Trilogy Tidings
February 2010
in this issue

     I write this on Valentine's Day.  But I do know what's really important; a fancy dinner out is planned for later!

     As a consultant to the medtech industry - although I prefer the more auspicious title of trusted advisor - I see, and try to solve, two kinds of problems.  The more common are tactical problems like these:

·         My customer is asking for something I don't offer.  How should I best respond?

·         My chief competitor is "eating my lunch" with a new product.  How should I best respond?

·         My academic associate is offering our firm an interesting new technology to license.  How should I best respond?

     I call these tactical problems because they are rather well defined, and my client in each case can pretty much control their future as a result of their action.  Then there are the strategic problems.  These are harder to exemplify because they deal with an uncertain future, client control of that future is likely to be greatly limited, and - much as I hate to admit this - my advice is less likely to be helpful.  But here's the rub: A strategic problem is going to have a greater long-term influence on my client's business; it may even influence that business's very survival.

     If you have some interest in the future of your medtech business, read on.

Change Ahead
Trends to Monitor in 2010 

Change AheadWith these strategic uncertainties in mind, I offer some prognostications that are likely to affect many, if not all, medtech businesses over the next few years starting in 2010.  I offer them for your consideration in no particular order.

Healthcare Costs

     If you don't realize the emerging importance of controlling the cost of delivering care in the U.S., you haven't been listening.  (I've been on the soapbox for many months on this topic.)  If your products don't exert a measurable and tangible reduction in healthcare costs, their acceptance will suffer in comparison to others that do offer this benefit.  There are several ways to make this happen, but a lower price is the least desirable approach.

A Revised 510(k) Process

     Important changes appear to be in the works for this venerable and historically easier path to FDA marketing clearance.  Its premise has always been tenuous, and the agency now appears ready to admit that fact.  It is likely the process will become more difficult, time-consuming and expensive.  Watch this closely, and consider accelerating commercialization of that new product to beat the changes.

U.S. Healthcare Reform

     It appears to be at best a 50:50 shot that anything will be signed into law this year, but if it happens it won't have a great effect on the medtech industry - at least that's what most "experts" believe.  The industry would enjoy the second-hand benefit of more insured patients being diagnosed and treated, but increased pricing pressure and industry give-back fees are likely to balance out that effect.  The bottom line: Not much is likely to change for medtech suppliers overall.

Patient Information and Advertising

     Medtech is likely to go the way of pharma in direct-to-consumer (DTC) advertising, especially via the Internet.  Expected formal guidance documents from the FDA this year will break the logjam of uncertainty that currently restrains the industry.  A new, lower-cost way to reach patients (and receive their feedback) will greatly expand.  And, so-called "social media" will enter the fray with a vengeance.

Comparative Effectiveness

     Comparative effectiveness research is off to a rocky start, as it's hard to know who will be the arbiter, how it will be paid for, and how one can manage the inevitable denials of care.  But I predict it will come to pass eventually.  Better to be prepared for that day than not.  And, really, does it not make sense that your product or procedure will be favored if you can prove its greater clinical effectiveness and better outcomes in comparison to alternatives?

The Sunshine Act

     While not yet signed into federal law, I think it's coming.  The proposed Physician Payments Sunshine Act of 2009 would require pharma and medtech companies to publicly disclose (1) payments or other consideration given to healthcare entities in excess of $100 annually and (2) physician ownership interests in manufacturers or GPOs.  Compliance with such a law would be challenging and would certainly impact at least record-keeping if not behaviors.

In Vitro Diagnostics

     The IVD industry has been on a roll lately, and that's likely to continue.  It has become the darling of private equity and venture capital life science investors owing to easier regulatory pathways, the growing importance of accurate, timely diagnoses (which are far cheaper than ineffective or inappropriate treatments), and some terrific technical developments in molecular methods.  This enthusiasm is somewhat tempered by the likelihood that FDA will begin to regulate the important market sector of laboratory-developed tests.

Diagnostic Imaging

     The news is not so good for this industry sector.  A growth rate of only 3% is predicted this year, a far cry from the historical trend.  Causes of this disappointing performance prediction are (1) large capital requirements, (2) reimbursement cuts by CMS, and (3) legislation against self-referrals.  Time to pull in the horns for now despite this sector's proven impact on the quality of patient care.

Expanding Markets

     Finally, a few market sectors are worthy of your attention.  First there's neurology, which has long been clinically interesting and is now attracting new investments and development initiatives by the likes of Medtronic and St. Jude Medical.  The neurology sector exhibits a strong pipeline of devices addressing major unmet needs, large patient populations, and favorable reimbursements.

       Then there's therapeutic hypothermia, which consists of a variety of protocols and technologies for rapidly cooling a patient's core temperature after acute, life-threatening cardiovascular and neurologic events.   Over 30 protocols are already in use by hospitals and many studies are underway for treatment of stroke, spinal cord injury, adult and pediatric cardiac arrest, traumatic brain injury, and hypoxic ischemic encephalopathy (perinatal asphyxia) in infants.
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