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    [title] => Professional Development for the Quality/Regulatory Professional
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    [body] => Recently, someone asked me if colleges offer degrees in quality. I replied that many schools do indeed offer undergraduate programs in quality management or other quality focus areas, but such diplomas are rare among quality or regulatory professionals (most have degrees in related engineering, science, or technical areas).

The question, however, made me think about the various education and training options for “new” quality/regulatory professionals who are just beginning their careers. Many opportunities exist for these individuals, ranging from professional organizations and universities to industry groups, mentorships, and certification programs.

Numerous organizations offer professional development programs, but only a few will provide the inexperienced quality/regulatory specialist with the proper training. These organizations should be chosen based on an individual’s education, experience, industry focus (medical device, diagnostics, pharmaceuticals), and career choice (quality, regulatory, or both). Obviously, no professional development course will check every box, but quality/regulatory newbies can still gain valuable knowledge through a combination of programs from different organizations. Some recommendations follow:

Colleges and Universities 
Many schools offer undergraduate degrees and certificates in quality assurance and/or regulatory affairs. This option is clearly very valuable for individuals given both the time and (financial) resources to focus on the courses. Some companies will even reimburse employees for continuing or furthering their education/training.

Industry Organizations
There are many sources in this category, but I can focus only on a few.

The Regulatory Affairs Professional Society (RAPS) offers a litany of professional development options to the regulatory professional. Chief among them is the Regulatory Affairs Certification (RAC)—a certificate that documents competency in regulatory affairs. RAPS offers certificates in regional focus areas like the United States, European Union, Canada, Global); the group also maintains specific educational/experience qualifications for those interested in becoming a qualified RAC candidate (all certifications require passing a test). The qualifications are available at www.raps.org, specifically in the 2018 RAC Candidate Guide.  

The RAC is not the only professional development option offered by RAPS, though. Other alternatives include programs in regulatory competency, salary negotiations, business training, and in-person training.

RAPS has a comprehensive library of books, articles, and regulatory affairs training materials, the latter of which are mostly fee-based. The Rockville, Md.-based group holds regional chapter meetings as well as large-scale events. Its annual conference is dubbed “Regulatory Convergence” and features several days of workshops on medical device regulatory strategies, the de novo process, shifting compliance-to-quality mindset, and the EU MDR.

Like RAPS, the American Society for Quality (ASQ) offers membership to interested parties, and holds both chapter meetings and large-scale educational events. Its professional development offerings are mostly fee-based and focused solely on quality. ASQ has various divisions that members can join; the two that I have found most beneficial are the Quality Management Division and the Food, Drug, and Cosmetic Division.

ASQ also has a plethora of certifications. There are qualifying programs for those interested in becoming a certified biomedical auditor; calibration technician; HACCP auditor (Hazard Analysis and Critical Control Points); manager of quality/organizational excellence; quality auditor, quality engineer, quality inspector, or quality technician; reliability engineer; Master Black Belt; pharmaceutical GMP professional; quality improvement associate; quality process analyst; software quality engineer; supplier quality professional; Six Sigma Black Belt; Six Sigma Green Belt; and Six Sigma Yellow Belt.

ASQ has specific education and experience qualifications for candidates in its certification programs. In addition, the organization has thorough libraries of books, articles, and standards that it sells from its website.

The International Society for Pharmaceutical Engineering (ISPE) is a great source of professional development for medical device industry employees who traverse the pharmaceutical sector or are focused on combination products. Like its medical device counterparts, ISPE is membership-based, conducts regional meetings and large-scale events, and offers courses on quality, regulatory, and technical. It also publishes guidance documents on Good Automated Manufacturing Practices (GAMP), and offers its members educational/professional development courses, books, standards, and guidance documents for a fee. 

ISPE offers the best professional development opportunities for individuals focused on the technical aspects of quality assurance and regulatory affairs. 

The Parenteral Drug Association (PDA) serves the pharmaceutical industry, offering quality/regulatory professionals training courses, books, guidance documents, and articles for purchase. Like the aforementioned groups, PDA is membership-based and has various chapters. It is a very good professional development source for those seeking expertise in sterilization and aseptic processes. 
The Center for Professional Innovative Education (CfPIE) is designed to serve those in the pharmaceuticals and biotechnology, medical devices, and skin and cosmetics industries. CfPIE offers training and certification; its medical device focus areas include best practices, clinical trials, design control principles, document management, U.S. Food and Drug Administration compliance, process validation, qualifying suppliers, and quality principles.

CfPIE has a similar list of training topics for the pharmaceutical/biotech sector and the skin/cosmetic sectors. The Malvern, Pa.-headquartered group also offers medical device compliance, GLP (Good Laboratory Practice) facility, and GMP (Good Manufacturing Practice) certifications.

As with most professional organizations, CfPIE requires memberships from interested parties and charges for its professional development courses and certifications.

Non-Industry Sources
The development opportunities discussed so far deal mostly with the technical and/or scientific aspects of the quality/regulatory field. But the business side of the profession cannot be ignored, as most quality and/or regulatory executives work for companies—whose main mission is to turn a profit. Thus, a business education is also a necessary component of any professional development path, even for government or not-for-profit workers.

Many new quality/regulatory specialists may have a good foundation in business, having earned an MBA or a similar degree, and some may even have management experience. Such preparation is a rarity, though—most individuals in this field lack a solid business background or administrative exposure. Although business school might seem like a logical solution for these folks, it’s not a practical one. There are less comprehensive alternatives that offer value-added training. Some examples are: Experience is important, too. New quality and regulatory professionals can undergo extensive training, but they also need real-world experience. Mentorship, therefore, is one of the greatest gifts a veteran quality and regulatory executive can provide, as it will mean more to rookies than most of us will ever know.
 
Failure is a valuable educational tool as well. The sting of failure will cement the learning experience for new quality and regulatory professionals. However, mentors must guard against big failures, as that could discourage unseasoned pupils and potentially endanger patients (the ultimate customer) and other stakeholders. 

As I mentioned earlier, business fundamentals should be a key component of any regulatory and quality professional development plan, since these individuals are an integral part of most corporate business models. Now, more than ever, newbie regulatory and quality professionals must have a solid understanding of business and how their roles fit into the overall company puzzle. The ability to influence peers and superiors is key to succeeding in the regulatory and quality profession. Knowing how to present a regulatory or quality case in simple business terms (financial terms mostly) is a valuable skill that should be mastered well before one reaches the management level. 

Quality and regulatory professionals do have an important job and add value to healthcare organizations. Hence, professional development is essential to sustained corporate success. The medtech industry is changing at a rapid pace, with new technology and clinical applications being discovered and developed every day. Regulatory requirements are evolving as well to keep pace with technological advancements and changing reimbursement environments. The industry is in constant flux, from digital health innovations and the Internet of Things to the pursuit of harmonized global requirements. We have to work smarter rather than harder; we have to be fast but comprehensive. We must be innovative while maintaining a solid foundation. Professional development is one of the tools that will help us do these things successfully. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete Quality Management Systems, providing Quality System Training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com.  [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-10-16 14:15:37 [updated_at] => 2018-10-16 14:15:37 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["296471","289751","279735","282682","289791","289768"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 [contentType] => ContentType Object ( [className] => ContentType [content] => Array ( ) [taxonomy] => Array ( ) [listURL] => [logoUrl] => https: [id] => 2490 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => content_types [tag] => columns [short_tag] => columns [class_name] => [display_view] => [list_view] => [slug] => columns [box_view] => [ignore_flag] => 0 [image_id] => 0 [layout_id] => 0 [formattedTag] => Columns ) [viewURL] => /issues/2018-10-01/view_columns/professional-development-for-the-qualityregulatory-professional/ [relatedArticles] => Array ( [0] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 279735 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2490 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => 2018-05-03 [author_name] => {"name":"James A. Dunning","title":"Principal, QPC Services LLC"} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 167039 [primary_image_old] => [slider_image_id] => 167039 [banner_image] => 0 [title] => 13485:2016—Beyond the Risk Management File [short_title] => [summary] => [slug] => 134852016-beyond-the-risk-management-file [body] => Many companies currently are transitioning from ISO 13485:2003 to ISO 13485:2016, the updated standard drafted to help medtech firms evolve with the industry and address changes in the underlying ISO 9001 benchmark. Some companies, however, are finding it difficult to understand the additional requirements imposed by the 2016 version of this Quality Management System standard.

There are many publicly available resources that describe in excruciating detail the differences between the two ISO  standards. But these explanations can be hard to follow and may not adequately answer questions associated with the update, thereby leaving companies confused and unaware of the steps necessary for compliance.

For quite some time I struggled to understand the new standard, and even when I did, I still had a hard time explaining the changes to others. Eventually, the lightbulb came on, but I nonetheless can only help companies and medtech executives focus on one aspect of the 2016 update—risk management. There’s one key concept in this area that companies must keep in mind: 13485:2016 represents a paradigm shift for the industry, as it encompasses much more than  the “risk management file.” 

