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Zif Medical – Market Analysis
The annual worldwide market for needle syringe devices is estimated at $1.5 billion. There are an estimated one million needle-sticks a year. This accident rate costs the medical industry $1.2 billion annually. Studies published to date indicate there is a real chance of acquiring HIV through occupational exposures. As of October 1993, 39 cases of HIV seroconversions of healthcare workers resulting from documented occupational transmission have been reported in the United States, and 81 additional cases of HIV seroconversions are considered to have possibly resulted from occupational transmission. Although the fear of contracting AIDS has overshadowed the concern about acquiring the hepatitis B virus (HBV) through an accidental needle-stick, the risk of acquiring and dying from HBV is much greater. Every time a health care worker gets a needle-stick, they must immediately document the incident and begin a regular testing program to determine if a virus was contracted via the needle-stick. This can range from a few months of testing for hepatitis, to several years of testing for the HIV virus. Another $1.8 billion is spent annually to treat workers who have actually contracted viruses from needle-sticks. Thus, the healthcare industry is spending a total of $3 billion on needle-stick accidents, twice the amount spent on needle syringes. Based on this, safety needles could be financially justifiable at twice the cost of standard needle syringes. In response to this, the medical industry is seeking ways to prevent needle-sticks, despite the higher costs for safer medical supplies. This is demonstrated in the intravenous (I.V.) market, where health organizations are paying three times the traditional costs of needle injections by using a needleless I.V. interface.
Personnel at Risk
Medical workers currently use needle syringes for subquetanious, intramuscular, and Hickman Catheter injections. In a 1993 study of 1,245 healthcare workers with exposure to HIV-infected blood, the authors found that nurses were the most likely group to have received an exposure (64% of the study population) and that the vast majority of the exposures were the result of needle-stick injuries.5 This study also found that 34% of the percutaneous injuries were caused by sticks from syringe devices. In another journal report by the Infection Control Department6, seventeen metropolitan Washington, DC, area hospitals were surveyed on all workers reporting needle-stick injuries during February 1990. The results were that 45.8% of the needle-sticks were to registered nurses. Recapping the needle accounted for a higher percentage than any other activity at 14. 1 %. Of the needle-sticks, 60.6% were after use and before disposal. The conclusion of the study was that safer needle devices would make a safer workplace. The Center for Disease Control and Prevention (CDC) recommended that needles not be recapped and, if they must be recapped, that a method other than the traditional two-handed technique be used.
Numerous studies show that conventional, two-handed recapping is the cause of a significant portion of all needle-stick injuries. The alternatives to recapping include the use of safety syringes or the disposal of uncapped needles into permanent sealable containers (e.g., sharps containers). Also, while disposing of uncapped needles into sealable containers (sharps containers) sounds like an ideal solution to the needle-stick problem, in actual practice, not all needles are properly disposed of, and needles stuffed into overfilled containers may still be dangerous. Again, this strengthens the need for safety syringes and the tremendous opportunity that Zif safety syringes will have in this environment.
About one out of every four needle-stick injuries involves I.V. therapy equipment. A sizable number of these injuries result during the disassembly, but needle-sticks also occur along every step of the assembly/use/discard process, including insertion into drip chambers, injection ports, and I.V. bags, for example. Needles attached to discontinued lines is another problem: sometimes the needles are concealed in bedding. At others, nurses would discontinue devices and hang tubing, with needles attached, over I.V. poles.
Another study done by the Pacific Presbyterian Medical Center for Infection Control7 evaluated the impact of a shielded 3cc safety syringe on needle-stick injuries among healthcare workers. The study found that the overall rate of needle-sticks involving 3cc syringes decreased from 14 per 100,000 inventory units to 2 per 100,000 inventory units due to shielded 3cc safety syringes. This evidence demonstrates that there is a tremendous need for a protection of health care providers from exposure to blood-borne pathogens and helps us identify the target end-user.
See page 30 for a nurse’s description of two needle-stick incidents and its personal consequences.
