other players aiming to expand into the region.

The region’s diverse diets and ingredients demand that companies tailor products to local preferences, such as incorporating sweet potatoes and seaweed in Japan. By aligning with these preferences, players can effectively navigate varied consumer demands. Those who can achieve that are better positioned to build relatability and trust with consumers, ensuring sustained long-term growth. A one-size-fits-all approach, or directly transplanting Western products into the regional markets, is unlikely to succeed.

The surge in online shopping across Asia-Pacific offers a significant opportunity to bypass traditional retail markups and reduce costs for consumers. Online platforms offer good growth avenues for brands that know how to strategically leverage e-commerce channels.

Asia’s price sensitivity will require careful threading

Price sensitivity will remain a critical factor and a barrier in this region, especially in developing economies such as India and China, where affordability often outweighs premium positioning. Here, players must adopt localized pricing strategies that cater to local economic conditions.

This can include offering smaller, budget-friendly packaging that can make plant-based pet food accessible for middle-income households. Hybrid products (combining plant-based and traditional ingredients) can serve as a cost-effective entry point for price-conscious consumers.

Subscription models, bulk discounts, and tiered pricing are good strategies for keeping product pricing accessible and relevant across diverse income levels. Tiered pricing, in particular, works well in markets with wide income disparities: simple formulations and no-frill products for budget-conscious consumers, enhanced formulations for middle-income buyers, and advanced formulations with premium ingredients for the high-income pet owners.

The regional markets also require investments in promotional campaigns, loyalty programs, and value-added offers that can further improve affordability and perceived value.

Brands that strike a balance between quality and affordability will likely appeal to a broader consumer base, ensuring deeper market penetration and success in the region.

27, Feb 2025by EOS Intelligence EOS Intelligence No Comments

Pet and Animal Health M&A: What’s the Scoop on the Industry’s Latest Shake-ups?

The pet and animal health market has seen a recent surge in M&A, signaling shifting dynamics within the industry. While rising pet ownership and increasing pet care awareness are creating positive momentum for the sector, broader trends are pushing major players to venture into the industry.

Many European players are focusing on cross-border acquisitions

M&A activity is particularly robust in Western markets

A significant number of mergers and acquisitions observed recently in the industry indicate a desire for major players to consolidate their positions and expand geographically in a bid to build their global presence and diversify revenue sources. Many companies pursuing geographic diversification are targeting Western markets with well-established pet care, mainly due to high disposable incomes, advanced veterinary services, and a cultural tendency to indulge pets.

An example of such a move is the 2023 acquisition of UK-based Kin Vet Community by Perwyn Capital, a European private equity (PE) investor, to gain entry into the UK veterinary services market. This acquisition aims to capitalize on the UK veterinary services market’s significant growth, which has risen from US$6.4 billion in 2021 to almost US$8 billion in 2023.

The UK-based veterinary sales and service provider, Animalcare Group acquired Australia-based Randlab in 2024 to strengthen its presence in the equine veterinary market. With this acquisition, Animalcare Group will be able to bolster its existing product portfolio and expand from the UK and Europe into Australia and New Zealand.

Similarly, Sweden-based investment company EQT Partners acquired VetPartners, a veterinary care network spread in Australia and New Zealand, in 2023. This move will not only help EQT enter the Australian and New Zealand veterinary markets but also help gain a strategic position in the veterinary industry with a network of 267 clinics and hospitals.

Experts believe that all these recent acquisitions indicate a desire of players to solidify their industry presence and widen their customer base, especially in the lucrative Western markets.

Central Europe is also experiencing a notable uptick

While M&A activity is the strongest in Western markets, some companies are also looking to Central Europe to search for their acquisition targets. An example is the 2024 acquisition of Bratislava-based VetCare Group by AniCura, a Swedish veterinary care provider owned by US-based Mars. This acquisition will add ten clinics to AniCura’s portfolio, three in the Czech Republic and seven in Slovakia. This strategic move also marks AniCura’s entry into the Czech and Slovak markets, significantly expanding its footprint in Central and Eastern Europe and complementing AniCura’s existing presence in Poland.

