The tissue engineering industry is an emerging market involving research and development taking place in the world's leading universities and companies worldwide. Tissue engineering is a multidisciplinary field that is part of both the medical device industry and the biotechnology/biopharmaceutical industry.

The estimated market for the regeneration of bone, cartilage, and other connective structural treatments is approximately $15 billion worldwide. The total estimated market for soft tissue repair is approximately $10 billion worldwide. The soft tissue repair market includes: 1) adhesion prevention - $1 billion, 2) acute wounds - $2 billion, and 3) chronic wounds - $7 billion.

Advances have been made in medical practice and new technologies applied to medicine have improved healthcare; however, organ and tissue failure remain a frequent and costly occurrence. Each year in the US, 40 to 90 million hospital days are attributed to the treatment of tissue and organ failure. The burden on the healthcare system is significant, approaching approximately one half of the total annual expenditure on healthcare. An excess of $400 billion per year is estimated as the total national healthcare cost for patients in the U.S. suffering end-stage organ failure or tissue loss. In the US, approximately eight million procedures are performed each year to treat patients with these diseases and disorders. Generally, tissue and organ loss are treated by transplantation of an organ from a donor, through surgical reconstruction, or through the use of a mechanical-type substitute. These mechanical approaches will continue to provide interim relief for many patients but, ultimately, the ideal treatments involve regenerating or repairing the organ or tissue.

Key Technology Trends
The application of functional genomics and developmental biology will accelerate tissue engineering product development by elucidating mechanisms of repair and regeneration. Tissue bioinformatics is contributing to a better understanding of both physiological and pathological processes on specific tissue types. By integrating knowledge of gene functioning during tissue formation and repair, along with other molecular and physical mechanisms that induce development of various tissues and organs, tissue engineered products can be designed that mimic these processes.

The availability and use of human cloned stem cells will accelerate tissue engineered product development. Concurrently, the need to eliminate animal-derived substances from tissue engineered and other products is driving research and development efforts in both recombinant human collagen and synthetic polymers.

Availability of Stem Cells Will Expedite Product Development
Despite earlier attempts to introduce legislation aimed at curtailing stem cell research and cloning in past, the recent approval of stem cell research to receive federal funds will help in making stem cells more accessible to tissue engineering efforts. President George W. Bush announced a decision to fund research with federal money for existing human embryonic stem cell lines that met certain criteria. The stem cell line had to have been initiated prior to the President's announcement - made August 9, 2001 - and embryos derived from the stem cell line had no chance of maturing. Additionally, any embryo originated from reproductive purposes must no longer be needed, and informed consent used to obtain the donation must come without financial inducement. This action represents a shift forward in both the government's and the public's understanding of the basic importance of stem cell research and its relevance to future product applications. The fundamental progression of these technologies towards life-changing products has garnered substantial support to expand research and development efforts.

Almost simultaneously with the growing support of stem cell research, the field of companies is burgeoning with new entrants. Companies pursuing stem cell research include numerous new privately held concerns as well as established corporations.

Eliminate Use of Animal-Derived Substances from Medical Products
A major issue that must be addressed at some point in the future is the use of animal products in the creation of tissue-engineered products. Many tissue-engineered products utilize collagen, primarily from bovine sources. While certain companies, Advanced Tissue Sciences and FibroGen, are working to develop and use recombinant human collagen, bovine collagen continues to be the primary collagen source. Although the extensive processing used provides a wide margin of safety, the preference for products that do not contain animal-derived materials is growing. Numerous companies are advancing the application of synthetic polymers to tissue engineering as well. Both synthetic polymers and biomaterials derived from recombinant or other processes will become increasingly important in future products.

Key Positioning Strategies
While new companies continue to enter the tissue engineering industry spawned by the tremendous investments made in university-based programs, the first phase of consolidation in the industry has already begun. In the past few years several companies consolidated and refocused their programs, among them Curis and Genzyme Biosurgery. The result is stronger companies with broader product lines and technology breadth that will enable deeper pipelines for the long term. Acquisitions, licensing, and alliances will continue to play a central role in developing growth and positioning strategies as tissue engineered products enter the market.

Companies will require two key elements to grow: 1) technology access and 2) market access. Many companies, such as Advanced Tissue Sciences, TEI Biosciences, and Integra LifeSciences, are applying their basic scaffold technologies to numerous product areas. Expanding their product applications may require the addition of technologies. The importance of a diversified portfolio of technologies is exemplified by companies like Advanced Tissue Sciences, Collateral Therapeutics, Geron, and Selective Genetics. These companies have assembled technologies that include stem cells, collagen and other polymers, growth factors, vectors, and genes. For tissue engineering companies, a broad technology portfolio will grow in importance and will have a significant impact on a company's ability to position itself within each product market vis-à-vis its competitors.

The new stem cell companies will quickly become acquisition targets as larger companies without their own stem cell lines recognize that they must broaden their technology portfolios to compete effectively over time. In addition, they will seek licenses to any missing growth factors and genes when acquisition is not an option. But the newer stem cell companies and the importance of their technologies in the market of the future will drive acquisitions.

Access to markets via major corporate alliances has always been critical from the standpoint of product development support, financing, and marketing. In the coming decade, the field of tissue engineering companies competing for major alliances is expected to increase and many large biotechnology companies, such as Human Genome Sciences, may emerge as the development and marketing partners of the future.

Emerging Business Models
The types of companies that are developing tissue engineered products can be categorized by their technology focus and targets markets. Tissue engineering companies are developing a variety of products utilizing numerous approaches to repair, regenerate, or replace the functioning or tissue lost as a result of diseases, defects, or injury. Technologies employed range from the use of growth factors alone or in combinations with other attractants formulated in delivery systems, small molecules that mimic growth factors, cell isolation and expansion technologies, stem cell lines for creating specific tissues in tissue banks, cell seeded matrices, ex vivo grown tissue implants developed for integration into existing tissues, combination cell and polymer tissue implants for long-term, nonintegration applications, and more. The range of technologies applied to the field of tissue engineering exemplifies the broad base of expertise, including cell biology, biochemistry, and polymer science, required for successful product development.

By examining both the types of companies involved and the categories of products and technologies under development, several key trends emerge. The beginning of a convergence among pharmaceutical, biopharmaceutical, and medical device companies is proceeding. Companies are spreading their technology risks by investing as widely as possible in both competing and replacing technologies. Long-term, over a period of about ten years, many of today's protein-based therapeutics, including those currently in trials, will be replaced by cell-based therapeutics that emerge in the field of tissue engineering. Tissue-engineered products will include implanted or transplanted tissues, tissues grown in vivo by properly activating the necessary signal transduction pathways including the use of small molecules, genetically altered cells ex vivo or in vivo that are transplanted to supply whatever is missing, e.g., liver enzymes or insulin.

Most tissue engineering companies are pursuing licensing and alliances with major pharmaceutical and device companies. These partnerships will continue to expand and further support the growth of the tissue engineering field. Partnership activity is expected to increase based upon recent successes in the area of wound healing and skin repair and cartilage replacement. The focus on cardiovascular applications is an area of rapid expansion potential based upon the intensive attention this area is receiving from researchers at academic and clinical institutions and numerous companies.