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In Ortho Implants, Diamonds Are a Coating’s Best Friend

Future artificial hips and knees will face two interlinked design and materials challenges: They will have to be able to prevent the release of particulate debris while surviving in the body for years on end. However, as evidenced by the 2010 recall of DePuy Orthopaedics's ASR XL acetabular and ASR hip resurfacing systems, today's hip and knee implants can generate debris, leading to inflammation and the need for revision surgeries. Among the efforts to develop orthopedic implant coatings designed to prevent this phenomenon, researchers at the University of Alabama at Birmingham (UAB) are developing a diamond-based coating technology that they say can reduce particle generation to a minimum and vastly increase the longevity of orthopedic implants.

In the United States today, 328,000 hip replacements and 418,000 knee replacements are performed each year, remarks Yogesh K. Vohra, professor in the department of physics at UAB and director of the UAB Center for Nanoscale Materials and Biointegration. However, most of these implants contain particle-shedding materials. For example, current orthopedic coating technologies are often made from ultra-high-molecular-weight polyethylene, which sheds plastic particles over time. The resulting osteolysis, according to Vohra, leads to a revision rate of about 15%.

Diamond-based coatings, in contrast, do not display these negative performance characteristics, Vohra comments. In past studies, they have been shown to reduce wear debris volume markedly compared with first-generation alloy and polyethylene joint parts. In addition, laboratory tests indicate that they last longer than conventional implants by a factor of two to three. "If a conventional total joint replacement has a 10-year life span, our technology has a life span of more than 30 years," Vohra adds. "We have also subjected hip and knee implant materials to several million cycles of motion, and the wear is minimal.

The nanodiamond coating under development at UAB involves the deposition of a smooth nanostructured diamond film onto the metal surfaces of orthopedic implants. Capable of adhering to metals, the coating has the same roughness as that of the starting material. "Our contribution to diamond-coating technology has been in how we bond these diamond materials onto metals," Vohra comments. "If you cross-section the implant after deposition, the film does not come off because it adheres so well to the metal substrate."

To create the nanodiamond coating, the UAB team uses a microwave plasma chemical deposition system containing carbon-containing gases such as methane or hydrogen. (For more on this technology, see the following slide, "Diamond-on-Diamond: The Future of Orthopedic Implant Coatings.") Then, nitrogen is added to the reactor chamber. "Before the addition of nitrogen, the base metal surface contains very rough-looking diamond grains at the micron scale," Vohra explains. "After nitrogen treatment, the diamond grains measure roughly 50 nm, although individual grains can be as small as 5 to 6 nm. That's our real innovation. Once you grow the nanodiamond grains, you don't have to polish the surface. After deposition, this surface resembles a mirror." A mirrorlike surface is beneficial, he adds, because diamonds are a very hard material and thus difficult and expensive to polish.

Measuring approximately 5 µm in thickness, the UAB diamond coating does not suffer from wear, Vohra says. After 2 million rubbing cycles, it is still intact. In addition, because diamonds are resistant to acids, etching, or environmental effects, the coating is compatible with any type of sterilization method.

In addition to displaying excellent wear characteristics, the nanodiamond coating has been shown to be nontoxic to living cells. For example, in tests performed at UAB, scavenging immune cells called macrophages were exposed to nanodiamonds ranging in size from 6 to 500 nm at concentrations of 0 to 200 mg per millimeter. At concentrations of less than 50 mg per milliliter of solution--the concentration at which they generate debris--the nanodiamonds were not toxic to macrophages. Because of their small size and low concentration, nanodiamonds are thus engulfed by macrophages, causing the macrophages to release fewer inflammatory chemicals.

"Diamonds create particles," Vohra comments. "But suppose in the worst-case scenario that you have diamond debris in the bloodstream or in the tissue surround the implant. What will be the body's reaction? We have shown that whatever debris is created, it will be so small that it will be encapsulated by macrophages." While the UAB team would prefer to develop a coating that does not release debris, any debris that is generated by the nanodiamond coating will contain smaller particles than those generated by the metal or plastic implants manufactured today, Vohra adds.

To date, the UAB researchers have tested its nanodiamond technology on titanium-alloy implants, although they are pursuing efforts to develop a coating that can be deposited onto cobalt-chromium or steel. "But our argument is that if diamond is going to last forever, the base metal really doesn't matter," Vohra says. "We'll go with the metal that promises the best coating adhesion."