The developing markets are also grabbing players’ attention

A few players are also showing interest in developing markets such as Asia and Africa, where pet ownership is increasing, but veterinary and pet healthcare infrastructure remains underdeveloped.

Strategic acquisitions are increasing in Africa

Africa is a particularly lucrative investment zone with a favorable market situation for able players interested in investing in the continent’s animal health sector. This is due to barriers in local drug manufacturing, lack of local vets in private practice, and shortage of veterinary drugs.

A recent example of such an investment is Dutch-based animal nutrition company Nutreco’s 2024 acquisition of AECI Animal Health in South Africa. With this acquisition, Nutreco intends to utilize AECI’s expertise in animal nutrition to bolster its operations in South Africa. This move is also expected to allow Nutreco to tap into AECI’s distribution network and manufacturing facility in Burgersdorp, expanding its footprint in Africa’s crucial markets.

Similarly, in 2022, Ireland-based Bimeda acquired Afrivet, an animal health product distributor based in South Africa. This acquisition facilitated Bimeda’s entry into the African animal health products industry.

Foreign players are targeting the growing Asia-Pacific market

The Asia-Pacific (APAC) animal health market is also seeing similar interest from many competitive players. The pet care market in Asia, though still developing in several areas, is experiencing rapid growth. Countries such as China, India, and Japan are seeing a rise in pet ownership and heightened awareness regarding pet health. This makes it a great place for players looking to concentrate on various growth strategies, including collaborations, partnerships, agreements, and M&A, to strengthen their market presence.

An example of a recent strategic acquisition in the Asian market was France-based animal health company Virbac’s purchase of Japanese ORIX Corporation’s animal health subsidiary, Sasaeah, in 2024. The acquisition will help position Virbac as a leader in Japan’s farm animal vaccine market, particularly in the cattle sector. Sasaeah already has a strong presence in Japan and develops a wide range of veterinary products for both farm and companion animals. With this acquisition, Virbac will also gain Sasaeah’s local manufacturing facilities in Japan and Vietnam and its R&D capabilities. It will also strengthen Virbac’s status as a major player in the Japanese animal health market and offer opportunities for further expansion throughout Asia.

Virbac also acquired in 2023 a majority stake in Globion, a poultry vaccines company located in India, as part of its strategy to enter the avian vaccines market in the region and expand its geographic reach.

Similarly, in 2022, Germany-based Symrise AG, the parent company of Diana Pet Foods, which provides palatants for the pet food industry, acquired Wing Pet Food, a leader in pet food palatability in China. This acquisition gave Symrise access to the APAC markets.

Though the acquisition efforts are much lower in the developing markets, with favorable conditions such as increasing pet ownership and rising demands for efficient veterinary care, interested players can expect an overall improvement in market conditions and attractiveness in the future.

Major players are vying for smaller companies in a bid to grow product portfolios

Beyond increasing the geographical reach, the M&A activities aimed at expanding and strengthening companies’ product portfolios are also a significant trend observed in the animal health industry. Many big players are eyeing smaller firms to build comprehensive portfolios that can compete more effectively against other industry giants.

An example is the 2024 acquisition of Boston-based Invetx, which specializes in protein-based animal therapeutics and monoclonal antibody (mAb) development, by UK-based Dechra Pharmaceuticals. This acquisition enhanced Dechra’s specialty therapeutics portfolio for pets and provided access to the growing mAbs market. It will also introduce new technological capabilities, strengthen Dechra’s pipeline, and create significant future growth opportunities for the company.

Similarly, in 2024, the NJ-based Merck Animal Health acquired Indiana-based Elanco Animal Health’s aqua business to enhance Merck’s position in the aquaculture sector. This includes medicines, vaccines, supplements, and nutritional products for aquatic species, as well as two manufacturing facilities located in Vietnam and Canada and a research center in Chile. With this acquisition, Merck aims to strengthen its extensive portfolio, including warm and cold water products, vaccines, anti-parasitic treatments, and nutritional supplements.

