Medical Device & Diagnostic Industry Magazine | MDDI Article Index

Originally published September 1995

Industry Trends:
Device Companies Try Out the Internet

The Internet - particularly the interactive, graphical part of it known as the World Wide Web - has caught the fancy of virtually every industry, and medical device companies are no exception. How much value, if any, a presence on the Internet will add to their marketing efforts remains an open question. But for now, the prevailing attitude appears to be that the ease and low cost of establishing and maintaining a site on the Web justify the effort.

Some device companies, particularly larger ones with electronic product lines, have leveraged their software expertise and networked customer base to set up their own sites. For Protocol Systems, Inc., a manufacturer of patient monitoring systems in Beaverton, OR, jumping onto the Internet was a natural choice, says director of communications Grant Gibson. "We are a high-tech company, and we interface with a lot of other high-tech companies - buying subassemblies or components from some, selling them to others - and we have a lot of strategic alliances in other high-tech industries. We've found that among these companies, the Internet is viewed as a commonly used medium of communication."

Similarly, Gibson states that his company's informal experimentation on the Internet seems to confirm that a substantial number of health-care professionals use the Net - he cites one estimate of a million clinical users.

Being part of a high-tech industry, however, doesn't necessarily guarantee a high volume of Internet use. Stuart Herskovitz, president of Qosina, an Edgewood, NY-based supplier of IV components to other device companies, is enthusiastic about his company's Web site, but has yet to see a lot of business. "When we got into the Internet, I thought we were way behind the trend, but it appears that E-mail is much more widely used in the computer industry than in the medical device industry."

Herskovitz has also found that company secrecy creates barriers to Internet access in the device industry. "A lot of the bigger companies are on mainframes and have really restricted the ability of their employees to go outside of the company on-line." But the increasing popularity and usefulness of the Internet will eventually overcome these hurdles, he says. "Either this situation in these companies will change or the employees will go on-line at home - which, with the growth of home computers, seems increasingly likely."

Companies that don't have the resources to create a solo Web site like those of Protocol Systems and Qosina have a growing number of vendors to help them. A particularly popular approach is the "virtual mall" concept, single sites where many device companies can establish their own presences, or "storefronts," typically with the guidance of the "mall" owner.

Among the first providers of Internet mall space devoted to medical products is the Lancet OnLine Corp. (Cambridge, MA). The company's Web site, called Avicenna, targets health-care professionals as its users, and device companies, among others, as its tenants. Included in the information services offered is a "virtual trade show," where medical device companies can highlight the products and services they provide to the clinical community.

Another early provider of mall space is Compliance Solutions, Inc. (Durango, CO), sponsor of MEDMarket, which president Thomas Slater prefers to describe as a "virtual industrial park."

Both Avicenna and MEDMarket offer their tenants a proprietary space in which to provide a wide range of services to device company customers, including basic product information, demonstration software that can be downloaded, and ongoing technical support. Neither provider, however, suggests that product purchases are likely to be made via the Internet any time soon.

According to Anne Marie Biernacki, Lancet OnLine's director of product design, "the purchase of medical products over the Internet is not a realistic model now. Purchases are generally made by committee, and after a great deal of investigation." But although the Internet isn't the medium of purchase, she says, "a presence on the Web can help influence the purchasing decision by providing detailed, up-to-the-minute information on a company's products."

MEDMarket's Slater adds that the Internet can also significantly expand markets, particularly for small companies. The Web gives such firms cost-effective international access, he says. "A small company won't be able to advertise in New Zealand, for instance, but by being on the Web, it may give a distributor in New Zealand the opportunity to find it."

The costs of establishing a presence in an Internet mall vary among providers and with the ambitiousness of the presentation desired. But in this early stage of Web development, costs are particularly low. MEDMarket, for instance, "has no set pricing structure for tenants yet," says Slater. "We're simply working with companies to see what works. Right now we're offering trial periods of up to six months for a few hundred dollars."

Indeed, cost is a key distinction of the Internet, according to Matthew Bellin, founder of Medical Internet Communications, based in Apple Valley, MN. "A trade show booth may cost in all $30,000, a magazine advertisement $5000, but developing and maintaining a Web site can cost "next to nothing." Bellin's standard fees for his site, The Internet Medical Products Guide, are split in half between Web page development and publication costs. He charges $150 to write the first page and $75 for each additional page, and a $250 annual publication fee for the first page and $50 for each additional page.

For all the promise of the Internet, there is still considerable uncertainty among device companies about its usefulness. "I sat in a meeting with half a dozen executives of a medical device company, presenting my services to them," says Bellin, "telling them how much they can do for a thousand dollars. I could tell that on one side of the table people were thinking they're not sure they want to spend a thousand dollars because they're not sure they'll get a return. On the other side, they were leaping ahead to installing their own Internet server and spending $100,000 to develop a big, extensive Web presence. Device companies are interested, but they're also confused."

- John Bethune

The following Internet addresses were current as of June 1995. Changes occur frequently on the Internet, so you may not be able to connect with them all. Phone numbers are included for Web site providers.

(This article originally appeared in the September, 1995, issue of Medical Device & Diagnostic Industry. © 1995 Canon Communications, Inc. All rights reserved.)