Positive Trends in the US Gastric Band Device Market—Despite the Economic Downturn

| October 6, 2009

by Heather Paterson, BSc; and Kamran Zamanian, PhD

Ms. Paterson is Research Analyst, and Dr. Zamanian is Head of Research, iData Research Inc.

Introduction

Obesity is considered a prevalent and growing disease both in the US and globally by multiple leading health organizations, such as the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC). According to the CDC, over the past 20 years there has been a considerable increase in the incidence of obesity in the US. In 2007, more than 65 percent of US states had rates of obesity between 25 and 30 percent, and not a single state had levels less than 18 percent.[1] The use of the adjustable gastric band(AGB) to treat obesity in the US is showing a very healthy increase. Current devices are made of inert materials such as silicone and are implanted around the proximal stomach to decrease food intake. The mechanism of action is not completely understood, but “satiety,” rather than “restriction,” seems to be a common theme among successful patients. These devices are used to treat the disease of morbid obesity, with the goal of ameliorating medical comorbid conditions and prevention of obesity-related diseases. As the US continues to struggle with rapidly increasing obesity rates, the AGB market will increase through 2015.[2]

Market Conditions and Forecast
In 2008, the US market for AGB was valued at more than $300 million, which is a 27.5-percent increase over the previous year.[2] Gastric bands represented almost 12 percent of the multi-billion dollar market for medical devices involved in laparoscopy (inclusive of laparoscopes, access devices, hand instruments, suction-irrigation devices, direct energy devices, ultrasonic devices, hand-assisted devices, closure devices, band devies, and female sterilization devices).[2] Market growth has been driven by several factors, including increased awareness of the procedure, insurance coverage, consumer marketing, bariatric centers, and the perception by the general public that it is safer and easier to reverse than a traditional gastric bypass. The US gastric band market was serviced solely by Allergan until late 2007, when Ethicon entered the market after acquiring the Swedish Adjustable Gastric Band and rebranding it the Realize™ Band. Likewise, the original LAP-BAND® has changed ownership several times. Competition and global market forces are expected to create a downward price shift, further driving patient interest. As long-term results become known with respect to safety and efficacy, the gastric band device market is estimated to grow at double-digit rates, more than tripling in value by 2015.[2]

Alternative Procedures
Although growth of gastric banding for obesity intervention is very steady, alternative methods can impact this market. These methods include gastric bypass procedure (GBP), vertical sleeve gastrectomy (VSG), and future endoluminal therapies.

The VSG is possibly the most important competitor to the AGB because of its simplicity and short learning curve compared with more complex operations. The VSG involves removal of up to 90 percent of the existing stomach, creating a long cylindrical stomach, which does not require rerouting of the food as in the gastric bypass. In addition, there is no foreign body or need for adjustments as in the AGB. However, long-term results are still lacking with only a few studies longer than five years. The short-term results seem to trend to improved weight loss and fewer reoperations than the AGB. Eliminating the need for postoperative adjustments and the potential for increased performance makes the VSG an interesting alternative to the AGB and GBP, yet the perioperative risks are higher than the AGB and it is not reversible. Insurance coverage is limited for the VSG at this time.

The gastric bypass remains the procedure of choice for a large number of patients because of its efficacy, safety, and applicability for most patients. More complicated than either the AGB or VSG, the GBP involves partitioning the stomach to divert food through a conduit. The majority of the existing stomach and proximal intestine is bypassed so food is diverted to the small bowel through the Roux limb. The mechanism by which the GBP induces reduced calorie intake and immediate metabolic effects is still debated, but likely due to the complex interaction of incretins on both the end organs and central satiety centers. Long-term consequences of the GBP include nutritional malabsorption, weight re-gain, dumping syndrome, and ulceration, among others.[3] Despite these issues, the GBP remains the standard by which all other operations are judged.

Endoluminal procedures are the least invasive and most experimental alternatives at this time. Given the growing problem of the obesity epidemic, it is hopeful that some of these procedures will find practical application.

Patient Support Drives Success
Patient support, primarily postoperatively, is a driver for the gastric band device market. After the stomach has completely healed, the band is adjusted, usually at 4- to 6-week intervals until early satiety after a meal is achieved. Although the device is customizable to each patient, it still requires each patient to commit to a process that includes modification of their previous diet and lifestyle.

Due to the importance of patient support, manufacturers aim to extend themselves beyond the operating room through interactive websites such as Ethicon’s Realize mySuccess™.[2] The websites are designed to assist the patient, acting as a long-term management and support system to achieve a healthy lifestyle. They are developed by both healthcare professionals and past patients to provide current users with planning, progress, nutrition, and fitness tracking. Each section contains comprehensive information to help develop nutrition and exercise plans. The site acts to help patients through the gastric banding process, and even suggests physician visits where deemed necessary.

Single Port Surgery to Drive Growth
The AGB is designed to be implanted with minimally invasive techniques that may require using 5 to 6 small incisions. Although visibly small once healed, patients believe that fewer incisions impart less invasiveness and postoperative pain and are more cosmetically pleasing. Techniques have been developed to place the band with a single incision, although they have yet to be proven as safe and efficient as current practice. If the AGB can be placed with less pain and less visible scarring, the procedure will be more attractive to many patients and can help generate more volume in the future.

