Private, with a Passion

This year's featured leaders illustrate medtech's ability to adapt and thrive in an ever-changing business environment.

Steve Halasey

September 1, 2007

39 Min Read
Private, with a Passion


For many people, no personal business scenario would be better than to start with a dream of contributing something good to the world, making that contribution in fact, and then growing the business into an industry powerhouse—all without ever losing that motivating purpose of serving people in need. Kem Hawkins, president of Cook Group Inc. (Bloomington, IN), will attest that when a company has such a history, it will have loyal, dedicated employees and no shortage of ideas for new products and technologies.

Cook Group is the largest private medical device manufacturer in the world, and its many business arms are all strongly oriented toward innovation. Management is more interested in bringing advanced tools to physicians and relief to medical patients than profits to shareholders. In this sense, Hawkins may have his dream job.

In this interview with MX editor-in-chief Steve Halasey, Hawkins discusses the fabled origins of the Cook enterprise and describes how a global company with numerous employees and divisions can still be nimble and responsive to market needs. He illuminates a culture of innovation to which outsiders are eager to contribute, a complex business organization whose elements share resources and speak with a common voice, and a growing focus on medical devices customized to the individual patient.

Cook Group president Kem Hawkins (center) and six Cook team members examine the company's Zenith AAA endograft. Cook employees pictured (at left) are Rick Maxwell, cafeteria group leader; Wanda Elliott, quality control supervisor; Diana Wu, Asia sales logistics manager; and (to the right of Hawkins) Mark Hiatt, engineering manager; Andy Hoffa, engineering manager; and Natalie Mojica, AAA group leader.(click to enlarge)

MX: It can be a little difficult for people outside of the Cook Group, or Cook Inc., to understand the relationships among all of its various entities. How do the main parts of Cook fall together, and where is Cook Medical in all of that?

Kem Hawkins: It'd probably be good if I go all the way back to the beginning, 1963. That was when the company was first organized as Cook Incorporated. Cook Inc. is still the biggest of the locomotives. We've simply added on other locomotives and cars that have various purposes.

At that time we had very few products. Bill Cook was shaping catheter tubing and wire guides and a few other devices. What he found over time was that it wasn't just the radiologists who were interested in interventional technology. We found applications because a physician—say, a urologist—would talk to a radiologist and then come to us with a suggestion: "If you could make this tube 20 centimeters shorter, or if you could make it just a little bit smaller or tapered, this would work for a ureteral stent." That's an example.

So, out of that interchange between the disciplines—and with a few champions—we were able to spin off companies that were very specifically oriented toward particular disciplines. That's how Cook Urological was born. Later on came Cook Critical Care, which we started because the same type of catheters could be used for central venous catheters and arterial lines. And then, of course, we branched into gastroenterology. All we had to do was make the catheters a lot longer.

Every time we did something like that, we took people within the organization who were interested in serving that discipline. And then we gave them the opportunity to grow. So, over time we have come to serve about 42 different medical disciplines, and we do that through eight strategic business units (SBUs). Those are operated across our medical manufacturing companies and distributors around the world.

It may seem rather complicated, but we've tried to organize our company into one Cook where we have a shared vision. We share technology that will benefit any and all of the disciplines that we serve. So, Cook has grown over time to about 45 different companies worldwide now, including some that are non-medical businesses. The number changes because we're adding companies all the time.

And it's not just medical. The medical part is confined pretty much to those 15 companies, but we also have subsidiaries that are set up in various countries—Cook Japan, Cook Singapore, Cook Malaysia—among others. Those add up to make the 45.

Among the various international companies that are medical and the eight strategic business units, which is the umbrella? Do the global companies fall within the business units, or is it the other way around?

Cook Group is the umbrella; everything reports to Cook Group eventually.

Cook Medical is the housing that we use for the eight SBUs, and Cook Medical is how we describe ourselves to the world. It's a way of addressing those 42 different medical disciplines.

Some manufacturing companies provide either raw materials or products like stainless-steel tubing. For example, we have Sabin Corp., which produces most of our plastics, whether it's through injection molding, extrusion, or some other process. We try to control anything that is integral to our businesses so we don't end up held hostage as a result of somebody buying one of our supplier companies. If that were to happen, we may find ourselves in the position of not having the wherewithal to move forward with the technology.

