Innovating Our Way toBetter Health
Fifth annual AdvaMed conference emphasizes the medtech industry’s value to patients and the global economy.
Each year, executives at the Advanced Medical Technology Association (AdvaMed) come up with a theme for the organization’s annual conference in Washington, D.C. For this year’s event, AdvaMed officials were determined to send a clear message about the medtech industry’s impact on both the national and global economies.
Conference organizers ultimately decided the best way to send such a message would be to focus on job creation and the industry’s overall value to patients.
“This conference continues to highlight the impact of our life-changing innovations on patient care, as well as our industry’s economic impact in the U.S. and abroad,” Caroll Neubauer, conference committee chairman and chairman/CEO of B. Braun of America, said. “By connecting companies of all sizes, advancing policies that support international and domestic growth, and bringing together industry, political decision makers, regulators, and financiers into one location, this event supports and fosters medical technology innovation for the good of all.”
Held Sept. 26-28 at the Walter E. Washington Convention Center, AdvaMed 2011: The MedTech Conference featured an array of business development opportunities and networking meetings that enabled medical device and healthcare professionals to interact with industry leaders and their peers from all corners of the nation and the globe. Organizers said the fifth annual event attracted entrepreneurs from 22 countries and 38 states who mingled with attendees in the Exhibit Hall throughout the course of the show. Most if not all of the state and international delegations that attended AdvaMed 2011 were there to attract business and tout their respective regions as viable, thriving biomedical and/or medical device hubs. Representatives from both Switzerland and New Zealand hosted networking receptions at their embassies on the second evening of the conference to showcase local companies and innovative products.
Participating in New Zealand’s event were business owners such as Natasha Williams, whose Auckland company, Impactwear Hip Protectors Limited, makes lightweight and ergonomic shields that are worn with underwear to safeguard the hips during falls. Williams claims the product is designed to prevent hip fractures in the elderly.
Bruce Davey was at the embassy event as well to tout the merits of his Christchurch company, Aranz Limited, which has developed a digital camera and software to track the healing of skin ulcers. Asher Gendelman, a vice president at Zephyr Technology Corporation, was on hand to inform visitors of the small wireless monitor his company has developed to measure the body’s electric signals (dubbed the BioHarness BT) and the software it has created to transmit those signals to cell phones. Angela Pantano, business development manager for the Medical Technology Association of New Zealand, and Gerard Dunne, managing director of BELTAS Ltd., mingled with guests and discussed the mechanics of their individual organizations. Dunne’s firm manages clinical trials (Phases I through IV) for pharmaceutical, biotechnology and medical device companies, and conducts clinical studies in New Zealand and Australia for international clinical research organizations. Jane Coombs, Deputy Chief of Mission for the New Zealand Embassy, and Ralph Ives, Executive Vice President of Global Strategy and Analysis for AdvaMed, briefly addressed guests at the start of the nearly three-hour event.
AdvaMed 2011 hosted a similar technology/company showcase opportunity for attendees on Sept. 27 and 28. A total of 62 companies were given nine minutes each to present their latest products and technologies in the categories of blood, cardiovascular, dental, diagnostics, imaging, metabolic disease/obesity, neurology, ophthalmology, orthopedics/spine, technology transfer offices and wound health/tissue regeneration. Among the companies that gave presentations were Zephyr; ContourMed Inc., a Little Rock, Ark., manufacturer of custom and non-custom breast prostheses; Interface Biologics Inc., a Toronto, Canada-based privately held commercial stage developer of transformative biomedical-polymer products; NeuroWave Systems Inc., a Cleveland Heights, Ohio-based developer of signal processing technologies for brain monitors; and P-Cure Ltd., an Israeli firm that is developing radiation therapy solutions for cancer treatment.
AdvaMed bigwigs kicked off the conference on Sept. 26 with a briefing about its upcoming advocacy efforts and a panel discussion on healthcare reform (See Washington Roundup on page 20 and Top of the News on page 12 for a detailed recap of these discussions). Other topics covered on the first day of AdvaMed 2011 included an analysis of opportunities in the Chinese medical technology sector, and the impact of the Sunshine Act on doctor-device company relationships. Conference organizers dedicated nearly four hours of special programming on the first day to global harmonization efforts, providing perspectives from industry representatives, regulatory officials and the academic world.