While I am aware of multiple risk management standards, my expertise in the medical device sector is ISO 14971 (Risk Management for Medical Devices) and the resulting risk management file. In the quality management systems I have previously worked with, risk management was typically owned by the design and development function within the company. It was primarily focused on the product and associated production processes, including post-market activities.

There are significant differences in the risk management mandates between the two ISO 13485 standards. Medtech companies with a solid command of the risk-based approach to risk management will likely find it easier to digest the disparities, since this method is specifically referenced in the new standard.  

In ISO 13485:2016, a risk-based approach to risk management is based on three main points: (1) actions taken in operational and management areas must contain measures for controlling risk; (2) “risk/benefit” considerations must be included in the decision-making process; and (3) executive level decision-making must consider risk. 
Let’s dig a little deeper on each of these three key points.

(1) Actions taken in operational and management areas must contain measures for controlling risk. Stated simply, this mandate requires risk management be addressed not only in design, manufacturing, and post-market, but also in operations and business management. The 13485:2016 update falls short of requiring an enterprise risk management system, but it does push companies much closer to that kind of system.  Management must now apply risk management methodologies to its daily business operations. While this directive does not mandate companies produce more Failure Modes and Effect Analyses (FMEAs) or risk management plans, it does require they gauge the risk level of their operations and consider the most effective method of controlling those risks.

(2) Risk/Benefit considerations must be included in the decision-making process. This decree makes it sound like each decision must come with a risk/benefit analysis, but that is not true. The key change here is ensuring that companies document the rationale for all decisions (especially key rulings) and verifying their quality management systems contain mechanisms for capturing the rationale as well as the risk/benefit considerations, associated with any decisions. 

(3) Executive-level decision making must consider risk. Despite how it sounds, this is not a repeat of the second mandate. This key point focuses on executive-level decision making to drive home the concept that a risk-based approach must be implemented at the highest corporate levels. Planning becomes significantly more important in an ISO 13485:2016 quality management system.

In transitioning to the new ISO 13485:2016 standard, medtech companies must remember that risk management is part of the management controls function, and should be owned by top management rather than design and development. They should also bear in mind that quality management system evaluations are effective, as they allow organizations to discover previously uncredited sources of a risk-based approach. Some examples of quality management system evaluations follow:


Most medical device quality management systems do take a risk-based approach, but most also fall short of properly capturing where and how this risk-based approach is applied within the quality management system. ISO 13485:2016, stripped down to its most basic components, attempts to address this shortfall. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete quality management systems, providing quality system training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com. [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-05-03 13:02:44 [updated_at] => 2018-05-03 13:02:44 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["269091","272977","276290","262287","270746","277734","266057","262285","279731","272975","272959"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [1] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 282682 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2490 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => 2018-06-01 [author_name] => {"name":"James A. Dunning","title":"Principal, QPC Services LLC"} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 168819 [primary_image_old] => [slider_image_id] => [banner_image] => 0 [title] => The State of Supply Chain Risk [short_title] => [summary] => [slug] => the-state-of-supply-chain-risk [body] => Special occasions are usually the perfect time for a stroll down memory lane and a peek into the metaphorical crystal ball. Medical Product Outsourcing’s 15th anniversary is no different, as it has prompted me to pause and reflect on the changes the medtech industry has undergone since 2003 and ponder what further transformations are in store for the sector. The changes are too numerous to itemize, though one in particular served as a guide for my brief jaunt to the past: supply chain controls (and risk). 

Before I share my insights on supply chain risk, I want to include some general information about supply chain controls for those unfamiliar with this subject. A supply chain is a series of linked activities and organizations to transform natural resources, raw materials, components, services, and information into a finished product that is delivered to end customers. Supply chain controls help minimize risk to a finished product—from its initial creation, to suppliers involved with all stages of development, through final customer distribution. Whether risk stems from an original raw ingredient producer or a storage warehouse, the safety and effectiveness of active pharmaceutical ingredients, foods, drug and biological products, cosmetics, veterinary products, and medical devices are increasingly jeopardized by supply chain challenges. As a result, supply chain controls must continuously evolve to meet rapidly mutating risks.

Growth of the 21st century globalized economy has allowed these challenges to exceed the 20th century expectations of the U.S. Congress in its creation of the FDA. Consequently, companies and regulators have had to consult a mix of guidance documents written by FDA, international regulatory agencies, and non-governmental organizations to devise a risk reduction strategy for the medtech supply chain.

Risk management is a key component of any present-day supply chain management program. Supply chain risk management (SCRM) is a discipline of risk management that attempts to identify potential disruptions to continued manufacturing production, and by extension, commercial financial exposure. SCRM attempts to reduce supply chain vulnerability through a coordinated holistic approach involving all supply chain stakeholders; these participants are tasked with identifying and analyzing the risk of failure points within the supply chain. Risk reduction plans can involve logistics, finance, and risk management disciplines. The goal is to ensure supply chain continuity in the event of a scenario that otherwise would interrupt normal business operations and thereby affect profitability. Supply chain risks could potentially include:

Rapid growth: While considered a primary managerial goal of many commercial organizations, rapid growth can also cause substantial problems and create additional risks. For example, small-scale production processes may not work on a large scale and may require additional development, testing, and validation to ensure they maintain the same level of safety and effectiveness as the approved product(s). Suppliers may not be able to grow at the same pace as the finished product manufacturer, and qualified employees may not be available to meet hiring demands.

Expanded and new facilities: As new facilities are constructed or brought on-line, or as older facilities are renovated or expanded, potential startup issues may be encountered.
Increased and/or changing product range: As product portfolios evolve and grow, manufacturing complexity may increase concomitantly. Supply chain professionals must work collaboratively with marketing and finance officials to ensure new products do not disrupt demand for existing products, at least until existing inventory has been depleted and supply chains are modified as necessary.

Changes to the supplier base: Suppliers may come and go as supply chains evolve. As this occurs, the overall performance characteristics of the supplier base changes (e.g., quality, delivery performance, lead times, cost variables), which may ultimately impact product profitability. As product profitability changes, managerial pressure to positively impact financial margins by decreasing costs may occur. Such changes may subsequently introduce substantial additional risk into the supply chain.

New or larger (and more demanding) customers: Generally, larger customers are more demanding. As dependability on specific customer revenues grow, the incentives to ensure customer satisfaction grow as well. Company manufacturing processes that ebb and flow with customer demand risk adding significant capacity and cost upon losing clients.

Changes to IT systems: Information technology (IT) systems are often a critical component to the logistics of executing supply chain processes. If planned and executed properly, IT operational improvements can add substantial benefits to the value of a supply chain. If conducted improperly, however, the results can be disastrous and lead to litigation.
Supply chain professionals incorporate at least three types of activities in mitigating supply chain risks:
  1. Sharing expertise: Although critical to their success, mitigating risk is just one of many roles with which supply chain professionals must be comfortable. Compliance professionals can use their expertise to monitor the supply chain and help prioritize risks based on their potential compliance impact. Compliance professionals have a strong role to play in the supply, production, and distribution areas.
  2. Use the supply chain as an entry point: Supply chain professionals have deep relationships with their third-party partners, critical suppliers, and third-party logistics providers. Compliance professionals should use those relationships to develop stronger mechanisms for both internal supply chain partners and the third-parties themselves to understand, identify, and report misconduct and other compliance risks.
  3. Work within the “flow” of the supply chain: Supply chain professionals think about their roles as they relate to product flow from the ground to the customer. Compliance professionals should avoid attempts to “box in” their support within specific aspects of those flows, understanding that a change in one area (e.g., supply) can have a substantial impact on another area (e.g., planning).
Some concluding thoughts to consider: Supply chain controls, especially supply chain risk management, have evolved significantly over the last 15 years, and will continue to do so over the foreseeable future. One thing is certain, though: These controls will definitely look a lot different when MPO celebrates its 30th anniversary in 2033. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete quality management systems, providing quality system training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com. [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-06-04 15:28:30 [updated_at] => 2018-06-04 15:28:30 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["269091","272977","276290","279735","270746","277734","282390","281299","280635","279504","279103","279015","278641","278237","278234","277967"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [2] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 289791 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2708 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => [author_name] => {"name":"","title":""} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 171772 [primary_image_old] => [slider_image_id] => 171772 [banner_image] => 0 [title] => 23. Edwards Lifesciences Corp. [short_title] => [summary] => [slug] => 23-edwards-lifesciences-corp [body] => $3.4 Billion

KEY EXECUTIVES:
Michael A. Mussallem, Chairman and CEO
Daveen Chopra, Corp. VP, Surgical Heart Valve Therapies
John P. McGrath, Ph.D., Corp. VP, Quality, Regulatory, Clinical
Joseph Nuzzolese, Corp. VP, Global Supply Chain
Stanton J. Rowe, Corp. VP, Advanced Technology and Chief Scientific Officer
Catherine M. Szyman, Corp. VP, Critical Care
Scott B. Ullem, Corp. VP, CFO
Larry L. Wood, Corp. VP, Transcatheter Heart Valves
Bernard J. Zovighian, Corp. VP, Transcatheter Mitral and Tricuspid Therapies

NO. OF EMPLOYEES: 12,200

GLOBAL HEADQUARTERS: Irvine, Calif.

