Aesthetic device sales were $520 million in 2006, according to US Markets for Energy-Based Aesthetics and Therapies, a report recently published by the Medtech Insight division of Windhover Information Inc., and are expected to reach approximately $1.2 billion in the year 2011. In addition to cultural factors, the minimally invasive nature of the new devices themselves, which result in lower treatment costs and shorter healing times, is helping to drive growth in the industry.

The device industry was robust in 2005. Share prices remain strong for the most part--some orthopedics and cardiovascular companies struggled, but for the most part device stock indices continue strong--and the IPO window for start-ups remains open. New technology is flowing and so are venture dollars. Certainly, the device industry has had few instances of the kinds of bad news that Big Pharma and biotechs have struggled with: investor frustration, high-profile pipeline problems, and general industry struggles to find a viable long-term strategy, with a couple of exceptions. The battle for Guidant was widely-reported precisely because Guidant ran into problems with its ICD line, which caused Johnson & Johnson to hesitate and opened the door for a rival bid from Boston Scientific. Similarly, conflict of interest stories were featured in several general business publications, all with a decidedly negative spin. We don't share the view that conflict of interest is a real problem-just the opposite: physician involvement in device development is the lifeblood of the industry.

The recent acquisition of ACMI by Gyrus boosts both companies considerably and creates a powerful competitor in urology, gynecology, and general surgery. But having created critical mass, have they also attracted the attention of much larger companies--threatening both the comfortable niches they occupy and their independence?

In the red-hot skin cosmetic surgery market, Reliant Technologies and Rhytec aim for the market gap between ablative laser skin resurfacing and gentler, but less effective technologies. Their devices match the resurfacing and regenerative power of CO2 lasers, but with less tissue destruction and therefore shorter procedures and faster recoveries.