Art Kerley

July 1, 2006

23 Min Read
2006 Medtech Executive Profiles

Originally Published MX July/August 2006

EXECUTIVE PROFILES

Featured executives illustrate medtech's skill at building and operating strong companies in a complex global marketplace.

Lori Luechtefeld and Art Kerley

Whether shaping an early-stage company or steering a multi-billion-dollar operation, medical technology executives have one thing in common: vision. From harnessing a new technology to orchestrating the acquisition of an emerging company, medtech executives are constantly evaluating the industry landscape and guiding their companies accordingly.

Whatever their company's size, many medtech executives make significant contributions to advancing industry goals and improving the delivery of healthcare to patients. In this issue, MX profiles company executives whose ideas and energies are making a difference in their own companies and in other areas of industry concern. This article highlights the top-level executives behind some of industry's biggest moves over the past year, as well as other executives who are operating and succeeding outside of the limelight.

Big Deals

The medical device industry has long been characterized by its penchant for mergers and acquisitions. This past year was no exception. Medtech executives in varied sectors executed some of the most impressive deals in the medical device industry's history, effectively altering the competitive landscape for years to come. While some mergers provide companies with a means to grow and expand their established market positions, others enable firms to enter new, yet complementary sectors of the medical device industry. In this section, MX looks at four recent deals—with a combined valuation of more than $40 billion—and the medtech executives who brought them from concept to reality.

0607x32a1.jpg

James R. Tobin
President and CEO
Boston Scientific Corp.

James M Cornelius
Chairman and CEO
Guiidant Corp.

0607x32b.jpg

William C. Weldon

In both size and prominence, the $27 billion acquisition of Guidant Corp. (Indianapolis) by Boston Scientific Corp. (Natick, MA) tops the list of mergers that the medical device industry has witnessed in the past 12 months. Tracking the transaction from start to finish required the use of several scorecards.

The stage was set in December 2004 by a $24 billion offer from Johnson & Johnson Inc. (J&J; New Brunswick, NJ), headed by chairman and CEO William C. Weldon. However, following waves of highly publicized news regarding Guidant product malfunctions and recalls, many industry analysts speculated that J&J might withdraw from the deal.

In December 2005, Boston Scientific surprised industry observers with a bid for Guidant that not only topped that of J&J, but exceeded its own market cap. The next several weeks erupted into a bidding war between J&J and Boston Scientific. When the dust finally settled in the closing days of January 2006, Boston Scientific had secured Guidant's highly prized cardiac rhythm management business and, in so doing, became the world's largest manufacturer of cardiovascular devices.

In addition to talent and creativity, the medtech executives who structured this deal surely must have had nerves of steel to ride out the seemingly unrelenting rollercoaster ride that characterized this 13-month saga.

0607x32c.jpg

Ron Dollens

Throughout the ordeal, Boston Scientific president and CEO James R. Tobin remained upbeat and confident in his company's ultimate success. When the deal was finally sealed, Tobin dismissed the many naysayers concerned about the damaged Guidant brand. He immediately forecast 12% annual growth for the combined company over the next five years. "The more we see, the better we like it, and the more opportunity we think we have," said Tobin.

Representing Guidant in the closing months of the transaction was James M. Cornelius, who stepped into the role of chairman and CEO following the retirement of long-time Guidant leader Ron Dollens. Cornelius left Guidant after the merger was finalized. He plans to "harvest and recycle his cash proceeds" from the Guidant deal into new Indiana investment opportunities through the Twilight Venture Partners investment firm.

0607x32d.jpg

Erich R. Reinhardt

0607x32e.jpg

Michael Ziering

Erich R. Reinhardt
President and CEO
Siemens Medical Solutions

Michael Ziering
CEO
Diagnostic Products Corp.

In late April, Siemens AG (Erlangen, Germany) agreed to the $1.86 billion purchase of Diagnostic Products Corp. (DPC; Los Angeles), thereby launching its medical unit, Siemens Medical Solutions (Malvern, PA), into the in vitro diagnostics market.