Many other acquisitions materialized in 2024 in a similar vein. This includes Animalcare Group’s acquisition of Randlab to enter the equine care market and Australia and New Zealand’s animal health market. Also, South Korea-based Easy Bio acquired US-based Devenish Nutrition to bolster its feed additive and premix operations in North America.

Players are focusing on consolidation to bolster their veterinary service offering

The veterinary services segment is also seeing robust consolidation. Several corporate buyers acquired independent clinics and businesses to strengthen their market position and access the robust customer base of the target companies. Significant consolidation has been visible in the USA and globally for the past three decades.

A recent example is Norway-based veterinary dental care provider EMPET acquiring Smadyrklinikken, a Norway-based provider of veterinary services, including surgery and emergency care, in 2023. EMPET also acquired a Norway-based horse treatment clinic, Hesteklinikken Bergen, in 2024, further expanding its veterinary treatment scope.

Similarly, in 2024, Miami-based at-home veterinary care provider The Vets merged with Boston-based BetterVet, a mobile veterinary service provider, to combine the strengths of both companies and enhance their pet healthcare services across the USA.

Another acquisition along the same line in 2024 was that by Pavo, part of the Netherlands-based ForFarmers‘ global equine organization, which acquired Thunderbrook Equestrian, operating primarily in the UK and Ireland. Thunderbrook offers a diverse range of products, including conventional and organic horse feed, supplements, and herbs, supported by a strong distribution network and online presence. Experts expect this acquisition to enhance Pavo’s distribution capabilities.

Private equity firms are also targeting pet health firms

It is not only businesses within the veterinary or pet sector that are acquiring clinics and animal health businesses, but also companies from other industries and PE firms.

One example is the 2024 acquisition of Ireland-based veterinary products manufacturer Chanelle Pharma by Exponent Private Equity, a UK-based PE firm. Chanelle specializes in R&D and has a prominent position in the market as a producer of generic pharmaceuticals for both human and veterinary use. This acquisition offers Exponent many opportunities for investments in product development and R&D.

Similarly, UK-based PE firm Apax Partners, in 2023, acquired stakes in US-based pet care software service provider Petvisor to focus on accelerating innovation and to position itself as a market leader in the pet software segment.

This trend will continue since the pet care market is expanding remarkably. According to Fortune Business Insights, an India-based market research firm, the global pet care market valued at US$246.7 billion in 2023 is expected to reach US$427.8 billion by 2032. Experts anticipate that this significant growth fueled by the increasing trend of pet ownership will prompt more PE firms to invest in the pet care market.

Pharmaceutical and vaccine segment is seeing acquisitions with rising pet diseases

The growing demand for specialized pet treatments is driving M&A in the pharmaceutical and vaccine segments of the pet health industry. The rising cases of pet and livestock infections and increasing zoonotic diseases are creating a strong demand for improved treatments, conveniently available medicines, and vaccines. This has prompted many players to divert their attention toward acquiring companies in the veterinary pharma segment to gain market access.

An example is the 2024 acquisition of Iowa-based animal pharmaceuticals and vaccines manufacturer Diamond Animal Health by Minnesota-based animal compounding pharmacy, Veterinary Pharmaceutical Solutions. Experts see this acquisition as the first step in VPS’s plans to grow its capabilities, market presence, product offerings, and research capabilities.

Another example is the 2023 acquisition of PetMedix, a UK-based firm developing species-specific therapeutic antibodies for pets, by US-based Zoetis, a global animal health firm. With this acquisition, Zoetis has gained access to PetMedix’s portfolio of antibody drug candidates targeting unmet clinical needs in dogs and cats with chronic and terminal diseases, including oncology and inflammatory diseases.

Similarly, the US-based Better Choice Company‘s acquisition of Canada-based Aimia Pet Healthco in 2024. This move will allow Better Choice to lead internal clinical trials focused on addressing the increased demands for treating obesity-related issues in cats and dogs.

In 2023, Zoetis acquired Germany-based veterinary care company Adivo, which focuses on creating animal therapeutic antibodies. This acquisition will allow Zoetis to leverage Adivo’s existing libraries of species-specific antibodies, facilitating the creation of a diverse array of new veterinary products.

