Medical Device Link.

Gartner's Hagemeyer: Applying industry's lessons.

In light of a report recently issued by FDA's Center for Devices and Radiological Health that criticized the ability of the agency to monitor postmarket medical device safety issues, FDA has launched a postmarket transformation initiative, a significant element of which will focus on building and managing "information and knowledge systems." Many of the current inadequacies cited within FDA's postmarket monitoring program are mirror images of challenges that manufacturers have already identified and addressed in their own complaints management processes.

In this month's lead article, Dale Hagemeyer, research director for the manufacturing sector of industry advisory services at Gartner Inc. (Stamford, CT), provides insight into the capabilities of best-in-class complaints and adverse-events management systems

Continuing a well-established pattern of financial performance that is relatively free from the cyclical nature of many high-technology sectors, the world's leading public medical device manufacturers generally experienced a good year in 2005, with 12 of the top 20 companies posting double-digit revenue gains over 2004. The company showing the greatest year-over-year improvement is St. Jude Medical Inc. (St. Paul, MN), whose revenues soared from $2.29 billion to $2.92 billion—a gain of more than 27%. A good portion of St. Jude's growth is believed to be market share captured from Guidant Corp. (Indianapolis), which saw sales decline by 5.7% in the face of product failures and extensive recalls in its cardiac rhythm management line. The only other company to report declining revenues was Kodak Health Group, a unit of Eastman Kodak Co. (Rochester, NY), which reported a 1.2% slippage in the hotly contested medical imaging capital equipment market.

The orthopedics sector turned in impressive numbers, with Stryker Corp. (Kalamazoo, MI), Smith & Nephew plc (London), and Zimmer Holdings Inc. (Warsaw, IN) posting sales gains of 14.3%, 12.7%, and 10.4% respectively. Johnson & Johnson Inc. (J&J; New Brunswick, NJ), GE Healthcare (Chalfont St. Giles, UK), and Medtronic Inc. (Minneapolis) held on to the top three spots again this year. [ More ]

Rapid-diagnostics manufacturer Inverness Medical Innovations Inc. (Waltham, MA) has entered into a definitive agreement to purchase Acon Laboratories Inc. (San Diego) for $175 million, subject to adjustment for working capital and net indebtedness. The acquisition, which adds to Inverness's already dominant position in the $630 million pregnancy and fertility consumer diagnostics market, ends more than three years of legal wrangling between the two companies. In its 2002 lawsuit, Inverness, along with its Unipath Diagnostics unit, claimed that Acon's test-strip products infringed its patent for colored-particle immunoassays.

As part of the deal, Inverness will also acquire Acon's newly built manufacturing facility in Hangzhou, China. Inverness has announced a strategy to lower production costs by moving much of its manufacturing operations to China.

"The settlement and related business transaction between Acon and Inverness is an excellent result for both companies," said David Doyle, an attorney at Morrison and Foerster, the law firm that represented Acon in its patent litigation and advised the company on its acquisition. "The willingness of both companies, after three years of intense litigation, to step back and look for a business solution based on mutual respect is a credit to the flexibility and resourcefulness of both companies."
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Fonar Corp. (Melville, NY), a manufacturer of medical imaging equipment, is set to launch a series of television commercials to promote its Upright line of magnetic resonance imaging (MRI) systems. Fonar has retained Leapfrog Advertising (New York City) to create and distribute the 30-second spots, which will run on national cable shows during both daytime and prime-time viewing hours.

"We are excited to bring the consumer's attention to the availability of the Fonar Upright MRI and its potential for helping patients suffering from back pain and other ailments," said Raymond Damadian, MD, president and founder of Fonar. No stranger to consumer promotion, Fonar has previously run both radio and television ads in the New York metro market. In addition, the company

Last September, Boston Scientific Corp. (Natick, MA) ended a 10-year contentious relationship with Israeli stent manufacturer Medinol Ltd. (Tel Aviv, Israel) after paying $750 million to settle a long-standing patent dispute. But now, with its acquisition of Guidant Corp. (Indianapolis) a near certainty, Boston Scientific finds itself embroiled with Medinol yet again.