The purchase will significantly broaden the Siemens product portfolio through the addition of DPC's diagnostic tests, which aid in the detection and management of diseases including adrenal and pituitary dysfunction, allergies, anemia, bone metabolism disturbances, cancer, cardiovascular disease, diabetes, and reproductive and thyroid disorders.

"The potential is huge to drive groundbreaking innovations by combining DPC's in vitro diagnostics leadership with Siemens' leading position in medical imaging and healthcare information technology solutions," said Erich R. Reinhardt, president and CEO of Siemens Medical Solutions. "Together, both companies will be empowered to continue to revolutionize the prevention, diagnosis, treatment, and management of disease."

Reinhardt's career with Siemens AG spans more than two decades. He began with the company in 1983 as the head of applications development in magnetic resonance (MR). In 1986, Reinhardt was promoted to head the MR division, a position that he held until 1990, when he became managing director of Siemens Ltd. Bombay. After completing his assignment in India in 1993, he returned to Erlangen and became a member of the executive board of Siemens Medical Solutions on January 1, 1994. Three months later, he was nominated as its CEO and president. In November 2001, he also became a |member of the managing board of Siemens AG.

On the other side of the merger is Michael Ziering, who has served as CEO of DPC since 1999. He joined the company in 1986 as legal counsel, then served as vice president for administration from 1988 to 1994, as COO from 1994 to 1999, and as president from 1994 to 2004.

"We believe that this merger with Siemens will be a very positive development for the future of our employees, customers, and the company as a whole," said Ziering. "This merger will allow us to continue on our current rapid course of development while also providing DPC access to the resources and support of a recognized leader in the delivery of integrated healthcare solutions. Siemens Medical Solutions is a perfect match for DPC in terms of corporate philosophy, business practice, and future direction."

DPC reported net income of $67.2 million on sales of $481.1 million in 2005, compared to net income of $61.7 million on sales of $446.8 million in 2004. At the end of April, DPC reported first-quarter sales of $129.6 million, a 14% increase over the first quarter of 2005. Quarterly earnings were $18 million, an increase of 12% over the year-ago period.

0607x32f.jpg

Daniel J. Starks

0607x32g.jpg

Chris Chavez

Daniel J. Starks
Chairman, President, and CEO
St. Jude Medical Inc.

Chris Chavez
President and CEO
Advanced Neuromodulation Systems Inc.

In a $1.3 billion deal, St. Jude Medical Inc. (St. Paul, MN) acquired Advanced Neuromodulation Systems Inc. (ANS; Plano, TX) late last year. Now a new division of St. Jude Medical, ANS is a leader in the neuromodulation device market and reportedly holds the number-two market spot in the spinal cord stimulation segment.

The merger brought together the strengths of Daniel J. Starks, St. Jude Medical chairman, president, and CEO, and Chris Chavez, president and CEO of ANS, who remains with the combined company.

"This is a compelling strategic opportunity for St. Jude Medical and is consistent with our efforts to create additional long-term growth drivers that diversify our business mix and deliver value to our shareholders," said Starks in announcing the proposed merger. In light of the added revenue from the ANS division, St. Jude Medical expects revenue growth of greater than 20% in 2006.

Starks was named chairman, president, and CEO of St. Jude Medical in May 2004 and has served as a member of the St. Jude Medical board of directors since May 1996. He was president and COO of the company from January 2001 to May 2004 and was previously president and CEO of the company's cardiac rhythm management business, beginning in April 1998.

Chavez hailed the merger with St. Jude Medical as a transaction that will strengthen his company's competitive position on a global basis. "It is important for me to emphasize that this combination is not focused on opportunities to consolidate but rather on accelerating the growth of ANS's business by bringing new resources to help us tap our incredible market opportunities," Chavez said.

Chavez, who has extensive leadership experience and has served with several Fortune 500 companies in the medical device industry, joined ANS as president, CEO, and director in April 1998.

