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Why a Minnesota Report Offers a Glimmer of Hope for Medtech Investing

By Nancy Crotti Trade group LifeScience Alley predicts that investments in Minnesota life science companies this year will outpace 2013, though the news is more mixed for medtech companies. Venture capital, angel investments and similar funding for Minnesota life science companies was up 65% year-over-year, to $110.5 million, during the second quarter. For the first half of the year, it's up 67%, to $185.9 million, according to St. Louis Park, MN-based LifeScience Alley, which compiled its totals from a variety of private and public reports, as well as press releases and news stories. Most companies, 71 percent, each raised less than $1 million, matching last year's results. The news is more mixed when medtech companies are specifically involved. They raised $89 million during the second quarter, more than double what they raised a year ago. But the number of companies winning funding was nearly halved, to 12. Nevertheless, the report raises a glimmer of hope for young medical device companies that face a funding environment that is still not as rosy as it was before the Great Recession. Reasons offered include the uncertainty around how the Affordable Care Act will change reimbursements for medical devices, not to mention the overall transformation of the U.S. health industry. The FDA's hard-nosed regulating also means that it could take investors years, if ever, to get a payout from a medical device startup or early-stage company. Two companies, Holaira and Inspire Medical, led the way in Minnesota, according to LifeScience Alley. Holaira, which is developing a catheter-based system to treat chronic obstructive pulmonary disease, closed on $42 million in venture financing in April. Inspire Medical landed $40 million in Series E money in May for its work on an implantable system that treats sleep apnea. On the health IT side, Minnesota- based Red Brick Health raised $7.5 million in the second quarter.

Refresh your medical device industry knowledge at MEDevice San Diego, September 10-11, 2014.
First-quarter medical device investment industrywide rose 28 percent to $588 million, according to PriceWaterhouseCoopers and the National Venture Capital Association's MoneyTree report, based on data from Thompson Reuters. That compares with $562 million in 2013 Q1. Medtech investments peaked at $1.1 billion in 2007.

Nancy Crotti is a contributor to Qmed and MPMN.

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UnitedHealth Executive: Fee-For-Value is Here

UnitedHealth Executive: Fee-For-Value is Here

Few surgeons know the price of implantable devices such as orthopedic implants, which are among the most expensive medical devices, often blamed for contributing to rising overall healthcare costs.

Separately, the federal government has been investigating the overuse of implantable defibrillators by surgeons for the past four years and that has lessened the number of procedures.

Still, neither a government investigation nor surprising study results showing the lack of pricing awareness of orthopedic surgeons is going to meaningfully bend the overall cost curve of healthcare. 

Reigning in costs has to be a healthcare industry initiative, and spurred by Obamacare, looks like the shift to fee-for-value is occurring. 

"That slogan - value-based healthcare - has been around for a while. I am telling you that it’s really here now," declared Dr. Deneen Vojta, Executive Vice President and Chief Scientific Officer, Corporate Research and Development, UnitedHealth Group, in an event Tuesday near Minneapolis, hosted by LifeScience Alley, a regional medtech trade association. "The current thinking is that 20% of payments today are fee-for-value and by 2017 it’s projected to go to 60-65%"

Data, big and small, will power this revolution, Vojta said adding that payors are paying special heed to whether covered therapies- whether it be device or drugs - are having the desired outcomes. 

For instance, recently Vojta asked her team to run some numbers on an intervention that UnitedHealth Group covers on behalf of 40,000 diabetic members. She was shocked to find that the intervention - she declined to say whether it was a drug or a device - didn't achieve the clinical outcome that it was expected to have. 

"I ran the data expecting to see this improvement in the indices and it was not there," she explained. 

The lesson was palpable.

"So in the real world with 40,000 people using a particular intervention, there’s no improvement," Vojta noted. "This intervention costs about $10,000 to $15,000 per year. When people like Medicare and UnitedHealthcare and ACOs begin to focus on fee-for-value, those red flags are going to come up. You're going to see dramatic changes in reimbursement and how things are paid for."