While the UAB team has a phase 2 grant from the National Institutes of Health (NIH) to produce a nanodiamond-coated dental implant in conjunction with Vista Engineering (Birmingham, AL) to treat temporomandibular joint disease, it has received a separate NIH grant to pursue the development of a coating for total joint hip and knee implants. However, the dental implant work is close to completion, while the work to develop the nanodiamond coating for use with hip and knee implants is still in the simulation phase.

"The temporomandibular joint market is very small," Vohra notes. "Maybe you're looking at 60,000 to 100,000 implants per year. But given the aging population, hip and knee implantations are expected to grow by 700% by 2030; an increasing fraction of Baby Boomers are getting joint replacements." To meet that growing need, the UAB researchers hope that existing orthopedic implants, such as those based on zirconium or polyethylene on cobalt-chromium, will be replaced with diamond-on-diamond implants displaying improved wear and longevity characteristics. --Bob Michaels

The New Commerce: How Sales Models are Changing in Medical Devices

An enormous change is on the horizon for medical device companies. For years many device companies have built their commercial models around a combination of innovative products and strong relationships with healthcare professionals (HCPs). These products and relationships have resulted in preferred product designations among HPCs, as well as comfort with single companies as suppliers. Thus interdependency has rewarded salespersons and their companies, and perhaps made both just a bit complacent.
 

But significant change is coming. This change will influence product perception, sales relationships, and ultimately, the revenue model that has been in place for years within the device marketplace. Medical device companies must consider major changes to the established commercial models to effectively compete in the marketplace of the future.
Dramatic changes in the commercial model are being driven by four factors: healthcare reform, sales and contracting models, promotion channels, and cost reductions and reallocations.
 

Healthcare Reform. Government and private payers are struggling to ensure clinical effectiveness while controlling costs across a healthcare model that is considered by many to be unsustainable. In response, governments around the world are introducing policies designed to control the cost of healthcare.
 

Complex Sales and Contracting Models. Hospital administrators and payers are exerting greater influence and increasingly focusing purchase decisions around clinical and economic value. These new economic stakeholders require different sales approaches, including comparative effectiveness studies, outcomes-based contracts, and bundled purchasing models.
 

New Promotional Channels. Medical device companies face an increasing variety of channels by which to promote their products, such as direct sales, customer support, e-mail campaigns, and wellness communities. HCPs and patients are increasingly using digital channels for medical information, offering device companies an opportunity to establish intimate, bidirectional connections with stakeholders, often at a low price.
 

Cost Reduction and Reallocation. Device companies have a substantial need to optimize their cost bases to address price pressures, shift resources to higher growth markets, invest in innovative solutions, promote products to a larger stakeholder base, and address continued performance demands from Wall Street.
 

Leading medical device companies are transforming their commercial models to respond to these new market realities. Commercial success must be driven by a holistic commercial model transformation that address key operating paradigms in sales and marketing.
 

The New Sales Tools
 

The medical device sales organization of the future is a lean, agile organization that aligns itself to provide effective clinical and economic information to a growing stakeholder community. It is focused on solutions and outcomes, not products. The new sales team considers the needs of individual decision-makers and their preferences for interaction, and then aligns the organization accordingly. To that end, new sales roles are being created beyond typical geographic model and include key account managers, inside sales, clinical specialists, administrative sales, and contract specialists. These new roles provide different skills and are available at a different price point, enabling leading medical device companies to optimize cost while effectively engaging with an evolving client base.
 

Promotion Optimization. Companies must determine the most effective channels of communications and promotions with key stakeholders. Multichannel promotional approaches can be used for a wide variety of purposes—from creating awareness to education to increasing brand preference. But success will be limited if each channel is operated in isolation from the others. The complex mix of promotional channels must be integrated to effectively support the pharmaceuticals buying process. Leveraging advanced multichannel analytics, MD marketers can optimize their promotional spend and improve performance by effectively integrating these new channels in their promotional mix.
 

Digital Marketing. Nonpersonal promotion opportunities are growing for medical device companies. Leveraging digital and social media, these companies can increase awareness, support diagnosis and treatment choices, and improve compliance with best-practice clinical approaches. Many companies have embraced product portals for providers and patients, but this is only the tip of the iceberg. Such tools provide a mechanism for these stakeholders to pull information about a product. However, they lack the rich, bidirectional communications of the emerging social networks. Leading companies are embracing wellness portals and other e-communities to engage in the decision dialog and ensure that patients, providers, and payers understand the value of their products. Using emerging social listening capabilities, companies can gain new real-time insights into market perceptions of their products and more effectively manage their brands.
 