Among the topics addressed was the Harmonization by Doing program, a joint effort between the U.S. Food and Drug Administration (FDA) and Japan’s Ministry of Health, Labor and Welfare to
promote regulatory harmonization between U.S. and Japaneseregulatory policies.
Organizers also devoted a number of sessions to business development and finance, covering subjects ranging from partnership agreements and Indian healthcare market opportunities to the need for medtech business model development. The session on India’s healthcare market examined ways that medical device and diagnostics companies can maximize their success and manage risks when establishing a presence or expanding operations in the country. The 75-minute panel also featured nuggets of data from a study conducted by PwC’s PRTM Management Consulting on the Indian healthcare market. The study’s preliminary findings concluded that nearly three-quarters of the medical technology market in India is composed of products imported from developed areas. But the next wave of growth likely will come from new innovation, developed specifically for the unique needs of the
Indian market.
Multinational medtech companies that participated in the study consider India to be one of the top three markets in the world for direct investment and growth. However, as access to healthcare in India expands to the vast population beyond the current middle class, challenges increase for multinational medtech firms seeking growth there.
“The Indian medical technology market is rapidly changing and the complexity of addressing the market opportunities and risks has increased,” said Tim Durst, a principal with PwC’s PRTM Management Consulting and a leading advisor to the medical device and diagnostics companies.
“Changes in regulatory, reimbursement, healthcare infrastructure, and competitive dynamics require new business strategies to be successful. Past approaches to accessing this thriving market will not succeed as the market continues to evolve.”
Durst moderated a panel discussion on India’s healthcare market landscape on Sept. 27. Panel members included Christopher Cerone, vice president of government affairs, Zimmer Holdings Inc.; Biten Kathrani, head of research and development, Johnson & Johnson Medical Devices India; and Suresh Vazirani, founder of Transasia, a Mumbai-based provider of in-vitro diagnostic products.
Because the Indian healthcare market is so diverse, panel members agreed that pre-conceived innovation models andassumptions quickly can lead to failure in that country. Intellectual property (IP) protection, for example, scares off many potential investors in the market despite the country’s strong laws against IP protection violations.
“What you think about India can be true, but it also can be wrong, Vazirani noted. “You think Indians cannot afford expensive healthcare, but there are people who can afford expensive healthcare. It’s a huge country, a huge market, and it’s totally untapped. It’s really up to you regarding how you go about it. There’s no one set formula that works in India. The key is understanding which aspect of India you want to target, how you want to do it, and exactly where you want to [provide care].”
Durst presented early results of a study about medical technology companies and their interests in India. The study’s full findings will be released later this fall.
One of the most anticipated (and heavily populated) sessions was the state-of-the-industry report issued by global professional services firm Ernst & Young. The company’s “Pulse of the industry: medical technology report 2011” detailed the financing, capital funding and initial public offering activity of U.S. and European medtech firms in 2010. The report found a 43 percent increase in net income for non-conglomerates in the United States and Europe and a 66 percent spike in capital raised b U.S. and European medtech firms in 2010. (For more details on Ernst & Young’s report, see Financial News on page 42).
With 39 panel discussions covering quality, key health policies, regulatory, compliance, legal and ehealth issues, attendees had plenty of opportunities to educate themselves on the most
vexing challenges facing the medtech industry. One of the other well-attended panel discussions focused on the pitfalls and strategies of negotiating medical product outsourcing agreements. Panelists included Tom Black, vice president, OEM Sales & Marketing for B. Braun Medical Inc.; Andres C. Rochwerger, global sourcing manager for Natick, Mass.-based Boston Scientific Inc.; and Richard Rubin, director of healthcare for Celestica Inc., a multinational electronics manufacturing services company headquartered in Toronto, Canada. Christopher Donovan, a partner at international law firm McDermott, Will & Emery, moderated the discussion.