So any one of those manufacturing companies may produce products for a number of different business units in several different countries?

Yes. For example, we have Cook Australia; they manufacture primarily in vitro fertilization (IVF) products and some of the custom abdominal aortic aneurysm (AAA) products that we do. We have Cook Ireland, which primarily manufactures gastroenterology and urology products. And we have William Cook Europe, in Denmark, that is manufacturing radiology-based products and some critical-care-based products.

We also have Cook Biotech, which is working with the substrate of the acellular collagen matrix, the material we call Surgisis Biodesign.

At Cook Inc., we primarily manufacture products for radiology that are sold in North America, South America, Europe, and other parts of Asia. We also manufacture products for critical care needs and the disciplines they serve. We also manufacture for surgical, as well as the standard AAA endografts, for the aortic intervention SBU.

So, there's Cook Group, there's the companies that are manufacturing for the eight SBUs, and there's Cook Medical, which is essentially the brand name by which our customers know us. I don't know if that makes any sense to an outsider, but, boy, it sure works here.

Is it the case that, on an executive level, each of the SBUs has a distinct global leader?

That's exactly right, and they're responsible for global sales and marketing so that our message will be uniform throughout the world and not waylaid by any specific country. Now obviously, a company wants to have people in Italy that know Italy and speak Italian. But it doesn't want to introduce a product that benefits all mankind and then have a certain country or distributor decide to deviate from what everyone else in the world is doing.

When we speak through the global leaders, we speak with one voice, and we make sure that our company's direction is clear and well delineated. Even though we may make special allowances in individual countries, the company's overall direction still has to be considered.

Big but Agile

When a global leader is following a particular product line or medical sector worldwide, isn't the task awfully complex?

Well, they're not doing it in a vacuum. We have people in Europe, we have people in Asia, and we have people in North America and South America with this line of responsibility who have detailed knowledge of how best to approach those particular marketplaces. They understand the reimbursement and the regulatory environments and other critical factors of their particular markets.

While the global leader has to be knowledgeable and needs to have a lot of experience in particular areas—or have a lot of skills that will enable them to lead on a global scale—they're not the only ones out there.

We don't want Cook to be perceived 106 different ways in 106 different countries. We don't want 106 different interpretations of what products we're going to sell. We want to be able to get the best product to the customer—irrespective of where it lands on the globe—and to the patients that it will ultimately benefit. We're serious about that.

And because we are serious, we don't want to compromise because, say, a distributor started with a polycatheter 30 years ago. Chances are, that distributor doesn't want to cannibalize its business by bringing in a newer product. Such a transition takes work.

We will drive changes like that because we want to make sure that, whatever is used on that patient—our patient—they will have the same opportunities that a patient would have in the United States or any other place. Medical knowledge is not just a product, but also an expression of that one corporate voice.

With Cook's significant commitment to working with the physician community and establishing the standard of care, how do you handle the complexity of interacting with the physician community on a global basis, when local standards of care are not those set by the industrialized world or the United States?

It's probably best for me to give an example that is indicative of how we're organized in that area.

When we approached the market of abdominal aortic aneurysm treatment back in 1992 and 1993, we were working with several doctors in the United States. There was also work going on in our Australian plant, and there was work going on in Europe. We knew everybody was working on it, but Cook wasn't as coordinated back then as we are now. Eventually, though, we brought every single physician we were working with together in one room and said to them, "Let's do this together. But let's make sure that we are putting the best technology and the best ideas into the product, as opposed to coming up with three products for three different continents."

And that's exactly what we've done. From that beginning, we've expanded that group of doctors, which is called our endoluminary group. It's an ever-growing global group of physicians that looks at the problems surrounding intravascular imaging and intravascular therapies. They discuss how we can improve our products, and how we can manage international regulatory issues to do so on a global scale. These physicians are creative, passionate thought leaders that we work with in order to be able to constantly improve the technology we're bringing to patients.

The process doesn't always require that level of organization, however. Sometimes it's just one physician. For example, Dr. Pat Ciaglia in Utica, NY, came up with an idea for a percutaneous dilatational tracheostomy device. That is a story worth telling.

Back in 1988 or 1989, when I was in charge of Cook's critical care SBU, I got a call from one of our reps, who told me I needed to take a look at an intriguing idea that a physician he had met had developed. So I went out to Utica.

