By: Amy & Tim
Published: 07 Mar 2014
Marketing Steps Up in Med Tech
Historically, marketing has been the Rodney Dangerfield of med tech. We marketing people don’t get much respect. Sure we wear dark suits at the booth and talk to customers, but the med tech Sales & Marketing equation has generally been big “S” plus little “m” (or as one sales executive we know put it, marketing is just sales overhead). Enter the last decade and the virtual collapse of the traditional med tech sales model; gone are the days when reps can leverage chummy relationships with physicians to brute-force expensive new medical devices into the hospital. An autopsy would reveal many causes of death, but to name a few:
- Hospitals have given financial decision makers more muscle in purchasing decisions, e.g. value-analysis committees are actually doing value analysis
- Doctors are increasingly employed by hospitals (though surgical subspecialties are bucking this trend) and more beholden to hospital priorities
- Increased regulation of sales interactions and hospital control on rep access have made direct selling to physicians much more difficult
This is where marketing enters the scene. Success, or even survival, in the face of all these challenges requires clever, proactive and well-executed marketing efforts, with sales as the icing on top. Big “M”, littler “s”. Highest on marketing’s current agenda are:
1. Launching the right product with the right data. The marketing imperative starts during product development, making sure that the R&D folks are creating stuff that future customers actually want / need, and doing so at COGS that leave room for some profit at market-driven ASPs. With the bar on clinical evidence continuously being raised by penny-conscious customers, the marketing voice is also critical to align study designs and endpoints with purchaser and payer requirements. Unfortunately many R&D and clinical teams take a similar view of marketing as their compatriots of sales, but this is slowly changing.
2. Offering a solution, not just a product. A great technology developed with lots of customer input is a necessary but insufficient condition for driving adoption in the current constrained healthcare environment. Device companies have to solve real problems for their customers, who are generally happy to maintain the status quo that existed before the appearance of your new gizmo. One way to become a total solution provider, and capture more value, is to combine device offerings with related services. Medtronic’s acquisition of Cardiocom for $200M is a notable move in this direction (a trend S2N predicted last year). No doubt marketing will play a vital role in coupling Cardiocom’s telehealth and chronic disease management offerings with Medtronics’ vast portfolio of devices to defend and grow share, maintain premium pricing, and create competitive barriers to entry.
3. Redefining the customer. Med tech companies need to take a more expansive view of the sales targets to include new purchase decision influencers, for example the consumers of healthcare. Americans now pick up the tab for about 13% of the US healthcare tab, spending >$400B per year out of pocket. This is a customer group that med tech sales forces rarely if ever touch, and therefore lands squarely in the domain of marketing. How patients feel about their healthcare experience is also mattering more to hospitals. The CMS Value-Based Purchasing Program is tying incentive payments to hospitals performance on the dimension of patient experience, and medical device companies are well positioned to help hospitals measure up against these metrics by engaging and “delighting” patients with their device-based care.
Consumers are also starting to take a bigger role in their own health, shelling out significant cash for health trackers like Fitbit, Nike+, Withings and other wearable technologies. These “toys” are migrating to more serious medical applications, creating a gray area that offers growth opportunities for device companies. The marketeers at Alivecor, for example, are putting home EKG monitoring in the hands of patients; we recently heard of one doctor recommending the self-pay device to patients because it’s cheaper than copays and deductibles on traditional heart monitoring. Hopefully orthopedics companies are putting their marketing teams to work on exploiting the synergies between activity trackers and new hip implants to improve or demonstrate better outcomes.
In the old med tech model, Marketing got pulled in when Sales ran into trouble (usually when it was too late to do anything productive). One could say that Sales is now in a permanent bind, and Marketing needs to take the helm for a while. Just someone please tell me where I can find some good med tech marketing people…
Published: 17 Jan 2014
It's not that Symple! The Rise (and Fall?) of Renal Denervation
When we founded S2N in 2011, the emerging medtech world was still awed, no dazzled by the uber-generous 2010 acquisition of Ardian by Medtronic for more than $800M. Last week, Medtronic unceremoniously announced the failure of Symplicity, Ardian’s renal nerve denervation technology for severe hypertension, in the US pivotal trial. The wreckage is still smoking, and the damage extends beyond Medtronic and the other device behemoths like Boston Scientific and St. Jude that joined the RDN gold rush. Emerging med tech companies will feel the ripple effects, too.