So what do device makers and drug makers need to do? They need to build products and services that can show that certain clinical improvements will occur in a certain patient population within a certain point of time.

"You don’t want to just say here’s a new device that has all these new features and you should pay more," Vojta said."You don’t want innovation for innovation’s sake."

But the device industry is chafing under this pressure to show outcomes and the consequent economic impact of a healthier, or less sick patient population. In a recent interview, the president & CEO of LifeScience Alley complained that the definition of what value is under this new healthcare paradigm is fairly vague.

"Now the most important thing that I have to be able to do is quantify the value proposition that nobody has defined for me even though they are telling me 'yes' and 'no' and I don't exactly know what they are asking for," said Shaye Mandle in June. "Nobody says if you are going +3 on outcomes and -1 on cost, that’s the key."

But Vojta said that insurance companies are not going to adopt a "draconian" approach in deciding what level of cost and clinical outcomes will lead to a positive coverage decision. It will be a collaborative approach that will take into account vendors' and physicians' perspectives as well, with data helping to drive the decision.

Still, it's important to realize that the days of developing a new drug or device, slapping on a price premium and expecting to get coverage is gone. 

"The current system is not working," Vojta said. "I can assure you we aren’t going to continue to spend. We can’t."

Data can help making the case to insurance companies and ACOs, Vojta advised, noting that she believes companies will do a lot more observational studies and comparative effectiveness in the future.

"There’s going to be a lot of comparative effectiveness [in clinical trials], not just against nothing. Because nobody is taking nothing. There will be comparing product against other things in the market - other drugs in the market and other devices in the market - and we are going to have to see outcomes."

 [Photo Credit: UnitedHealth Group] 

-- By Arundhati Parmar, Senior Editor, MD+DI

3 Key Takeaways from Stryker's Q2 Earnings Call

3 Key Takeaways from Stryker's Q2 Earnings Call

Stryker reported second-quarter earnings late afternoon Thursday, and results were mostly in line with what analysts expected.

In the earnings call, Stryker's senior management both in their prepared statements, and in answers to analysts, provided some insights into how the integration with MAKO Surgical is progressing, their take on tax inversions and thoughts on the Zimmer-Biomet deal among other things, according to a transcript of the call from SeekingAlpha. 

MAKO Integration Harder Than Expected But Gaining Momentum

Stryker made a bold move in 2013 when it paid $1.65 billion to buy robotics surgery company MAKO Surgical. In the earnings call, Katharine Owen, VP of Strategy and Investor Relations, said that the integration has proved to be "more challenging than anticipated" but is slowly gaining some momentum. She noted the following:

  • About 20% of 1,000 U.S. sales reps have been trained on the MAKOplasty system that includes the RIO Robotic Arm Interactive Orthopedic System and relevant hip and partial knee implants. The rest of the sales team will be trained by the end of the year so they will be able to talk about the benefits of MAKO to surgeons and sell the implants that go with the robot.
  • Stryker will launch a hip product on the MAKO platform in 2015 as well as a total knee system, which is currently in trials. 
  • 6 Mako systems  have been sold in the second quarter.

MAKO's potential still remains strong, Kevin Lobo, Stryker's president and CEO said although it will not be realized overnight.

"Mind you, this is going to take time," he added. "It takes time to sell the capital. It takes time to put the implants that we want on the robot and we would be rolling that over a period of time. But I remain extremely bullish on the opportunity long-term."

Don't Do Tax Inversions For the Wrong Reasons

As of July 1, Stryker has opened a regional European headquarters in Amsterdam enabling the orthopedics company to gain some tax advantages in 2015. Tax inversions have come to the limelight after Pfizer's failed bid to buy U.K.-based AstraZeneca that would have allowed the company to move headquarters outside of the U.S. and gain a lower tax rate and while accessing overseas cash without having to pay tax on it. While Pfizer's bid was rejected, Medtronic and Covidien are well on their way to create a new medical technology company with headquarters in Ireland.

