Adopting New Technology

Originally Published MX May/June 2006

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

By adopting advanced technologies, medtech companies can revitalize their existing product portfolios.

Andrew Diston

Investing continuously in innovation is essential for success in any industry, and this is especially the case in medical devices. The consolidation under way among larger vendors and the recent upturn in venture capital funding for medical device start-ups have renewed emphasis on innovation as a key element for success in an increasingly competitive environment.

When innovation comes to mind, people often think of entirely new products and categories. Yet adoption of new technology approaches can be just as important as breakthroughs. Applying everyday technologies from other industries or countries to medical devices is an important option for driving short-term innovation. This creative reuse is among the smartest of innovations, as it harnesses proven technologies at low cost without complicating product design and build plans.

The proliferation of wireless-enabled medical products is an example of the medtech industry looking outside itself for innovation. Currently, the frequencies available for many wireless medical devices are limited and are not robust enough for the powerful applications that are emerging. However, such challenges are being overcome through the use of technologies borrowed from cellular phones, medical frequency bands more common in Europe, and smaller, longer-life batteries.

Creative reuse enables a medtech company to outdistance its peers competitively, often enough to earn the organization a clear market lead for several quarters. Yet knowing when to employ such an approach is the art behind the science of innovating. To ensure that the rewards of their efforts far exceed the risks, executives must carefully consider when and how to leverage proven innovations as a way to improve the comfort, safety, and convenience of their companies' products.

Identifying Innovation Needs

Successful innovation requires analyzing and prioritizing technological opportunities based on the advantages they can offer the marketplace, regardless of whether the technologies were developed internally or externally. When exploring new technologies, executives should perform a rigorous opportunity analysis by consulting with existing customers, competitors' customers, and large companies whose opinions sway market directions. An analysis of such stakeholders' frustrations and functional and technical needs can provide a basic road map to key elements of what a next-generation innovation must provide.

For example, Boston Scientific (Natick, MA) and Johnson & Johnson (New Brunswick, NJ) recognized that cardiologists embrace new ideas in stent design, and adoption of the companies' stents mushroomed when they introduced innovations in this product category. Stents were originally only bare metal, but the companies added drug elution, more sophistication, better technology, as well as better deployment. A multibillion-dollar market ensued.

In addition to new features, markets may be clamoring for simplicity. Prior to creating the Clearblue Easy digital pregnancy test, Unipath (Bedford, United Kingdom) conducted focus groups to determine market perceptions on existing tests. At the time, existing pregnancy tests were read by matching up the thickness of a line. Focus group feedback suggested women in the target market wanted less ambiguity on test results and were willing to pay more for it. Unipath created the Clearblue Easy with a low-cost optoelectronic reader that provided a definite positive or negative result. The core technology in the pregnancy test hadn't changed, but the addition of the proven optoelectronic technology, which was already featured in other Unipath products, made Clearblue Easy more user-friendly than competing products. The incremental improvement gave Unipath a well-differentiated product at a higher profit margin.

In addition to consulting external stakeholders, executives should seek input from internal personnel to assess both what they need and what they can offer. Product enhancements that could contribute to a stronger revenue stream may already be within the company's grasp. A company's core competencies are usually well known, but executives should also factor in intangibles, such as a geographic location near centers of innovation, such as universities and specialist partners.

Management should also ensure that its strategic direction runs concurrent to broader trends. In today's world, in which most hospital visitors come through the door with a cell phone or an MP3 player in hand, it doesn't take an in-depth market analysis to recognize that medtech companies should be considering how to leverage wireless, miniaturized, and ergonomic technologies.

Philips Medical Systems (Andover, MA) is one example of a firm that did just that. The company had a sizable medical telemetry product line, but its products were limited to use in a specific room or ward of a hospital. With the collaboration of outside partners, Philips borrowed common wireless technology from cell phones and pagers to embrace the new 1.4 GHz wireless medical telemetry service spectrum recently allocated for U.S. hospitals. The result was a new line of IntelliVue telemetry system products that manage bandwidth to accommodate simultaneous and continuous monitoring of multiple patients. The system's radio communications technology wirelessly coveys patient data from a patient-worn monitor to the central hospital information system, where it can be viewed by clinicians. The systems avoid interference and seek the strongest available signal for data transmission as patients roam within the hospital.