Even at 66 years of age, James Garrett led a very active lifestyle. His passion for rock climbing resulted in him being credited with more than 300 “first ascents,” pioneering climbing routes all over the world. In his travels as a flight nurse, he also witnessed many medical needs in developing countries. One that particularly interested him was the battle against cataracts. He began volunteering with the Himalayan Cataract Project where he mentors and works with local paramedical staff during high-volume cataract surgery campaigns to help restore sight to those with little access to eye care around the world.

On an average evening in 2017, while on the couch with his physician wife, all of that came to a sudden and frightening halt.

“I had my head and my ear against his chest,” said James’ wife, Franziska Garrett, M.D. She then sprang up suddenly and exclaimed that she heard a really loud murmur. She continued, “We knew we had to see a cardiologist right away. I was definitely shocked.”

The cardiologist noted James’ aortic valve was a congenitally malformed bicuspid valve, diagnosed him with aortic stenosis, and asked with urgency how soon could they schedule James for open-heart surgery.

As would be understandable, James wasn’t on board with the prospect of open-heart surgery.

Oddly fortunate, during one of his trips, James contracted a viral respiratory illness that created questions about the safety of performing an open-heart procedure on him. As a result, James Harkness, M.D., interventional cardiologist and Stephen Clayson, M.D., cardiothoracic surgeon, both of Intermountain Medical Center Heart Institute in Salt Lake City, Utah, began to explore other treatment options. TAVR (transcatheter aortic valve replacement) was selected as the best alternative for him. The Edwards SAPIEN 3 transcather heart valve was the specifically chosen solution.

As a result of the TAVR technique, physicians were able to perform the procedure with James under conscious sedation, meaning he would not be under general anesthesia, which was important given his respiratory condition.

A few weeks after placement of the replacement valve, James felt like “himself” again and his lungs were healing as well. He has continued his work in the fight against cataracts in regions around the world and he and his wife are very grateful to be able to do so.

Unfortunately, the health battle patients like James face requiring the placement of a TAVR device isn’t the only fight Edwards has been associated with involving the technology. In 2017, the company faced ongoing legal challenges regarding the validity of several patents in a dispute with Boston Scientific.

In March 2017, a U.K. patent court and a German patent court both issued initial decisions that stated one of Boston Scientific’s patents asserted against Edwards’ patent was invalid while another was deemed valid and infringed. A year later, the European Patent Office sided with Boston Scientific, along with several other opponents, in its dispute of Edwards Lifesciences’ European patent EP 2,399,550, which resulted in a revocation of the patent. This action harkened back to the German court decision, which found Boston Scientific infringed upon that patent. The patent dispute is ongoing.

Meanwhile, in the United States in March 2018, the U.S. Patent and Trademark Office decided in Edwards’ favor in an Inter Partes Review of Boston Scientific’s U.S. transcatheter heart valve patent, number 8,992,608. All claims of the ‘608 patent asserted against Edwards were determined to be invalid. Similar to the European case, the U.S. dispute is ongoing as well.

As can be observed in the anecdotal story involving James Garrett, TAVR represents a new, novel therapeutic approach to treat a damaged heart valve. As such, it’s no surprise to see medtech companies fight over the rights to the patents involved with the technology. It could result in a significant reward for the “winner” in licensing agreements and/or market share.

Certainly, Edwards is well aware of the potential of the technology. The company already saw an impressive 16 percent increase in 2017’s net sales ($3.4 billion) over 2016’s just-shy $3 billion total. Further, the company has enjoyed steady growth since at least 2013 when it posted $2 billion in sales, but noted in its 2017 annual report it has experienced 10 years of double-digit adjusted sales growth. With a focus on cardiovascular disease, the company approaches its treatment options for healthcare by way of three separate divisions—Transcatheter Heart Valve Therapy, Surgical Heart Valve Therapy, and Critical Care.

The Transcatheter Heart Valve Therapy unit is helmed by two major products for Edwards, the SAPIEN XT and SAPIEN 3 transcatheter aortic heart valves and their respective delivery systems. The segment contributes a majority number to the company’s sales total, delivering 59 percent in 2017 (a significant increase compared to 47 percent just two years prior). That translates to just over $2 billion in 2017 net sales—an almost 25 percent increase over 2016, which had experienced a 38 percent rise over its prior year.

The next largest unit in net sales in 2017 was Surgical Heart Valve Therapy. This unit’s signature product is the Carpentier-Edwards PERIMOUNT pericardial valve platform, including the line of PERIMOUNT Magna Ease pericardial valves for aortic and mitral surgical valve replacement. Contributing $807 million in 2017, the segment enjoyed a 4.2 percent increase over the prior year, which was a welcome change for the company compared to its 2016 total when the unit’s sales shrank 1.3 percent from 2015.

Accounting for the remainder is Critical Care, comprised of hemodynamic monitoring systems used to measure a patient’s heart function and fluid status in surgical and intensive care settings. Edwards offers a selection of products for this space, including the minimally invasive FloTrac system and the noninvasive ClearSight system. It saw sales of $601 million in 2017, which was a bump up from 2016 by 7.3 percent.

Edward’s biggest market is the United States, where it achieved sales of more than 1.9 billion in fiscal 2017. Internationally, it took in $1.5 billion, with Europe ($831 million) and Japan ($350 million) reflecting the lion’s share of that total.

Not satisfied to rest on its laurels as it looks to the future, Edwards made two complementary acquisitions in 2017 to help ensure its growth remains positive. In the first month of its 2017 fiscal year, Edwards completed a previously announced purchase. In November 2016, the firm revealed it would be buying Valtech Cardio Ltd. for $340 million, with the potential for up to $350 million in pre-specified milestone driven payments over the next 10 years. The Israeli firm developed the Cardioband system, which is used for transcatheter repair of the mitral and tricuspid valves.

“We look forward to the Valtech team joining Edwards. We believe their knowledge, experience, and the Cardioband technology are valuable additions to Edwards,” Michael A. Mussallem, Edwards’ chairman and CEO, said in a news release declaring the close of the transaction. “This therapy has the potential to be a breakthrough structural heart therapy to help many patients in desperate need, and we look forward to gaining valuable insights from its commercial use in Europe.”

The device still awaits FDA clearance in the United States.

Bookending the fiscal year with the Valtech acquisition, Edwards announced the December 1 closing of its acquisition of Harpoon Medical on December 6. Harpoon’s focus was on the development of technology to enable beating-heart repair for degenerative mitral regurgitation. The purchase price was $100 million in cash at the close, with the potential for an additional $150 million if certain milestones are met within the following 10 years. According to Edwards, the system is designed to facilitate echo-guided repair of mitral valve regurgitation by stabilizing the prolapsed mitral valve leaflet to restore proper coaptation and valve function.

Regarding the acquisition of Harpoon, Bernard Zovighian, Edwards’ then corporate vice president of surgical heart valve therapy, said, “The unique beating-heart repair procedure for mitral valve patients complements Edwards’ comprehensive portfolio of treatments for structural heart disease, and reinforces our commitment to innovation in cardiac surgery.” [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-07-26 00:00:08 [updated_at] => 2018-07-27 07:31:49 [last_updated_author] => 195666 [uploaded_by] => 195666 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["289730","282075","281011","279366","278767","278112","277952","276438","274744","274036","273733","270922","274882","272977","289751","276290","270746","289768"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [3] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 289751 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2490 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => 2018-07-01 [author_name] => {"name":"James A. Dunning","title":"Principal, QPC Services LLC"} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 171751 [primary_image_old] => [slider_image_id] => [banner_image] => 0 [title] => Selling Regulatory Compliance [short_title] => [summary] => [slug] => selling-regulatory-compliance [body] => Does the title of this column strike a nerve? Does it seem crass or disrespectful to combine “selling” with “regulatory compliance”? I ask these rhetorical questions because I have found that many regulatory professionals feel this way. I chose the topic of this column rather carefully, but deliberately, not to aggravate potential readers, but to drive a bit of atypical thinking about how best to communicate regulatory requirements and the value of compliance. I want this column to initiate further thought, discussion, and maybe even research about effective communication regarding regulatory compliance.

I have found that most regulatory professionals do not consider themselves salespersons, since many find the act of sales to be foreign or unfamiliar to them. In short, they just don’t think it is their job to sell anything. Here is my counterpoint to this position: We are all either sellers or buyers in today’s business world because important concepts that require action must be sold in order for them to achieve the appropriate level of importance in organizations. Regulatory compliance is not an exception. 

Many, if not most, regulatory specialists believe organizations should drive regulatory compliance because it’s the right thing to do. It is necessary to compete in the medtech industry. While this is the way it should be, it’s not always the case. There are countless companies of all sizes, with products ranging widely in terms of complexity, benefits, and risks, that have struggled with compliance issues. The reasons for these struggles are varied and complicated, but a company’s standpoint on regulatory compliance is a major contributing factor. Regulatory professionals play an important role in helping companies appropriately value compliance. This valuation starts with communication about the importance of regulatory compliance, and a part of this communication is “selling” this value to the organization. 