While panel members agreed that strong partnerships are vital to negotiating fair outsourcing agreements, each provided a different perspective on the ingredients needed for success. Black, for instance, stressed the importance of defining key risks up front as well as an understanding of the other side’s manufacturing and product development capabilities. Delineations of responsibility also is crucial, he said.
Rochwerger’s recipe for success included an understanding of each partner’s key objectives and the flexibility each side is willing to provide in order to get what they want. “Generally, the supplier agreement is the goal post of the relationship,” Rochwerger told audience members. “As long as you operate within those goalposts, you can continue to conduct business. Within those goalposts, you have to define how you operate your business and define your agreements. You have to be sure than everything you work out stays within those goalposts and meets the requirements of both sides.”
One audience member unknowingly triggered some controversy by asking about effective solutions to product recalls. Black believes such solutions should be incorporated into quality agreements, though he acknowledged that a dialogue about responsibility for recalls often can stall outsourcing negotiations.
It was Rochwerger’s reply that triggered some startled reactions from audience members. He said Boston Scientific typically approaches product recall responsibility by “asking for everything and then negotiating.” When pressed for details, he declined to give a percentage (the amount for which a supplier would be responsible for a recall) but advised suppliers in the audience to “push back” during the negotiation process. “We do have supply agreements that say [suppliers] are responsible for 100 percent of recall costs plus additional costs, but it’s up to the contract manufacturer to push back. If you don’t push back, you might get stuck. Some contract manufacturers are so eager to get the contract, they come back three or more years later looking to renegotiate and that’s just not happening. If we have a recall that is not our fault and we have to scrap $1 million in products, yes, we are going to go after the supplier. But if there is a clear issue, and there is a good relationship between us and the supplier owns up to it, there might be some wiggle room.”
New to the 2011 conference lineup was a track on in-vitro diagnostics issues. “Last year, the association started ‘AdvaMeDx’ to focus solely on the regulatory, payment and legislative needs of its in-vitro diagnostics (IVD) members,” AdvaMed conferenceproducer Ray Briscuso told Kenneth G. Walz, co-founder and partner of Popper and Company LLC, a Sarasota, Fla.-based M&A advisory and specialty consulting firm to the life-sciences industry. “The members asked us to make sure AdvaMed 2011 was the de facto meeting for AdvaMeDx…we added a dedicated track and other programming specific to the diagnostics industry.”
That programming included sessions on personalized medicine, the future of the IVD Directive, the future of advanced diagnostics, and molecular diagnostic reimbursement, coverage and coding matters.
Besides the specific subject tracks, AdvaMed 2011 featured eight CEOs Unplugged sessions, where top executives from such healthcare conglomerates as Abbott Laboratories, Edwards Lifesciences Corporation and Baxter Healthcare discussed critical medical technology issues related to the regulatory process, mergers and acquisitions, safety and quality, payment and healthcare delivery, and competitiveness. In addition, nearly 950 one-on-one medtech partnering meetings took place, according to AdvaMed data. More than 200 venture capitalists, angel and private equity investors, bankers and senior medical technology business development executives attended this year’s conference.
Early risers and those who remained at the convention center for lunch listened to speeches from Indiana Gov. Mitchell E. “Mitch” Daniels, once a hopeful for the 2012 GOP presidential nomination and an outspoken critic of the medical device excise tax; former President George W. Bush, who closed his visit to the media; John M. Taylor III, counselor to the FDA commissioner; Jeffrey E. Shuren, M.D., director of the FDA’s Center for Devices and Radiological Health; Maryland Gov. Martin O’Malley; and U.S. Department of Health and Human Services Secretary Kathleen Sebelius.
“We heard directly from the decision makers shaping U.S. policy and the business leaders who will lead the next wave of medical and economic progress,” said James V. Mazzo, president of Abbott Medical Optics and AdvaMed board chairman. “The medical technology industry is an economic crown jewel. Policies should be put in place to foster our ability to innovate, as well as make improvements in quality and efficiency in patient care. With a comprehensive agenda for growth, we can continue to innovate our way to better health outcomes and a stronger economy.”