Regulations and Recommendations
Currently, needle-stick prevention devices (safety syringes) are not required by OSHA. There is however, a large scale, voluntary effort – known as the Exposure Prevention Information Network (EPINet) – under way to compile a national database of device specific injury information. In addition, ECRI, a health services research agency, recently released a detailed evaluation of 30 needle-stick prevention products. On December 6, 1991, OSHA published “Occupational Exposure to Blood-borne Pathogens: Final Rule” (29 CFR Part 1910.1030). This standard requires that healthcare facilities use engineering controls (e.g., sharps containers) and safe work practices to protect their employees from all blood-borne pathogens. In addition, OSHA inspectors will be considering whether an institution has reviewed the feasibility of implementing more advanced engineering controls, such as needle-stick prevention devices (safety syringes). OSHA may also impose fines of up to $70,000 (for repeat violations) on facilities that fail to take adequate measures to protect workers. Between March 1, 1992, and February 28, 1993, OSHA conducted more than 1,000 inspections in healthcare institutions and handed out more than 1,700 citations- fines totaling $1.3 million- for violations of the blood-borne pathogen standard. Of the 1,700 violations, 78 were given for failure to use engineering controls and safe working practices, including the unnecessary recapping of needles and failure to use mechanical devices for needle recapping or removal. This is a clear signal of regulatory change and the future demand for safety syringes.
On March 9, 1993 congress reintroduced Anti-Needle-stick legislation (H.R. 1304). The bill proposed an imposition of a tax on conventional syringes, thereby providing a price encouragement for acceptance of the safety syringe devices. The bill was referred to the House Committee on Ways and Means and no further committee action has been scheduled. Additionally, OSHA’s requirement of needleless injection I.V. systems, may carry over to the syringe market. In other words, OSHA may require the adoption of safety syringes in the near future. Additional legislation and regulation is expected to continue the trend toward safety syringes.
The worldwide market for needle-syringes is 12 billion units annually. The demand per hospital bed per year is 1200 syringes. Unit demand for needle-syringes is rising at 7.1% per year.8 Currently the market for safety syringes has less than a 10% market penetration. Industry experts are speculating that the worldwide market for safety syringes will be over 5 billion units by the year 1998. A Theta group research report suggests that 80% of the needle-syringe market in the year 2000 will be comprised of safety syringes. This means the market potential for the year 2000 is 9.6 billion units. With a current market penetration of less than 10%, this leaves 70% market share potential from now until the year 2000.
The sales of traditional syringes are expected to contract by 12.8% a year through increased use of safety syringes and needleless I.V. systems. The replacement of the traditional syringes is constrained somewhat by cost since hospitals are not as concerned with the cost savings associated with safe needles due to insurance coverage; thus, the market has not moved as fast as it could. However, the potential for hospital liability after a needle-stick may increase with the availability of products, especially if the hospital fails to provide such devices. As the AIDS epidemic increases, health care providers and insurers alike are expected to move towards the safer syringes.
Problems associated with the safety syringe products have primarily focused on their higher cost versus standard syringes. Other problems with the safety syringes have been their user unfriendly design, additional disposal bulk, and their availability in limited sizes. We will address these issues more closely in Competitor Analysis (page 7), Customer Needs’ (page 6), and Marketing Strategy (page 13).
The 3cc syringe dominates the market because most doses require 2cc injections. Next to the 3cc syringe, demand is greatest for the 1cc version followed by the 5cc and 10cc syringes.
The demand in the U.S. was 4.8 billion syringes in 1994 for a total of more than U.S. $700 million. Zif ‘s initial target markets will be U.S. psychiatric facilities and pre-filled chemotherapy and nuclear medicine companies. The estimated sales potential for these markets are 145 million units and 20 million units, respectively. The rationale for choosing these markets and further analysis of our initial target markets is provided on page 11.
The conventional U.S. syringe market is broken down as follows:9
The safety syringe market segments are as follows:
- Psychiatric Hospitals (early adopters)– Low volume user, however high usage rate – 75% safety syringes. The reason for the high usage rate is due to concern with the hazard of needle-sticks due to the potential for chaos in the hospital as well as rooms not being equipped with sharps containers. They are inclined to utilize distributors, although much less so than hospital. In addition, they are less price sensitive than the hospitals.
- Nuclear Medicine (early adopters)– Low volume users, however companies are pursuing the use of safety syringe to differentiate their products. Zif has had discussions with Syncor (60% market share) and Amersham (40%) regarding the design of safety syringes for their needs.