The vaccine market in emerging economies such as Asia-Pacific is also seeing some scattered M&A activity. Virbac’s 2023 acquisition of a majority stake in India-based poultry vaccines company Globion to venture into the growing avian vaccines market can be seen as an instance of this budding trend.

Preventive care and wellness players are becoming attractive targets

A 2023 survey published by the American Veterinary Medical Association indicated that 76% of pet owners consider their pet’s safety and health a top priority. This disposition has also started influencing how pet owners choose food for companion animals, prompting them to opt for organic and healthy treats. All these have made diagnostics, preventive care, and sustainable health a hot topic among interested players, leading to some major acquisitions.

Wellness and preventive care players are attractive acquisition targets

Many acquisitions in the animal health industry are also focused on wellness and preventive care businesses. The factors driving this trend are the rising awareness among pet owners about the advantages of preventive healthcare, early disease detection, and overall wellness of the pets in the long term.

An example is the 2024 acquisition of US-based treat and pet care company Riley’s Organics by Skane-based Swedencare‘s subsidiary business, Pet MD Brands, marking its entry into the organic dog treat market in the U.S. The acquisition will give Pet MD access to Riley’s premium organic dog treats and nutritional supplements targeting coat and skin health, liver support, ear care, etc.

Similarly, Antelope, a US-based company that offers premium pet care products and services, has acquired My Perfect Pet, a US-based brand known for its ‘gently cooked’ dog and cat food. With this acquisition, Antelope can strengthen its portfolio with My Perfect Pet’s nutritionally balanced pet food without preservatives.

Veterinary diagnostics surge as acquisitions drive segment growth

The veterinary diagnostics sector has also seen some recent acquisitions. Mars, currently a leading name in the pet health segment, acquired Cerba HealthCare’s stake in the French veterinary diagnostics firms Cerba Vet and Antagene. Mars made a similar decision in 2023 when it acquired US-based Heska, a veterinary diagnostic and specialized solutions provider. All these acquisitions can help Mars position itself as a major competitor in the pet diagnostics sector.

Similarly, in 2024, US-based Ollie, a subscription service for fresh dog food, acquired Dig Labs, a diagnostic company that delivers real-time health screenings for pets, including stool analysis and weight management. This acquisition also aims at helping pet owners monitor their pet’s food intake and get personalized food intake recommendations to prevent health issues.

We expect the veterinary diagnostics segment to grow significantly, and M&A activity will continue accelerating in the coming years.

EOS Perspective

The flurry of M&A activity in the animal health sector highlights the industry’s significant potential. Along with the existing trends, experts believe there are many more segments interested and able players looking to consolidate their position in the industry can focus on.

Online and mobile pet care is a promising area for businesses considering investment or acquisition within the pet health sector. Companies that can effectively navigate this space will likely capitalize on the increasing demand for online services, likely through acquiring businesses with an established customer base to strengthen their portfolio. It will also help firms enhance their competitive edge through a digital-first approach. The 2024 acquisition of The PharmPet Co by Pharmacy2U, both UK-based firms, can be seen as one of the early steps in this direction. This merger will allow Pharmacy2U to offer pet medicines online to customers.

A nascent trend that could offer opportunities in the future is pet owners’ increasing interest in their pets’ gut and microbiome health. Experts believe this inclination of pet owners will increase in the coming years, creating a massive market for pet foods and supplements, especially those containing probiotics and gut-supporting formulas. This will make profitable businesses in the pet supplement segment a lucrative option for able and interested players to focus on.

Read our related Perspective:
 Poop to Pills: Is FMT the Future of Veterinary Medicine?

Sustainable and eco-friendly products are another segment with growing attractiveness thanks to the ever-increasing environmental awareness. As in many other markets, pet owners will seek products that consider environmental impact. With consumers aligning their choices with eco-friendly solutions, we can expect major brands to merge or acquire companies making eco-friendly pet products. The 2024 merger of Chr. Hansen and Novozymes, both Denmark-based firms, to create Novonesis is an example. With this merger, the new company aims to develop microbial solutions and enzymes while focusing on minimizing chemical use and advancing climate-neutral practices.

