Archive for March 2012
Jerry Sanders, one of the medical device industry’s top entrepreneurs, visited Saïd Business School last month for a series of masterclasses on his role in the startup industry. Sanders’ firm San Francisco Science is legendary for its ability to identify promising innovatons that big medical device companies will pay handsomely for. Given the firm’s success, it was quite a shock when Sanders acknowledged that SF Science’s activities were being gradually run down because of what he believed to be the decreasing attractiveness of the market for independent medical device developers. To that effect, Sanders has reduced the number of deals he runs per year from greater than twenty to two active deals currently and only takes on new projects that meet an unusually high level of return for the risk involved.
To summarize Sanders’ argument, independent medical device firms — often only inventor, engineer, financial-whiz, and a few support staff — have been disproportionately impacted by the FDA’s increasing conservatism in the approval of new drugs and medical devices. Following the Vioxx recall, regulatory approval has become both more difficult and more expensive. This constellation of problems has made it near- impossible for a small medical device firm with perhaps 2-3 early-stage products to actually become commercially successful on its own. Essentially, the only option available to bring a medical device to market is to quickly identify a consolidated medical device company (e.g., Johnson & Johnson, Covidien) who is interested in adding a particular innovation into an existing product platform. This situation puts independent medical device innovators into a difficult strategic position. Rarely will more than one or two of the diversified device companies have interest in a particular innovation, but the inventor is often looking for a quick outcome that either funds him or her to progress with further development or exit and move on to something else. A desperate seller and a large, powerful buyer allows for the latter to capture much of the value generated from the deal and leaves the entrepreneur with limited upside.
Does Signostics even have a chance? (Courtesy: Signostics)
To use a real-world example from an earlier post, has the GE VScan device already beaten other handheld ultrasound competitors like Signostic’s Signos Personal Ultrasound because whatever incremental feature benefit Signostics may have will never allow the firm to compete with such an established player in a highly regulated industry? According to some of the leading lights of this industry, the only option for many of these smaller firms is early exit.
What explains Sanders’ complete exit from this industry is that the difficulties he spoke of have little or no chance of disappearing soon. The contentious state of American politics makes ambitious change at the FDA highly unlikely in the near future (although future rumblings do exist). With the increasing role of corporate influence on future regulation, it is likely that any reforms to the FDA device approval process will likely benefit large diversified device firms as much if not more than they do the smaller independent device makers. During a masterclass, Sanders noted that contrary to conventional wisdom “Big Business” (defined here as large consolidated device makers) often welcomes increased regulatory oversight because such hurdles disproportionately hurt small, new entrants to their established industries.
While incremental improvements to existing medical devices will continue to be churned out by the “majors,” the current business and regulatory environment of the medical device industry make the emergence of new, disruptive innovations far less likely.
For those of you familiar with my background and specific research interests in global health and quality improvement, it should be no surprise that I routinely get asked how do I connect two very disparate fields of medicine like global health and quality improvement. Just last week, a fellow of my college at Oxford, asked for further clarification. I still find myself falling into the trap of assuming the overlap between the two is obvious to others since that overlap is where most of academic work currently focuses. This particular fellow was a healthcare economist with an interest in financial crises and their impact on global health, so I incorrectly assumed that he would “get it.” This lack of discernment is unusually common, and I believe it only reinforces the relative lack of interest even within the global health establishment for the issues that I find most engaging.
Before one can understand my area of overlap between these two fields, it is important that I re-frame what these terms mean. To understand how I use the terms and my particular interests within each, most would benefit by briefly reviewing prior posts on the two (global health, quality improvement). At the macro-level, I find both of fields fascinating and ultimately the causative factor for why I am pursuing a career in academic medicine (i.e., not private practice). For me, these two fields are the current focus of healthcare’s greatest obstacles. Globally, we have billions of people around the world who cannot access even basic healthcare services aligned to 21st century standards of clinical care. In the industrialized world, we find that most countries are unable to provide healthcare services in a manner that maximizes capabilities given a set of constrained financial resources.
Albeit in different contexts, the kinds of systematic and institutional inefficiencies that ultimately impair the delivery of quality healthcare in modern health systems like the U.S. are also evident in the delivery of healthcare in even the most resource-limited environments. Global health is quickly reaching a point where the technical capabilities needed to address the world’s healthcare problems (e.g., effective antibiotics, vaccine development and production technologies, low-cost anesthesia equipment) are available, but global health interventions often lack the operational competence needed to achieve their goals.
My belief and where much of my research efforts are focused is that we can use the quality improvement frameworks being developed for modern healthcare systems to also improve the healthcare delivery in less developed healthcare settings as well. Global surgery is an ideal area in which to adopt these analytic models because of the process-driven nature of the surgical resource procurement (e.g., anesthesia and surgical equipment, pharmaceuticals for infection prevention and anesthesia) and direct patient care.
Outside Hôpital St. Thérèse (Hinche, Haiti)
“Global surgery” is a relatively new addition to its parent field of global health. Although the notion of surgeons from the industrialized world sharing skills and equipment with resource-scarce environments has been around for decades (largely arising out of the medical operations of the world powers’ militaries), “global surgery” as an academic interest within traditional global health circles has emerged only recently. The increasing interest in the global burden of surgical disease has largely paralleled the relatively new awareness of noncommunicable disease as a global problem.
I should be clear that a consensus has only just begun to form in the last 10 years around the broadening of the definition of global health. For example, although there is an increasing effort to use “global health” in a more appropriate, literal sense, many well-qualified academics still associate the term with the unique disease burden of low- and middle-income countries. Say “global health” in a professional healthcare setting and poor, non-white people suffering from malaria or HIV is what the majority of the audience will be envisioning. It is only recently that the more complex problems of noncommunicable diseases like diabetes and cancer that span the industrialized and developing world have been authentically engaged by the global health community.
Inside Hôpital St. Thérèse (Hinche, Haiti)
Within global surgery, I am most interested in the persistent difficulty we have of finding the means of providing even the most basic surgical care for all the world’s communities. Although it will be decades before the poorest countries will have the means of performing complex surgeries like spinal fusions or coronary artery bypasses, the infrastructure and skills necessary to perform hernia repairs and thyroidectomies is well within reach. These latter cases may be less “newsworthy” but they represent substantial quality-of-life improvements for patients suffering from surgically-correctable disease. Although the field of global surgery is still in its nascent stages, a number of expert bodies are catalyzing around the idea of essential surgical care (e.g., ASAP Today, WHO GIEESC) and how best to deliver it.
A note on the pictures: The pictures in this post include two from a humanitarian surgical mission I joined in June 2009. This was the first of a series of many missions (more in a later blog post). I inserted these two images here to demonstrate how even the limited infrastructure of Hôpital St. Thérèse (see “outside” photo) can provide the platform for delivering basic surgical care (see “inside” photo). The bottom picture is provided courtesy of Nick Vittone of AtlantaAperature.com.
Ira Leeds
Blue Oceans for Health 