Regulatory experts would greatly benefit from taking a sales course to become more familiar and competent in selling intangibles within an organization. Some sales training courses that I like are Dale Carnegie and Sandler Training (I have no financial ties to either one). I recommend these two simply because they helped me learn more about the sales process.
The ability to sell is an important skill for regulatory professionals to develop. Here’s why:
Regulatory experts with sales ability can help their organizations better recognize the need to comply with changing regulatory requirements, and better understand the timing and resources required to implement the change. When regulatory professionals have uncommon sales ability, they can better communicate the need to take action and commit the necessary resources for  compliance. 

An additional benefit of regulatory compliance salesmanship is the reduction in frustration within companies regarding this topic. Good sales folk can help organizations “get it” when it comes to compliance.

The medtech industry operates in a dynamic regulatory environment, and fairly rapid rule changes will continue for the foreseeable future. I encourage all regulatory professionals to focus on developing their sales ability because it will make their jobs easier and help organizations better sustain regulatory compliance. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete Quality Management Systems, providing Quality System Training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com.  [views] => 0 [published] => 1 [status] => 3 [priority] => 6 [publish_date] => 2018-07-26 00:00:17 [updated_at] => 2018-07-25 15:03:13 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["269091","272977","276290","279735","282682","289791","270746","289768","277734"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [4] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 289768 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2708 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => [author_name] => {"name":"","title":""} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 171799 [primary_image_old] => [slider_image_id] => 0 [banner_image] => 0 [title] => 10. Baxter International [short_title] => [summary] => [slug] => 10-baxter-international [body] => $10.6 Billion

KEY EXECUTIVES:
José (Joe) E. Almeida, Chairman,
President and CEO
Giuseppe Accogli, Sr. VP and President, Global Businesses
Scott Pleau, Sr. VP, Operations
James (Jay) Saccaro, Exec. VP and CFO
Sumant Ramachandra, M.D., Ph.D., Sr. VP, Chief Science and Technology Officer
Laura Angelini, General Manager, Chronic Renal
Will Boren, General Manager, Advanced Surgery
David Ferguson, Ph.D., General Manager, Medication Delivery
Reaz Rasul, General Manager, Acute Therapies
Scott Luce, General Manager, U.S. Hospital Products
Brik Eyre, Sr. VP and President, Americas
Cristiano Franzi, Sr. VP and President, EMEA
Andrew (Andy) Frye, Sr. VP and President, APAC

NO. OF EMPLOYEES: 47,000

GLOBAL HEADQUARTERS: Deerfield, Ill.

Something was missing.

Dick Stapleton kept looking for the large IV bag that usually housed his cancer treatment, but it wasn’t in sight. It wasn’t in the hands of the nurse approaching him, or with any of the other staff milling about the John Theurer Cancer Center at Hackensack University Medical Center in northeastern New Jersey.

The only equipment he noticed was a medication vial, catheter, syringe, and needle package. There was no IV bag, large or small.

Ben Boyer had a similar experience at Moore’s Cancer Center in San Diego, Calif., shortly after Christmas last year. Like Stapleton, Boyer was puzzled at the sight of an IV bolus containing his wife’s chemotherapy drugs.

‘“Wait—what’s going on?’ I asked, noting the change,” Boyer recounted in a Jan. 8, 2018, blog. “He [the nurse] answered, ‘I have to push this manually. Huge IV bag shortage.’ ‘Because of the Christmas holiday?’ I assumed. ‘No dude,’ he replied. ‘The hurricane in Puerto Rico. Like, all of the IV bags in the country are made in Puerto Rico, and nobody has any left. The factories are still a mess.’”

Such confusion was all too common last fall after Hurricane Maria raked Puerto Rico in September, crippling the island’s production of intravenous (IV) bags and fluids, and exacerbating an existing multi-year product shortage in the United States.

Puerto Rico produces about 44 percent of all IV bags and saline compounds used in U.S. hospitals, with most manufactured in factories owned by global medical products firm Baxter International Inc. Although the company’s three facilities sustained minimal damage in the storm and resumed limited production within a week of the deadly tempest, output was stymied by impassable roads and an agonizingly long recovery process that is still continuing.

Baxter’s Puerto Rican operations are mainly responsible for production of the MINI-BAG and MINI-BAG Plus Container Systems (50 mL and 100 mL small volume parenterals, or SVPs), which are used mostly in hospital pharmacies to compound or administer medication or to help deliver medicine, amino acids, and certain pre-mixed products. Baxter does not manufacture any large IV bags on the 5,320-square-mile island.

To help ease the nationwide bag and saline shortage, the U.S. Food and Drug Administration (FDA) permitted Baxter to temporarily import amino acid medical products from its facilities in Italy and the United Kingdom, and IV bags from factories in Australia, Brazil, Canada, Ireland, and Mexico. In addition, the University of Utah and the American Society of Health-System Pharmacists drafted guidelines for hospitals on the best use of existing supplies; the recommendations included administering medicine orally whenever possible, or through an IV “push” (injecting drugs directly into an IV line).

It took several months for Baxter to regain full power in its Puerto Rican factories and resume pre-hurricane production levels of its small IV bags. In its 2017 annual report, released in late February this year, Baxter heralded an impending return to “normal” inventory levels upon the waning of flu season.

“Baxter’s operations in Puerto Rico were affected by Hurricane Maria in late 2017. Additionally, an aggressive flu season in the U.S. significantly heightened demand for Baxter’s large volume IV solutions...” Baxter Chairman, President, and CEO Jose (Joe) E. Almeida told investors in the report. “Resulting supply issues created difficulties for the customers and patients who depend on us. Disruptions are an inevitable part of doing business. What matters is our ability to react swiftly and maintain our commitments to our stakeholders.”


ANALYST INSIGHTS: Baxter is a different company under the leadership of CEO Joe Almeida than it was two years ago. Watch for aggressive inorganic and organic investments to facilitate growth in their core businesses.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors



Baxter upheld that commitment rather well last year despite the protracted manufacturing interruption and U.S. IV bag shortage. The company expected a $70 million hit to its fourth-quarter sales from the market tumult, but the annual report shows the final three months of 2017 was actually the most profitable period for Baxter. The $2.77 billion the Deerfield, Ill.-based firm generated in Q4 was 2.5 percent higher than its third-quarter sales of $2.7 billion and 12 percent greater than the $2.47 billion yielded in Q1.

“Two years ago at Baxter, we set our sights on achieving sustained top-quartile performance among our healthcare industry peers. We have made great strides since, building on the strength of our portfolio and global footprint while bolstering speed, efficiency, and discipline across our operations,” Almeida said in his letter to stakeholders. “Now we have arrived at a pivotal moment, where operational gains are helping revitalize Baxter’s culture of innovation. We are well-positioned to advance our mission to save and sustain lives while delivering enhanced value for our investors.”

That enhanced value included a 4 percent boost in 2017 sales (to $10.6 billion), a 27 percent increase in adjusted earnings per diluted share ($2.48), and a 240-basis point rise in adjusted operating margin to 16 percent. Moreover, free cash flow was up 35 percent to $1.22 billion compared with 2016, and the company returned roughly $879 million to stockholders last year through $315 million in dividends and $564 million in share repurchases.

Such a bountiful balance sheet was largely driven by Baxter’s three-pronged growth strategy that focuses on portfolio management/research and development (R&D); operational excellence; and capital allocation.

The company boosted R&D last year through research alliances with the Mayo Clinic and Ramot at Tel Aviv University/Tel Aviv Sourasky Medical Center. The latter partnership targets surgical care, while the former—lasting five years—initially centers on kidney disease.

Baxter relied heavily on product introductions and enhancements in 2017 to manage and grow its portfolio. For example, the company tweaked various items for safety or usability (AK 90 hemodialysis system, FLOSEAL Hemostatic Matrix, TISSEEL [Fibrin Sealant], SIGMA SPECTRUM infusion system), and added the enteral ENFit syringe and accessory line to its nutrition care lineup. It also launched a digital tracking solution (DeviceVue) for its Sigma Spectrum Infusion pumps, deployed its next-generation PrisMAX acute care technology in select European markets, and expanded the use of its oXIRIS blood purification set to include the removal of excess cytokines, endotoxins and other inflammatory markers from blood. The label expansion was implemented last fall in more than 30 European countries and certain Mideast and African nations.

Baxter also took steps to ensure future innovation, receiving guidance from the FDA on the regulatory pathway for its new home peritoneal dialysis solution. The system—likely to be submitted as a combination product—produces sterile PD solutions using a home-based water filtration device that integrates with the company’s Amia PD system.

“We continue to increase our investment in new product development, build R&D productivity, and advance the impact of Baxter innovation globally,” Almeida said in the 2017 annual report. “An accelerating pace of high-value innovation is essential to achieving our performance goals.”