Other companies have followed suit and there is some talk in political circles to stem this tide of U.S. companies fleeing abroad for tax advantages. When asked about inversions and whether given the political environmenment companies would be less likely to do inversions, Lobo responded that it depends on on the rationale for the deal.

As you know some of the deals that have been done, have been done really largely for financial reasons. In those cases, it's a cause for pause [for companies] if the main driver of the deal is financial. However, if the deals are more strategically driven, I really don't see having much of an impact at all until legislation is actually enacted and what we are seeing in the press is the likelihood of near-term legislation doesn't seem very probable.

So again, I would bifurcate into two areas. Those that are very financially driven, I think those companies will pause a little bit. Those that really are strategically, that's a bigger part of the logic and then as an inversion as maybe icing, I think those will continue to be pursued.

The Biomet-Zimmer Deal Is Not That Surprising

In April, Zimmer announced that it was planning to buy rival Biomet for $13.35 billion, underscoring the wave of consolidation in the medtech world. When an analyst asked Lobo to comment on how the Zimmer deal positively or negatively affects the Michigan company if it does close, Lobo didn't directly answer the question but made a broader comment on the acquisition.

Certainly, this consolidation within recon is something that we have been anticipating. It's not a big surprise, the Zimmer, Biomet, that that would happen. Having five competitors in a market that's not growing close to double digits normally would lead to some form of consolidation. So it's not totally surprising. The market has been pretty well disciplined thus far and we expect that that will add extra discipline to that.

 [Photo Credit: user MCCAIG]

-- By Arundhati Parmar, Senior Editor, MD+DI

Baxter IV Solutions Recalled after Particles Discovered

By Nancy Crotti Baxter International recently announced that it is voluntarily recalling four lots of intravenous (IV) solutions from hospitals and users because of potentially deadly particulate matter in the solutions. These products contain particulate matter identified as cellulosic fibers and/or plastics, according to a Baxter news release, dated Moday and relayed by the FDA. Baxter received four complaints over a six-month period from customers who saw the particulate matter prior to administration to a patient, according to the new release. If infused, particulate foreign matter could be life-threatening, or elicit inflammatory or allergic responses, either chronic or acute, according to Baxter. There have been no reported illnesses or deaths associated with this issue to date, and Baxter said it is investigating to determine the cause of the contamination. Products affected by this recall are:

  • 0.9 percent Sodium Chloride 100 mL (Quad Pack), lot number P298190, expiration date August 2014, NDC 0338004918;
  • 0.9 percent Sodium Chloride 100 mL MINI-BAG Plus, lot number P308650, expiration date October 2014, NDC 0338055318;
  • 0.9 percent Sodium Chloride, 50 mL (Single Pack), lot number P309187, expiration date October 2014, 0338004914;
  • Highly Concentrated Potassium Chloride Injection, 20 mEq/50 mL, VIAFLEX Plus Container, lot number P309476, expiration date October 2014, NDC 0338070341.
Baxter distributed the recalled lots worldwide to customers and distributors between February 2013 and June 2014. If infused with IV solution containing the particles, the severity of the inflammatory and allergic reaction would vary depending on the amount of particulate matter injected into the patient, the size of the particles, the patient's underlying medical condition, and the presence of a right-to-left cardiac shunt, according to by Baxter. The reaction could be life-threatening, though. Sodium Chloride Injection, USP is used as a priming solution in hemodialysis procedures, and may be used as a diluent for reconstitution of a powdered drug product. Potassium Chloride Injection is a potassium replacement to support nerve conduction, muscle contraction and prevention of cardiac arrhythmias. More information, including how to contact Baxter over the recall, is available on the <FDA's website.

Nancy Crotti is a contributor to Qmed and MPMN.