In addition to general observation, involving customers can be a good way for companies to stay abreast of market trends. Asking customers—particularly those who are early adopters and for whom product differentiation holds strong appeal—for input early in the conceptualization process can reveal unseen problem areas that the management team can address. Customer feedback can also help the firm assess whether a proposed innovation is perceived as being on the bleeding edge, meaning it's too advanced for comfortable adoption.

Gauging Timing

Determining the appropriate time to introduce an innovation to a medtech product line can be difficult; however, certain signals generally indicate that a technology is ready for adoption. One indication is wide use of the technology in other business sectors. For example, Bluetooth wireless technology is currently being used around the world in a vast number of applications, including use in mobile phones and computers. This now-mature technology offers a set of powerful features that are well understood and can be easily manipulated for many purposes, and its suppliers continue to see demand increase dramatically year after year.

But even the most mature technology—though a safer bet than one in its infancy—cannot be incorporated into a product line until a company is internally prepared to innovate. Enhancements to competitors' products can be powerful drivers in this arena. Though difficult to predict or manage, such enhancements typically lead to a call for innovation within competing companies. Desirable features, additional capabilities, or lower-cost components that appear in a competitor's product may threaten the company's own products and market share. To combat these market changes, device manufacturers must have tactical and strategic innovation plans in place. Such plans should enable a company to leap-frog the competitor, and, if planned properly, a technological innovation should enable a company to move ahead of the competition by a few stages. Plans should be crafted in a way that enables product innovations to last for at least a few iterations.

Managing Innovation Costs

Research and development funds are often limited and are even declining at some larger companies. It's imperative that companies maximize the value of innovation investments, and borrowing proven technologies from other industries can help. Such a strategy allows companies to stay on the leading edge without unreasonably expending internal resources in the form of both time and costs. Borrowed technologies can include not only those that are being incorporated into a new product line, but also those employed during the manufacturing process.

Cost pressures have led to a dramatic shift in the way device executives manage development. Medtech firms' sourcing strategies now represent a blend of internal development and sophisticated outsourcing. Due to the need for speedy time to market, expert outsiders are recruited to design key subsystems and components. After experimenting with outsourcing approaches in the early 2000s, many device makers found the process to be a viable strategy. Today, they're refining these approaches to bring out the best in their internal teams, as well as harness the finest skills and technologies of product development and manufacturing partners.

NDO Surgical (Mansfield, MA), developer of the Endoscopic Full-Thickness Plicator system for treating gastroesophageal reflux disease, successfully leveraged feedback from surgeons for the product's initial launch, and again to develop an enhanced version.

Rather than a total redesign, NDO Surgical's executives chartered the company's management to explore new materials and manufacturing techniques as a way of improving the device. Core device design and integration responsibilities remained with NDO. "Employing the best technologies, already proven successful and safe in other industries, has been a cost- and time-effective practice for NDO Surgical," says Tom Bromander, vice president of engineering for NDO. "This method allows NDO Surgical to continually enhance its Plicator system by incorporating expert insight from key physicians while ultimately retaining design management for the system."

Planning for Execution

Executing a technology incorporation requires executives to conduct an orchestra of medical, marketing, engineering, and production teams at multiple sites, often around the globe, in perfect harmony. "Incorporating a new function into an existing system requires great care so that the functions it already has are not disrupted," says Jonathan R. Wolpaw, MD, chief of the Laboratory of Nervous System Disorders at the Wadsworth Center (Albany, NY).

The Wadsworth Center, a public health laboratory for the New York State Department of Health, knew it had a winning medtech device concept on its hands, yet recognized the need to incorporate new technologies to drive adoption. The center had developed a brain-computer interface (BCI), a device system to translate brain waves into computer control commands. The device represented a breakthrough in the way computers assist patients in their daily activities, and the system was far less expensive than alternatives, such as invasive systems that require surgery to implant electrodes in the brain. The BCI system is also applicable to individuals who have lost all muscular control, something other augmentative or assistive communications approaches, such as eyeball-tracking systems, cannot support.