0607x32h.jpg

Marijn E. Dekkers

Marijn E. Dekkers
President and CEO
Thermo Electron Corp.

Paul M. Montrone
Chairman and CEO
Fisher Scientific International

In May, Thermo Electron Corp. (Waltham, MA) and Fisher Scientific International Inc. (Hampton, NH) announced that both companies' boards had unanimously approved a definitive merger agreement. Under the agreement, which is valued at more than $10 billion, the two firms will join to form Thermo Fisher Scientific Inc., a leading provider of laboratory products and services expected to achieve revenues of more than $9 billion in 2007.

At the forefront of the deal is Thermo president and CEO Marijn E. Dekkers, who following the merger will become president and CEO of the combined company. Dekkers, who joined Thermo as COO in July 2000, was named CEO of Thermo in November 2002. During his time as COO, he was responsible for leading the operational integration of the company, which underwent a major reorganization beginning in January 2000.

"Both Thermo and Fisher have strong track records of acquisition success and margin expansion," said Dekkers in announcing the Thermo-Fisher merger. "By combining our companies' complementary world-class product and service offerings with Fisher's unparalleled customer access, we expect to accelerate growth by further penetrating our vast customer base. Our companies and employees share a strong commitment to our customers, and I am pleased to bring the talented employees of these two great companies together."

At the helm of Fisher going into the merger is chairman and CEO Paul M. Montrone, who plans to step aside at the culmination of the deal. According to the companies, he will be "concentrating on launching new business opportunities." However, he will remain an adviser to the newly formed firm.

Montrone has been CEO of Fisher since 1991 and chairman since 1998. Under Montrone's leadership, Fisher has been transformed from a North American manufacturer and distributor into a global enterprise serving approximately 145 countries on six continents.

"For more than 100 years, Fisher has played an important role in aiding scientific discovery," Montrone says. "Our focus on supplying innovative product and service solutions has enabled our 350,000 customers to concentrate on what they do best—improving health and extending life. Thermo has an equally solid record, and the combined company will be well-positioned to deliver accelerated earnings growth for shareholders."

Big Money for New Ideas

It takes more than a great idea and an entrepreneurial spirit to bring innovative medical devices to market; it takes a good deal of cash as well. The two executives in this section have recognized this need and responded by raising impressive sums of capital. Now, with fresh financial infusions and optimistic investors working in their favor, these leaders are ready to capitalize on the untapped market potential at their companies' cores.

Glen French
CEO
Asthmatx Inc.

In late 2005, Asthmatx Inc. (Mountain View, CA) reported that it had raised $27 million in a third round of venture funding. Glen French, CEO of Asthmatx, has wasted no time in putting the notable sum to work on a wave of clinical trials, leading up to an anticipated product launch in 2008.

Asthmatx is developing catheter-based medical devices for the treatment of asthma, which affects more than 20 million people in the United States. The company has developed the Alair system to perform an investigational outpatient procedure called bronchial thermoplasty. The procedure involves the delivery of controlled thermal energy to the airway wall, to reduce the amount of airway smooth muscle and lessen these muscles' ability to narrow the airway. According to Asthmatx, the early results of three clinical studies suggest the procedure may offer significant benefits to patients with asthma.

"Later this year, we anticipate announcing positive results from another study of bronchial thermoplasty in patients with very severe asthma, and our fourth study, an FDA-approved IDE pivotal study, is already well under way at roughly 40 top-tier medical centers around the world," French says.

0607x32i.jpg

Anthony G. Viscogliosi

Anthony G. Viscogliosi
Founder, CEO, and Chairman
Small Bone Innovations Inc.

Less than a year after its debut at the American Academy of Orthopaedic Surgeons annual convention in February 2005, Small Bone Innovations (SBI; New York City) announced that it had received a fresh infusion of $42.2 million in second-round financing—the largest-ever investment of venture capital in the orthopedics sector, according to Venture Source, a business unit of Dow Jones & Company, Inc.

