March, 2013    SMM-095

The role of product life cycle in medical technology innovation

Based on a review of both general and context specific literature in this field, this paper finds that medical technology innovation is strongly influenced by life cycle effects, particularly with respect to price erosion. It also finds that our general understanding of product life cycle indicates that individual curves are strongly influenced by supply side constraints, such as patent protection and barriers to entry, and demand side factors, such as market heterogeneity and diffusion mechanisms. This has important social and economic implications for access to improved therapies, healthcare spending and investment in innovation.