- Physicians (Family Practices) (early majority)– Low volume users; utilize the 3cc syringe most, although, 1cc syringes are most common in pediatrics. This segment of the market is less tied to their distributors and may be more inclined to purchase safety syringes due to the high cost of insurance for small practices. They are also willing to pay a significant premium for safer syringes.
- Hospital and HMO’s (late majority)– High volume users, however late adopters. This overall hospital and HMO group primarily utilizes the 3cc syringes due to the fact that most doses given are 2cc doses. As prices continue to decline and realization of the cost benefits increases, hospital usage of safety syringes is expected to escalate dramatically. Hospitals and HMO’s are highly tied to their group purchasing organizations and distributors for a multiple source of medical supplies.
- Diabetics (laggards/non-users)– Low volume user. This segment of the market is only concerned with the retail price, and is not inclined to purchase safety syringes because they are using the needles on themselves.
Current products offered in the market are weak relative to the markets key needs for ease of use and automatic safety. Based on focus groups and in-depth interviews (see page 28) the desired end-user product features/needs are:
- a transparent safety device requiring no additional steps to operate
- the ability to lock and unlock the protective sheath
- the ability to change the needle on the syringe
- the ability to cover the needle for sterility
- one handed operation a low cost product; it must have a good cost/benefit analysis
- a safety syringe in which the graduations can be easily read
- easy removal from the package
- needle mated with syringe- not separate
- to be able to hold the barrel directly
These features define the key attributes of:
- ease of use
- automatic safety
- syringe and needle included together
- size availability (1cc, 3cc, 5cc)
A complete primary data research report can be made available upon receipt of the non-disclosure form.
Currently there are several syringes in the market that claim some form of safety. These syringes have had little impact on this market mainly because they are “clumsy” to use which make it more difficult for the health care worker to perform the injection. Additionally, most of these safe syringes provide little safety benefits because they require manual intervention to ensure safe operation. Manufacturer’s of these safety syringes have yet to develop the perfect safety syringe that has both the benefits of ease of use and automatic needle-stick protection.
The competition can be separated into two distinct segments: (1) those pursuing an automatic safety syringe, and (2) those that are manufacturing a manually operated “safe” syringe. The following is a description of the competitors offerings separated by design (see page 10 for product photographs):
(1) Automatic Safely Design Products
- Med-Design has a library of patents and is working on the development of various new products. Early in 1996 the company received its first FDA clearance to market a safety syringe, and the company has another 510(k) application filed and pending. The company also received approval for some patents in the European Community. Their syringe is a complicated retractable needle device that utilizes a spring to retract the needle. To enact the retraction mechanism, the medication contents of the syringe are dispensed by pushing the plunger into the syringe barrel. By pushing the plunger further into the barrel, like the click of a retractable ball-point pen, a spring loaded system is triggered which pulls the needle back into the syringe body, protecting the worker from accidentally sticking him or herself. It also serves to package the needle in a handy container for disposal which minimizes the contact of any bio-hazardous materials which might be present. Med-Design win pursue an 18 cent price and expects to obtain 10% of the syringe market. The company is concentrating on product development and design while leaving manufacturing and marketing to strategic partners. Med-Design’s product costs will most likely be significantly higher based on the products complexity and its incompatibility with existing assembly equipment.
- Injectimeds -The Protector
- The Protector uses a spring-loaded, flexible, four-armed plastic sheath to cover the needle. The four arms bend and fold during injection and then automatically drive the end-cap to cover and lock over the needle after withdrawal. Currently they have discontinued production and are redesigning their product. The company is striving for a price of under 20 cents for their new product. Their product, however, is a needle only system, and must be mated to a syringe for use. This is a convenience problem because the user will have to purchase syringes separate from the needle and then attach the needle to the syringe. This can also create an emergency issue situation were the user will not have the syringe ready for use when needed, this could be a significant problem in psychiatric hospitals. Injectimed intends to market its final product to small distributors and use a marketing pull strategy to draw demand from the end user. A significant problem with The Protector is it’s needle guard flaps may interfere with its use at skin connection.
