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Covidien Emerges As Medtech Trendsetter With Wearables Acquisition


Posted in Mobile Health by Arundhati Parmar on May 7, 2014

In a surprising move, Covidien has quietly bought wearables technology firm Zephyr Technology thereby emerging as a trendsetter in the medtech arena.


Covidien has quietly bought a wearables company - Annapolis, Maryland-based Zephyr Technology - as first reported by MobiHealthNews.

It appears to be a small acquisition - the Dublin, Ireland-based company is not releasing transaction details but in an quarterly earnings filing revealed that it has acquired three companies in the first six months of fiscal 2014 for a grand total of $128 million.

This marks Covidien’s - and presumably any traditional medtech firm’s - first foray into wearables, undoubtedly making Covidien a trendsetter given that wearables is arguably one of the hottest trends in the tech world with rumors of the likes of Apple building a wearable device.

Daniel Levine, director of the Avant-Guide Institue in New York and a close watcher of social and marketing trends, noted that wearables is an undeniable consumer trend, and this acquisition by Covidien is very much on the cutting edge. 

"Many people in the trends arena are talking about at 2014 as finally being the year that wearables hit their tipping point," says Daniel Levine, director of the Avant Guide Institute, which closely watches social and consumer trends. "Leading the charge for wearable computing has really been two industries - one is sports and the other is medicine." 

Similar acquisitions by device makers and diagnostics companies might be in the offing given how the medtech sector is aimig to boost its services capabilities and play across the healthcare continuum.

"A number of wearables with clinical applications will now become good acquisition targets," said Keith Liu, VP of Klick Labs,  the digital innovation lab at digital agency Klick Health in Ontario.

But the deal leads to several questions: Can this acquisition truly allow Covidien the tools to address some of today’s healthcare challenges - namely keeping patients healthy when they leave the hospital? Is Covidien hoping to have a direct relationship with consumers by jumping on to the wearables bandwagon? Where does the acquisition fit inside the company's portfolio of products.

A Covidien spokeswoman - Rhonda Luniak - declined to provide too many details about its venture into the wearables space, but in very broad terms noted where Zephyr fits:

Integrating Zephyr into [Covidien's] Respiratory and Monitoring Solutions business will allow us to broaden our monitoring portfolio across the continuum of care while building our wireless and connectivity capabilities.

Combining our business and complementary product portfolios, we can take a leadership position in the care of patients as they transition from hospital to other care settings by providing solutions at each phase in the care continuum. Covidien will be well positioned to offer comprehensive solutions that could help with some of the most pressing issues in skilled nursing and long-term care settings—such as early warning systems, alarm fatigue, pressure ulcers and fall prevention. It also closes the loop of care on currently unmonitored patients, leading to increased safety, earlier discharge, workforce efficiencies and reduced readmissions.

An expert in the medical device industry said that Covidien's acquisition underscores the importance of remote monitoring in the care of patients amid a changing healthcare landscape.

"I think we are emerging into a world that is moving toward remote care and remote monitoring where technologies like this will be part of the enabling system," said Bob Hickey, partner, Newport Board Group, a strategic consulting and business advisory firm. "A mosaic is developing. Pieces of different technology are going to be integrated into the care delivery of patients." 

Founded in 2003, Zephyr is one of the earliest companies that began making wearables to enable the so-called physical status monitoring. The company makes different products including the BioHarness chest straps and BioPatch skin patches able to track heart rate, breathing rate, and posture among other things that work with companion software.

In the hospital setting, ZephyrLife paired with BioPatch device can allow real-time updates of a patient's heart rate, respiration rate, ECG and positional and activity information on a central monitoring station. When a patient moves from a hospital to a long-term care facility or skilled nursing facility and later the home, doctors can still be aware of the patient's health status through updates on a web-based portal as can the patient. 

"I am not an employee of Covidien and I can't say this is why Covidien bought the company, but I think that monitoring patients when they travel domestically or internationally for potential complications post surgery is how this acquisition makes sense to me " said Dr. Kevin Huffman, medical director with American Bariatric Consultants who is often hired by Covidien to train primary care physicians on how to care for patients who have undergone bariatric surgery. 

In other words, Zephyr's products could fit nicely as an add-on with Covidien's surgical devices unit, one of its core businesses.

But Zephyr has a sports fitness business and a consumer business as well. It sells its heart rate monitors through online retailer Amazon.com as well as its own website. Elite athletes and even CNN's Sanjay Gupta have trained on the system to get "medical grade" knowledge about their bodies to know exactly which area to improve upon.

If those consumer and sports businesses are allowed to continue, and once the technology is validated in a hospital setting, Covidien could conceivably become like a Johnson & Johnson that has a strong connection with the average consumer, Hickey of Newport Group declared.

Ultimately, however, the true value of the acquisition is in the way it shows a glimpse of a tantalizing future in healthcare powered by remote monitoring.

"You and I are going to be living in a world where cloud-based instantaneous access to our complete medical profile will be available to us anywhere we go even if we are on a safari in Tanzania," Hickey said. 

 [Photo Credit: iStockphoto.com user Cimmerian]

-- By Arundhati Parmar, Senior Editor, MD+DI
arundhati.parmar@ubm.com

 


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Great Article!

Are we approaching a tipping point w/wearables?