Will Safety Concerns Slow The Growth Of The Cochlear Implant Industry In The Year Ahead?
Just when the cochlear implant industry seemed to be on a roll, the recent announcement by the U.S. Food and Drug Administration (FDA) that Advanced Bionics (AB) is voluntarily recalling its HiRes 90K cochlear implant device raises safety concerns many thought had been put to rest long ago. AB has shared little additional information about the status of the recall since its November news release, in which it described the problem in concise but graphic detail:
“This action is being taken in response to two confirmed instances where the product experienced a malfunction requiring explantation. These recipients experienced severe pain, overly loud sounds and/or shocking sensations at 8-10 days after initial activation of their device….This voluntary action is being taken to ensure continued patient safety and product quality. The risk of any significant adverse medical events appears to be remote at present.”
There was immediate speculation that the recall might slow the growth of the cochlear implant market and/or pose a serious financial challenge to AB parent Sonova Holding AG, which acquired the California company in 2009. But while Sonova shares tumbled right after the Nov. 23 announcement, they are still trading well above their low for the year set earlier that month.
The fact is that in the more than 40 years since they were invented, cochlear implants have proven to be about as safe as any other surgical implants, with the main risks being those associated with going under general anesthesia. Patient satisfaction has improved dramatically as new generations of sound processors have made their way to the market, which recently has been growing at a rate of 20 percent per year.
In the meantime, Cochlear Ltd. of Australia, the world’s biggest cochlear implant maker, was quick to issue its own statement that “this problem pertains solely to the devices manufactured by Advanced Bionics and does not affect the Cochlear Nucleus(R) line of implants.” Cochlear Ltd., with about 70 percent of the $1 billion (USD) market for cochlear implants, reported 13 percent growth in units sold in a global recessionary environment its 2009-2010 fiscal year, and 20 percent unit sales growth in the second half of the fiscal year.
Considering that there are only three major global providers of cochlear implants (Med El of Austria is the third), a recall by any one manufacturer can seriously disrupt supply and impact growth of the industry. But the fact that market leader Cochlear continues to prosper while AB has a financially sound parent indicates that the recall–assuming the problem can be solved quickly and decisively–might instead be a temporary setback for AB as well as a temporary opportunity for Cochlear to increase its market share.