- Sterimatic Medical Corp.- Sterimatic Safety Needle
- Sterimatic’s automatic system is much like that of The Protector above. The Sterimatic is removed from a sterile package and fitted to any size conventional syringe. A protective sheath is then removed to reveal the needle point. The needlepoint is injected into the patient and a spring loaded inner sleeve retracts freely to allow the required penetration. As the needle is withdrawn, the sleeve automatically slides forward to cover the whole length of the needle and locks permanently. This device, however, is inconvenient because, like The Protector, it is sold as a needle only system and must be fit to a separate syringe. Again this can create a potential emergency readiness issue. It also requires a Leur-end vial adapter to draw the medication into the syringe. The Sterimatic’s guard can be accidentally activated during use, creating a potential safety problem. Sterimatic prices this device at about 30 cents.
(2) Manually Locking Safety Design Products
- North American Medical Products- Safepoint
- Safepoint is a manually activated needle guard that extends and locks in place over the needle. Its Luer end must be attached to a syringe. The needle guard has a cutout that allows it to lock onto a Y – site once it has been activated. The advantages to Safepoint is available in many different size needles and the manufacturer will provide customized packages of different syringe sizes. Some disadvantages cited are that the recessed needle function is not obvious without training, the length between user’s hand and needle may make use more awkward. Safepoint’s price with needle and syringe: 58 cents to $1.97 (depending on the size of the syringe).
- Sims Smith Industries- Needle-Pro
- The Needle-Pro is a manually activated needle guard; the needle protection device fits onto a Luer-lock syringe, and the needle is then twisted onto the male Luer-lock fitting on the Needle-Pro’s base. After use, the user snaps the sheath against a hard surface. The biggest advantage Needle-Pro has is its price, only 12 cents (17 cents with syringe). Another advantage is that Needle-Pro can be activated with only one hand. The major disadvantages are that a needle-stick can occur if it’s guard is not closed on an appropriate surface. Also, a Luer-end vial adapter is needed if medication is to be drawn up into the syringe.
- Becton Dickinson- Safety-Lok
- Becton Dickinson’s (BD) Safety-Lok syringe design is such that the user must manually move the plastic sheath over the needle when they are done with the injection. They also have to manually lock the sheath into place. This is a distinct disadvantage and a safety problem because of its inherent unsafe needle exposure after injection and before the user moves the sheath into place. This is also a convenience problem because the sheath does not automatically cover the needle.
BD holds 54% of the safety syringe market. BD’s sliding sleeve syringe (Safety-Lok) accounts for approximately $70 million in sales. BD is currently undercutting all other safety syringes by pricing their product at 14 cents to hospitals. Overall, their safety syringe prices range from 14 cents to 26 cents.
BD has a powerful relationship with large distributors giving it a great distribution advantage and the potential ability to prevent the entry of smaller competitors into these channels. Additionally, BD takes advantage of its broad product lineup and size by bundling their syringes with other items when selling to large distributors. In this way, BD has some flexibility to undercut pricing of one product to increase revenues of its entire line. Syringes have often been used in this way to grow BD’s overall product volume.
- Sherwood Medical Co.- Monoject
- Sherwood’s Monoject product is similar to BD’s and has the same convenience and safety problems. Sherwood has 43% market share, a strong relationship with distributors, and the advantage of product bundling. Sherwood sells its Monoject to hospitals for 14 cents.
- U.S. Medical Instruments Inc. – Safesnap
- U.S. Medical Instrument’s (USMI) Safesnap is a retractable needle safety syringe. After injection, the user pushes the plunger fully into the barrel of the syringe until it locks onto the needle. The user then pulls the needle back into the syringe barrel. Once the needle is fully retracted, the plunger is snapped off and inserted into the open barrel, thus sealing the needle within the syringe. This also has the convenience and safety problems of the above syringes due to the manual operation and inherent needle exposure. Safesnap costs between 15 and 20 cents.
- The Medtech Group- Entrap
- Entrap is similar to the Safesnap in that it is a retractable needle syringe. Its design allows for the contaminated needle to be withdrawn inside the syringe barrel following use. The needle automatically tilts sideways during retraction, thus preventing needle re-exit and possible needle-sticks. Again, this product has the convenience and safety problems we have seen with the other manual systems. Medtech had planned to sell Entrap for 30 cents, but was forced to withdraw from the market due to patent infringement lawsuits. They remain a potential future competitor.