Indeed, innovation is key to growth, but there’s more than one path to innovation. Baxter augmented its new product introductions and enhancements last year by finalizing its $625 million deal for global injectable drug firm Claris Injectables Limited, and purchasing Chanhassen, Minn.-based Wound Care Technologies Inc., developer of the DermaClose Continuous Tissue Expander. The device, used for suturing and stapling skin in moderate to large wounds, created a complementary offering within Baxter’s Advanced Surgery business.

Though it occurred in the first quarter of 2017, the Wound Care acquisition did not impact total revenue in Baxter’s Advanced Surgery business last year. Proceeds rose 2.5 percent to $707 million due to higher international sales, but were offset by lower demand for non-core surgical products Actifuse and Peristrips.

A similar counterbalancing act transpired in most of Baxter’s seven business units in 2017, though all segments generated solid profits. Renal Care revenue, for instance, climbed 1.7 percent to $3.48 billion on robust growth of PD patients as well as adoption of Amia PD cyclers in the United States and HomeChoice CLARIA systems overseas but proceeds were impacted by lower international hemodialysis sales.

Baxter lost $45 million in Medication Delivery sales from Hurricane Maria, but still increased revenue in that unit 3.9 percent to $2.69 billion. Executives attributed the increase to select pricing and improved volumes for U.S. IV solutions and higher sales of the company’s IV access administrative sets.

Maria also blew away $15 million in Nutrition revenue, but improved demand, new product launches, and ongoing geographic expansion for the company’s parenteral solutions helped grow sales 2.8 percent to $882 million. Pharmaceuticals suffered the same fate, losing $10 million in sales to Maria, but the loss was more than offset by a $57 million boost from the Claris acquisition as well as higher demand for pre-mixed injectable drugs, and better pricing for fast-acting IV beta blocker BREVIBLOC. Total Pharmaceuticals revenue jumped 9.3 percent to $1.88 billion, according to Baxter’s 2017 annual report.

Strong sales of continuous renal replacement therapy systems boosted Acute Therapies revenue 6.3 percent to $456 million, while higher product volume led to a 1.8 percent rise in Other proceeds to $455 million.

In addition to growing sales through new product innovations, portfolio management, and acquisitions, Baxter also fortified its profit-making prowess last year by changing its geographical reporting segments. The company now breaks down its world map into three regions: Americas (North and South America); EMEA (Europe, Middle East, and Africa); and APAC (Asia-Pacific).
Each of these new reporting regions posted gains in 2017, with the Americas leading the charge at 5.2 percent (to $5.72 billion), followed by APAC (4 percent to $2.11 billion), and EMEA (1.3 percent to $2.73 billion).

“We have arrived at a pivotal moment, where operational gains are helping revitalize Baxter’s culture of innovation,” Almeida said. “We continue to promote simplification and disciplined cost management to ensure every dollar we spend is making the greatest impact for patients and stockholders.” [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-07-26 00:00:21 [updated_at] => 2018-10-04 10:59:33 [last_updated_author] => 199474 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["297040","291991","280790","279720","280665","279724","289758","289772","289797","289785","299201","290592","280922","289744","289761","284028","281185","289791"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) ) [relatedContent] => Array ( [0] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 279735 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2490 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => 2018-05-03 [author_name] => {"name":"James A. Dunning","title":"Principal, QPC Services LLC"} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 167039 [primary_image_old] => [slider_image_id] => 167039 [banner_image] => 0 [title] => 13485:2016—Beyond the Risk Management File [short_title] => [summary] => [slug] => 134852016-beyond-the-risk-management-file [body] => Many companies currently are transitioning from ISO 13485:2003 to ISO 13485:2016, the updated standard drafted to help medtech firms evolve with the industry and address changes in the underlying ISO 9001 benchmark. Some companies, however, are finding it difficult to understand the additional requirements imposed by the 2016 version of this Quality Management System standard.

There are many publicly available resources that describe in excruciating detail the differences between the two ISO  standards. But these explanations can be hard to follow and may not adequately answer questions associated with the update, thereby leaving companies confused and unaware of the steps necessary for compliance.

For quite some time I struggled to understand the new standard, and even when I did, I still had a hard time explaining the changes to others. Eventually, the lightbulb came on, but I nonetheless can only help companies and medtech executives focus on one aspect of the 2016 update—risk management. There’s one key concept in this area that companies must keep in mind: 13485:2016 represents a paradigm shift for the industry, as it encompasses much more than  the “risk management file.” 

While I am aware of multiple risk management standards, my expertise in the medical device sector is ISO 14971 (Risk Management for Medical Devices) and the resulting risk management file. In the quality management systems I have previously worked with, risk management was typically owned by the design and development function within the company. It was primarily focused on the product and associated production processes, including post-market activities.

There are significant differences in the risk management mandates between the two ISO 13485 standards. Medtech companies with a solid command of the risk-based approach to risk management will likely find it easier to digest the disparities, since this method is specifically referenced in the new standard.  

In ISO 13485:2016, a risk-based approach to risk management is based on three main points: (1) actions taken in operational and management areas must contain measures for controlling risk; (2) “risk/benefit” considerations must be included in the decision-making process; and (3) executive level decision-making must consider risk. 
Let’s dig a little deeper on each of these three key points.

(1) Actions taken in operational and management areas must contain measures for controlling risk. Stated simply, this mandate requires risk management be addressed not only in design, manufacturing, and post-market, but also in operations and business management. The 13485:2016 update falls short of requiring an enterprise risk management system, but it does push companies much closer to that kind of system.  Management must now apply risk management methodologies to its daily business operations. While this directive does not mandate companies produce more Failure Modes and Effect Analyses (FMEAs) or risk management plans, it does require they gauge the risk level of their operations and consider the most effective method of controlling those risks.

(2) Risk/Benefit considerations must be included in the decision-making process. This decree makes it sound like each decision must come with a risk/benefit analysis, but that is not true. The key change here is ensuring that companies document the rationale for all decisions (especially key rulings) and verifying their quality management systems contain mechanisms for capturing the rationale as well as the risk/benefit considerations, associated with any decisions. 

(3) Executive-level decision making must consider risk. Despite how it sounds, this is not a repeat of the second mandate. This key point focuses on executive-level decision making to drive home the concept that a risk-based approach must be implemented at the highest corporate levels. Planning becomes significantly more important in an ISO 13485:2016 quality management system.

In transitioning to the new ISO 13485:2016 standard, medtech companies must remember that risk management is part of the management controls function, and should be owned by top management rather than design and development. They should also bear in mind that quality management system evaluations are effective, as they allow organizations to discover previously uncredited sources of a risk-based approach. Some examples of quality management system evaluations follow:


Most medical device quality management systems do take a risk-based approach, but most also fall short of properly capturing where and how this risk-based approach is applied within the quality management system. ISO 13485:2016, stripped down to its most basic components, attempts to address this shortfall. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete quality management systems, providing quality system training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com. [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-05-03 13:02:44 [updated_at] => 2018-05-03 13:02:44 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["269091","272977","276290","262287","270746","277734","266057","262285","279731","272975","272959"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [1] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 282682 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2490 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => 2018-06-01 [author_name] => {"name":"James A. Dunning","title":"Principal, QPC Services LLC"} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 168819 [primary_image_old] => [slider_image_id] => [banner_image] => 0 [title] => The State of Supply Chain Risk [short_title] => [summary] => [slug] => the-state-of-supply-chain-risk [body] => Special occasions are usually the perfect time for a stroll down memory lane and a peek into the metaphorical crystal ball. Medical Product Outsourcing’s 15th anniversary is no different, as it has prompted me to pause and reflect on the changes the medtech industry has undergone since 2003 and ponder what further transformations are in store for the sector. The changes are too numerous to itemize, though one in particular served as a guide for my brief jaunt to the past: supply chain controls (and risk). 

Before I share my insights on supply chain risk, I want to include some general information about supply chain controls for those unfamiliar with this subject. A supply chain is a series of linked activities and organizations to transform natural resources, raw materials, components, services, and information into a finished product that is delivered to end customers. Supply chain controls help minimize risk to a finished product—from its initial creation, to suppliers involved with all stages of development, through final customer distribution. Whether risk stems from an original raw ingredient producer or a storage warehouse, the safety and effectiveness of active pharmaceutical ingredients, foods, drug and biological products, cosmetics, veterinary products, and medical devices are increasingly jeopardized by supply chain challenges. As a result, supply chain controls must continuously evolve to meet rapidly mutating risks.

Growth of the 21st century globalized economy has allowed these challenges to exceed the 20th century expectations of the U.S. Congress in its creation of the FDA. Consequently, companies and regulators have had to consult a mix of guidance documents written by FDA, international regulatory agencies, and non-governmental organizations to devise a risk reduction strategy for the medtech supply chain.