Recall Aftermath Who is Gaining Share in the Sleep Apnea Devices by EOS Intelligence

13, Feb 2025by EOS Intelligence EOS Intelligence No Comments

Recall Aftermath: Who is Gaining Share in the Sleep Apnea Devices and Ventilators Market?

In recent years, the number of ventilator recalls has increased considerably, primarily due to product quality issues, software malfunction, and manufacturing defects. This affected manufacturers such as Philips, Medtronic, and Vyaire Medical, leading to brand damage, financial losses, and a shift in the market competition. Existing players and new entrants such as Getinge and Nihon Kohden are stepping in to fill the gap with innovative and non-invasive products. The recalls caused challenges for manufacturers and patients, highlighting the need for strong quality control and regulatory oversight.

Recalls of its sleep apnea devices and ventilators hit Philips the hardest

The medical device industry has recently experienced many product recalls, particularly in the ventilators segment, impacting major market players such as Philips, Medtronic, Baxter, GE Healthcare, Hamilton Medical, and Vyaire Medical.

Philips (Philips Respironics) faced a series of class I respiratory product recalls, including CPAP and BiPAP machines, and ventilators, due to health risks caused by the polyester-based polyurethane (PE-PUR) sound abatement foam breakdown in the devices. Industry experts consider Philips’ sleep apnea devices and ventilator recalls among the most significant since 2021. As of January 2024, the company experienced a recall of over 15 million sleep apnea devices and ventilators, and reportedly hundreds of deaths. The recall seriously hurt the company’s reputation, weakened its position in the market, and caused significant financial problems.

The recalls led to a decline in the company’s share price by 60-70% in 2021, and it is still about 50% lower than its peak in April 2021 (US$ 53.45). Comparable sales of the connected care segment, including sleep apnea devices and ventilators, declined by about 19% in 2021 in comparison to 2020. This happened primarily due to sleep apnea devices and ventilators recalls, and the normalization of demand for hospital ventilators and monitoring systems following the COVID-19 surge. Recalls continued to drive down ventilator and sleep apnea device sales in 2022 and 2023.

The considerable impact on sleep apnea devices and ventilator sales resulted in a decline in Philip’s share in the sleep apnea device market, dropping to an estimated 20% between 2021-2023 from over 30% before the recall. The company also experienced a notable decline in market share in the ventilators market. Despite the decline in market share, Philips maintained its position as one of the leading players in both the sleep apnea devices and ventilators market.

However, in January 2024, Philips agreed to halt the sales of 19 sleep and respiratory products in the USA as a part of the consent decree with the US Department of Justice (DOJ). These products included hospital ventilation, certain home ventilation, sleep diagnostic devices, and portable and stationary oxygen concentrators. This affected the company’s brand image greatly and resulted in a further loss of market share in both ventilators and sleep apnea devices markets. Since the company will continue to sell consumables and accessories, including masks, it is anticipated to maintain a portion of its market share in both segments.

In April 2024, the company agreed to pay US$1.1 billion in legal settlement to resolve injury-related cases caused by sleep apnea devices and ventilators in the USA. Overall, sleep apnea device recalls cost the company over US$5 billion, likely including charges such as provisions for Philips Respironics-related litigation, consent decree, remediation costs, legal settlements, workforce restructuring, and quality remediation action. In addition, Philips cut 6,600 jobs by 2023 and is likely to reduce its workforce by a total of 10,000 by 2025.

Several companies bore the brunt of their own ventilator recall setbacks

Other prominent manufacturers such as Drägerwerk (Draeger), Medtronic, Vyaire Medical, Hamilton Medical, and Baxter also experienced various ventilator recalls due to manufacturing and quality defects. Although the FDA classified these recalls as serious, these companies did not face the same severe consequences as Philips, as these recalls did not result in major injuries.

All these manufacturers also witnessed a drop in ventilator sales largely due to the stabilization of demand for ventilators following the COVID-19 surge, with product recalls also contributing to the downturn.

