Trilogy Tidings

September 2013


in this issue
Do you really know your market?
Supersizing Hospitals
Yet More Consolidation Underway
Managing Your Email
Resources from our Archives
What does Trilogy do?


     I'm sure you are raring to get back to work -- assuming you took any time off this summer.  But don't do that!  Take a few moments to read this newsletter first.


     I know that's a presumptuous attitude.  But my messages today are about knowing what's going on around you, specifically what's happening in the markets you serve.  If by some miracle you don't think that's important, check with Steve Ballmer at Microsoft.


     So kick back, close the office door (Does anyone still have an office door?), and read on. 




   Change Ahead


Do you really know your market?

     Motherhood, apple pie and market awareness - who would argue with any of those? But truly understanding your market and knowing that you must understand it can be two very different realities. Why? Because really knowing your market is hard work. And if you don't know it, bad things can happen: (1) You might get blindsided by a disruption, (2) you might make a very unwise investment, (3) you might underestimate a sleepy little competitor which is suddenly taking your share, (4) your pricing may be too low or too high, or (5) some number of other nasty surprises.


Know Your Market 


     So, how do you come to really know your market? Well, you do research, of course. But what does that mean? How should you best carry out that research? Of course - and here's the consultant's infamous response - it depends. Surely, you should hear the voices of your customers on some regular basis. You might be able to justify buying some quarterly data from a service that actually records sales transactions, if such a service exists in your industry and you can afford it. Perhaps you should buy a syndicated market update every few years from a purveyor of market research reports. Obviously, you attend your industry's trade shows and buttonhole customers or carry out some specific research at the booth. Maybe you just do a Google search every few months and hope for the best. Perhaps you know an expert in your market segment who is fully up to date on what's going on, so just ask her on occasion. (By the way, I've never met such a person.) Could be you just throw in the towel and hire a capable consultant in your industry (hard to argue with that one!).


     If you've read this far, you're ready for the punch line: What's the magic bullet, Joe? Sadly, there isn't one, at least not one optimal research approach for all purposes. But here's an example from a recently completed due-diligence engagement at Trilogy: An investor (our client) needed a measure of historical and future demand for a drug used throughout the world. But the target company (the potential investment) was a contract manufacturer who did not have the visibility of a marketer or distributor, so that company did not have an effective "knowledge pathway" to the drug's ultimate hospital users. What to do?


     We did several things, including purchasing some data, some of which was useful and some of which was inaccurate or incomplete. And we spoke to a handful of KOLs in North America, South America and Europe. But the most important thing we did was to build a worldwide market model from the bottom up, i.e. from experiences and trends in the clinical literature, consisting of hundreds of refereed publications, including scores of registry studies and clinical trials. This was a case, often encountered in life science markets, in which clinical experiences and trends "drove the bus". After much painstaking research, we got it done.


     The moral of this story is this: When you are dealing with medical markets, never underestimate the importance of the clinical drivers. Those will often tell you where you've been, what your market is all about, and where you're likely to be going. But be prepared to do some tedious work to find out!

Supersizing Hospitals 


     According to a recent article in the New York Times, a new wave of US hospital mergers and consolidations is upon us. It's not entirely clear to me why this is happening. Is it the looming Affordable Care Act? Is it reduced reimbursements under Medicare? Maybe, as implied by an insurance trade group, it's good old-fashioned greed: "The rhetoric is all about efficiency ... the reality is all about higher prices."


     Whatever the motivation, medical-product suppliers need to recognize the current dynamic and respond smartly to it. Recognition is fine, but I'm not clear on the best response. Presumably, a larger scale implies more purchasing opportunity, but it also implies more pricing leverage on the buyer side. This trend is also likely to further lessen the influence of individual care providers and further increase the influence of admin people in the "corporate office". Clinical outcomes will always matter, of course. But maybe they will now matter a little less and the price will matter a little more.


     In any event, be aware of what's happening out there.


Yet More Consolidation Underway 


     Those selling to alternate sites of care and independent physician practices need to be aware of even more consolidation afoot, if they have not already experienced their effects. Private practices and alternate-care sites are being absorbed into hospital systems at a rapid pace.


     According to an August article by John McManus:

  • The number of active physicians employed by hospitals increased by nearly 75% from 2000 to 2012
  • The percentage of specialty physicians employed by hospitals jumped from 5% to 25% during the same period
  • The percentage of primary care physicians employed by hospitals jumped from about 17% to 40% during the same period
  • Hospitals that acquire ambulatory surgery centers often retain each center's physicians, nurses and even the name on the building but bill 78% more for the identical procedures delivered before the acquisition

     According to a 2012 report by the Robert Wood Johnson Foundation: "Hospital-physician consolidation has not led either to improved quality or reduced costs. Indeed, studies find that consolidation was primarily for the purpose of enhanced bargaining power with payers."

     Seller beware!

Managing Your Email 


     Jeff Weiner, that LinkedIn guy, recently joined the large group of folks offering to help you manage the workload connected to your use of email. He has some pretty good suggestions. The ones I like best:

  • Be precise with your words
  • Give some thought To: the recipients
  • Acknowledge receipt

     But he missed the suggestion that would do me the most good: Prioritize what you read and respond to. You see, I'm interrupt-driven. Maybe it's because of the business I'm in, but I try to be very responsive. So, when I get a new email message (and, of course, Outlook is on all the time), I read it immediately and, if it's at all worthy, I respond right away. That's a big mistake, and I know it is. But I cannot shake the habit. Weiner has kind of a solution he calls "Mark as Unread", but I'm not sure it would suit my pathology.

     Good luck with your own methods.
Resources from our Archives 
     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).



What does Trilogy do? 

     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.

Contact Information
ContactInfoJoseph J. Kalinowski, Principal
LinkedIn Profile: www.linkedin.com/in/trilogy