Innovation Under Attack?

Innovation. It’s a topic that I have addressed on this page a number of times during the last four years. After all, innovation is one of the key ingredients to a successful medical device development recipe. And once a product reaches the market, companies must continue to innovate to stay competitive—because, as we all know, the next iteration of device is often right around the corner, and it often comes from the competition.

Josh Makower is a serial device entrepreneur who has spent more than 20 years in the medical device industry. He has been involved in the creation of six independent device firms, holds more than four dozen patents, and is co-founder of the Biodesign Innovation Program at Stanford University. He currently is founder and CEO of ExploraMed, a medical device incubator based in Mountain View, Calif., that focuses on the identification, creation and development of new medical device solutions. He holds an MBA from Columbia University, an MD from the New York University School of Medicine, and a bachelor of science degree in Mechanical Engineering from the Massachusetts Institute of Technology. He recently sold one of his most recent startups, Acclarent, to Johnson & Johnson for close to $800 million.

The point of this bio? He knows a thing or two about innovation.

During the recent annual meeting of the Medical Device Manufacturers Association in Washington, D.C., Makower addressed the gathering about the topic of what lies ahead for U.S. device innovation. His message was a little grim. “My mission is not to depress you but to activate you,” he said. “That’s how we need to approach this challenge ahead of us. The goal is to take action, because it’s time.”
For Acclarent, from concept to commercialization of the company’s device to treat sinusitis took a swift 18 months.

“The idea worked. The FDA process was predictable. There was investor confidence in our patents. There was readily obtainable financing,” he described, as if talking about the good ol’ days (yes, of 2004). “We could work closely with physicians, and we were able to compensate them appropriately for their time. As we look at the future and challenges we face in 2010, I am exceptionally concerned. Things we relied on for our success are now being threatened.”

Makower spouted stats like venture capital financing for medtech dropping a billion dollars between 2008 and 2009, and viable startups are failing to find capital. He talked of an unpredictable FDA approval process (see On the Hill on page 22), hyper legislation of device industry relationships with physicians, and the medical device excise tax (some call it an innovation tax) that already is having an
impact. “There needs to be an exception for small companies,” he argued. “This needs to be back on the agenda. People don’t realize this is a tax on revenue, not profit. Small companies may never get the chance to reach profitability.” He likened it to a “perfect storm,” noting that a combination of different factors have coalesced to create a difficult environment for medical device development.

What’s the solution? Get involved. It’s not enough to sit back and let it happen or to complain and do nothing, Makower said.

Industry has faced these types of challenges before and was able to affect change and shift the legislative tide.

“We need to reinforce how important medical innovation is to people’s lives and our economy. It is not the cause of increased healthcare spending. It is and can continue to be a solution,” he said. “If we repair these issues, we will revive investors and improve the quality of lives and retain talent in our industry to help drive our economy forward.”

He urged medtech professionals to seek out industry advocacy groups, adding: “I was never into politics; I don’t like politics, but I felt compelled.”

This call to action is not just the responsibility of OEMs. If suppliers, vendors and contract manufacturers claim they play such an important role in bringing innovative technology to market, they also have a stake in keeping that market vibrant. At a recent event held by our sister publication Orthopedic Design & Technology, one of the supplier attendees told me: “This Washington stuff is interesting, but it really doesn’t affect us.” Think again. When your clients start vanishing, don’t stand around wondering what happened when you could have done at least a little something to help. Most industry organizations would welcome your participation.

OK. Off the soapbox. Moving on to a less-controversial topic.

This month you’ll notice a new look for Medical Product Outsourcing. We’ve rolled out a new logo and have tweaked the design throughout our magazine. This new look will be reflected in all of our print publications, online and with our conferences and programs. The goal is to continue to offer our quality content under the look of a cohesive brand. Innovative? Not earth shattering. But certainly a reflection of our commitment to the industry we serve.