Risk management is a key component of any present-day supply chain management program. Supply chain risk management (SCRM) is a discipline of risk management that attempts to identify potential disruptions to continued manufacturing production, and by extension, commercial financial exposure. SCRM attempts to reduce supply chain vulnerability through a coordinated holistic approach involving all supply chain stakeholders; these participants are tasked with identifying and analyzing the risk of failure points within the supply chain. Risk reduction plans can involve logistics, finance, and risk management disciplines. The goal is to ensure supply chain continuity in the event of a scenario that otherwise would interrupt normal business operations and thereby affect profitability. Supply chain risks could potentially include:

Rapid growth: While considered a primary managerial goal of many commercial organizations, rapid growth can also cause substantial problems and create additional risks. For example, small-scale production processes may not work on a large scale and may require additional development, testing, and validation to ensure they maintain the same level of safety and effectiveness as the approved product(s). Suppliers may not be able to grow at the same pace as the finished product manufacturer, and qualified employees may not be available to meet hiring demands.

Expanded and new facilities: As new facilities are constructed or brought on-line, or as older facilities are renovated or expanded, potential startup issues may be encountered.
Increased and/or changing product range: As product portfolios evolve and grow, manufacturing complexity may increase concomitantly. Supply chain professionals must work collaboratively with marketing and finance officials to ensure new products do not disrupt demand for existing products, at least until existing inventory has been depleted and supply chains are modified as necessary.

Changes to the supplier base: Suppliers may come and go as supply chains evolve. As this occurs, the overall performance characteristics of the supplier base changes (e.g., quality, delivery performance, lead times, cost variables), which may ultimately impact product profitability. As product profitability changes, managerial pressure to positively impact financial margins by decreasing costs may occur. Such changes may subsequently introduce substantial additional risk into the supply chain.

New or larger (and more demanding) customers: Generally, larger customers are more demanding. As dependability on specific customer revenues grow, the incentives to ensure customer satisfaction grow as well. Company manufacturing processes that ebb and flow with customer demand risk adding significant capacity and cost upon losing clients.

Changes to IT systems: Information technology (IT) systems are often a critical component to the logistics of executing supply chain processes. If planned and executed properly, IT operational improvements can add substantial benefits to the value of a supply chain. If conducted improperly, however, the results can be disastrous and lead to litigation.
Supply chain professionals incorporate at least three types of activities in mitigating supply chain risks:
  1. Sharing expertise: Although critical to their success, mitigating risk is just one of many roles with which supply chain professionals must be comfortable. Compliance professionals can use their expertise to monitor the supply chain and help prioritize risks based on their potential compliance impact. Compliance professionals have a strong role to play in the supply, production, and distribution areas.
  2. Use the supply chain as an entry point: Supply chain professionals have deep relationships with their third-party partners, critical suppliers, and third-party logistics providers. Compliance professionals should use those relationships to develop stronger mechanisms for both internal supply chain partners and the third-parties themselves to understand, identify, and report misconduct and other compliance risks.
  3. Work within the “flow” of the supply chain: Supply chain professionals think about their roles as they relate to product flow from the ground to the customer. Compliance professionals should avoid attempts to “box in” their support within specific aspects of those flows, understanding that a change in one area (e.g., supply) can have a substantial impact on another area (e.g., planning).
Some concluding thoughts to consider: Supply chain controls, especially supply chain risk management, have evolved significantly over the last 15 years, and will continue to do so over the foreseeable future. One thing is certain, though: These controls will definitely look a lot different when MPO celebrates its 30th anniversary in 2033. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete quality management systems, providing quality system training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com. [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-06-04 15:28:30 [updated_at] => 2018-06-04 15:28:30 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["269091","272977","276290","279735","270746","277734","282390","281299","280635","279504","279103","279015","278641","278237","278234","277967"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [2] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 289791 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2708 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => [author_name] => {"name":"","title":""} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 171772 [primary_image_old] => [slider_image_id] => 171772 [banner_image] => 0 [title] => 23. Edwards Lifesciences Corp. [short_title] => [summary] => [slug] => 23-edwards-lifesciences-corp [body] => $3.4 Billion

KEY EXECUTIVES:
Michael A. Mussallem, Chairman and CEO
Daveen Chopra, Corp. VP, Surgical Heart Valve Therapies
John P. McGrath, Ph.D., Corp. VP, Quality, Regulatory, Clinical
Joseph Nuzzolese, Corp. VP, Global Supply Chain
Stanton J. Rowe, Corp. VP, Advanced Technology and Chief Scientific Officer
Catherine M. Szyman, Corp. VP, Critical Care
Scott B. Ullem, Corp. VP, CFO
Larry L. Wood, Corp. VP, Transcatheter Heart Valves
Bernard J. Zovighian, Corp. VP, Transcatheter Mitral and Tricuspid Therapies

NO. OF EMPLOYEES: 12,200

GLOBAL HEADQUARTERS: Irvine, Calif.

Even at 66 years of age, James Garrett led a very active lifestyle. His passion for rock climbing resulted in him being credited with more than 300 “first ascents,” pioneering climbing routes all over the world. In his travels as a flight nurse, he also witnessed many medical needs in developing countries. One that particularly interested him was the battle against cataracts. He began volunteering with the Himalayan Cataract Project where he mentors and works with local paramedical staff during high-volume cataract surgery campaigns to help restore sight to those with little access to eye care around the world.

On an average evening in 2017, while on the couch with his physician wife, all of that came to a sudden and frightening halt.

“I had my head and my ear against his chest,” said James’ wife, Franziska Garrett, M.D. She then sprang up suddenly and exclaimed that she heard a really loud murmur. She continued, “We knew we had to see a cardiologist right away. I was definitely shocked.”

The cardiologist noted James’ aortic valve was a congenitally malformed bicuspid valve, diagnosed him with aortic stenosis, and asked with urgency how soon could they schedule James for open-heart surgery.

As would be understandable, James wasn’t on board with the prospect of open-heart surgery.

Oddly fortunate, during one of his trips, James contracted a viral respiratory illness that created questions about the safety of performing an open-heart procedure on him. As a result, James Harkness, M.D., interventional cardiologist and Stephen Clayson, M.D., cardiothoracic surgeon, both of Intermountain Medical Center Heart Institute in Salt Lake City, Utah, began to explore other treatment options. TAVR (transcatheter aortic valve replacement) was selected as the best alternative for him. The Edwards SAPIEN 3 transcather heart valve was the specifically chosen solution.

As a result of the TAVR technique, physicians were able to perform the procedure with James under conscious sedation, meaning he would not be under general anesthesia, which was important given his respiratory condition.

A few weeks after placement of the replacement valve, James felt like “himself” again and his lungs were healing as well. He has continued his work in the fight against cataracts in regions around the world and he and his wife are very grateful to be able to do so.

Unfortunately, the health battle patients like James face requiring the placement of a TAVR device isn’t the only fight Edwards has been associated with involving the technology. In 2017, the company faced ongoing legal challenges regarding the validity of several patents in a dispute with Boston Scientific.

In March 2017, a U.K. patent court and a German patent court both issued initial decisions that stated one of Boston Scientific’s patents asserted against Edwards’ patent was invalid while another was deemed valid and infringed. A year later, the European Patent Office sided with Boston Scientific, along with several other opponents, in its dispute of Edwards Lifesciences’ European patent EP 2,399,550, which resulted in a revocation of the patent. This action harkened back to the German court decision, which found Boston Scientific infringed upon that patent. The patent dispute is ongoing.

Meanwhile, in the United States in March 2018, the U.S. Patent and Trademark Office decided in Edwards’ favor in an Inter Partes Review of Boston Scientific’s U.S. transcatheter heart valve patent, number 8,992,608. All claims of the ‘608 patent asserted against Edwards were determined to be invalid. Similar to the European case, the U.S. dispute is ongoing as well.

As can be observed in the anecdotal story involving James Garrett, TAVR represents a new, novel therapeutic approach to treat a damaged heart valve. As such, it’s no surprise to see medtech companies fight over the rights to the patents involved with the technology. It could result in a significant reward for the “winner” in licensing agreements and/or market share.

Certainly, Edwards is well aware of the potential of the technology. The company already saw an impressive 16 percent increase in 2017’s net sales ($3.4 billion) over 2016’s just-shy $3 billion total. Further, the company has enjoyed steady growth since at least 2013 when it posted $2 billion in sales, but noted in its 2017 annual report it has experienced 10 years of double-digit adjusted sales growth. With a focus on cardiovascular disease, the company approaches its treatment options for healthcare by way of three separate divisions—Transcatheter Heart Valve Therapy, Surgical Heart Valve Therapy, and Critical Care.

The Transcatheter Heart Valve Therapy unit is helmed by two major products for Edwards, the SAPIEN XT and SAPIEN 3 transcatheter aortic heart valves and their respective delivery systems. The segment contributes a majority number to the company’s sales total, delivering 59 percent in 2017 (a significant increase compared to 47 percent just two years prior). That translates to just over $2 billion in 2017 net sales—an almost 25 percent increase over 2016, which had experienced a 38 percent rise over its prior year.

The next largest unit in net sales in 2017 was Surgical Heart Valve Therapy. This unit’s signature product is the Carpentier-Edwards PERIMOUNT pericardial valve platform, including the line of PERIMOUNT Magna Ease pericardial valves for aortic and mitral surgical valve replacement. Contributing $807 million in 2017, the segment enjoyed a 4.2 percent increase over the prior year, which was a welcome change for the company compared to its 2016 total when the unit’s sales shrank 1.3 percent from 2015.