Advanced Analytics. Emerging promotional channels are highly measurable and provide opportunities to better assess performance and react to the market. Collecting and mining the big data generated across channels about decision-makers, product perceptions and the competition offer new insights to guide brand strategies. Combining this new data with traditional data and analytics can offer a comprehensive view of the market and enable rapid response to changing market dynamics. Leading companies are taking steps to improve their data management and analytics to convert raw data into predictive insights. Over time, these companies will setup customer innovation labs that allow them to effectively analyze the data in near real-time and adjust their promotional approaches accordingly.
 

Comparative Effectiveness. With payer influence on the rise and concern over quality and efficacy, companies must better understand how their products fit within the procedures in which they are used and in the hospital ecosystems overall. Leveraging new health economics teams that are closely aligned with marketing departments, they craft effective messaging and consider alternative business models to ensure market success. In some cases, a stronger integration with the hospital ecosystem through remote monitoring or more effective patient intervention that reduces readmission may be more valuable to the hospital than the device itself. Leading companies will use comparative effectiveness and patient flow analysis to better understand their customer’s customer—the patient—and provide services that optimize the clinical and economic effectiveness.
 

Leveraging these new commercial approaches, leading device companies are positioning themselves to effectively respond to substantial changes in the healthcare marketplace. This commercial transformation offers device companies the opportunity to become more intimate with patients, providers and payers, and enhance their important role in healthcare innovation.
 

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Don Otterbein is a vice president within Cognizant’s Life Sciences Business Unit and leads its sales and marketing practice. He can be reached at [email protected] Richard Lincoff is the medical devices practice leader within Cognizant’s Life Sciences business unit. Richard can be reached at [email protected]
Bruce Carlson is a principal director in Cognizant’s Analytics practice, and manages the firm’s Midwest region. Bruce can be reached at [email protected]

 

R&D—A Neglected Topic in the 2012 Election Debate

Health topics have taken the center stage in the presidential debate this year, with the healthcare reform and the device tax widely debated. But the presidential candidates are neglecting a core issue—research and development—argues G. Pascal Zachary, Professor of practice at the Consortium for Science Policy & Outcomes at Arizona State University, in an article on IEEE Spectrum.

The US government spends $140 billion annually on R&D. A large amount of this money is spent on health research, such as projects funded by the National Institutes of Health. The NIH spends about $30 billion a year, and much of this is spent on science and biomedical engineering. This money would be better spent if the research was directly linked to healthcare services and the needs of end users, instead of focusing on origins of diseases and similar studies. Perhaps internal competition between different government agencies through challenges and prizes can help facilitate innovation, Zachary suggests. Zachary recognises, however, that R&D is not a hot election topic and sees little hope that it will be getting any more attention this year than during previous elections. At a minimum, Zachary asks that the presidential candidates read the book The Moon and the Ghetto by Richard R. Nelson, which discusses how the government agencies could better solve problems by reorganising the structure and management of research programs.

—Camilla Andersson

Will the Trend of Mergers and Acquisitions in the Medical Device Industry Continue?

Reports by analysts have shown a significant uptick in mergers and acquisitions in medical device and life science companies in the past six years. Since 2005 diagnostic, orthopedic, and cardiovascular devices have enjoyed the largest investments while the surgical and vascular devices sectors saw the highest mulitples versus dollars deployed. MPMN spoke with Johnathan Norris managing director of Silicon Valley Bank and author of “Continued Rebound: Trends in Life Science M&A" about the trend. 

Norris sees two factors driving medical device merges and acquisitions:

"From my perspective, there are two different factors at play here. One is cost-effectiveness. Does the merger or acquisition opportunity really reduce the overall cost of medical procedures or the medical device itself? Another huge driver is the increasing prevalence of minimally invasive surgeries. Minimally invasive devices are replacing drugs."
He cautions however that the economic downturn has slowed M&A activity a bit and that the effects are just now beginning to show. However he is also confident that any downturn will only be temporary in the face of so much innovation coming from the medical device industry
"Innovation is still alive and well. However, right now, venture has been hampered by a difficult-to-read FDA environment. A large number of early-stage focused device firms are out raising new funds, and the majority of the firms that are out fundraising typically do not make many new investments. However, many of the firms that are out fundraising at this time have a proven record of getting exits over the goal line, and I think that many of them will end up raising funds. But it’s just taking a lot longer than people had predicted. Because of that, many noteworthy venture firms are out of the market in terms of doing a lot of new investments. Over the next year, most of these funds will raise monies, and they’ll go to the market and invest. Therefore, while innovation is going to continue to be supplied by the life science venture community, at this point, we’re experiencing a temporary lull."
Ulimately, though the pace of the market may change, the attitude is that merges and acquisitions will continue within the medical device industry. Ultimately, medical device mergers and acquisitions could also have a salutary effect on suppliers and contract manufacturers as the industry’s bigger fish gobble up the little fish and expand medical device commercialization efforts.
 
You can read the full interiew here:

This Week in Devices [8/3/2012]: Toddler Receives 3-D Printed Exoskeleton; Elective Amputation for Athletes; Photoacoustics Aren't All They're Cracked Up to be; Spray-On Skin For Ulcers

Will Athletes Undergo Elective Amputation for Better Performance?

  • The debate on Oscar Pistorius' Olympic performance continues. Now there's a new question: Will athletes someday undergo exective amputation and body part replacement procedures in order to enhance their performance?
    Source: Institute for Ethics and Emerging Technologies

Photoacoustic Scans May Not Effectively Detect Cancer

  • Photoacoustic scans use laser light and sound to detect cancer cells earlier than x-rays. But researchers say the technology still only has limited usefulness and effectiveness.
    Source: Medical News Today

Spray-On Skin Helps Treat Ulcers

  • U.S. And Canadian researchers have developed a coating of skin cells and blood clotting that helps treat ulcers more rapidly than other treatments.
    Source: BBC Health

3-D Printed Exoskeleton Helps Disabled Toddler

  • Two-year old Emma has a condition known as arthrogryposis that prevents her from moving her arms. But researchers at the University of Delaware have created a tiny exoskeleton for her using 3-D printing technology.
    Source: io9

 

Birmingham: Rising Star in the South

When you think of the biotech and medical device manufacturing industries in the United States, California's Silicon Valley, Massachusetts's high-tech clusters, and Minnesota's LifeScience Alley immediately come to mind. It is unlikely, however, that you'll give much thought to Birmingham, AL. At least I didn't before visiting the area in May as part of a press tour organized by the Birmingham Business Alliance (BBA).

Unbeknown to many, however, Alabama's largest city is an important and up-and-coming hub for a variety of medtech-related companies, university research efforts, incubator activities, and government research expenditures. Among the city's seven key economic sectors, high-tech jobs, specifically those in the biological and medical technology fields, are targeted for expansion under Blueprint Birmingham, BBA's strategic plan for the region.

Birmingham is home to nearly 800 technology-based companies, making it one of the largest technology hubs in the United States. This concentration of technology-oriented enterprises is rooted both in the past and the present. Following the Civil War, Birmingham became known as the "Magic City," boasting a steel manufacturing sector rivaling steel centers in the North such as Pittsburgh and Cleveland, remarks Brian Hilson, president and CEO of BBA. When hard times hit in the 1970s, however, Birmingham--like its Northern brethren--had trouble growing beyond its industrial origins.

"At that point, a period of reset began," Hilson notes. "The University of Alabama at Birmingham (UAB) and University Hospital were founded, opening the door to medical research and helping to fill the jobs lost in the area's coal and steel industries." Today, UAB is the single-largest anchor for the Birmingham business district, employing upwards of 21,000 people. Of the hundreds of technology companies in the area, approximately 50 grew out of UAB. BBA, Hilson adds, has established a formal partnership with the university with the goal of growing the region's economy. "We want it to be a bit noisier than it is now."

One of UAB's specialties consists of melding the activities of engineering and business students to developing business plans for transferring technologies from University Blvd. to Main St., Hilson says. Thus, the university offers a course in which students build a medical device prototype and develop a viable business plan to guide the device along the path of commercialization. "Designed to mentor students interested in converting business plans into concrete plans, this program in life sciences entrepreneurship is unique to UAB," Hilson adds. A living embodiment of the nexus between research and entrepreneurship is the Innovation Depot, Birmingham's technology incubator.

