Trilogy Tidings
October 2009
in this issue
     My recent experience responding to a client's request for due diligence on an M&A deal really got my attention.  In my opinion in many such situations the needs are overstated and the resulting consulting engagements are too involved and too expensive.  I like money as much as you do, but I just won't do a client the disservice of a bloated project with poor ROI.

     Also, there's some important news from FDA that I find worthy of comment.


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Improve Your Due Diligence 

Due DiligenceDue diligence on behalf of industrial and financial clients is a significant part of our management consulting practice.  A recent experience with a former client reminded me that the process is often flawed.  The client needed some focused information about the demand and supply of a commodity used to produce a medical product in order to drive their acquisition decision.

     Simple enough, but when the written engagement specs arrived they were loaded with extraordinary detail, most of it superfluous and requiring a very extensive investigation coupled with the one-month timeline that is typical of M&A due diligence.  I argued, unpersuasively, that the specs were unnecessarily onerous and that the client would waste a great deal of money with little benefit.  Since my views did not prevail, I no-bid the project; we could not have performed as requested.

     This reminded me of my own golden rule of consulting: Accurately interpret and establish the client's expectations, then work to meet and slightly exceed them.  This recent situation had failure and disappointment written all over it.  But I digress....

     This client's perspective is really not that unusual, so I decided to capture some of what we've learned about due diligence over the last 20 years of practice in a little essay:

Get Better at Due Diligence: 10 Tips for Improving Your Due Diligence Projects
Read it here.

     Maybe you will find some of my suggestions useful the next time you need to develop information to support a pending decision.  Whenever possible, keep it simple!

     Let me know what you think ... especially if you disagree.
Is 510(k) Going Away?
Due DiligenceMaybe so, according to the FDA announcement of September 23, 2009.  Device makers, don't panic.  If it happens at all it won't happen for a few years, but the stage may have been set.  The text of FDA's announcement can be found here.

     FDA has commissioned the Institute of Medicine to conduct a $1.3 million study of "the premarket notification [510(k)] program used to review and clear certain medical devices marketed in the United States".  Its report is scheduled for publication in March 2011.  This action seems to have been precipitated most recently by a GAO report in January 2009, which found that the 510(k) program had been used to clear hundreds of complicated medical devices including pacemakers and replacement heart valves.  GAO suggested the agency strengthen its approval standards and make them more consistent.
     Additional detail on the FDA announcement has been published in the Wall Street Journal.   Let's be honest, boys and girls.  The artifice of substantial equivalence to medical devices marketed prior to 1976 wore thin a long time ago.  What the medical device industry--and more importantly the American public--needs is a more rational basis for FDA's clearance decisions for Class I and II devices.  There are now very few pre-76 comparisons that can stand up to scientific scrutiny.  However, we do have access to a great reservoir of prior device clearances over the last three decades.  My solution: have device makers suggest a few of those prior clearances that are most relevant , and have FDA review those comparisons for adequacy with regard to both efficacy and safety.  If some clinical trials are needed, so be it; that's no more onerous than what happens today.  The right solution does not have to compromise innovation or disadvantage small firms.

     So I'm in favor of reforming the 510(k) process, as long as it's done smartly.  And, like AdvaMed, I encourage the Institute of Medicine to seek input from industry as its study evolves, and I encourage you to make your suggestions and concerns known.  As it happens, the Institute is expected to hold two workshops in coming months to gather comments from industry, physicians and patients.  You might want to participate or at least monitor the proceedings.
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