In February 2024, Medtronic completely exited the ventilator market due to unprofitability. Similarly, in June 2024, Vyaire Medical filed for bankruptcy and was subsequently acquired in October 2024 by Zoll, an Asahi Kasei company engaged in the manufacturing of medical devices and related software solutions. This caused a profound impact on the ventilators market.

Market players are introducing products with advanced features to gain market share

The ventilator market encountered a radical shift in competition due to numerous product recalls. The suspension of sleep and respiratory product sales cost Philips its leading market position in sleep apnea devices and ventilators (except for certain home ventilators). It remains unclear when or if Philips will be able to resume sales of these devices. However, the company is unlikely to leave its presence in the sleep apnea devices and ventilators market entirely due to its commitment to service and supply of parts of ventilators in use, as well as its decision to continue the sale of consumables and accessories.

Existing market players such as Getinge, Hamilton Medical, Drägerwerk (Draeger), ResMed, and GE Healthcare, and newer entrants such as Nihon Kohden, are likely to fill in the gap left by Philips, Medtronic, and Vyaire Medical in the USA.

Market players such as Getinge, Drägerwerk (Draeger), and Nihon Kohden are focusing on introducing technologically advanced ventilators with features such as enhanced patient comfort, advanced monitoring capabilities, portability, and adaptive ventilation modes, to grab a slice of the pie. They are also increasingly focusing on expanding their portfolio of non-invasive ventilators with different interfaces, including face masks, nasal masks, helmets, and mouthpieces.

For instance, in October 2024, Nihon Kohden introduced a new ventilator system that combines invasive and non-invasive ventilation and high-flow oxygen therapy in one device, offering adaptability and eliminating the need to switch between machines. It also features a customizable, app-based touchscreen interface with advanced monitoring capabilities. Similarly, in January 2024, Getinge introduced ‘Servo-air Lite’, a non-invasive ventilator with high-flow therapy that offers optimal respiratory support, enhanced patient comfort, and ease of use for clinicians.

ResMed, a leading player in both the sleep apnea devices and ventilators market, is estimated to have grabbed over 10% of Philips’ market share in the sleep apnea devices market in the USA. ResMed witnessed a substantial increase in demand for its sleep and respiratory care products, including sleep apnea devices and ventilators, for various reasons, including Philips’ product recalls. The demand for its sleep and respiratory care products in the USA, Canada, and Latin America increased by 16%, 25%, and 10% in 2022, 2023, and 2024, respectively.

Companies engaging in sleep apnea devices and ventilator rentals, sales, and distribution, such as Trace Medical, also started adding brands from different companies to their product mix to meet the demand for these devices.

Patients experience delays in treatment and struggle to switch to other brands

Philips’ foam degradation issue has exposed patients to severe health risks, leading to respiratory complications and even cancer. Recalls of many ventilators and sleep apnea devices have left hospitals struggling to replace them, causing delays in patient treatment.

Patients relying on a specific brand faced reduced treatment options. Many patients found it difficult to switch to other brands due to cost and differences in machine settings or interfaces. With Philips halting sales of various sleep apnea devices and ventilators, patients have no choice but to switch to other brands.

The recall of various products from different companies has created significant demand and supply chain pressures for existing companies. These pressures will likely drive up ventilator and sleep apnea device prices, further burdening patients.

EOS Perspective

Product recalls in the sleep apnea devices and ventilator segment brought quality issues to the limelight. This highlights the need for stronger quality control processes and technologically advanced sleep apnea devices and ventilators incorporating virtual monitoring and AI integration, which can help detect defects earlier.

While the FDA received complaints about Philips’ degradation of the sound abatement foam in the sleep apnea devices and ventilators before the recall initiation, decisive action to force correction was not taken immediately. Also, despite knowing that Philips had been aware of the foam degradation issue for many years, the FDA did not take stronger enforcement measures against the company sooner. This situation highlights the importance of assessing and enhancing the FDA’s oversight process to ensure timely response to medical device complaints.