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FDA Approval Gives Mobility to Total Artificial Heart Patients

freedom driver
Released in 2010 for the Freedom driver's CE Mark approval, this photo contrasts the device's size to the Big Blue driver.
Clinically stable patients waiting for heart transplants do not have to be tethered to large clinical equipment. They can live at home, socialize, eat at restaurants, go boating, exercise--even box, according to SynCardia, maker of the Freedom portable driver. The FDA on June 26 approved use of the driver with the SynCardia's temporary artificial hearts, the Arizona company announced yesterday. Patients can carry the 13.5-lb. driver in a backpack, shoulder bag, walker, or pull it in a rolling caddy. It powers SynCardia's Total Artificial Heart with precisely calibrated pulses of air and a small amount of vacuum so the diaphragm is properly positioned to accept the next filling of blood into each artificial ventricle, according to a company statement. "These patients can be discharged and live in their homes and communities while they wait for their matching donor hearts," Michael Garippa, SynCardia's CEO and president, said in a statement. "We anticipate that this will save patients, hospitals and insurance companies thousands of dollars through eliminating most in-hospital costs for this portion of patient care." SynCadia released a promotional video showing two recipients of its total artificial heart patients who happen to box as a hobby. One of the patients was shown without the Freedom driver while the other was shown using it. With the FDA approval of the Freedom driver, stable patients who need IV therapy or outpatient dialysis will be able to be take care of those conditions on an outpatient basis.
Refresh your medical device industry knowledge at MEDevice San Diego, September 10-11, 2014.
To obtain PMA approval for the driver, SynCardia provided the Freedom device to 96 SynCardia artificial heart patients through 22 SynCardia-certified centers in the U.S. to gather data for a clinical study. The company provided drivers to an additional 10 patients under compassionate-use exemptions at nine other centers. The combined artificial heart and driver allowed 75% of those patients to be discharged from the hospital, while 86 percent either received heart transplants or were still using the driver as of June 30. The Freedom driver runs on lithium-ion batteries that users can recharge with a standard electrical outlet or a car charger, which works in many boats. It represents an evolution of portable drivers that the company has had approved since the 1980s. The 418-lb. "Big Blue" driver powers the temporary artificial heart for inpatients but restricts their mobility. The company's Companion 2 (C2) Driver system, improves patient mobility within the hospital until their conditions stabilize. The C2 won a silver Medical Design Excellence Award in 2013.
A video from October 2007 shows a patient with the Syncardia temporary artificial heart boxing while tethered to the Big Blue driver system.
Once stable, eligible patients can be switched to the Freedom portable driver and leave the hospital while waiting for a donor heart. European regulators approved the Freedom driver in 2010, followed by Canadian regulators the following year. One hundred of SynCardia's artificial hearts were implanted as of July 2013, three months earlier than the company had projected. Last year, SynCardia Systems was a silver winner in the 2013 Medical Design Excellence Awards (MDEA).

Nancy Crotti is a contributor to Qmed and MPMN.

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Outsourcing: A Process, Not a Destination

At last year’s MD&M Minneapolis conference, Jack Sandahl, Fellow Commodity Specialist at Boston Scientific, explained that companies outsource operations for three primary reasons: to reduce costs, focus on core competencies, and ensure growth and flexibility. Continuing this theme in the following Q&A, Sandahl discusses how and why medical device companies should develop flexible and robust supply chain management strategies.

By relying on economies of scale, leveraging volume discounts, and maintaining quality systems, outside suppliers can reduce the OEM’s production costs, enabling it to reduce capital investments and focus on core competencies. Outsourcing enables the OEM to achieve growth and flexibility goals by increasing capacity without adding capital investment costs, safeguard its proprietary technical expertise, and gain access to new markets. To determine its core competencies, the OEM must ask itself: What do we do well? Where is the business going? What differentiates us from our competitors? What value do we add that is visible to our customers?

To make or not to make: Determing whether to insource or outsource depends on a company's core versus noncore capabilities.

A medical device OEM’s primary focus should be to determine what is important to the customer, what provides the company with a competitive advantage, and what negative consequences can ensue if these goals are not done well. To answer these questions, the company should determine which processes or components are central to the company’s business. Then, it should decide whether these processes or components are core capabilities. If they are, the company should insource. If they are not, it should reassess its internal capabilities or develop an outsourcing partnership with a supplier.