Accounting for the remainder is Critical Care, comprised of hemodynamic monitoring systems used to measure a patient’s heart function and fluid status in surgical and intensive care settings. Edwards offers a selection of products for this space, including the minimally invasive FloTrac system and the noninvasive ClearSight system. It saw sales of $601 million in 2017, which was a bump up from 2016 by 7.3 percent.

Edward’s biggest market is the United States, where it achieved sales of more than 1.9 billion in fiscal 2017. Internationally, it took in $1.5 billion, with Europe ($831 million) and Japan ($350 million) reflecting the lion’s share of that total.

Not satisfied to rest on its laurels as it looks to the future, Edwards made two complementary acquisitions in 2017 to help ensure its growth remains positive. In the first month of its 2017 fiscal year, Edwards completed a previously announced purchase. In November 2016, the firm revealed it would be buying Valtech Cardio Ltd. for $340 million, with the potential for up to $350 million in pre-specified milestone driven payments over the next 10 years. The Israeli firm developed the Cardioband system, which is used for transcatheter repair of the mitral and tricuspid valves.

“We look forward to the Valtech team joining Edwards. We believe their knowledge, experience, and the Cardioband technology are valuable additions to Edwards,” Michael A. Mussallem, Edwards’ chairman and CEO, said in a news release declaring the close of the transaction. “This therapy has the potential to be a breakthrough structural heart therapy to help many patients in desperate need, and we look forward to gaining valuable insights from its commercial use in Europe.”

The device still awaits FDA clearance in the United States.

Bookending the fiscal year with the Valtech acquisition, Edwards announced the December 1 closing of its acquisition of Harpoon Medical on December 6. Harpoon’s focus was on the development of technology to enable beating-heart repair for degenerative mitral regurgitation. The purchase price was $100 million in cash at the close, with the potential for an additional $150 million if certain milestones are met within the following 10 years. According to Edwards, the system is designed to facilitate echo-guided repair of mitral valve regurgitation by stabilizing the prolapsed mitral valve leaflet to restore proper coaptation and valve function.

Regarding the acquisition of Harpoon, Bernard Zovighian, Edwards’ then corporate vice president of surgical heart valve therapy, said, “The unique beating-heart repair procedure for mitral valve patients complements Edwards’ comprehensive portfolio of treatments for structural heart disease, and reinforces our commitment to innovation in cardiac surgery.” [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-07-26 00:00:08 [updated_at] => 2018-07-27 07:31:49 [last_updated_author] => 195666 [uploaded_by] => 195666 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["289730","282075","281011","279366","278767","278112","277952","276438","274744","274036","273733","270922","274882","272977","289751","276290","270746","289768"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [3] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 289751 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2490 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => 2018-07-01 [author_name] => {"name":"James A. Dunning","title":"Principal, QPC Services LLC"} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 171751 [primary_image_old] => [slider_image_id] => [banner_image] => 0 [title] => Selling Regulatory Compliance [short_title] => [summary] => [slug] => selling-regulatory-compliance [body] => Does the title of this column strike a nerve? Does it seem crass or disrespectful to combine “selling” with “regulatory compliance”? I ask these rhetorical questions because I have found that many regulatory professionals feel this way. I chose the topic of this column rather carefully, but deliberately, not to aggravate potential readers, but to drive a bit of atypical thinking about how best to communicate regulatory requirements and the value of compliance. I want this column to initiate further thought, discussion, and maybe even research about effective communication regarding regulatory compliance.

I have found that most regulatory professionals do not consider themselves salespersons, since many find the act of sales to be foreign or unfamiliar to them. In short, they just don’t think it is their job to sell anything. Here is my counterpoint to this position: We are all either sellers or buyers in today’s business world because important concepts that require action must be sold in order for them to achieve the appropriate level of importance in organizations. Regulatory compliance is not an exception. 

Many, if not most, regulatory specialists believe organizations should drive regulatory compliance because it’s the right thing to do. It is necessary to compete in the medtech industry. While this is the way it should be, it’s not always the case. There are countless companies of all sizes, with products ranging widely in terms of complexity, benefits, and risks, that have struggled with compliance issues. The reasons for these struggles are varied and complicated, but a company’s standpoint on regulatory compliance is a major contributing factor. Regulatory professionals play an important role in helping companies appropriately value compliance. This valuation starts with communication about the importance of regulatory compliance, and a part of this communication is “selling” this value to the organization. 

Regulatory experts would greatly benefit from taking a sales course to become more familiar and competent in selling intangibles within an organization. Some sales training courses that I like are Dale Carnegie and Sandler Training (I have no financial ties to either one). I recommend these two simply because they helped me learn more about the sales process.
The ability to sell is an important skill for regulatory professionals to develop. Here’s why:
Regulatory experts with sales ability can help their organizations better recognize the need to comply with changing regulatory requirements, and better understand the timing and resources required to implement the change. When regulatory professionals have uncommon sales ability, they can better communicate the need to take action and commit the necessary resources for  compliance. 

An additional benefit of regulatory compliance salesmanship is the reduction in frustration within companies regarding this topic. Good sales folk can help organizations “get it” when it comes to compliance.

The medtech industry operates in a dynamic regulatory environment, and fairly rapid rule changes will continue for the foreseeable future. I encourage all regulatory professionals to focus on developing their sales ability because it will make their jobs easier and help organizations better sustain regulatory compliance. 


James A. “Jim” Dunning’s consulting career began in 2001. He has provided quality and regulatory consulting services for various companies ranging from Fortune 500 medical device firms to startups. Dunning’s passion, however, lies with startups and small companies, especially those in regulatory distress. He has amassed significant experience in preparing 510(k) applications, developing complete Quality Management Systems, providing Quality System Training, and advising on quality, business, and leadership issues. Dunning is a senior member of the American Society for Quality (ASQ) and a member of the Regulatory Affairs Professional Society (RAPS). He can be reached at jdunning@qpcservices.com.  [views] => 0 [published] => 1 [status] => 3 [priority] => 6 [publish_date] => 2018-07-26 00:00:17 [updated_at] => 2018-07-25 15:03:13 [last_updated_author] => 195666 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["269091","272977","276290","279735","282682","289791","270746","289768","277734"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) [4] => Content Object ( [className] => Content [contentLinks] => Array ( ) [belongsTo] => [contentIssue] => [id] => 289768 [pageNumber] => [offset] => [totalPages] => [last_query] => [last_sql] => [show_errors] => 1 [databaseServer] => Array ( [key] => master [host] => 172.24.16.232 [user] => rodpub_beta [pass] => MvQQzhse92k58yA [db] => rodpub_beta ) [tableName] => contents [content_type_id] => 2708 [resource_id] => 0 [author_id] => 0 [primary_issue_slug] => [author_name] => {"name":"","title":""} [magazine_id] => 6 [layout_id] => 0 [primary_image] => 171799 [primary_image_old] => [slider_image_id] => 0 [banner_image] => 0 [title] => 10. Baxter International [short_title] => [summary] => [slug] => 10-baxter-international [body] => $10.6 Billion

KEY EXECUTIVES:
José (Joe) E. Almeida, Chairman,
President and CEO
Giuseppe Accogli, Sr. VP and President, Global Businesses
Scott Pleau, Sr. VP, Operations
James (Jay) Saccaro, Exec. VP and CFO
Sumant Ramachandra, M.D., Ph.D., Sr. VP, Chief Science and Technology Officer
Laura Angelini, General Manager, Chronic Renal
Will Boren, General Manager, Advanced Surgery
David Ferguson, Ph.D., General Manager, Medication Delivery
Reaz Rasul, General Manager, Acute Therapies
Scott Luce, General Manager, U.S. Hospital Products
Brik Eyre, Sr. VP and President, Americas
Cristiano Franzi, Sr. VP and President, EMEA
Andrew (Andy) Frye, Sr. VP and President, APAC

NO. OF EMPLOYEES: 47,000

GLOBAL HEADQUARTERS: Deerfield, Ill.

Something was missing.

Dick Stapleton kept looking for the large IV bag that usually housed his cancer treatment, but it wasn’t in sight. It wasn’t in the hands of the nurse approaching him, or with any of the other staff milling about the John Theurer Cancer Center at Hackensack University Medical Center in northeastern New Jersey.

The only equipment he noticed was a medication vial, catheter, syringe, and needle package. There was no IV bag, large or small.

Ben Boyer had a similar experience at Moore’s Cancer Center in San Diego, Calif., shortly after Christmas last year. Like Stapleton, Boyer was puzzled at the sight of an IV bolus containing his wife’s chemotherapy drugs.

‘“Wait—what’s going on?’ I asked, noting the change,” Boyer recounted in a Jan. 8, 2018, blog. “He [the nurse] answered, ‘I have to push this manually. Huge IV bag shortage.’ ‘Because of the Christmas holiday?’ I assumed. ‘No dude,’ he replied. ‘The hurricane in Puerto Rico. Like, all of the IV bags in the country are made in Puerto Rico, and nobody has any left. The factories are still a mess.’”