According to Anthony G. Viscogliosi, founder, CEO, and chairman of SBI, the company focuses on the largely untapped and ever-increasing potential of the small-bone surgery sector. With solid financial backing behind it, the company is now poised to capitalize on its broad portfolio of FDA-approved implants to treat both small-bone and joint degenerative diseases.

"The large orthopedic firms do not see the small-bones market as large enough yet to stake out a major presence," Viscogliosi says. "Our goal at SBI is to develop the broadest and deepest product portfolio and the best global sales and service force within the sector. We fully expect to become the market leader-and an attractive target to be gobbled up by one of the big orthopedic firms."

"One of the most difficult and complicated challenges we face stems from the fact that the small bone and joint industry has been so neglected by the large orthopedic companies—it essentially didn't exist a year ago," he says. "Even though joint arthroplasty has been used by orthopedic surgeons for decades in the form of hip and knee replacements, the reality of small joint arthroplasty is still in its infancy, evolving continuously. The challenge, therefore, is to shift the paradigm of therapeutic treatment of injury and disease—from providing only temporary relief from pain with medications to restoring motion and function with artificial joints and other implants. We're addressing this challenge with strategic education and marketing campaigns to target surgeons and other healthcare professionals as well as potential patients directly."

SBI was formed in 2004 by Viscogliosi and his brothers, John and Marc. The three are principals of Viscogliosi Brothers LLC (New York City), a merchant banking firm specializing in the musculoskeletal-orthopedic sector.

Founding Execs

Getting a medical device enterprise off the ground is no small task. If and when a company grows wings of its own and achieves commercial success, it's not a surprise that many founding executives welcome the opportunity to hand over the reins of their company's day-to-day operations to another qualified leader. However, there are those founders who choose to remain at the helm and guide their companies for years—and sometimes decades—to come. In this section, MX recognizes three executives who continue to lead the successful medical device firms that they helped to form.

0607x32j.jpg

John B. Simpson

John B. Simpson,
PhD, MD
Founder and CEO
FoxHollow Technologies Inc.

As a clinician and entrepreneur with a record of founding successful medical device companies, John B. Simpson, PhD, MD, founder and CEO of FoxHollow Technologies Inc. (Redwood City, CA), knows a thing or two about getting a medtech operation up and running. Since the company's initial public offering in 2004, FoxHollow's revenues have more than tripled. In 2005, the company reported revenue of $128.2 million, compared to $38.6 million in 2004. Likewise, the company's net loss decreased to $11.6 million in 2005, compared to $45.9 million in 2004.

In June, FoxHollow announced that its board of directors had named Simpson as permanent CEO of the company. He had been serving as interim CEO following the retirement of Robert W. Thomas in January 2006.

In addition to FoxHollow, Simpson is the founder of Advanced Cardiovascular Systems Inc., which was acquired by Eli Lilly and Co. in 1984 for $125 million and was later spun out as Guidant Corp. He also founded Devices for Vascular Intervention Inc., which was acquired in 1990 by Lilly-Guidant for $115 million. More recently Simpson was the founder and chairman of Perclose Inc., which went public in 1995 and was acquired in 1999 for $680 million by Abbott Laboratories.

In addition to his corporate activities, Simpson is engaged in helping other entrepreneurs. He is a founding partner of De Novo Ventures, a venture capital firm created to help build companies in the life sciences.

0607x32k.jpg

Kim D. Blickenstaff

Kim D. Blickenstaff
Chairman, CEO,
and Cofounder
Biosite Inc.

Over the past 18 years, Kim D. Blickenstaff has built Biosite Inc. (San Diego) from a start-up company of four employees to a public company with more than $280 million in annual revenues and more than 1000 employees. In 2005, the company's revenues grew 17% over the previous year to $287.7 million, with net income increasing 30% to $54 million.

In addition to the company's growth last year, Blickenstaff orchestrated and executed a complete company move to a new 400,000-sq-ft facility in San Diego. Built on 30 acres of property, Blickenstaff says the new location will allow Biosite to triple in size without outgrowing its amenities. And according to Blickenstaff, grow is precisely what Biosite intends to do.