Pat Ciaglia, who is now deceased, had gone by an operating room (OR) and seen a nephrostomy being done—a percutaneous, dilatational nephrostomy, in which the surgeons use very large dilators. He went into the OR and asked if he could take the dilators out of the trash. Then he cleaned them up, took all the parts home, and, using his stove, began to shape them into a tool he thought would be appropriate for performing a dilatational tracheostomy, rather than the usual cut-down for a tracheostomy.

Then he put the parts together, went down to the morgue, got all the necessary approvals, and performed the world's first percutaneous dilatational tracheostomy on a cadaver.

Those are the origins of a global product that's now number one in the world. About 60% of all tracheostomies today are done percutaneously. Instead of doing a full cut-down—what's known as a flap—and having all the problems that go with that, a physician simply goes in with a needle and a wire. After taking the needle out, the doctor serially dilates up and then puts in a tube. It's almost bloodless, and it's a beautiful procedure.

Developing that kind of innovation doesn't require the coordination of a group of endoluminaries the same way the complexity of an AAA device did. There are multiple levels of products being brought to market. The percutaneous dilatational tracheostomy example represents a simpler level of innovation, and the endovascular aortic repair of the AAA represents a more-complex product development process.

Cook's many international units, with manufacturing for an entire product line perhaps being done in one country and the products then globally distributed, presumably involve quite a complex supply chain, and a significant logistical challenge as well. Can you describe those complexities from your point of view? How does the company manage them?

When you grow up within any enterprise, what seems complicated from the outside is something to which you yourself have naturally adapted. We may be selling 25,000 different products around the world, but we didn't start out selling that many. We started with one product, and then two; eventually we got to 200. When the old systems can't manage things any more, we develop better systems. Today that may mean new computers or software, but the same principles applied in the pre-computer era. Once a new system was developed, quality assurance documents were developed around the better system.

A company might run up against a barrier when it reaches 500 products. Again, things can't be done the same way any longer. A company just needs to keep adapting as it grows.

The raw materials Cook employs are used across many product lines. We may have 300 products that use polyethylene tubing, all perhaps from the same extrusion. It may be cut in different lengths; it may be flared differently; it may be attached to other products differently. But there are a lot of shared raw materials and subassemblies. That should take away some of the appearance of a very complicated operation.

We certainly have state-of-the-art machinery, just as any other company would, but we have a lot of employees that are handcrafting products under very stringent and highly regulated specifications. There are many quality control checks along the way.

Cook's manufacturing arrangement puts the company in a very good position. If a product needs to change, we can do it within an hour. As soon as we get our specifications up and are managing it responsibly within our regulatory obligations, we change. We don't have to tear down a machine, retrofit it, and spend six months planning for it. In most cases, we can adapt to any change in the marketplace very quickly.

If a facility in Australia is producing something that may be used as a component elsewhere, how do the facilities communicate with one another? Is Cook using Internet-based design systems and manufacturing systems?

We do have Web-based systems that enable us to communicate through highly protected systems. We can do that in the regulatory function, we can do it within our engineering areas, and we can do it in operations. Of course, we're not above still using the phone, and for a lot of things we have corporate jets that take people back and forth to Europe, etc. We try to use, as all companies do, every available type of communication tool.

Cook Medical is commonly cited as the largest private medical device manufacturer, with more than $1 billion in revenue. Where do the company as a whole and its various units stand relative to the public companies in the sector?

There are a handful of public companies that are bigger than we are—Johnson & Johnson and Medtronic come to mind. And several medical device companies are similar in size, for example, Bard. As far as companies registered with FDA are concerned, we're in the top 1% in terms of size. As a general rule, we are number one, two, or three in virtually every marketplace in which we choose to participate.

Now, if we're just getting started with a new technology—we've got a new cardiology unit starting up, for example—then obviously we're well down the food chain there. But we have technologies in cardiology that we believe will eventually make us competitive in that market.

How are Cook's employees distributed around the world?

In the United States, we're running at about 4000 people. In Europe, we now have about 1500. And we have close to 400 employees in Australia in manufacturing. We have salespeople located virtually everywhere, including about 70 salespeople in Canada. We also have people in Japan, in other parts of Asia, and all throughout Europe—not just salespeople, either, but in management, marketing and in other disciplines. In all, it adds up to about 7000 employees.

