October 10 (Bloomberg) -- Henry Lulli spent nearly a quarter-century solving problems as a high school math teacher in Los Angeles before retiring in 1992. The 88-year-old says he’s been an “utter failure” when it comes to remedying minor hearing loss that started about three years later and leaves him unsure whether his wife is saying “five” or “nine” or asking about “dowels” or “towels.”
He says a prescription hearing aid was too powerful, so he's invested about $3,000 in three alternative gizmos in eight years. A couple devices amplified all sounds so all he could hear was background noise; another had a battery so tiny he couldn’t change it every nine days, as required; the most recent device was so uncomfortable he couldn’t sleep on his side. “I’m fed up; it’s so confusing. There are so many people out there trying to sell their wares, who am I going to pick?” Lulli asks.
The confusion for buyers of alternative devices is pervasive: Over-the-counter analog or digital amplifiers have been available for decades. In recent years, a handful of established manufacturers like Bell & Howell, Panasonic, RCA, as well as a host of startups have been transferring advanced noise-cancellation technology and miniaturization breakthroughs from consumer devices such as smart phones and headphones into hearing devices. All of them hope to add Lulli – and the estimated 36 million Americans facing age-related hearing loss – as customers. The hearing aid market is estimated at $6 billion globally, with U.S. sales accounting for 40 percent of the total, says Venkat Rajan, a medical technology analyst at Frost & Sullivan.
That figure does not include the burgeoning market for “personal sound amplification products” (PSAPs). Because they are classified as electronics, not medical devices, by the U.S. Food and Drug Administration, they are not regulated and do not require a prescription. PSAPs range from under $100 to around $1,000 per pair; the typical pair of hearing aids is closer to $3,000 to $4,000. “The aging population is a significant market opportunity, so small [startups] are jumping in," Rajan says. "[They] might have developed a Bluetooth headset for cell phones and realized that that market is highly competitive and it’s hard to maintain distinctions. So why not turn that [technology] into a hearing device?”
One entrepreneur who’s done just that is David Duehren, chief executive of SoundFest in Needham, Mass. The one-year-old company has six part-time employees and is one of 125 finalists in MassChallenge 2012, a business competition that attracted more than 1,200 entrants. The company is looking to raise nearly $3 million through private investors and crowdfunding site Indiegogo to develop a smart phone app that enhances sound through a Bluetooth earpiece. He expects to sell the software for $10 to $20 and the earpiece for around $175. “People think [traditional behind-the-ear hearing aids] make you look old," Duehren says. "But a Bluetooth looks cool and for Baby Boomers who are used to carrying their phones around all the time, it’s very convenient for them to use it in situations where they need help hearing, like when they’re in a noisy restaurant or at a party.”
There is some pushback from the traditional hearing-aid industry on PSAPs, which were labeled "electronic" rather than "medical" devices in a 2009 FDA guideline. On Aug. 31, a group of hearing aid specialists and audiologists sent a letter to the FDA calling out four vendors (including RCA) they allege are violating that guideline, which says PSAPs are only supposed to be marketed as hearing enhancement, not to correct hearing impairment.
Finding a safe, lower-cost solution for mild or moderate hearing loss drove Sreek Cherukuri, an otolaryngologist in Chicago, to found MDHearingAid, a 10-employee company that developed an FDA-approved hearing aid it has sold through its website since 2009. Because his patients – steelworkers and auto plant employees – could not afford standard hearing aids, he priced his product at around $330 per pair. “Every day I see people with hearing issues and if they could not afford hearing aids I wanted to offer them another solution,” Cherukuri says.
Another company offering lower-cost options is Able Planet, a $140 million consumer electronics company in Wheat Ridge, Colo. CEO Kevin Semcken has moderate, hereditary hearing loss and says he is driven to help people like him. The 50-employee company’s tiny, in-ear Personal Sound device, which has won numerous product awards, sold out in three days when it went on the market in September after several delays pushed back its planned March release. Semcken says 1,200 units are now on back order and expects to start shipping them by mid-October.
Demand for the Personal Sound and another line of hearing devices that he plans for 2013 is so robust Semcken recently went to China to line up a second manufacturer. “A lot of large retailers have already expressed interest and we can’t even fulfill our own orders. The need is so big we can’t keep it in stock,” he says. “It’s embarrassing.”
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