This year, Blickenstaff expects his company will again achieve solid double-digit growth while expanding its presence in Europe and bolstering its product portfolio. "The company has really grown over the past couple years," he says. "Our biggest challenge recently has been competition for our lead product, a test for congestive heart failure. It's been hard over the past two or three years, but we have really maintained our market share."

0607x32l.jpg

Karen D. Talmadge

Karen D. Talmadge, PhD
Chief Science Officer and Cofounder
Kyphon Inc.

Since cofounding and funding Kyphon Inc. (Sunnyvale, CA) in 1994, Karen Talmadge, PhD, has played an integral role in growing the company to its current stature. In 2005, the company reported $306.1 million in revenue—a 43% increase over prior-year revenue.

Currently chief science officer of the company, Talmadge has served as a member of its board of directors since the company's inception. She assumed the CSO role in 2003 and has been executive vice president of the company since 1998. During Kyphon's start-up period between 1994 and 1998, Talmadge served as president, CEO, and treasurer.

Beyond her role at Kyphon, Talmadge says her greatest challenge over the past year has been fulfilling the demands of the four additional boards of directors on which she serves. These include the boards of two start-up medical device companies, Cartilix Inc. and VeraLight Inc.; the angel investing group Life Science Angels LLC; and the American Diabetes Association.

Prior to founding Kyphon, Talmadge worked at California Biotechnology (now Scios Inc.) for 10 years in a variety of research and business positions.

Women on the Rise

The medical device industry is far from the man's world it once was. Today, women executives are leading the charge at a number of medical device firms, from start-ups to major corporations. The following two profiles highlight two women who have emerged at the forefront of two of the hottest and fastest-developing areas of medical technology: information technologies (IT) and women's health.

0607x32m.jpg

Janet Dillione

Janet Dillione
President
Healthcare Information Technology
Siemens Medical Solutions USA

With more than 20 years of experience in the healthcare IT industry, Janet Dillione is part of a senior executive team responsible for ensuring that the global healthcare IT offerings of Siemens Medical Solutions USA (Malvern, PA) enable the company's customers to achieve optimal results in patient safety, operational efficiency, and clinical outcomes. She assumed her current position on July 1, when she succeeded Tom Miller as president of Siemens' healthcare IT division. She had served as COO of the division since 2005.

As COO of the division, Dillione helped to establish a new senior management model and governance structure. "The model has fostered tightly coupled business teams and new levels of collaboration across our organization," she says.

A frequent speaker at industry forums, a member of the advisory board for the Healthcare Information and Management Systems Society (HIMSS), and HIMSS fellow, Dillione passionately espouses the need for technology to support the local delivery of healthcare. She says her greatest challenge over the past year has been establishing internal processes and business practices that can support the increasing globalization of Siemens' clinical health IT portfolio and its expansion into new markets. "We're handling the challenge by deploying the right people to help achieve greater customer intimacy globally, while gaining in-depth market insight in order to deliver products that meet and exceed customer need worldwide," she says.

0607x32n.jpg

Christina Anné

Christina Anné
Global Business Unit Leader
Women's Health
Cook Group Inc.

In early May, Cook Group Inc. (Bloomington, IN) formally unveiled its new women's health business unit, devoted solely to the development and marketing of medical devices for the female patient. The genesis of the new division falls in line with a broader industry trend, in which companies in a variety of sectors are placing increased emphasis on meeting women's unique needs.

Heading up the new Cook division is Christina Anné, who joined the company in 1990 and has held a variety of roles within the company over the past 16 years. Although the initial focus of the division's products will be on urological and gynecological applications, Cook's broad base of medical device experience provides an opportunity for the division to eventually expand into cardiology, endoscopy, and radiology applications for women's health, Anné says.