First, a little history:
- Before the take out by Medtronic, Ardian had raised about $65M in equity (including some from MDT in Series C). By my sophisticated calculations, that’s a >10X return on capital for the VC’s. Sweet.
- Ardian turned that $65M into a successful pilot study, CE Mark, and initiation of the randomized, controlled, multicenter HTN-2 trial with 52 patients in the active treatment arm.
- On November 17, 2010, Ardian published 6-month data from HTN-2 in the Lancet showing that 84% of treated patients (vs. 35% of control patients) achieved a 10 mm Hg or greater drop in blood pressure. Five days later, the acquisition was announced.
- MDT initiated the 530-subject HTN-3 US pivotal trial in 2011 and completed enrollment in May 2013.
- Symplicity is available commercially in Europe, Asia, Africa and Australia and has been used in more than 5000 patients.
Before the Symplicity failure, the rich Ardian deal served as a big, juicy comp for med tech start-ups of all stripes defending the value of their novel gizmos. The deal also emboldened emerging med tech companies (and S2N) to point to CE mark as a critical risk-reducing milestone for potential acquirers.
Now, in the shadow of Symplicity’s demise, there will likely be some pencil sharpening on pre-FDA valuations, as well scrutiny on timelines and total investment required until exit. European regulators, left to sort out the on-market implications of the study failure, will no doubt reference the situation in support of tightening data requirements for new products.
Well before last week’s announcement, though, the Ardian acquisition was starting to qualify as an anomaly, not replicated by any company at that same stage, with structured deals and risk-sharing becoming more the norm. Symplicity’s downfall serves to remind us all that early stage technologies are just that – early. There is still significant technical risk and some products will fail when put to a scaled or real world test, regardless of whether that test is carried out by the small company or the big strategic that buys them. Safety does not equal efficacy, and efficacy is what matters in the end. Investor success is not the end of the journey (though it is for the investors!).
On the positive side, we don’t have to hear anymore “why can’t I get a deal like Ardian?” Envy isn’t generally a helpful business motivator, and every company has to carve its own path.
Published: 02 Jan 2014
New Year’s Resolutions for Medtech Companies
As I sit here reaching for one more stale holiday cookie, mulling the merits of spiked eggnog vs. spiked hot cider, I realize it’s time to make some New Year’s resolutions. Ugh. I much prefer hiding under the covers in blissful denial, but activation is required before the situation turns dire. Similarly, the medical device industry, still a bit complacent and bloated from the good old days, needs to confront the new reality of the lean, mean healthcare marketplace and take action.
So here are my New Year’s Resolutions for medtech companies, big and small; a little menu of aspirations for the 2014 company plan (if you don’t have a 2014 company plan, getting one should be resolution 1a):
1. Stop whining
Last I checked, the U.S. spends over $7 trillion on healthcare every year, and this vast sum is only going up, albeit at a slower but still unsustainable rate of growth. The global regulatory environment, while tightening up, is also becoming more transparent and predictable. Investors that never had the stomach or appropriate time horizons for healthcare are getting out, but others are stepping into the breach and M&A deals are still happening. Things could be a lot worse – remember 2008?
2. Truly disrupt, even yourself
Leaps in processing power, unprecedented data capture, and globalization of R&D should all be catalyzing the innovation revolution required to truly bend the cost curve of health care. The device industry should be leading the charge for technology- and information-based solutions to address the biggest cost juggernauts in healthcare – labor and infrastructure. Incremental improvements and defense of the status quo are ultimately failing strategies.
3. Invest in the data
Increasingly, there are no shortcuts to market adoption for new technologies, and existing devices are far from secure if they don’t demonstrate a clear benefit in terms of outcomes and/or economic savings. Unfortunately not much has come along to disrupt the cost of clinical trials (and we’ve been looking), but no amount of modeling and hypothesizing can replace rigorous human data when making the case to health systems, payers and clinicians who are increasingly employees of health systems. Patients, who are bearing more and more of the cost of healthcare, are “Googling” for evidence, too.
4. Know your customer better
Medtech companies traditionally excel in engineering, and also in roll-up-sleeves sales. Between invention and commercialization, though, there is often too little customer input into product and clinical development; a surefire recipe for an anemic market launch. As difficult as it may be to raise that extra money and/or spend that extra time to get solid feedback from the real world during development, it is even harder to do once a product is commercial and not hitting the mark.