While Birmingham's goal of developing a vibrant medtech sector is slowly putting the region on the map, its technology-driven activities are not taking place in a vacuum. In addition to fostering the growth of companies that design and manufacture products for a host of medical device applications, the region is home to manufacturing facilities operated by some of the world's largest companies, including Mercedes, Honda, and Hyundai. And 260 miles to the south, the ThyssenKrupp steel concern and Airbus are building facilities in Mobile, promising to expand technology and industry in the Deep South.

When all is said and done, Birmingham may yet develop into a rising medtech star next to California, Massachusetts, and Minnesota. To see why, check out the following slides detailing a variety of medical device technologies emerging from UAB and the Innovation Depot. --Bob Michaels

What’s Behind the Flurry of Medical Device M&A Activity?

Recently, Qmed Daily reported that venture-backed life science acquisitions have hit a seven-year high. Based on an analysis by Silicon Valley Bank (Santa Clara, CA) of private mergers or acquisitions involving U.S. venture capital-backed bio- and medtech companies, the article noted that there were 35 big exits since 2005 and that $12.5 billion had been invested in life science firms in the same period. Medical device technologies receiving the largest investments since 2005 included diagnostic, orthopedic, and cardiovascular devices, while sectors with the highest multiples versus dollars deployed included companies that manufacture surgical and vascular devices. In an effort to flesh out what's behind the spate of mergers and acquisitions from 2005 to 2011, MPMN spoke with Jonathan Norris, managing director of Silicon Valley Bank and author of "Continued Rebound: Trends in Life Science M&A."

While venture capital investment in innovative companies has taken a hit as a result of the uncertain economic climate, it is not dead by any stretch of the imagination, according to Norris. M&A activity and the drive to maintain the pace of innovation will continue--albeit perhaps at a different pace. Ultimately, medical device mergers and acquisitions could also have a salutary effect on suppliers and contract manufacturers as the industry's bigger fish gobble up the little fish and expand medical device commercialization efforts. --Bob Michaels

MPMN: What are some of the technology, R&D, and business drivers behind the continued flurry of medical device mergers and acquisitions?

Norris: From my perspective, there are two different factors at play here. One is cost-effectiveness. Does the merger or acquisition opportunity really reduce the overall cost of medical procedures or the medical device itself? Another huge driver is the increasing prevalence of minimally invasive surgeries. Minimally invasive devices are replacing drugs.

One good example of M&A activity that was driven by the growth of minimally invasive medical devices was Medtronic's 2010 acquisition of Ardian. Ardian manufactures the catheter-based Symplicity renal denervation system for treating hypertension. This device enables doctors and patients to reduce the use of hypertension drugs, which are not without side effects. Ardian was able to create a device for minimally invasive procedures that produced excellent results. In this fairly substantial acquisition, Medtronic agreed to pay $800 million upfront, with potential earn outs on top of that. If you can find opportunities to remove potential harmful side effects in a minimally invasive procedure, that's is a really great M&A opportunity in the medical device area.

MPMN: Aside from the Ardian acquisition, what types of M&A activities have taken place?

Norris: The Ardian acquisition was announced in 2010 and completed in January 2011. In 2011, two different types of device acquisitions occurred. One subset involved big markets in which companies took an average of more than 10 years to exit, and the venture capital level was more than $80 to $100 million in. This subset yielded a bunch of mixed exits in terms of the actual multiple that investors were returning. In addition to slow exits, there was another bucket of M&A activity involving very-quick-to-exit device companies, in which the exit time was less than five years and the amount of money involved was less than $25 million in. The multiple back to investors in those cases was around three- to fourfold. The vast majority of the quick-to-exit cases were FDA-approved companies.

The difference between these two groups was that the former represented folks going after bigger markets and dealing with premarket approvals (PMAs) while the latter were often pursuing a 510(k), quick-to-exit pathway. There is a difference in time and cost when you are approaching a PMA project, and I think that's one of the biggest issues in the market with respect to venture capital deployment.

MPMN: What types of companies have been pursuing the longer versus the shorter exits?

Norris: In terms of technology, 510(k) approvals typically pertain to iterations of already approved products versus new products and markets, which is more of a PMA opportunity. I think we are seeing people bet on both sides of the ball. Investors are really doing well in the quicker-to-exit 510(k) iteration-type opportunities. However, that doesn't necessarily mean that this cycle is going to continue for a long time. The cycle could swing back to longer-term bigger exits as soon as there is more clarity in the market about how PMA paths are put forward, the FDA's approach to that, and when prospective acquirers are going to decide to buy. The vast majority of acquirers right now are looking for deals that are already approved, in revenue, and close to or already accretive in terms of revenue to the bottom line. That's the characteristic of what buyers are looking for now.

