I’ve been writing about physician owned distributorships (PODs) for a while. See my previous posts here and here. Whether or not there is improper behavior, physician owned distributorships create the appearance of impropriety and give the medical device industry a bad name.
I’m fortunate to live in one of world’s great medical device hubs, so I hope you’ll forgive this unabashed promotion. Massachusetts is home to hundreds of innovative medical device companies, and we are well known as a source of med-tech start-ups. What’s less known is that Massachusetts is the best place for European and Israeli companies to set up their US operations.
Last year, Syneron merged with Candela in Wayland MA, becoming the largest Israeli medical device company in New England. Israeli start-up Odin Medical located its US HQ in MA prior to its acquisition by Medtronic, and Israeli start-up rcadia has their HQ in Newton, MA. EarlySense is the most recent Israeli company to locate here.
Ireland-based Creganna, a leading provider of medical device contract R&D, set up its first US location in Massachusetts and later expanded to locations in California and Cleveland. Ireland’s Shimmer Research, designer of new devices for wearable health sensing, set up their US operations in Boston.
I’d love to see more European and Israeli companies set up shop here. If you are developing a great new medical device outside the US, and thinking about entering the US market, you should be thinking about Massachusetts. Here’s why.
If you haven’t already heard the big news from last week, Johnson and Johnson’s Cordis subsidiary announced its withdrawal from the drug-eluting (DES) stent market, a momentous event for the firm that launched the first DES and created a new multi-billion-dollar medical device sector. Cordis is also shutting down its Conor MedSystems DES business, which it acquired for $1.4 billion in 2007. My reaction: Wow!
Meanwhile, the same week, the NY Times reported that metal-on-metal hip implants may become “the largest product liability cases of this decade.” The FDA website states that “on May 6, 2011 the FDA issued orders for postmarket surveillance studies to manufacturers of metal-on-metal hip systems. The FDA sent 145 orders to 21 manufacturers.”
Two long-term implants. Two medical device sectors. One critical difference.
Payments to physicians always raise conflict-of-interest issues for medical device companies (see my post on When Is It Okay to Pay Physicians?). These issues never go away. Today, the Wall Street Journal reported that five US Senators have requested an investigation into the legality of Physician-Owned Distributorships (PODs).
Not being in the spinal implant business, this is the first I’ve ever heard of PODs. What are PODs and what are the implications for medical device companies?
A recent article in The Economist describes “The dwindling allure of building factories offshore.” The article concludes that “Increasingly, it makes sense to make things in a variety of places, including America.”
I agree. Medical device companies face the same global opportunities and challenges as other manufacturers. While moving medical device manufacturing to a low-wage location sounds like a no-brainer, it takes real skill and experience to make it work well. Sometimes it makes sense, and sometimes it doesn’t.
In their spring 2011 Life Science Report, the law firm Wilson Sonsini Goodrich & Rosati (WSGR) provides helpful advice on “What Senior Management of Commercial-Stage Life Sciences Companies Need to Know about Interactions with Healthcare Professionals.” Definitely check it out here and then turn it into a corporate SOP.
As online communities have evolved from BBS’s and usenet groups, to forums and yahoo groups, to social networks and blogs, the quantity and quality of direct patient-to-patient interaction has dramatically increased. In March 2009, an article in Forbes called these new patient-centric social networks a disruptive innovation in patient care (Disruptor of the Month: Creating A New Kind Of Health Care Community by Renee Hopkins Callahan). If you’re developing a novel device or a novel procedure, there’s a chance you are already the subject of an online patient conversation. The more patient-facing your product (either used-by or implanted-in a patient), the more likely patients will share their experiences with each other online.
On 19 January 2011, the FDA unveiled its much-awaited proposal for changes to the 510(k) process. Medical device industry representatives were generally pleased with the modest scope of the proposal. In a press release, AdvaMed president Stephen J. Ubl called the plan “clearly a good first step that will address some of the major problems with the program.” Mark Leahey, President and CEO of the Medical Device Manufacturers Association (MDMA) commended “FDA leadership and staff for working with various stakeholders in an open and constructive process to develop consensus proposals that improve patient access to safe and effective therapies.” The NY Times quoted Medtronic CEO William A. Hawkins as stating “This is a more balanced approach that sends a positive signal to industry that the F.D.A. is engaged, listening and concerned.”
Patient safety advocates were underwhelmed. Public Citizen’s Sidney Wolfe stated “the FDA is not being forceful enough about improving the safety and effectiveness of new devices.” Dr. Rita Redberg (UCSF, Editor of Archives of Internal Medicine) told theHeart.org that she is “worried about the implanted high-risk devices that are getting cleared without any data. There are lots of examples of stents, inferior vena cava filters, heart valves, that are [cleared through 510(k) but] not low risk.”
But is the FDA’s modest proposal really a good outcome for the device industry?
Over the weekend, a friend asked what one book I would recommend to guide a first-time entrepreneur. I replied that just one book was not sufficient. My friend suggested Michael Porter‘s Competitive Strategy, which I agreed was an excellent choice. I also told him I’d address the question more fully on my blog, so that’s today’s post.
The Launching Tech Ventures Reading List
Fortunately, local entrepreneur and investor Ty Danco recently pointed out an amazing reading list for first time entrepreneurs. Harvard B-School Professor Tom Eisenmann is developing an MBA class called Launching Tech Ventures, and he posted his well-curated course reading list on his blog Platforms and Networks. As Ty says, the list makes me wish I was back in school. While you’re working through the list, don’t skip Eisenmann’s earlier compendium of the web’s best advice for entrepreneurs. For tech start-ups, Eisenmann’s recommendations are unsurpassed.
For medical device entrepreneurs, Eisenmann’s list isn’t quite enough, so I’ve put together a few suggestions from my own experience. Leave me a comment telling me what I missed or if you disagree with my choices.