Such confusion was all too common last fall after Hurricane Maria raked Puerto Rico in September, crippling the island’s production of intravenous (IV) bags and fluids, and exacerbating an existing multi-year product shortage in the United States.

Puerto Rico produces about 44 percent of all IV bags and saline compounds used in U.S. hospitals, with most manufactured in factories owned by global medical products firm Baxter International Inc. Although the company’s three facilities sustained minimal damage in the storm and resumed limited production within a week of the deadly tempest, output was stymied by impassable roads and an agonizingly long recovery process that is still continuing.

Baxter’s Puerto Rican operations are mainly responsible for production of the MINI-BAG and MINI-BAG Plus Container Systems (50 mL and 100 mL small volume parenterals, or SVPs), which are used mostly in hospital pharmacies to compound or administer medication or to help deliver medicine, amino acids, and certain pre-mixed products. Baxter does not manufacture any large IV bags on the 5,320-square-mile island.

To help ease the nationwide bag and saline shortage, the U.S. Food and Drug Administration (FDA) permitted Baxter to temporarily import amino acid medical products from its facilities in Italy and the United Kingdom, and IV bags from factories in Australia, Brazil, Canada, Ireland, and Mexico. In addition, the University of Utah and the American Society of Health-System Pharmacists drafted guidelines for hospitals on the best use of existing supplies; the recommendations included administering medicine orally whenever possible, or through an IV “push” (injecting drugs directly into an IV line).

It took several months for Baxter to regain full power in its Puerto Rican factories and resume pre-hurricane production levels of its small IV bags. In its 2017 annual report, released in late February this year, Baxter heralded an impending return to “normal” inventory levels upon the waning of flu season.

“Baxter’s operations in Puerto Rico were affected by Hurricane Maria in late 2017. Additionally, an aggressive flu season in the U.S. significantly heightened demand for Baxter’s large volume IV solutions...” Baxter Chairman, President, and CEO Jose (Joe) E. Almeida told investors in the report. “Resulting supply issues created difficulties for the customers and patients who depend on us. Disruptions are an inevitable part of doing business. What matters is our ability to react swiftly and maintain our commitments to our stakeholders.”


ANALYST INSIGHTS: Baxter is a different company under the leadership of CEO Joe Almeida than it was two years ago. Watch for aggressive inorganic and organic investments to facilitate growth in their core businesses.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors



Baxter upheld that commitment rather well last year despite the protracted manufacturing interruption and U.S. IV bag shortage. The company expected a $70 million hit to its fourth-quarter sales from the market tumult, but the annual report shows the final three months of 2017 was actually the most profitable period for Baxter. The $2.77 billion the Deerfield, Ill.-based firm generated in Q4 was 2.5 percent higher than its third-quarter sales of $2.7 billion and 12 percent greater than the $2.47 billion yielded in Q1.

“Two years ago at Baxter, we set our sights on achieving sustained top-quartile performance among our healthcare industry peers. We have made great strides since, building on the strength of our portfolio and global footprint while bolstering speed, efficiency, and discipline across our operations,” Almeida said in his letter to stakeholders. “Now we have arrived at a pivotal moment, where operational gains are helping revitalize Baxter’s culture of innovation. We are well-positioned to advance our mission to save and sustain lives while delivering enhanced value for our investors.”

That enhanced value included a 4 percent boost in 2017 sales (to $10.6 billion), a 27 percent increase in adjusted earnings per diluted share ($2.48), and a 240-basis point rise in adjusted operating margin to 16 percent. Moreover, free cash flow was up 35 percent to $1.22 billion compared with 2016, and the company returned roughly $879 million to stockholders last year through $315 million in dividends and $564 million in share repurchases.

Such a bountiful balance sheet was largely driven by Baxter’s three-pronged growth strategy that focuses on portfolio management/research and development (R&D); operational excellence; and capital allocation.

The company boosted R&D last year through research alliances with the Mayo Clinic and Ramot at Tel Aviv University/Tel Aviv Sourasky Medical Center. The latter partnership targets surgical care, while the former—lasting five years—initially centers on kidney disease.

Baxter relied heavily on product introductions and enhancements in 2017 to manage and grow its portfolio. For example, the company tweaked various items for safety or usability (AK 90 hemodialysis system, FLOSEAL Hemostatic Matrix, TISSEEL [Fibrin Sealant], SIGMA SPECTRUM infusion system), and added the enteral ENFit syringe and accessory line to its nutrition care lineup. It also launched a digital tracking solution (DeviceVue) for its Sigma Spectrum Infusion pumps, deployed its next-generation PrisMAX acute care technology in select European markets, and expanded the use of its oXIRIS blood purification set to include the removal of excess cytokines, endotoxins and other inflammatory markers from blood. The label expansion was implemented last fall in more than 30 European countries and certain Mideast and African nations.

Baxter also took steps to ensure future innovation, receiving guidance from the FDA on the regulatory pathway for its new home peritoneal dialysis solution. The system—likely to be submitted as a combination product—produces sterile PD solutions using a home-based water filtration device that integrates with the company’s Amia PD system.

“We continue to increase our investment in new product development, build R&D productivity, and advance the impact of Baxter innovation globally,” Almeida said in the 2017 annual report. “An accelerating pace of high-value innovation is essential to achieving our performance goals.”

Indeed, innovation is key to growth, but there’s more than one path to innovation. Baxter augmented its new product introductions and enhancements last year by finalizing its $625 million deal for global injectable drug firm Claris Injectables Limited, and purchasing Chanhassen, Minn.-based Wound Care Technologies Inc., developer of the DermaClose Continuous Tissue Expander. The device, used for suturing and stapling skin in moderate to large wounds, created a complementary offering within Baxter’s Advanced Surgery business.

Though it occurred in the first quarter of 2017, the Wound Care acquisition did not impact total revenue in Baxter’s Advanced Surgery business last year. Proceeds rose 2.5 percent to $707 million due to higher international sales, but were offset by lower demand for non-core surgical products Actifuse and Peristrips.

A similar counterbalancing act transpired in most of Baxter’s seven business units in 2017, though all segments generated solid profits. Renal Care revenue, for instance, climbed 1.7 percent to $3.48 billion on robust growth of PD patients as well as adoption of Amia PD cyclers in the United States and HomeChoice CLARIA systems overseas but proceeds were impacted by lower international hemodialysis sales.

Baxter lost $45 million in Medication Delivery sales from Hurricane Maria, but still increased revenue in that unit 3.9 percent to $2.69 billion. Executives attributed the increase to select pricing and improved volumes for U.S. IV solutions and higher sales of the company’s IV access administrative sets.

Maria also blew away $15 million in Nutrition revenue, but improved demand, new product launches, and ongoing geographic expansion for the company’s parenteral solutions helped grow sales 2.8 percent to $882 million. Pharmaceuticals suffered the same fate, losing $10 million in sales to Maria, but the loss was more than offset by a $57 million boost from the Claris acquisition as well as higher demand for pre-mixed injectable drugs, and better pricing for fast-acting IV beta blocker BREVIBLOC. Total Pharmaceuticals revenue jumped 9.3 percent to $1.88 billion, according to Baxter’s 2017 annual report.

Strong sales of continuous renal replacement therapy systems boosted Acute Therapies revenue 6.3 percent to $456 million, while higher product volume led to a 1.8 percent rise in Other proceeds to $455 million.

In addition to growing sales through new product innovations, portfolio management, and acquisitions, Baxter also fortified its profit-making prowess last year by changing its geographical reporting segments. The company now breaks down its world map into three regions: Americas (North and South America); EMEA (Europe, Middle East, and Africa); and APAC (Asia-Pacific).
Each of these new reporting regions posted gains in 2017, with the Americas leading the charge at 5.2 percent (to $5.72 billion), followed by APAC (4 percent to $2.11 billion), and EMEA (1.3 percent to $2.73 billion).

“We have arrived at a pivotal moment, where operational gains are helping revitalize Baxter’s culture of innovation,” Almeida said. “We continue to promote simplification and disciplined cost management to ensure every dollar we spend is making the greatest impact for patients and stockholders.” [views] => 0 [published] => 1 [status] => 3 [priority] => 0 [publish_date] => 2018-07-26 00:00:21 [updated_at] => 2018-10-04 10:59:33 [last_updated_author] => 199474 [uploaded_by] => 142087 [user_role_id] => 0 [custom_fields] => [] [custom_fields_old] => [splitcontent] => 1 [content_url] => [related_content_ids] => ["297040","291991","280790","279720","280665","279724","289758","289772","289797","289785","299201","290592","280922","289744","289761","284028","281185","289791"] [is_show_company_name] => [created_at] => 2019-04-09 04:36:23 ) ) [relatedSearches] => Array ( [0] => Taxonomy Object ( [className] => Taxonomy [id] => 64719 [pageNumber] => [offset] => [totalPages] => [last_query] => 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