5. Inspire and train the next generation
Anyone who has lingered in the medtech industry as long as I have will agree that it’s a small, almost incestuous little community, and (let’s admit it) an aging one as well. In many skill areas much needed by medtech, such as manufacturing, quality systems, regulatory affairs, clinical development, and yes even marketing, the pool of experienced professionals is often insufficient to fill our org charts. Medtech companies need to take an active role in enticing smart people to enter our industry, which has all the makings of a rewarding career (challenging, multifaceted, global, opportunity to impact on many lives). We also should commit resources to training promising talent in the specialized skills necessary for our long-term success.
Dismounting from my high horse now, a hearty pat on the back to all of the medtech companies out there confidently riding the waves of change and gearing up for a spectacular 2014!
- 07 Mar 2014: Marketing Steps Up in Med Tech
- 17 Jan 2014: It's not that Symple! The Rise (and Fall?) of Renal Denervation
- 02 Jan 2014: New Year’s Resolutions for Medtech Companies
- 25 Nov 2013: Making the Most of Scientific Meetings - 5 Tips for Emerging Medtech Companies
- 08 Oct 2013: Five Essentials for Emerging Medtech Pitch Decks
- 02 Sep 2013: Reimbursement Fundamentals for Disruptive Medical Technologies
- 30 Jul 2013: Should I Fund My Medical Device Company on Kickstarter?
- 10 Jul 2013: Medtech heads to Africa and so does S2N
- 12 Jun 2013: Defining Disruption in Emerging Medtech
- 07 May 2013: The Luck Factor for New Medical Devices
- 03 May 2013: S2N Whitepaper - Marketing for Emerging Medtech: A Stage by Stage Guide
- 21 Mar 2013: Valuation Drivers for Emerging Medical Device Companies
- 27 Feb 2013: The Rise of Robotics in Med Tech
- 14 Feb 2013: Five Marketing Essentials for Emerging Medical Technology Companies
- 31 Jan 2013: Is The Medical Device Industry Ready for Big Data?
- 11 Jan 2013: Europe Ups the Post-Market Ante for New Medical Devices
- 28 Nov 2012: KOL Matchmaking – Four Key Considerations for Medical Device Companies
- 09 Nov 2012: Election Lesson for Emerging Med-Techs - It's All About the Ground Game
- 31 Oct 2012: The New Normal in Medical Device Exits
- 27 Sep 2012: The Next Big Niche? Emerging Med-Tech in Transplant.
- 19 Sep 2012: The Three Greatest Pivots in Medtech
- 12 Sep 2012: Driving Early Market Adoption for your New Medical Device
- 30 Aug 2012: S2N Summer 2012 Newsletter
- 19 Jul 2012: The Affordable Care Act - Implications for Emerging Med Tech Companies
- 17 Jul 2012: Six Ways Through the Valley of Death for Emerging Medical Device Companies
- 26 Jun 2012: When Medical Devices go Quiet - Managing End of Life
- 14 May 2012: The Mythical Emerging Medical Device “Platform” Company
- 07 May 2012: What specialty distributors need to know about medical device start-ups
- 24 Apr 2012: Top 5 Anxiety-Provoking Med-Tech Acronyms
- 19 Mar 2012: Pulling Together: Aligning Stakeholders in Emerging Med Tech Companies
- 06 Feb 2012: How Low Can You Go? The Value of Developing Cheap Medical Devices
- 12 Dec 2011: The Legacy of Boston Scientific for MedTech Entrepreneurs
- 26 Sep 2011: Emerging Med Tech Execs: The 10 C’s You Need to Lead
- 08 Aug 2011: Back to Basics: The Surgical Segment Heats Up
- 28 Jun 2011: First Stop, Third World: Emerging Markets for MedTech
- 06 Jun 2011: Successfully Naming your MedTech Company (hint: add beer)
- 16 May 2011: The Squeeze of the VCs - Four Conspiring Trends
- 25 Apr 2011: Who Will Win in the New Healthcare Economy?
- 08 Apr 2011: Corporate Venture Funds – What’s the Deal?
- 23 Mar 2011: Medical Device Exits - Part 2
- 09 Mar 2011: Medical Device Exits - Part 1
- 01 Mar 2011: The Hidden Cost of Non-Dilutive Funding
- 22 Feb 2011: How Virtual Can You Go in Emerging Medtech?
- 01 Feb 2011: Top 5 Reasons Why We Like The Medical Device Industry