Anné began her career with Cook as a district manager selling the company's portfolio of assisted reproductive technology and gynecology products in Belgium, the Netherlands, and Luxembourg. After four years, she was promoted to European manager. Then, in 1998 she was promoted to manager for all Eastern Europe, the Middle East, and Africa. She was appointed head of the women's health unit in 2004.

Strong Number Two

Being second in command can offer executives the sometimes-welcome opportunity to avoid spotlights cast by investors, media outlets, and the general public. Nevertheless, some chief operating officers and divisional leaders choose to step forward and make their marks all the same. In this section, MX highlights three such executives who are helping to shape their companies as well as the medtech industry as a whole.

0607x32o.jpg

Paul A. LaViolette

Paul A. LaViolette
Chief Operating Officer
Boston Scientific Corp.

With his company successfully executing the biggest medtech merger of the past 12 months, Paul A. LaViolette, COO of Boston Scientific, has had no shortage of responsibilities at the company. But despite in-house obligations, LaViolette has maintained a strong presence in the broader medical device industry. A constant participant in industry events and a member of the board of directors of industry association AdvaMed, LaViolette was named chair of the group's technology and regulation committee in March. The new appointment is one of multiple leadership roles LaViolette has held with the association over the years.

As COO, LaViolette is responsible for all of Boston Scientific's business units, worldwide commercial activities, and global quality and manufacturing activities. In addition, he shares responsibility for the company's clinical, regulatory, and research and development functions.

LaViolette joined Boston Scientific in 1994 as president of Boston Scientific International and has held a variety of positions within the company since then. Prior to his latest appointment, he was senior vice president and group president responsible for the interventional cardiology, peripheral interventions, vascular surgery, electrophysiology, and neurovascular businesses. He was also responsible for Boston Scientific International, corporate sales and national accounts, healthcare strategies and programs, and government affairs.

0607x32p.jpg

Stephen H. Mahle

Stephen H. Mahle
Executive Vice President
President, Cardiac Rhythm
Management
Medtronic Inc.

Since joining Medtronic Inc. (Minneapolis) in 1972 as a reliability engineer, Stephen H. Mahle has worn many hats at the company. He was named executive vice president and president of Medtronic's cardiac rhythm management (CRM) division in May 2004. In his current position, Mahle is responsible for research, development, and operations for the company's arrhythmia management activities, as well as directing development activities for new device-based therapies and chronic patient management for heart-failure patients.

In addition, Mahle is responsible for CRM sales and global marketing, Medtronic Physio-Control, and a new patient management business that combines implanted devices and e-business to serve physicians and patients worldwide. Two integrated components suppliers—Medtronic Microelectronics Center (Tempe, AZ) and Medtronic Energy & Components Center (Brooklyn Center, MN)—also report to him.

Mahle came to Medtronic from the U.S. Army, in which he held the rank of captain while serving as a research scientist at NASA's Manned Spacecraft Center (Houston). He was the product development manager on the first Medtronic programmer. He was also responsible for the formation of theMedtronic Energy & Components Center.

Mahle is presently a member of the board of trustees of Beloit College and the board of advisers for Penn State University, as well as a board member of the St. Paul Chamber Orchestra and Advanced Material Technology Inc.

0607x32q.jpg

William A. Hawkins

William A. Hawkins
President and COO
Medtronic Inc.

William A. Hawkins has served as president and COO of Medtronic Inc. since May 2004. Prior to assuming his current role, he was senior vice president and president of Medtronic's vascular business.

Hawkins joined Medtronic in January 2002 from Novoste Corp. (Norcross, GA), where he had been president and CEO since 1998. His earlier positions included corporate vice president and president of the Sherwood Davis and Geck organization of American Home Products; president of the Ethicon Endo-Surgery organization of Johnson & Johnson; and president of devices for vascular intervention and U.S. operations at Guidant Corp. He began his medical technology career with Carolina Medical Electronics in 1977.

Hawkins received his bachelor's of science in electrical and biomedical engineering from Duke University, where he also conducted medical research in pathology. He also received an MBA from the Darden School of Business at the University of Virginia.

Copyright ©2006 MX

Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like