In late February, a federal court in the southern district of New York ruled that a coronary stent manufactured by Guidant infringes on a Medinol patent. If Medinol's claim holds up, the company is expected to seek royalty payments representing as much as 20% of all infringing stent sales. Neither Guidant nor Medinol issued a public comment on the dispute, but Paul Donovan, Boston Scientific's senior vice president for corporate communications, said, "We intend to fight this vigorously." [ More ]

Rehabilitation and regeneration product manufacturer dj Orthopedics Inc. (Vista, CA), which targets the nonoperative orthopedic and spine markets, has announced plans to acquire rival Aircast Inc. (Summit, NJ) for $290 million in cash. Industry analysts generally hailed the move as further strengthening dj Orthopedics' presence in the rapidly growing sports medicine and rehabilitation markets. The acquisition will reportedly double the company's international sales while adding a line of complementary—and formerly competitive—products, as well as Aircast's vascular systems devices.

Cross: Executing on a
strategic growth plan.

Leslie H. Cross, dj Orthopedics' president and CEO, said, "This acquisition clearly fits squarely into our growth strategy of strengthening our lead in our core domestic businesses and expanding our international business so it becomes a larger piece of the total company." Cross also emphasized that the deal opens up new opportunities for the company in the growing hospital-based vascular systems business. He expects Aircast's VenaFlow system to be "a solid contributor" to the company's future growth. [ More ]

The $6 billion worldwide market for drug-eluting coronary stents gained another entry in late February as the CoStar stent manufactured by Conor Medsystems Inc. (Menlo Park, CA) received the CE mark from European regulators. Unlike other drug-eluting stents on the market, the CoStar design features hundreds of holes or reservoirs for holding the drug. This design is in

contrast to those of conventional drug-eluting stents, in which the drug is layered on top of the stent's polymer coating.

In related news, the United Kingdom's High Court of Justice ruled that Conor's use of the drug paclitaxel does not infringe the drug-coating stent technology patented by Angiotech Pharmaceuticals Inc. (Toronto) and licensed to Boston Scientific Corp. (Natick, MA) for its market-leading Taxus stent. Angiotech plans to appeal, and Conor faces similar suits in the Netherlands, Australia, and the United States.
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More than any other industry sector, medical manufacturers are targeting improved customer satisfaction and overall profitability through their postsales service operations, according to new research from consulting firm Aberdeen Group (Boston). Additionally, the study found that medical manufacturers have outpaced other sectors in their adoption of technology, including deploying service parts planning and execution systems, performance reporting and analytics solutions, and mobile field service solutions. [ More ]

Saginaw Future Inc., a Michigan-based economic development agency, has launched a medical devices and technology initiative designed to attract, retain, and assist medical device, diagnostic, and life sciences firms in the central region of the state. To date, the agency has raised nearly $700,000 for the initiative and is applying for a $2 million grant from a state fund designed to promote job growth and new investment in the state.

Christophe Sevrain, former head of Delphi Medical Systems Corp. (Troy, MI), has been contracted to

lead the new initiative. "Pharmaceuticals, medical devices, instrumentation, diagnostics, and biotech research are growing faster in Michigan than in any other state," he says. "Saginaw Valley's role will help keep that momentum going." [ More ]

Edward J. Ludwig, president and CEO of Becton, Dickinson and Co. (Franklin Lakes, NJ), has taken the reins as chair of the AdvaMed board of directors. He succeeds Arthur D. Collins Jr., chairman and CEO of Medtronic Inc. (Minneapolis), whose tenure was marked by unprecedented growth in membership.

"Over the last 100 years, our sector has grown steadily, but in many respects, quietly," Ludwig said during his incoming address, delivered earlier this month at the AdvaMed annual meeting. "It's now time to deepen and accelerate our efforts in tandem with other players to better communicate our value to policymakers and the public. [ More ]