Thus, if you have a PMA project, not only do you need to get through approval, which can involve a lengthy and quite costly clinical trial, but you often have to raise a commercialization round, which involves additional money. One of the issues that makes it challenging for PMA-type companies to continue to move forward is the sheer cost of getting the device through FDA approval and into commercialization.

MPMN: Could you give some examples of companies in each category--those pursuing PMAs and those going the 510(k) route?

Norris: Examples of companies involved in longer-to-exit acquisitions are Concentric Medical and Salient Surgical Technologies Inc. A global provider of acute ischemic stroke intervention devices, Concentric Medical was acquired by Stryker Corp. for $135 million in an all-cash transaction in August 2011. Medtronic announced that it was acquiring Salient Surgical Technologies--a manufacturer of advanced energy devices used for hemostatic sealing of soft tissue and bone in orthopedic surgery, spine, open abdominal, and thoracic procedures--in July 2011 for $525 million.

On the earlier-stage side, M&A activity in 2011 included Medtronic's $120 million acquisition of Peak Surgical, a provider of energy surgical incision technology. Also in this category were Hologic Inc.'s $125 million acquisition of Interlace Medical, a manufacturer of a hysteroscopic tissue-removal system for the removal of submucosal fibroids and polyps, and Olympus Corp.'s acquisition of Spirus Inc., an endoscope insertion device manufacturer.

MPMN: While you may not be able to predict how this M&A activity will play out in the future, could you offer any prognoses for the next 12, 18, or 24 months?

Norris: Innovation is still alive and well. However, right now, venture has been hampered by a difficult-to-read FDA environment. A large number of early-stage focused device firms are out raising new funds, and the majority of the firms that are out fundraising typically do not make many new investments. However, many of the firms that are out fundraising at this time have a proven record of getting exits over the goal line, and I think that many of them will end up raising funds. But it's just taking a lot longer than people had predicted. Because of that, many noteworthy venture firms are out of the market in terms of doing a lot of new investments. Over the next year, most of these funds will raise monies, and they'll go to the market and invest. Therefore, while innovation is going to continue to be supplied by the life science venture community, at this point, we're experiencing a temporary lull.

MPMN: Is the investment slowdown related to the continuing effects of the Great Recession? Is tight credit a factor because banks don't want to lend money?

Norris: Yes, the slowdown is a function of the recession, and economic factors are involved. The recession also translates into a reduced number of limited partnerships that invest in venture funds because these investors have reduced capital to deploy in certain situations. As a result, you're seeing fewer active investors in the market and fewer funds being raised.

But this situation does not mean that the life science sector is dead. To the contrary, what's happened is that the folks that have proven that they have been able to achieve exits over the last few years are going to be the ones that survive. And those are the folks that in the end know how to make these exits happen. Thus, they will continue to invest in innovative technologies and put the right executive teams around these technologies to find a way of getting the exit.

I do think that the economic forces that brought us to a downturn are still holding us back a little bit from returning to where we were from 2005 to 2008. But in a sense, the question is, was medical device activity from 2005 to 2008 overfunded, or was it right sized? That's a question that only time will bear out. Overall, I think we're going to see less capital flow into venture funds and thus less venture funding for life science companies. But in the end, is this trend just a case of natural selection, which will create an abundance of really excellent companies that are going to achieve a higher percentage of M&A, or is it chronic underfunding?

Only time will tell, but I think it's part of a right sizing because from 2005 to 2008, there was overfunding of capital coming into life science ventures. Funds were invested in too many companies, and now, you're still seeing an overhang of many private companies that are still out there trying to get to exit. And I think that this overfunding involves more companies than can be rationally supported in this current environment. Overall, what's happening now is continued strong M&A interest but not enough M&A interest to support all of the companies that are still private.

Jury Award in Vaginal Mesh Lawsuit Could Open Flood Gates

A jury in Bakersfield, CA, has awarded $5 million to a plaintiff in the first major transvaginal mesh lawsuit.

Rochelle Rottenstein

Rochelle Rottenstein is a product liability attorney and the principal of Rottenstein Law Group (New York City)

Christine Scott had been treated with Bard Medical’s Avaulta mesh to treat a bladder problem. After the mesh was implanted, Scott underwent eight surgeries to treat complications stemming from the medical device.