Dividing Lines

How have the eight strategic business units emerged and changed shape over the years?

Cook Cardiology, which I just mentioned, provides a perfect example of how our business units emerge. In general, a company has to have a platform of technologies that is going to provide value. Today, most cardiologists are using our introducers for placement of other companies' stents. Our introducers are used to position stents in specific vessels, whether carotids, renals, or others. So cardiologists and their physicians think of Cook in connection with products that they're using on a regular basis, even though it may not be a drug-eluting stent for coronary applications.

In addition, we've licensed technology that's coming out of AVI BioPharma. That company is working specifically on a gene therapy agent, to be able to treat restenosis in a manner that is very different from that of paclitaxel or sirolimus.

We believe the new approach deserves a very hard look, so we license that technology exclusively. There are studies going on in Germany right now, and more studies are planned. We're very hopeful that this technology will enable us to bring value to that discipline within a few years.

Does this genetic therapy not rely on the mechanism of a stent for delivery?

Technically, yes. The stent and the gene therapy agent are adjunctive.

A physician can put a bare stent in and then introduce a specific gene agent that will shut off ischemic expression. In other words, it will prevent any type of restenosis, or any type of proliferation of smooth muscle cells. It will stop that sequence from happening and allow total endotheliazation in an incredibly short time.

So there is no need to worry about polymers—and we've all heard about the problems with polymers in drug-eluting stents.

Was the addition of the cardiology unit the main reason for restructuring all of the previous seven business units into eight new ones?

No. In the case of the cardiology unit, we had acquired a new, potentially significant technology in a market in which we already had a presence, and we decided the area deserved additional investment and focused attention.

The only way to bring focus to a business unit is to put people who are experts and have a passion to serve the discipline in key positions. So we have people who really enjoy the cardiology challenge in that SBU. They're very knowledgeable, and they're totally immersed in it. They are what we call the champions. The impetus does not come from my office; it comes from the people who are working on and trying to bring this technology to fruition, so long as it's worthwhile. If they discover the endeavor is not worthwhile, fine—we'll go find something that is.

People have certain skill sets and certain passions. Executives must try to match these skills and passions with the area where they're going to have the greatest positive impact on the business. To develop a strategic business unit, you have to have the technology foundation but also the people in place to champion it.

How do the new units rank in terms of size?

Right now, the radiology unit—what we call the peripheral intervention SBU—is number one in size. Number two is aortic intervention, and number three would be the endoscopy unit. The fourth is urology, the fifth is critical care, the sixth is surgery, and the seventh is women's health. The latest and smallest of the business units is the new start-up, cardiology.

The women's health unit has only existed for a little over a year. The unit handles a combination of IVF and OBGYN products. Since they're primarily directed at women, we wanted to approach the products a little differently. When you get right down to the cellular level, women may respond differently to drugs than men do, and differently with respect to anesthetics. Because their blood vessels are a different size, various factors need to be taken into consideration in product development.

The differences aren't between just women and men. Diversity also affects product design. It's not as simple as neonates and pediatrics and adults. It's also a matter of gender, ethnic background, and many other considerations. With the women's health SBU, we're trying to make sure that women's health issues get the same consideration as men's health issues.

You'd like to see all of the units continue to grow, of course, but do you foresee this ranking changing significantly as, for instance, the women's health or cardiology units begin to take off?

I hate to say this, but I don't care.

What we really want to do is be of value to physicians and patients in all the areas. Wherever the technology leads us, and wherever the technology provides an advantage over everything else out there and we have the data to support it, that's where we want to see our products. It's important that we have data that truly support what we say to physicians: that our product can and will make a difference if they use it on their patients.

What I don't want is our people spending time trying to convince someone that it is more important to buy a me-too technology from Cook than from someone else.

So to return to the question: Do I have a favorite business unit? No. Do I care which unit is at number one or number two? No. Do I want them all to take full advantage of the opportunities that they have? Absolutely.

