Trilogy Tidings
October 2008
in this issue
     Has the medical device industry reached a plateau?  Some think so.  Not me.  Rumors of its demise have been greatly exaggerated.
     I address this issue by way of reference to a recent article, then discuss two strategies for circumventing some of the important challenges faced by medical device makers today.  Your ideas along these lines are solicited so I can share them with all.  Finally, I offer a simple tool for covering all the bases in recognizing and communicating the benefits offered by your new medical product.


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Challenges in the Medical Device Industry 

StethoscopeI was interested in a recent article in The Scientist (one of my favorite publications) authored by Alla Katsnelson entitled "Biotech's Hidden Stepsister". See http://www.the-scientist.com/article/print/55047/ (free registration required).  First of all, I recoiled at that title.  Medical devices are certainly not "hidden".  And the "stepsister" characterization is more than a little condescending, as the medical device industry has been around much longer and measures up pretty well on several economic indicators cited in the article:
  • Total market capitalization: Medtech $240 billion; Biotech $365 billion
  • VC investment: Medtech $4.1 billion; Biopharma $5.2 billion
  • Private companies receiving VC money: Medtech 707; Biopharma 808

     Those initial impressions aside, the article is pretty good.  It nicely lays out some of the significant challenges facing the medical device industry today, challenges that have emerged and grown in recent years:

  • The time and money required to bring a breakthrough device to market in the U.S. have, on average, doubled over the last decade to 5-9 years and $70-100 million.
  • Medical devices are getting increasingly complex (think combination devices), and FDA requirements are becoming more stringent as a result.
  • Healthcare costs are growing at an alarming rate, so ensuring that new devices will be fairly reimbursed is becoming increasingly difficult.
  • Proposed changes to the U.S. patent system dealing with obviousness and amendment limitations could complicate and lengthen IP initiatives.
     Now, the good news is that over the last half decade VC money into devices has been flowing nicely, perhaps as a consequence of biotech's and pharma's pipeline woes.  Nevertheless, the economic squeeze on new ventures is on.  IPOs are all but out of the question today.  The big buyout firms and industry leaders have become risk-averse.  So young companies have to stay afloat longer on their own until their products are fully commercialized.
     The shifting sands of the regulatory minefield can be a real "gotcha".  Katsnelson cites the example of Acorn Cardiovascular, which experienced the raising of the regulatory bar after completion of a 300-patient randomized trial of its mesh heart restraint to treat congestive heart failure, and the device is still not approved four years after their initial trial began.  (I had the pleasure of moderating a cardiologist panel to assist a potential corporate investor in assessing this unique technology; the world-class cardiologists in attendance essentially designed that trial.  So much for regulatory predictability!)

Thoughts to share?
So ... What to Do?
DoctorOK, chances are you know all this stuff.  You have seen these trends close up.  Perhaps they have even negatively affected your business.  So are you going to quit and sail off into the sunset?  I didn't think so.  There's plenty of opportunity and growth left in medtech.  And, there are several compelling reasons for optimism.  Here are two reasons arising from two diametrically opposed points of view - both valid.
The first reason is actually mentioned in the article: Stay away from heavily trodden spaces.  Go after poorly developed areas where patient outcomes are not good, perhaps even terrible.  As a result, the barriers will come down in all quarters - clinical, regulatory and reimbursement.  Focus on better medicine, preferably delivered faster and cheaper.  Focus on major improvements in patient well-being and provider benefits.
     I'll submit a second reason from the other extreme: Keep it simple (KISS).  Don't try to change the world.  Just make the doc's or nurse's day a little less troublesome.  Reduce the patient's procedural risk.  Save the hospital a few bucks.  If you do this - if you alter your existing products just a bit - you can get to market quickly and inexpensively, and you won't need a new CPT code.  Check out the FDA's catalog of 510(k) clearances.  Do you think some of those products are economic blockbusters?  You bet they are.  And those successes are not all one-of-a-kind breakthrough offerings; many are just design tweaks or augmented features that made all the difference.  One more thing to remember in these turbulent, hunker-down times in healthcare: reduce provider and patient costs wherever possible, even if it damages your bottom line; you will be rewarded in the long term.
Help Me Make the Point
     I have a few examples of this KISS alternative from my own practice, and I'll bet you can name a few as well.  In fact, I wish you would.  Please send me an example of a "KISS product" that has been very successful, whether your own or someone else's.  If I get enough of a response, I will catalog those examples and send them out to my newsletter list.  That should help prove the point.  Medtech lives!
Understand Your Product's Benefits
CustomersYour new product will need to serve several "customers": patients, healthcare providers, healthcare facilities, and insurers.  So it pays to understand and properly communicate your product's benefits to each of these constituencies.  I've come up with a little reminder of the kinds of benefits to consider for each of these customers.  You'll find it here.

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.

Resources from our Archives 
     Check out our Reading Room to view my published articles, presentations and white papers on a variety of topics.  Let me know if you find one or more of these useful, and feel free to share them with others with appropriate attribution.
     And, if you're considering engaging our services but wish to increase your comfort level before taking that first step, check out our FAQs to learn about the mechanics of working with Trilogy.
Contact Information
ContactInfoJoseph J. Kalinowski, Principal