Emphasizing that companies should strive to understand the processes required for driving sound sourcing decisions, Sandahl notes that the OEM’s ultimate goal should be to create the organizational connections required for managing its business, ensuring quality performance, and increasing value for customers.

MDDI: How has an increasingly globalized economy put pressure on companies to optimize their supply chain capabilities?

Sandahl: Medical device companies are under increasing pressure to drive innovation, efficiency, and cost reduction to satisfy customer needs. This trend is being driven by changes in the U.S. healthcare system and also by global market growth opportunities where the technologies are being adopted but with limited economic resources to support the needed therapies. The most successful medical device companies will be the ones that can deliver to the customer the most innovative therapies at the best value. Medical device companies increasingly need to identify supply chains that can effectively deliver innovation and value. All factors considered, the acquisition of supply chain capabilities can result in a combination of outsourcing and vertical integration strategies depending on the technological, economic, and logistical advantages.

MDDI: What are some of the organizational measures that companies can take to optimize supply chain management?

Sandahl: Supply chain management is not just the movement of materials through the system. To be effective, it must be seen as a much broader concept. Organizations need to be structured to best connect market research, product development, design, and manufacturing operations to provide the products that the customer needs—at a great value, at the right time. The process for delivering a medical device to market is a long one because of the clinical and regulatory requirements involved. At each stage of the supply chain, from start to finish, there needs to be a high level of communication and speed. Setting up an organization in which people can most efficiently engage with customers and suppliers inside and outside the company will have the best results for optimizing supply chain management.

MDDI: Please give some examples of how companies can optimize the allocation of resources between insourcing and outsourcing activities.

Sandahl: Cross-functional teams combining resources from both external sourcing and internal manufacturing operations are an effective method for balancing resources. The best decisions are made by people who understand the challenges involved in performing both insourcing and outsourcing activities. Because the people involved in managing external and internal supply chains have similar skills and knowledge, blending these resources into one team facilitates the flexibility required for implementing both insourcing and outsourcing strategies. Most companies have strategies for both insourcing and outsourcing materials, processes, and technologies, so it is best to utilize these resources in the most flexible manner possible by creating a combined team.

MDDI: Why do you think that the decision to outsource is a process, not a destination? How does this work out in practice?

Sandahl: Manufacturing technologies, the global business environment, and corporate goals are in a constant state of change. The most successful organizations and people are the ones that adapt to change in the most effective and efficient manner possible. The process is never complete. To be sustainable, it needs to follow and respond to signals found during the classic plan-do-check-act cycle. Outsourcing decision that may make sense today will be different tomorrow with the changes in the environment. Thus, the process needs to respond, or it will become obsolete.

Jack Sandahl has more than 25 years of manufacturing operations experience in the medical device industry, including in the areas of production planning, manufacturing team leadership, contract manufacturing, purchasing, and global supplier management. He has managed complex high-technology component supply chains in an environment with demanding quality, reliability, regulatory, and cost objectives. A Fellow in a supplier and materials management role at Boston Scientific, he is engaged in make/buy decisions. He is also a course developer and instructor in the Manufacturing Operations Management program at the University of Minnesota. Sandahl received a BS degree in business finance from the University of Minnesota and an MBA in manufacturing systems from the University of St. Thomas in St. Paul, MN. Reach him via LinkedIn.

What Not To Miss At MEDevice San Diego

What Not To Miss At MEDevice San Diego

For the fourth year in a row, MEDevice San Diego will bring together the best in Southern California's medtech community. If you are planning to attend the conference and showcase on Sept. 10 and 11, here are some not-to-be missed opportunities for learning and connecting.

Keynotes on Hot Topics

Personalized medicine and device interoperability are two equally important and exciting topics that hold much promise for how healthcare will look in the future.