The critical care unit is sitting on an absolutely spectacular technology with its Spectrum product line to reduce catheter-related bloodstream infections. Spectrum technology involves the combination of rifampin and minocycline, two drugs that are synergistic. The technology was the subject of a lead article in the New England Journal of Medicine. There are about 140 different articles now supporting that technology for reducing death and morbidity due to catheter-related infection within intensive-care units. The Institute for Healthcare Improvement's previous 100,000 Lives campaign—designed to reduce incidents of medical harm in U.S. hospitals—has evolved into the new 5 Million Lives campaign. In line with efforts like this, Spectrum technology is playing a huge role in increasing patient safety, and it will continue to play one going forward.

So the critical care business unit is poised to grow dramatically. Such growth would be a result of bringing value to the patients, to the hospitals, and to the physicians, and Cook would be able to drive these benefits throughout the world.

If critical care overtakes endoscopy in terms of unit size, super. But it's more important to me that the technology—be it aortic interventional technology or applications for dealing with biliary obstructions in gastroenterology—delivers advantages.

Every SBU has its niche and its technologies. We want to make sure that we bring what's right to the patients and for the right reasons. If we do that, everything else will take care of itself.

For 44 years, we have grown every single year. And while I'm steward of this office, I don't want to see that trend change.

What does Cook Medical's strategic planning process look like across the eight business units? How do you and your fellow executives sort out which projects you're going to fund?

It's not very complicated. We all work for a family that has reinvested in this business for 44 years. The Cooks have allowed all of the profits to be reinvested, so we've never had a strategic business unit come to us with a technology that we've turned down because of money. And we don't go out and borrow funds either.

If any SBU comes to the executive team and tells us that a project is going to cost $5 million or $10 million, if it's worth doing, we will give it the funding it needs. Our executives have great latitude in making those decisions, and they're held accountable for them.

We're not going to hit on every project. For example, as much as we hope gene therapy is going to prove out—and we have great evidence to suggest that it will—it's not a sure thing.

Typically, we have chosen not to buy companies. We have acquired companies in the past, but it's not our standard practice. We try to invent from within, we try to develop competencies from within, and we try to make sure that, as a company—a very large company—we do not give up that entrepreneurial spirit that was hatched 44 years ago.

That's difficult when a company grows to around 7000 people and becomes as diverse as Cook. It can be difficult to make sure that institutional knowledge remains—that people who have been with the company for more than 30 or 40 years are important. We love those people—those are the people who got us here. Those are the people with institutional knowledge who are going to teach the next generation.

Our company has a responsibility to promote the Hippocratic Oath as much as a physician by trying to provide products that are going to do no harm. And as long as our employees are willing to learn, and realize that we're in this for a purpose that's very special, ultimately, we'll all be able to sleep well at night.

A report from last November said that what formerly was called Cook's diagnostic and interventional unit had 175 active product-development projects under way. Is that large number typical for all of the SBUs?

That is a large number—and not all 175 projects make it. And not all of those that do make it do so within the same time frame. Some of them will take 10 years, some will take five years, and some will take five months.

New products and product enhancements are always coming out in a steady stream. But not every SBU is going to support 175 projects at a given time. Urology probably has about 60 ongoing projects, but they've likely focused a significant amount of time, effort, energy, and resources into 10 in order to be able to bring those to fruition.

Private Life

What benefits does Cook's private ownership afford the company and its technologies? Are there drawbacks?

I've never worked for a public company, so my perspective is limited in that way. But I can say that, when I drive in to work in the morning, the only thing I'm thinking about is how we're going to best serve patients. I think my counterparts are very concerned with how they're going to serve the shareholders.

How does the fact that the company is privately held change the shape of your responsibilities as an executive? For instance, how often are you required to report on the company's progress, and how is that reporting handled?

Bill Cook's office is about 20 feet from mine. We have lunch together. He comes in at 4:30, 5 o'clock in the morning, and I'm in here. We sit down and have coffee together before we go through our workouts.

At the end of the day, he walks into my office, and we talk about a lot of different things. Or he'll come into a meeting and sit down. When he's out on his boat for a week or two, it's my job to keep him informed.

I don't think there is another president in the world that has had the direction I've been given. Twice Bill Cook said to me—I don't know if he thought I wasn't listening the first time or might not take him seriously, but this is a real quote—"Kem, listen, this isn't about money. Do the right thing by the patient all the time." Now, to paraphrase him, what he was saying was that he didn't care if I had to recall every Cook product there was; if there was a problem, I should do the right thing by the patient. I shouldn't ever—ever—concern myself with the financial implications of a decision that could affect the health of our patients.