- Other Competitors
- Besides these well established companies, there are many start-up companies venturing into the anti-needle-stick market – since 1992 the U.S. Patent Office has approved more than 300 patents for safety features for syringes and needles. One of these start-up companies is Unique Management Enterprises Inc. of Albany-NY. Anthony Vallelunga, the company owner, has sunk four years and $70,000 in borrowed money into development of a safety syringe. He has four patents on his product, with another waiting the go-ahead. The Food & Drug Administration has also given him a green light to go to market. Medisys Technologies, Inc., Baton Rouge, Louisiana, as of July 15, 1996 has completed functional prototypes of the CoverTip(TM) safety syringe. CoverTip is a needle and syringe which automatically encloses the needle in a protective micro-thin sheath before the hypodermic is withdrawn from the patients body thereby eliminating exposure to a potentially contaminated sharp needle point. UnoLife Syringe Technologies, Inc., Hollywood, California, as of July 1, 1996, has patented a single-use self-destructing safety syringe which has received FDA 510(k) Pre-Market Notification clearance. The company’s product is a retractable needle syringe, where the needle is retracted into the syringe barrel and incorporates a self-destructing feature. UnoLife is seeking funding to provide for commercial-test manufacturing run, marketing and sales development, and full production by contract manufacturing and distribution.
Competitor Analysis Summary
Below, we have summarized the strengths and weaknesses of competitors products on key customer driven product attributes based on secondary and primary market research data. As shown a + indicates a strength on this attribute while a – indicates a weakness in this attribute. As shown, the Zif product will capture all of the key customer attributes.
|Injectimed – Protector||0%||25||+||–||–||–|
|Sterimatic – Sterimatic||1%||35||+||–||–||+|
|BD – Safety-Lok||54%||14 to 26||–||–||+||+|
|Sherwood – Monject||43%||14 to 26||–||–||+||+|
|USMI – Safesnap||2%||15 to 25||–||–||+||+|
|Medtech – Entrap||0%||30||–||–||+||–|
|Zif – Zif||N/A||14-18||+||+||+||–|
Primary Target Market
Zif ‘s initial target will be U.S. psychiatric hospitals due to 1) their early adopters status 2)their high percent usage of safety syringes (70 to 100% of syringes used in these areas are safety syringes) 3)their dissatisfaction with the current safety syringes, and 4) Zif product features meeting their needs.
As of 1992 there were 5,498 mental health facilities in the U.S.11 These hospitals/wards includes 121,000 beds. Utilizing the usage figures per bed per hospital of 1200 units, we find the unit sales potential of this market to be 145 million units per year.
Secondary Target Market
Our secondary initial target will be the chemotherapy and nuclear medicine pre-filled syringe market with an estimated market size of 20 million units. Medi-Physics (40% market share and subsidiary of Amersham) has indicated a strong desire for a safety syringe to differentiate their product and provide safety from accidental needle-sticks. In addition, Syncor also has indicated a strong desire to pursue safety syringes. Further research has found the overall pre-filled syringe market to be 6 billion units.
5 “Needle-stick Prevention Devices,” Health Devices, August-September, 1994.
6 “Reported hospital needle-stick injuries in relation to knowledge/skill, design, and management problems”, Infection Control Hospital Epidemiol, May 1993, pp. 259-264.
7 “Impact of a shielded safety syringe on needle-stick injuries among healthcare workers”, Infection Control Hospital Epidemiol, June 1992, pp. 349-353.
8 “Safer syringes boost molder opportunities”, Plastics World, August, 1993.
9 Market segmentation estimates are based upon number of beds times usage rate per beds per segment. Discussions with distributors and nurse managers were also factored in.
10 “Safety syringe sales may reach 4 billion units a year by 1998,” Health Products News, May 15, 1994, pg 6. American Hospital Association, Chicago, IL, Hospital Stat. 1995-96.
11 American Hospital Association, Chicago, IL, Hospital Stat. 1995-96.
|Zif Medical Devices|
|Table of Contents||Appendices|
|0. Executive Summary
1. Product Design
2. Market Analysis
3. Commercial Options
4. Marketing Strategy
5. Manufacturing Plan
7. Corporate Vision, Mission
8. Financial Plan
Focus Group Summaries
Patent Attorney’s Opinion
FDA Consultant’s Option
|© 1996 Zif Medical Devices. All rights reserved.|