Rob Brainin, vice-president and general manager at Thermo Fisher Scientific who currently leads the Enterprise Genomics Solutions business, will talk about how healthcare can be transformed by bringing personalized medicine to the average clinic. He will also address advances in device technology that are influencing personalized medicine, while also answering the question of how device value will be affected when customized therapies will become available. Brainin delivers the keynote on the first day of the conference. 

The lack of interoperability is costing the healthcare industry billions of dollars. Joseph Smith, chief medical and science officer at West Health Institute, will address the challenge of medical device interoperability and how it is unsustainable to have devices that are not integrated into the electronic medical record, and what's needed to close the loop. Smith will provide the keynote on Sept. 11.

A separate panel discussion on interoperability will occur in the afternoon on Sept. 11 with speakers from Starfish Medical, Massachusetts General Hospital, University of Cincinnati and Logic PD. 

Hear from FDA Official

Joni Foy, director of the Office of Device Evaluation, which is part of FDA's Center for Devices and Radiological Health, will talk about how to strengthen 510(k) de novo and PMA submissions for an effective regulatory approvals process. Foy will also talk about new guidance documents and how they can inform product development. She will speak on day 1 of the conference.

The Consumer is Your Friend

Two speakers will talk about developing devices for the consumer that not only addresses how the device industry has a new customer they can think about but also how devices can actually move the needle on patient engagement, a big challenge in all of healthcare.

A speaker from Scanadu, the company that is competing for the Tricorder X prize and has turned heads through its successful crowdsourcing campaign for its at-home medical diagnostic products, will talk about the consumerization of healthcare and how device firms can take advantage of that. Koen De Lombaert, director of clinical development at Scanadu, will also provide the latest trends in the consumer-centric devices. 

The other company that has developed consumer-centric devices is Misfit Wearables. Matthew Diamong, the clinical lead from the company, will talk about how to design wearable devices as well as how wearables can be used to prevent and treat chronic disease. Both speakers will speak on Sept. 10.

We have you Covered If Interest Is Product Development And/or Business Development

Two tracks on business development and product development delve deeper into each topic. Those interested in business development can learn about how to raise money, how to commercialize novel technology faster and requiring less money and how to engage medical device consumers in today's multitouch environment.

Product developers can learn how to create wireless medical devices, the challenges and benefits of miniature wireless diagnostics, and designing for biocompatibility, sterilization and cleaning.   

Meet and Greet Suppliers 

Take a break from the keynotes and panel discussions to meet with more than 40 exhibitors that are part of the Tech Showcase. Touch and feel the materials being exhibited and talk face-to-face with contract manufacturers and service providers. Head to a cocktail reception at the end of the first day to network some more.

[Photo Credit: user EduLeite]  

-- By Arundhati Parmar, Senior Editor, MD+DI

4 Things to Consider About China’s Medtech Ecosystem

4 Things to Consider About China’s Medtech Ecosystem

Leading medtech companies are searching for revenue in global markets like China to augment slow to flat performance in domestic markets. However, in order to be successful, companies must fully understand key market characteristics and cultural nuances to ensure sustainable market acceptance of their products. For China, in particular, successfully navigating the medtech ecosystem requires structured consideration along four key concepts.

1. Dissecting China’s Growth Economy

The China market is growing, but where and how? For the medtech ecosystem, China has experienced explosive growth over the past five years. Fortified by demographic shifts, increased healthcare access, low overall healthcare market penetration, fragmented markets with undefined leaders, and the rise of local players, the China medtech market is expected to continue its ascent in the near future.

Looking at the growth rate of the China medical device market by product sector, as the chart shows below, medical equipment still dominates the market, but consumables are showing promising signs of growth.

James Varelis, Principal, PwC Health Industries

2. Understanding Government’s Role in Medtech Regulation, Purchasing

While medical device regulations are relatively new in China, they are quickly evolving. In particular, the government's tendering process of medical devices is assuming a more important role in how medical devices are procured, especially capital intensive medical equipment. Therefore, pricing is no longer the first priority to consider in medical device purchasing.