I don't think that's the approach other companies take, and I don't think that's the direction their executives are given. I've never lived in the public world where stock ownership, shareholders, quarterly earnings, and similar considerations play a role. I am always amazed to the extent that public companies have to consider their investment schedules and their financial decision making when issuing quarterly reports. The ramifications of not performing in the public sector are so severe. A company can lose $1 billion worth of capital in an eyewink.

Cook never worries about a quarterly or a six-month statement. The only thing that matters is that the decisions we make are appropriate. If you truly need that machine that costs $600,000, given the company's current situation, you need to make that purchase. The need doesn't go away. You have to consider the cost of not making the purchase. If you're going to postpone it, what does that cost you in the long run? What does that cost the patient? What is the cost in terms of efficiency in meeting a given timeline?

We don't think in terms of what our profit is today. We can evaluate whether we are growing on the top line or on the bottom line. But we understand that, on the bottom line, one year may not be as good as the year before because we've made a heavier investment and we're taking more risk.

Cook can do that because I serve a shareholder who's more interested in making sure we do things in a timely manner for the right reasons than in how it's going to look on a quarterly report.

Is there still some sort of formal process you go through--an annual report, or an annual meeting, or an annual evaluation of where the company stands?

Yes, we get a financial view of the company on a regular basis. At the end of every month, every company and every SBU produces a full financial report and we produce consolidated financial reports to the entire company. So we have financial reporting similar to that of a public company.

However, decision making is never governed by an objective of reaching some figure at the end of that month. If we think we have to make an investment commensurate with a company need, we don't worry about whether the expenditure should fall in the next quarter, the next month, or at any other particular time. The reporting tells us where we stand, but it doesn't drive our decision-making.

A few years ago, Guidant, before it was purchased, was interested in acquiring Cook, but that transaction fell through. What was Cook's mindset when that transaction was evaluated? How has that experience shaped Cook's current thinking about whether becoming a publicly held company or being acquired by another company would ever be a good idea?

That proposed deal surprised a lot of us in the company. Guidant put an incredible offer in front of Bill Cook. There were things about that contract that were very beneficial to us, and not necessarily financially.

Guidant was primarily interested in AAA, and with that, paclitaxel. We set a benchmark for a joint study, but it didn't work out. We didn't meet the desired benchmark when we put paclitaxel on Guidant's stent platform.

Now, paclitaxel on Cook's own stent platform, as shown in two studies prior to that, was very effective. But Guidant thought it had a better architecture—that if it put the same dosage of paclitaxel on its stent, the resulting product would yield better results. That did not turn out to be true. So the deal fell through, they paid us about $50 million for the fall-through, and we went on our way.

Can I say categorically that the Cook family would never consider selling the company? Of course not. However, I don't believe that there is any inclination to sell the company. The Cook family is very passionate about trying to make sure that the company survives another 44 years and upholds the same tenets of ethical behavior and purpose that we've followed for the previous 44.

All indications are that we will not consider selling. Offers do come in frequently from a lot of different places in the world. I don't want to dismiss them as inconsequential; we're appreciative that people find value in our company.

Converging Worlds, Customized Solutions

Cook has been exploring opportunities in what's called personalized medicine, or the customization of medical devices. In what areas are the greatest advances being made?

The one that stands out is what we're doing with a little company called Cook MyoSite Inc. MyoSite sprang from work that was done at the University of Pittsburgh, and its president is Carl Cook.

MyoSite is focused on developing technology to treat urinary incontinence and other diseases. Essentially, the process begins by taking cells from an individual patient—for example, an incontinent woman. We'll put a needle into the patient and remove a biopsy. We send the cooled specimen to a lab in Pittsburgh that separates out specific cells. A lot of people would call them stem cells, but they're really not. But they're similar to stem cells.

Those cells are then put into a special media where they are grown to a few million cells. Then they're reinjected into the patient. In this example, they're localized at the urinary sphincter. They enable that sphincter to be regenerated to its original functioning state.

We have several dosing studies going on at the moment for this technology.

