Contents:

Table of Contents I. EXECUTIVE SUMMARY 5 Market Projections 5 Competitors and Market Share 6 Organization 6 Research Methodology 7 Core Technologies 8 II. NEUROLOGICAL DISEASES AND DISORDERS 10 Spinal Cord Injury 10 Deafness 10 Blindness 11 Stroke 11 Chronic Pain 12 Movement Disorders 12 Incontinence 13 Migraine 14 Sleep Apnea 14 Psychiatric Disorders 15 Cognitive Disorders 16 Obesity 16 Epilepsy 17 Tinnitus 17 III. NEUROTECHNOLOGY MARKETS 20 Market Segments 20 Market Size 21 Factors Influencing Growth 22 Barriers to Growth 24 IV. PRODUCT CATEGORIES 31 Neural Prostheses 31 Neuromodulation 44 Neurorehabilitation 56 Neurosensing 63 V. COMPANY PROFILES 71 Aspect Medical Inc. 71 Boston Scientific Corp./Advanced Bionics 73 Cardinal Health, Inc. 77 Cleveland Medical Devices Inc. 78 Cochlear Ltd. 80 Compumedics Ltd. 81 Cyberkinetics 83 Cyberonics 85 EnteroMedics Inc. 87 Greatbatch Inc. 90 Hanger Orthopedic/Innovative Neurotronics 93 IIP Technologies/Intelligent Medical Implants 94 Integra NeuroSciences 96 Med-El 99 Medtronic 100 Natus Medical Inc. 104 NDI Medical Inc. 105 NeuroMetrix Inc. 107 Neural Signals 109 Neuronetics 111 Northstar Neuroscience 113 Optobionics Corp. 115 Otto Bock Health Care GmbH 116 ReAble Therapeutics, Inc. 117 Second Sight 119 St. Jude Medical, Inc. 121 Victhom Human Bionics 124 Zynex Medical 126 VI. RESEARCH INSTITUTION PROFILES 128 Aalborg University 128 University of Alberta 129 Alfred Mann Foundation 130 Arizona State University 131 Brown University 132 Caltech 133 Case Western Reserve University 134 Cleveland Clinic 135 Cleveland FES Center 136 Drexel University 136 Duke University 137 Fraunhofer Institute for Biomedical Engineering 138 Georgia Tech 139 University of Glasgow 140 Huntington Medical Research Institutes 141 Illinois Institute of Technology 143 Johns Hopkins University 144 University of Kentucky 145 University of Ljubljana 145 Max Plank Institute for Biological Cybernetics 146 University of Miami 147 University of Michigan 148 Neurosciences Institute 149 New York University 150 University of Pittsburgh 151 Rehabilitation Institute of Chicago 152 Salisbury District Hospital 153 University of Southern California 154 University of Toronto 155 UCLA 156 University of Utah 157 VII. FUNDING SOURCES 160 US Government 160 State Governments 167 Foreign Governments 170 Private Organizations 172 Venture Capital Funding 176 VIII. FUTURE DIRECTIONS 191 Nanotech Devices 191 Closed Loop Systems 192 Optical Stimulation 193 Electrode Design 196 Signal Processing 201 Neural/Silicon Hybrid Chips 201 Biomimetic Neural Networks 203 Neurochemistry 205 Neural Transplantation 206 Power Supplies 207 APPENDIX A: COMPANY LISTINGS 209 TABLES Table I-1. Worldwide Neurotechnology Market, 2008-2012 ($M) 5 Table II-1. Potential Recipients of Neurotechnology Devices, Worldwide and U.S., (thousands) 19 Table III-1. Worldwide Neurotechnology Market, 2008-2012, ($M) 21 Table III-2.U.S. FDA Approval Status 25 Table IV-1. Worldwide Neural Prostheses Market, 2008-2012 ($M) 31 Table IV-2. Worldwide Neuromodulation Systems Market, 2008-2012 ($M). 45 Table IV-4. Worldwide Neurorehabilitation Systems Market , 2008-2012 ($M) 56 Table IV-5. Worldwide Neurosensing Systems Market, 2008-2012 ($M) 64 Table VII-1. Venture Capital Funding in Neurotechnology 190 FIGURES Figure IV-1. Worldwide Cochlear Implant Sales, 2008-2012 ($M) 33 Figure IV-2. Worldwide DBS System Sales, 2008-2012 ($M) 47

Summary:

The field of neurotechnology, which we define as the application of electronics and engineering to the human nervous system, is one of the most dynamic and promising areas of technology to emerge in the 21st Century. Neurotechnology uses electrical stimulation and sensing as tools for understanding and controlling nervous system function, as opposed to biotechnology, which focuses on molecular and genetic engineering approaches. The most noteworthy applications of neurotechnology to date have been neural prostheses such as cochlear implants, and neuromodulation systems, such as implanted stimulators for treatment of chronic pain. Market Projections: This report projects that the overall worldwide market for neurotechnology products will be $3.6 billion in 2008 and will reach $8.8 billion in 2012. The report divides the market for neurotechnology into four segments: neural prostheses, neuromodulation, neurorehabilitation, and neurosensing. The largest segment of the market for neurotechnology is currently neuromodulation, followed by neural prostheses, and neurosensing. Within the neural prostheses product category, cochlear prostheses represent the largest and most mature product category. This report estimates that the worldwide market for cochlear implants will be $725 million in 2008, growing to $1.59 billion in 2012, a 22 percent compound annual growth rate. Two factors that are helping to drive the market for cochlear implants are the rapid growth of implants in children, and the expansion of the market beyond profoundly deaf individuals to severely hearing impaired individuals. Many of the candidates for cochlear implants in this latter category are seniors with hearing loss that can no longer be improved with hearing aids. Background: Neurotechnology has grown and matured as an industry as a result of advances in several fields of science and technology, including neuroscience, electrical stimulation, biomaterials, and microelectronics. MEMS technology will have a positive impact on the development of neurotechnology devices. Neurotechnology is currently in use or under study for the treatment of a number of different medical disorders and diseases. These include spinal cord injury, deafness, blindness, stroke, urinary incontinence, epilepsy, chronic pain, neurological disorders, and psychiatric disorders. Neurotechnology products and services will experience considerable growth in the worldwide healthcare market in large part because of the continued growth and identification of neurological disorders and conditions. Many of these disorders and conditions will become more pronounced as demographic shifts in the aging of the population, as well as increased life expectancy and demand for a higher quality of life by senior citizens, exert their effects. As society has become more aware of the prevalence of specific neurological and neuropsychiatric disorders such as chronic pain, depression, dyslexia, and autism, business and government leaders have become more aware of the costs of these conditions to society in terms of lost productivity, treatment, and diminished quality of life. These factors will all contribute to the growth of neurotechnological treatments and therapies for neurological disorders. Also, successful neural prostheses have been shown to be cost-effective because of the reduction in ongoing costs for healthcare and assistive services. Some studies have shown that these devices pay for themselves with five to seven years. The healthcare segment of the neurotechnology industry depends heavily on the readiness of private and public health insurance organizations to reimburse patients for the cost of the devices and the procedures associated with implanting, maintaining, and training the device. The growth of neural prostheses and neuromodulation devices also depends heavily on the degree to which clinicians and their patients are aware of the capabilities of neural prostheses. Because it is new, neurotechnology has not yet achieved the degree of penetration in awareness of both physicians and patients who would be strong candidates. Opportunities: One of the greatest opportunities for growth in the market for therapeutic electrical stimulation products is rehabilitation of stroke patients. Neurotechnology stands to offer benefits to the stroke patient both as a functional treatment to temporarily replace lost functions, and as a therapeutic treatment to achieve longer-term rehabilitation of natural functions. The report believes that the increasing understanding of central neural mechanisms in stroke recovery will lead to dramatic growth for neurotechnology products used in therapeutic stimulation for stroke patients. Because of the time required for more scientific studies, regulatory approvals, and growth of awareness in the clinical communities, the most significant growth will not occur until late 2007 and 2008, when several new products for stroke rehabilitation will arrive on the market. Competitors: The market for neurotechnology includes both established competitors and start-up firms. Among the main competitors in the neurotechnology industry are: - Neural Prostheses: Cochlear Ltd., Advanced Bionics, Bioness, and Med-El - Neuromodulation: Medtronic, Boston Scientific, Cyberonics, and St. Jude Medical/Advanced Neuromodulation Systems - Neurosensing: Cardinal Health, Natus Medical, Nihon-Kohden, and Elekta Future Trends: Neural/silicon hybrid chips have the potential for dramatically expanding the rate and the quality of information exchange between a computer and human. These devices initially will have application as improved forms of electrodes built with intelligent microelectronic hardware rather than passive devices. Ultimately they offer the potential for greatly enhanced neural prostheses and brain-computer interfaces. Neural/silicon hybrid chips cultured outside the body offer potential to be used in a new form of computer architecture for neurocomputing applications. The integration of transplanted or cultured neural cells with electronic components could help accomplish artificial intelligence and neural network applications that are currently difficult to implement on a standard digital computer.

Companies Mentioned

- Medtronic - St. Jude Medical - Boston Scientific - Cyberonics - Cardinal Health - Cochlear Ltd. - Northstar Neuroscience - Greatbacth - Victhom Human Bionics - Med-El - Several Others