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Trilogy Tidings
August 2014
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in this issue
A Medtech Gorilla Aims to Gain Weight
Think you know about pricing? ... Think again.
What does Trilogy do?
Resources from our Archives
     Medtronic is stirring things up in the medtech space, a development that will cause trouble for many. Also, I suggest a fine presentation on the important matter of product pricing.

Regards,
Joe
  
A Medtech Gorilla Aims to Gain Weight     
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     Perhaps you've read that Medtronic intends to acquire Covidien and is also eyeing Smith & Nephew with some interest. Since both targets are UK-based, a hue and cry has arisen in the US about tax-driven inversions being unpatriotic. I suspect potential moves like these are at least as much about scale as they are about lowering taxes and freeing cash.

Medtronic
 

     There is no question that a Medtronic/Covidien combo would be a big deal - figuratively and literally. The deal would require several years of digestion, but there is no question that it would ultimately affect most players in the medtech space. Here are some of the affected:
  • J&J would experience more competition overall and in many of its medtech lines. We would see something closer to parity at the top of the medtech pyramid.
  • Medtech startups and other early stage medtech ventures would have one (or two) fewer potential suitors to pitch, which might cause their investors to be more patient or to avoid investing in future rounds. But these young companies would still have to compete on the basis of unique solutions and clever technologies - nothing new there.
  • Middle-market medtechs, of which there are many, would suffer the most I think. They would find it more challenging to effectively compete against a leading player with greater scale and more influence with providers.

     Those middle-market firms will need to meet the increased challenge somehow. Here are some of their potential strategies:

  • Stick to their knitting. Continue to make and sell better stuff in niche markets where it matters. Innovate. Reduce societal healthcare costs.
  • Consider broadening their view to include carefully chosen healthcare services (which Medtronic is already doing), information services, or even consumer products. In other words, run an "end-around".
  • Revitalize their own M&A activities to enhance their existing powerful niches and achieve dominance in those market segments. In other words, achieve some immunity from gorilla presence.
  • Make themselves attractive acquisition targets and convince their public or private investors of the wisdom of being acquired.

     What do you think? Do you see other viable strategies open to second-tier medtech companies?      

  

Think you know about pricing? ... Think again.     
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     Is product pricing an arcane topic? Yep. Is product pricing kind of important to your new-product's success? You bet.

 

     Jim Geisman is a world-class expert on pricing. Jim and I go back a few years in Boston, when we both were involved with the MIT Enterprise Forum -- him much more than me.

 

     I caught his presentation at the Business of Software Conference in Boston. It was outstanding, informative and entertaining. I highly recommend the video recording. You will enjoy it, and I think you will learn some important nuances about pricing your offerings. 

 

What does Trilogy do? 
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     Trilogy Associates facilitates business growth and renewal through commercialization of new products, providing the following services:
  • Opportunity assessment
  • Business planning and enterprise growth strategies
  • New-product conceptualization, commercialization and marketing
  • Market research and competitive assessment
  • Business development and partnering
  • Market and technological due diligence
  • Assessment of the therapeutic and diagnostic potential of novel technologies
  • Design of efficient and effective development strategies for early-stage biomedical products
  • Business and technical writing/publishing

     Inquiries to establish whether and how we might support your business initiatives are always welcome.  Contact us.

Resources from our Archives 
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     Check out our Reading Room to view my published articles, presentations and white papers on a variety of topics.
  
     And, you can examine an archive of my prior newsletters (since February 2007).
Contact Information
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Joseph J. Kalinowski, Principal
919.533.6285
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