The jury award, which was announced in late July, followed a four-year legal battle. In addition to the $5 million awarded to Scott, an additional $500,000 was awarded to her husband (the couple alleged in the suit that the device had ruined their sex life). Of the $5.5 million sum, C.R. Bard, the parent company of Bard Medical, is liable for $3.6 million; Tillakarasi Kannappan the physician who surgically implanted the mesh in 2008, is responsible for the remainder. Bard Medical stopped selling the Avaulta mesh in the United States on July 1, 2012, after FDA asked the company for new clinical trial data related to the product.

The Scott v. Kannappan case is a landmark, says Rochelle Rottenstein, principal of the Rottenstein Law Group (New York City).

“It's a significant amount awarded by a jury in a case against one of the five mesh manufacturers facing hundreds of vaginal-mesh-injury lawsuits right now," she explains.

The Scotts aren't the first people in the United States to recover compensation for vaginal mesh injuries. Claimants in litigation in Georgia settled with Mentor for injuries resulting from the company’s OB Tape mesh product. “That was a few years ago, and the amounts of the settlements remain confidential,” Rottenstein says.

Nearly 140 cases naming C.R. Bard as a defendant are pending in New Jersey state court. There are more than 600 cases against companies including Boston Scientific, American Medical Systems, and Johnson & Johnson’s Ethicon division in the mesh multidistrict litigation in the U.S. District Court for the Southern District of West Virginia. Multidistrict litigation is also underway in the U.S. District Court for the Middle District of Georgia, and mass tort cases have been filed against C.R. Bard and Gynecare in New Jersey.

“The California jury award bodes well for victims of all brands of vaginal mesh, but—since Scott was
harmed by Bard’s Avaulta mesh product—claimants in the lawsuits against Bard should be particularly encouraged by the award,” Rottenstein says.

A federal case, which Rottenstein describes as a bellwether trial, is slated to begin February 5, 2013. “Courts use bellwether cases when there is a big group of plaintiffs suing based on the same theory or claim,” she says. “These representative cases go to trial and the results help the plaintiffs in similar suits gauge how their cases will play out.”

To date, FDA has received almost 4000 reports of adverse events linked to the surgical mesh. In 2008, the agency released a warning to healthcare professionals outlining complications linked to the use of surgical mesh in treating pelvic organ prolapse and stress urinary incontinence. The agency issued a second warning July 13, 2011, as a result of a spike in reports of serious adverse events associated with the mesh.

Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz.

CROs Catch On With Medical Device OEMs

 Clinical trials are arguably the most stressful point the development process for medical devices. Companies without proper expertise risk shooting themselves in the foot by improperly conducting trials, which can set them back months or even years. To ensure the process goes smoothly, more and more medical device companies are taking a cue from the pharmaceutical industry and outsourcing their clinical trials and research to contract research organizations (CROs).

CROs—also known as clinical research organizations—have been around for about 30 years. Their traditional domain has been clinical trials, but over the past 10 years they have broadened their service offerings and are catering more to medical device manufacturers.
 
The Association of Clinical Research Organizations (ACRO), a trade association representing a number of CROs that collectively operate in more than 155 countries, estimates that the medical device industry accounts for about about 5% of its members’ business, according to a recent survey. Biotech makes up nearly another third, while the pharmaceutical industry accounts for an estimated 60%.
 
John Lewis, vice president of public affairs for the ACRO, attributes the large disparity to the fact that drug development is a longer and costlier process than device development. “When you’re looking at the development of a new drug you’re looking at 10 years and maybe $1 billion in the research and development, and you’re looking at large scale trials with thousands of patients,” he says. “Device trails tend to be much smaller and new product development, to the extent you have the 510(k) process, is just not as involved of a development process.”
 
But medical device companies are increasingly turning to CROs. The medical device CRO market in the United States, valued at $1.6 billion in 2011, is expected to more than double over the next six years, according to a recent report by market research provider GlobalData. Worldwide the medical device CRO market is expected to reach $7.2 billion by 2018.
 
We’re seeing medical device companies doing now what the pharmaceutical industry did about 10 years ago,” says Ryan Wilson, general manager of the medical device division of Medpace, a CRO serving the medical device industry. “[Medical device] companies are focusing more on R&D, distribution, sales, and patents and less on the execution of bringing something to market. Coming out of the last recession especially, we’re starting to see device companies focus more on outsourcing.”
 