This example and the AVI BioPharma example in the new cardiology SBU indicate that Cook is at the forefront of today's convergence of devices, pharma, biotech, gene therapy, and cell technology. Where do you think that field is headed generally, and what kinds of issues do you think it is going to run into as companies develop products that have to be approved and regulated?

The complexity of the regulatory environment in this area is still developing. When a system is trying to regulate devices that don't even exist yet, it creates a lot of questions, and those questions create confusion. The whole world is groping for answers as to how we are going to deal with the ethics of this technology, let alone how we are going to make sure that products based on it are safe and efficacious.

Cook Medical is trying to approach this in a way that takes some of those questions away. For example, when we use Surgisis Biodesign technology, the materials are coming from a pig, not from a cadaver that may have been infected with HIV or other human transmittable diseases. It's an acellular technology.

In the case of our gene therapy agent, well-controlled clinical studies will be required to demonstrate the safety and effectiveness of this technology. These studies will require enormous resources and time to complete all the required follow-ups.

Regarding the convergence of all those technologies, right now Cook is a medical device company, clearly. The drug-eluting stents (DES) are combination products because they incorporate a drug on a device. Cook is currently conducting a DES trial looking at the effect of the technology on blockages of the superficial femoral artery, or SFA. If this combination product proves to be successful for patients suffering with serious peripheral arterial disease of the vessel in the leg, it could really be an important advancement in the treatment of this debilitating vascular problem.

We don't know what the future's going to look like. No one does. But we have to position ourselves so that, when certain technologies come along, we are able to put them in place to solve problems across all of the SBUs.

The technologies associated with our Surgisis Biodesign material are being used throughout the field of surgery. Surgeons of many disciplines are using it—general surgeons, vascular surgeons, plastic surgeons, neurosurgeons, trauma surgeons, and reconstructive surgeons. It's being used in a Cook Women's Health product for pelvic floor reconstruction. In the urology SBU, it's being used as a bladder sling. It's being evaluated for esophageal repair during endoscopic surgeries. Conjoined twins have been separated with the help of Surgisis Biodesign technology.

A technology such as this can be integrated into all of the SBUs for further development. Our goal is to use the current Surgisis Biodesign technology wherever it can be of benefit while we continue to develop it in other forms, such as emulsification, a sheet, or a sphere. And these same goals also apply to our gene therapy agent.

Regarding what Cook is doing at MyoSite, we are listening to the physicians to gain an understanding of what solutions they need to treat their patients. Cook doesn't come up with ideas; we don't have think tanks. We have physicians bring us clinical problems that need solutions. The physician says, "I have a problem. And if we can marry your technology to this possible solution, we may be able to help many patients." We try to keep it that simple.

Is Cook working directly with FDA—and not only with the device center, but with other centers—to figure out how some of these things being developed might be regulated?

We are working with many different regulatory groups around the world, trying to promote harmonization wherever possible. That's a very difficult task, but Cook is very much a proponent of harmonization. We favor transparency not just in registering studies but also to make sure the data are published and go through rigorous review. We want all data to reach that level of transparency.

Partnerships for the Future

What is Cook's general attitude toward partnering with other companies? How does it seek out partners and handle them? And what kinds of agreements do you try to shape for the benefit of the products you're putting forward?

I'll start by talking about intellectual property. We cross-license, and we have to. With AAA, there are probably 1500 different patents out there. It's a minefield. If we're going to come to market, we have to be able to work together in a way that gets our products out there. And the last thing we want is to be bogged down in litigation all the time. It becomes a distraction.

Of course, at some point you have to protect your intellectual property. There are times to do that. But it's always best to find ways of working with the owner of the intellectual property that may be blocking your technology from getting to market.

Again, ultimately you have to fight to do the right thing by the patient. You may have the base technology, but someone else may have built a roadblock that doesn't permit you to optimize and fully exploit that technology. So you have to deal with that roadblock. You've got to try to find a way to cross-license, whether it means trading, paying a royalty, or paying an up-front fee.

Obviously, companies work with us, and we work with other companies to try to provide opportunities for those technologies to keep evolving.

Are there companies with which you just cannot reach a partnering agreement or a licensing arrangement?