Philips suffered lasting brand damage due to the recalls. Although the company is trying to regain shareholder and consumer trust after settling US claims for an amount much lower than anticipated (US$2-5 billion) by analysts and the public, it faces a long road ahead.

Regarding market competition, ResMed is estimated to continue to lead and strengthen its dominant position in the sleep apnea devices market. The exit of well-established players from the ventilator market will intensify competition among existing companies and new entrants seeking to capture market share. However, it will be a gradual process as customers slowly transition from existing products to new brand ones. On top of that, the new entrants are likely to face stricter regulatory norms and product approval processes aimed at reducing the number of product recalls and enhancing patients’ safety.

Who We Are

Connect With Us

Work With EOS

Who We Are

Connect With Us

Work With EOS

Breaking the mold: Is metal-on-polymer TKA still the best we can do?

Beyond metal: could PEEK be the future of knee implants?

Faster, lower-cost production

On-site 3D printing and customization

Minimizing metal-related risks

Enhanced imaging transparency

Bone-friendly mechanics

Is all-polymer TKA entering the home stretch?

FDA approval accelerates clinical testing

Decades of collaboration accompany ready manufacturing

Early trial results build confidence

India leads the commercial charge

Academic funding fuels long-term validation

EOS Perspective

Gen AI’s early stage prompts EHR players to focus on critical use cases

Oracle plans to trounce Epic by targeting a broader customer base long term

Epic and Oracle’s digital assistants outperform other solutions

Small companies’ narrow focus on addressing documentation challenges

EOS Perspective

VBP policy follows the Healthy China strategy

VBP has had a tremendous impact on many medtech players in China

Declining revenues

Pressure on resource availability

Market exits

Medtech companies have adapted amidst tough market conditions

Staffing and organizational changes

Business model alterations

VBP brought a mixed bag of consequences to other medtech industry stakeholders

Impact on the Chinese government spending

Impact on medtech distributors

The focus of VBP has expanded to specialized medical device categories

EOS Perspective

GLP-1 anti-obesity drugs make big waves in the pharmaceutical sector

Only two players operate in this highly-coveted market

Leading drugmakers race to compete in the growing anti-obesity drug market

GLP-1 agonist drugs have benefits beyond diabetes and weight loss

High prices and limited coverage pose as speedbumps for obesity drug adoption

Insurers are slowly warming up to the inclusion of GLP-1 drugs in their plans

EOS Perspective

AR, VR, and Extended Reality solutions offer an immersive healthcare experience

Surgery-specific applications and AI integration drive innovation

Apple Vision Pro is a key enabler for startups to develop healthcare solutions

Dependence on limited hardware ecosystems is a key challenge for developers

EOS Perspective

Plant-based dog food brands innovate with new protein sources

Creating products from protein-rich plants

Addressing the taurine deficiency in legume proteins

Innovation beyond protein sources also drives competition

Formulating nutritionally complete products

Innovating in more appealing flavors and textures

Addressing specific health concerns

Developing hybrid diets for flexitarian consumers’ pets

Brands differentiate by focusing on fresh, instead of processed, foods

Companies use sustainability to attract ethically driven consumers

Plant-based food brands use diverse strategies for price competitiveness

Offering subscription models to make products more affordable

Using direct-to-consumer models to build trust and loyalty

Introducing process optimization to reduce production costs

Plant-based food for cats poses greater challenges

EOS Perspective

Health and sustainability will drive market growth in the West

Asia-Pacific will be a rising frontier for players with localized strategies

Asia’s price sensitivity will require careful threading

Many European players are focusing on cross-border acquisitions

M&A activity is particularly robust in Western markets

Central Europe is also experiencing a notable uptick

The developing markets are also grabbing players’ attention

Strategic acquisitions are increasing in Africa

Foreign players are targeting the growing Asia-Pacific market

Major players are vying for smaller companies in a bid to grow product portfolios

Players are focusing on consolidation to bolster their veterinary service offering

Private equity firms are also targeting pet health firms

Pharmaceutical and vaccine segment is seeing acquisitions with rising pet diseases

Preventive care and wellness players are becoming attractive targets