What does become more important is understanding the nuances of the tendering system, the key criteria for purchasing decisions, and the data that drives these decisions. Unfortunately, there is not a national standard for tendering systems and they may differ greatly between provinces. Additionally, recent tender system reform may require a nationwide system to be implemented which could create additional barriers for manufacturers.

Andrew Chen, PwC Director and China Medical Device Leader, believes that, “The China healthcare market is undergoing a series of transformations. The device industry will follow the footsteps of the pharma companies, which saw the raising of the bars for regulations, pricing, market access, and product requirements.Many companies miss the opportunity because they lack the forward-looking view and only react to an issue after the fact.”

Understanding the complex and multileveled role of the Chinese government can assist to navigate the medtech world there. 

The market approval process is also difficult to navigate, while being important to understand. As it stands now, there is a separate process for domestic and imported devices, both of which are receiving a greater level of scrutiny. And once the device has been approved, it must be re-registered in four years using the same process used for initial approval. This is considered by most as inefficient and costly, but that’s the current reality.

3. Paying Close Attention To Chinese Healthcare Reform

By expanding insurance coverage and government expenditure, healthcare reform in China has improved overall access to healthcare. Recent trends have illustrated greater percentage of government spending has been on reform initiatives, and it is expected to at least maintain this level into the foreseeable future.

However, it is unclear if these initiatives will drive efficiencies or erect hurdles, or how much this is specifically applicable to medtech, so it becomes increasingly important keep a close eye on hot button reform topics (i.e. tendering system, etc.)  

In addition, as more and more hospitals are undergoing the reform process, profits have shifted from those generated from consumables to those generated from service charges.  The focus has been on the solutions that a medical device company can provide to improve hospital performance. The desire to shift from point of care to disease continuum management, volume vs. performance, is no different from the health care provider (HCP) requirements in the U.S.

However, careful consideration of different business models to engage the HCP while they evolve through the journey is key. PwC has successfully helped several of our clients in designing multichannel solutions for companies in China.

4. Commitment in China. Getting “glocal” to stay competitive

With many different and unique sub-markets, China is a complex market that is not easily defined when it comes to growth opportunities. Penetrating into the different market segments requires patience and commitment, and establishing the right control measures to balance the risk versus reward decision.

The first mover advantage in China still exists, but the emergence of strong domestic players makes it increasingly difficult to be successful. Multinational companies need to focus on how to be Global-Local or ‘glocal’ to ensure their operations are nimble and effective. Domestic and multi-national corporations (MNCs) alike need to delicately balance macro-global strategies with locally tailored market needs.  

--- By James S. Varelis, Principal, PwC Health Industries, Pharmaceutical & Life Sciences sector

How to Turn Surgical Robots into Shapeshifters

A group of U.S. and German researchers think they've come upon a materials innovation that could enable deformable surgical robots--and perhaps other types of exotic medical devices.

Anette Hosoi, a professor of mechanical engineering and applied mathematics at MIT, and her former graduate student Nadia Cheng, worked alongside researchers at the Max Planck Institute for Dynamics and Self-Organization and Stony Brook University to experiment with phase-changing material built from wax and foam, according to MIT News.

The innovation was actually pretty simple: polyurethane foam placed in a bath of melted wax.

"A lot of materials innovation can be very expensive, but in this case you could just buy really low-cost polyurethane foam and some wax from a craft store," Cheng told MIT News.

The research team's work is described in a recent paper in the journal Macromolecular Materials and Engineering. They envision the material could be used in robots capable of moving inside the human body without damaging organs or blood vessels along the way. Another use involves robots capable to squeezing in between rubble in search and rescue operations.

MIT Squishy Robots
MIT researchers have been working on 3-D printed scaffolds that can morph from being rigid, left, to being soft and compliant, right. (Photo courtesy of MIT News)

Working with Waltham, MA-based robotics company Boston Dynamics, the researchers started developing the material as part of the Chemical Robots program of the Defense Advanced Research Projects Agency (DARPA).