And for good reason, he says. “[CROs] take a lot of the execution risk out of running a trial,” Wilson says. “We’ve seen a couple of notable cases where people have good products and then they’ve fallen down on the actual implementation of the trial and collection of data. We take a lot of that risk out.”
 
Today, CROs are also involved in areas of medical device development as diverse as animal research, regulatory affairs, approvals, reimbursement, and even marketing, Lewis says.
 
Medpace’s Wilson sees many advantages for medical device companies, big and small, in turning to CROs. “When you’re relying on individual employees you’re really hanging your hat on how good an employee that person is. That one person can set back your entire study quite significantly, whereas with a CRO it’s more about the expertise, the system, and the process of doing things where you can come in and test and qualify.”
 
CROs like Medpace now offer services in nearly every step of development. “Most [device] companies will do their first demand study on their own, and we’ll usually be brought in at a feasibility or CE Mark trail phase (in Europe), and then we’ll partner with them through the Investigational Device Exemption (IDE) in US.” Medpace can perform services including designing case report forms, getting local and country approvals, monitoring studies, claiming data, and preparing submission packages for regulatory approval.
 
As medical device companies seek to place their products in markets around the world, CROs are evolving to help them deal with regional regulatory requirements, clinical trial procedures, and standards. In the past, niche CROs catered to a specific region, so device companies often had to work with multiple CROs. Now, many CROs are one-stop shops. “Having options where that is all under one roof makes it easier and lowers the bar that much more for people being able to outsource,” Lewis says.
 
All of these things should be particularly attractive to medical device developers and OEMs given the FDA stance on CROs. “From an FDA perspective there’s fundamentally no difference if a sponsor is running a trial or if a CRO is,” Lewis says. The same regulatory structure, approval process, and data scrutiny apply to CROs as to any manufacturer who may be running clinical trials in-house. “The only tricky area is really in having defined roles and responsibilities within the role of the trail so it’s clear who’s responsible for what.”
 
Wilson says Medpace makes a point to outline and contract these things with clients. “The medical device industry has no transfer of obligations like pharmaceuticals, therefore FDA sees CROs as an extension of a manufacturer,” he says. “Any issues that come up will come up for the sponsor, not for us as the CRO. FDA holds the sponsor liable. However, our contracts will usually outline timelines, responsibilities, and penalties for the CRO.”
 
Though medical device CROs have a long way to go to match their pharmaceutical counterparts, Lewis says they are gaining momentum among medical device companies. “One thing [ACRO is] going to try to do next year is scope out the market in terms of size and research spending,” he says. “A lot of device trials are pretty small and pretty fast. There might be other reasons to outsource a device trial, other than speed…It’s a question of how much need and demand there is for CROs and how much focus they’re going to pay to the device sector.”
 
-Chris Wiltz is the Assistant Editor of MD+DI
 

Covidien Deepens Investment in China With Shanghai R&D Center

Covidien’s China strategy took a leap forward today with the opening of a new R&D facility in Shanghai.

The company’s China Technology Center will focus on designing products specifically for China and other emerging markets as well as developing local talent.

“We are dedicated to improving patient outcomes, and we recognize the immense potential of basing an R&D facility in Shanghai,” Dong Wu, Covidien’s vice president of China R&D, said in a statement. “This location will help us tap into internationally renowned experts based here in China, including world-class engineering talent.”

The 100,000-sq-ft facility, which will eventually have 300 employees, features 17 laboratories and surgical and simulation suites. The project will cost the company $45 million over three years.

The R&D center is not Covidien’s first investment in China. The company already has 10 commercial offices, a manufacturing plant, and training facilities for healthcare providers in the country. It also has partnerships with Chinese universities and has aligned itself with the healthcare priorities laid out in the country’s 12th Five-Year Plan, which include developing healthcare infrastructure.

“China is a key market in our global strategy, and this investment is a reflection of our strategic initiatives,” José E. Almeida, chairman, president, and CEO of Covidien, said in a statement.

In the company’s Q3 earnings call, Almeida said Covidien experienced 25–30% growth in some of the BRICs countries, led by China.

“China is growing exceptionally well, our deployment of our growth plan there including the infrastructure,” Almeida said on the call. “But also the sales force and how we are understanding the market and how we are penetrating several different facets of the market has been great for Covidien.”

Covidien makes medical devices for markets including vascular, soft-tissue repair, and respiratory.

Jamie Hartford is the associate editor of MD+DI. Follow her on Twitter @readMED.