Expanding Demographic for Gastric Band Surgery
As the safety profile for bariatric surgery, including AGB, continues to improve, the risk/benefit ratio has called into question the traditional National Institutes of Health (NIH) guidelines published almost 20 years ago. In conjunction with long-term comparative studies demonstrating the superiority of surgical interventions over conventional medical therapy with respect to disease-related mortality, and a significant reduction in actual operative mortality, surgical procedures should be offered to individuals beyond the original NIH recommendations. This demographic includes both adolescents (age less than 18 years) and those who have body mass indices (BMI) less than 35kg/m[2].

As of December 2008, Allergan began a study using LAP-BAND® in adolescents ages 14 to 17. Research is also being conducted on patients with lower BMIs, between 30 and 40kg/m[2]. Data submission to the FDA for both studies is expected to occur before 2011.[2]

Strategic Alliance Enhances Market Presence
The acquisition of the Swedish Adjustable Gastric Band by Ethicon Endosurgery and the rebranding of the product as the Realize™ Band has increased competition in the band market. Direct-to-consumer marketing and the strategic alliance between Allergan and Covidien have been effective in providing increased public awareness and support for the training of AGB surgeons. Interestingly, both Ethicon and Covidien also market different procedures, the GBP and VSG, which can impact further growth in the AGB market.

Obesity to Increase Steadily Through 2015
Obesity rates are increasing across the US, leading this condition to be widely accepted as an epidemic. An estimated 18 million Americans were classified as being morbidly obese in 2008.[2] Morbid obesity is defined as having a BMI of 40 or more, or at least 35 in conjunction with a weight-related disease, such as asthma, hypertension, or type 2 diabetes.

The number of obese Americans could reach more than 25 million by 2015.[3] This will be a strong driver for bariatric surgery, especially minimally invasive surgery such as the AGB that can be performed in a cost-efficient manner with long-term results. Lack of nonsurgical therapies with acceptable performance compared to bariatric surgery also supports growth for all procedures, rather than a simple zero-sum shift from one procedure to another.

Growth Estimated Despite Global Economic Crisis
The global economic crisis beginning in 2008 has decreased the demand for gastric band devices, especially due to their elective nature. Despite the economic downturn, the gastric band market is still expected to show double-digit growth as patient health concerns override the financial constraints.[2]

Allergan and Ethicon Control the Band Market
In 2008, Allergan was the leader in the gastric band market with their LAP-BAND® product. Innovation has been a strong driver for Allergan with the 2007 release of the LAP-BAND AP®, an advanced model that accommodates the severely obese. The same year, Allergan acquired EndoArt SA, which pioneered a remote-controlled gastric band: the EasyBand™. It is predicted that this type of gastric banding will affect future trends in the US bariatric surgery market pending approval. Allergan has also expanded its reach in sales and marketing through the aforementioned alliance with Covidien for education and training for the LAP-BAND® product.

An emerging competitor in 2008 was Ethicon, which managed to achieve double-digit share in a formerly monopolized market. The REALIZE™ Band has shown strong growth, especially through the company’s pioneering of online bariatric support through its website, Realize mySuccess™. While Allergan’s LAP-BAND® and Ethicon’s REALIZE™ Band function similarly, Ethicon was the first to focus on extensive patient support. As described in further detail already, this online assistance proved to be a competitive factor for a company relatively new to the market—so much so that Allergan currently has a similar site under development.

In terms of brand selection, it is unclear what the role of patient and surgeon preference will have as opposed to the traditional hospital-centric focus based on cost and existing buying agreements. The presence of more than one band company will likely be beneficial in terms of more competitive pricing structures and innovative developments.

Conclusion
Representing almost 12 percent of the multi-billion dollar market for medical devices involved in laparoscopy, gastric banding is the fastest growing segment in the US laparoscopic device market.[2] With more than 40 percent of bariatric surgical procedures involving gastric banding,[2] it is a critical component of the US market for laparoscopic devices that is poised for rapid market penetration, and will likely stay above double digit growth until at least 2015.

Figures: Figure 1 and Figure 2

References
1.    Centers for Disease Control and Prevention. Behavioral Risk Factor Surveillance System Survey Data 2009. Available at: www.cdc.gov/obesity/data/trends.html. Accessed September 1, 2009.
2.    iData Laparoscopy Research Team (iData Research). US Market for Laparoscopic Devices; 2009 May. Available from iData Research Inc.: Vancouver, British Columbia.
3.    Mayo Clinic. Gastric bypass surgery: What can you expect? Available at: www.mayoclinic.com/health/gastric-bypass.html. Accessed September 1, 2009.

About the Authors
Heather Paterson, BSc, is a research analyst at iData Research Inc. Kamran Zamanian, PhD, is the head of research at iData Research Inc.

Disclosures
The information in this article is taken from a detailed and comprehensive report, US Market for Laparoscopic Devices 2009, which is available for purchase from iData Research Inc. Heather Paterson, BSc, is with iData Research Inc. She has disclosed that she holds no interest or securities in any company mentioned herein. Kamran Zamanian, PhD, is with iData Research Inc. He has disclosed that he holds no interest or securities in any company mentioned herein. iData Research is an international market research and consulting group focused on providing market intelligence for the medical device, dental, and pharmaceutical industries.

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