Hosoi, Cheng, and others decided the foam was optimal because it can be squeezed to fraction of its normal size, but bounce back. The wax meanwhile can transform from hard to soft and pliable through moderate heating. This is possible by applying an electrical current via a wire run along each of the coated foam struts.

Turn off the current, and the wax returns to its rigid state. Better yet, the melting does away with any previous damage to the wax.

"This material is self-healing," Hosoi said. "So if you push it too far and fracture the coating, you can heat it and then cool it, and the structure returns to its original configuration."

Hosoi, Cheng, and colleagues found they could further enhance their shape-shifting material through using a 3-D printer to carefully control the position of each of the struts and pores in a foam lattice structure. Hosoi also suspects the wax could be replaced by a stronger material such as solder.

Refresh your medical device industry knowledge at MEDevice San Diego, September 10-11, 2014.

The MIT team is also exploring unconventional materials for robotics, such as magnetorheological and electrorheological fluids that consist of a liquid with particles suspended inside. Such materials can switch from a soft to a rigid state when a magnetic or electric field is applied.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker.

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Study: Patients are More Honest With Virtual Humans

Study: Patients are More Honest With Virtual Humans

Clinicians and doctors take note. When it comes to honesty in disclosure, patients prefer a computer-simulated human to the real thing. According to a first-of-its-kind study released by the University of Southern California (USC) and published in the journal Computers in Human Behavior, virtual humans (VHs) elicited more honest answers from patients about their symptoms, regardless of how potentially embarrassing the information was.

Using SimSensei, USC researchers render a virtual human to interact with patients. [image via USC Institute for Creative Technologies]
The researchers, led by Gale Lucas, a social psychologist at USC's Institute for Creative Technologies (ICT), recruited 239 adults, ages 18-65, to interact with a virtual human as if they were being admitted into a clinic or hospital. Subjects interacted through SimSensei, an application developed at the ICT that renders a computer-generated person and uses realtime sensing and behavior recognition to detect signs of depression and other mental illness.
The participants were randomly told that the VH was either fully-automated or being remotely controlled by a human whom they would never see or meet. After analyzing video of the human-VH interactions the researchers found that the belief that they were speaking with a computer program made participants more honest and open in their responses, even to personal and potentially embarrassing questions like, ‘‘Tell me about the hardest decision you’ve ever had to make.’’ and “‘Tell me about an event, or something that you wish you could erase from your memory.’’
Participants who thought they were being watched were less forthcoming, with one commenting, “I wish you hadn’t told me that other people were in the other room listening in. It was weird, like, I don’t even know these people. I would have said a lot more stuff if they weren’t there.”
“Because some participants were led to believe that a researcher in the other room was watching their responses, and others were told that the very same virtual human was completely automated, we can identify that the effect in this study was driven by the belief they were interacting with just a computer,” Lucas says via email.
Lucas and her team hope is that VHs will work alongside human doctors and clinicians to provide more comfort to patients in clinical settings and perhaps even help cut down on provider costs.The study suggests, for example, that VHs can be used to reach patients in remote or sparsely populated locations where it would be costly to provide traditional health screening services.
“Virtual humans could be useful in eliciting more honest responses from, for example, cancer patients who are taking part in in clinical trials or studies,” Lucas says. “However, research suggests that cancer patients can also have especially heightened fears of disclosing information to healthcare providers. Cancer patients in clinical trials might, for example, be afraid to disclose information about side effects because they worry the cancer might progress if doctors, in turn, decide to reduce or discontinue that treatment.”
But is this really a case of human's bonding with a computer-generated face or is it just that we're more honest when we think we're being anonymous? “In our research, the effect of being unobserved on disclosure held even though participants knew that their responses would be viewed by researchers in the future. They knew that they were being videotaped and that the tape of their session would be viewed by researchers later,” Lucas says.
-Chris Wiltz, Associate Editor, MD+DI