Despite its many benefits, early-adopter feedback was that the system, which involved a tight-fitting cap worn on the head, was uncomfortable for extended wear. Early adopters also reported that the computer control far exceeded the skill of the average home-care worker. As a result, the BCI unit was redeveloped. The 3000 variables controlled by its computer were structured into a simple graphical display on a personal computer, and the cap was redesigned for extended wear. The redevelopment transformed a research system on the leading edge into an easy-to-use, more-portable system suitable for patients and their caregivers—at a fraction of the cost.

Without a significant amount of advance planning, however, technology redevelopments may not go as smoothly or be quite as successful as that of the BCI redesign. Key elements to consider before diving into a new product iteration are as follows.

Future Generations. As mentioned earlier, technology additions to a product line must extend a platform beyond one generation. Based on an advanced product road map, a firm launching the first version of a product should already have the second version waiting in the wings, as well as a vision for the third generation. Companies can plot the futures of their devices by considering new ways to approach the same problem that is addressed by the device. Manufacturers should also identify other needs that coexist alongside the main one that a product addresses.

International Considerations. In a global marketplace, medtech companies looking to execute a technology adoption must keep an eye on international requirements. Disregarding differences related to voltage, unit systems, and even dimensions may ultimately cost a company market share or even the entire market due to late entry. It is surprising how often mix-ups arise due to confusion between inches and millimeters.

Regulatory Requirements. FDA requirement adherence is always crucial in the medical device industry, and planning a product's specifications based on FDA data can save time and money. For example, Smith & Nephew (London) developed implants that were original in design. However, in order to expedite approval, the company chose to form them from a limited library of polymers approved by FDA.

Assess and Minimize Risks

Adding new technologies to an existing product portfolio presents risks as well as opportunities. Incorporating innovations in products and processes always carries an air of uncertainty. Unlike in the software business, in which software glitches are expected and can be patched in the field, FDA device safety requirements emphasize full testing and validation. Following widely publicized device failures in recent months, FDA is indicating that validation of a product's design prior to in vivo use will become even more crucial. After all, what constitutes a product recall in any other industry can be the difference between life and death in the medical device field.

In addition to safety risks, incorporating an immature technology into a product line can irritate end-users, damage a firm's reputation, and destroy its market share. Making products unnecessarily complicated to end-users—particularly in today's era of simplified handheld devices—is also a sure way to frustrate customers.

There's also an inherent risk that firms will not fully understand how a new product will be used until consumers become familiar with it. Until device firms put a tool into a physician's hands, it's difficult to be certain which features will attract the most interest. This can lead to both unpleasant and pleasant surprises, and companies must be prepared to react to those surprises.

Conclusion

Guiding innovation is not a matter relegated to product development staff, but rather part of the fundamental charter of every executive team member in the quest for continual improvement of both competitive position and profit margin. In fact, a recent study found that CEOs across industries spend approximately two-thirds of their efforts on business model and operational innovation.¹ Executives need to move beyond the platitudes of simply believing in continual innovation to create a detailed and thorough plan. Creatively incorporating technology from outside the medtech realm can be an integral and savvy approach to such an innovation action plan.

In the medical device industry, speed is as important as timing. When already-proven technologies are redeployed anew, the invisible work of innovation—that which ensures technical sophistication and background safety validation—is largely complete. At the same time, visible innovation—in the form of core technology that is demonstrably more accessible and user friendly—can be swiftly brought to market. In doing so, the strategic groundwork is laid for moving several iterations ahead of the competition all at once.

Reference

1. IBM Global CEO Study 2006 (Armonk, NY: IBM Business Consulting Services, 2006). Andrew Diston is senior vice president and managing director of the U.S. headquarters for Cambridge Consultants, a research and development firm based in Boston with headquarters in Cambridge, UK.

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