Yes, but it's certainly a very small minority. Most companies are realistic in knowing that products can require tens of millions of dollars and years and years to develop. And most will rationally decide to do what's in the patients' best interest. They'll just try to get a fair dollar for their technology. Very rarely does Cook get held up or stymied in the process. And in those cases, it usually goes to court to be settled there. But in that case, no one wins.

Looking into the future, where do you personally see the greatest opportunities for the company—and for the patient?

Well, I'm not a soothsayer, but let me try to put it in perspective.

I have never seen a time in my 26 years in the business that offers so much hope for patients and offers so much in terms of ideas for technological advancement as right now. Cook has more ideas coming in today than came in yesterday—that's been a general pattern over time—and those ideas are exciting. Because of our history, we provide access for a lot of people with ideas in medicine to bring technology to customers for the patient's benefit.

Devices aren't going away. Gene therapy and cellular-based technologies aren't going away. They're going to proliferate. We're going to marry technologies, and we're going to go to individualized custom devices and pharmaceuticals in the future. There's no doubt about it.

How quickly we get there will depend upon how well we can take care of intellectual property, how well we can work in our regulatory environments, how well we can demonstrate safety and efficacy, and how responsible we are in making sure that we do no harm and always do the right thing for the right reasons.

To me, the world has never been more exciting from a medical standpoint. It's full of challenges. But ideas keep coming to Cook Medical for us to consider. Many will be a good match for us and will result in incredible patient benefit in the future.

I'd like to close by talking about the people that have gone before me and have created the opportunities I've had in this company. Bill Cook's first two employees provide examples that are not unusual.

When Bill was exhibiting at the Radiological Society of North America conference in 1963, he struck up a friendship with a gentleman across the aisle by the name of Miles Kanne, who worked with Cordis Corp., which was a private company back then. They talked about medicine and where it was going. Later, Miles came to Bill and said he thought they shared the same belief system and both wanted to do things for the right reasons.

Now, Bill Cook has great charisma. Eventually, Miles said, "I'd like to come to work for you." Bill replied, "I'd love to have you, but I can't afford you." So Miles said, "I tell you what, I'll come to work for you for free."

So, for a few months, Miles would drive down from Chicago. There wasn't money for a hotel room, so he would sleep on Bill and Gayle's couch. The next morning, he would get up and go over the products with Bill, relaying ideas from physicians and taking products back up to Chicago to sell. He was really creating a market, and Bill started paying him eventually.

About 15 years ago, Miles Kanne retired from Cook Medical as an executive vice president. I must say, he was repaid many times over for working for free.

How many people today would buy into a belief system and start working without being paid? That was how our company was built. These stories abound within Cook, and that's why people stay with the company.

Here's another story. In 1963, Bill was starting to work with wire, but he didn't understand brazing and soldering and all that. So he went downtown and struck up a friendship with a gentleman at Osborne Jewelers. That man taught Bill everything he knew about how to join metals and make sure that the result was safe.

After they had gotten to know each other, Mr. Osborne told Bill about his son, who was graduating from high school. He was riding a motorcycle, wearing leather, getting into fights. He didn't know what he wanted to do with his life. The jeweler asked Bill whether he could give him a job.

Bill made Tom Osborne his first hourly employee, and he found out that the boy was an absolute genius. Tom went back to school at night and got an engineering degree.

Tom Osborne is still with the company, 44 years later. He is a senior vice president and probably has more patents to his name than anybody else in the company. He rivals anyone in the country in that department.

These people paved the way. Now, I get to walk into a nice office and stay in a nice hotel room when I'm traveling. I even have the luxury of using a company jet to get around on business.

These stories reflect the Cook family's highly ethical approach to business that we don't want to relinquish. We perpetuate these values within the company because that's how we want to be going forward. We want to be a company for which people would want to work for free. Of course, we do pay everybody now; it's a different time. But we want that passion and that sharing of a vision and a belief system to be there.

Bill Cook is a remarkable man. He's 76 now. We just cannot lose that sense of who he is and what Cook Inc. is as we expand, despite the complexity of trying to keep that message alive.

When someone in the company has had a Cook Medical device used on them, we ask that person to go out and talk to the people who are making the device about their experiences and what the device has meant to them. Very often, it's a tearful exchange as they give thanks. And the people who make the product understand what it is that they provide. They see how seriously we have to take our responsibility to patients, because patients can be our loved ones.

Copyright ©2007 MX

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