12th Annual | May 8th, 2013 | Minneapolis, MN
E X E C U T I V E
S U M M A R Y
By Jim Stommen, IBF Contributing Editor
12th Annual | May 8th, 2013 | Minneapolis, MN
E X E C U T I V E
S U M M A R Y
By Jim Stommen, IBF Contributing Editor
Dreary outlook on medtech is nudged aside by optimism. Certainly some pessimism remains when it comes to assessing the medtech sector, but the mere fact that a standing-room-only crowd jammed into the ballroom of the Graves 601 Hotel in Minneapolis for the 12th Annual MedTech Investing Conference on May 8, shows there’s an abundant amount of optimism that clearly seems to be growing.
Medtech is alive and well...” “...there are signs of intelligent life at the FDA, with 26 original PMAs winning approval over the past 12 months.”
— Kevin Wasserstein, conference Co-Chairman, former Versant Ventures, Managing Director, and Founder of MentorCatalyst 2
When conference Co-Chairman, Kevin Wasserstein, former Versant Ventures, Managing Director, and recent Founder of Menlo Park, Calif.-based MentorCatalyst, asked the audience for a show of hands as to whom amongst them thought the medtech industry was in better shape than was true a year earlier, only three raised their hands. While most said they thought things were about the same, only a handful said they thought things were worse. In his welcoming remarks, Wasserstein opined that the roomful of attendees belied any real pessimism. “Medtech is alive and well,” he said.
Wasserstein referred to the large Chinese characters shown on large screens in the ballroom, saying the characters—which represented the words “danger” and “opportunity”— were a good reflection of the situation facing medtech these days. Medical innovation “also is alive and well,” he said. “What we investors need to do is focus on how we can bring that innovation to market.” He said there remain large unmet clinical needs, with the growth of consumer-driven healthcare expected to bring even more opportunity for new technologies. Wasserstein added that one of the most positive trends providing upside potential for medtech is that “there are signs of intelligent life at the FDA, with 26 original PMAs winning approval over the past 12 months.” Citing the emergence of new funding sources to help fill the well-documented falloff in VC investing, he said those include a strong and growing interest by corporate investors, a rebound in technology investing by Big Pharma and rapidly evolving investments in U.S. firms by overseas investors. “Corporate acquirers are as voracious as ever” he said. “They’re very active in both investing in and acquiring technologies being developed by
smaller firms.” He added that “the stage is set for the opening of an initial public offering window.” Despite the dire nature of the data he reported, Mark Scholtes, Partner in the Minneapolis office of PricewaterhouseCoopers, also expressed optimism for the sector. Scholtes outlined the findings of the quarterly MoneyTree report on VC investing in all industries, including dismal numbers for the medical device segment. Both biotech and medical device companies saw a marked decrease in the number of deals and dollars in 1Q13 compared to 4Q12. At 167, the number of deals was the fewest since 1Q09. In medical devices, though, the opposite seemed to happen. Total dollars invested in the medical device sector dropped 20% from 4Q12 to $509 million. In a first-quarter comparison to the same year-earlier period, the number of deals fell by 10% to 71 deals in the quarter, while the total dollar amount declined by some 26% from $687 million. Some bright spots, however, included early-stage investor, Third Rock Ventures raising a $516 million fund, Hatteras Venture Partners closed a $125 million early-stage fund, and Domain Associates launched a partnership to help start-ups succeed in the Chinese market. 3
Only seven device companies received venture capital funding for the first time in 1Q13, the fewest since 2Q95. The total amount of those investments was $23 million, with the average first-time deal at $3.4 million, about the same as the prior quarter.
Investment decisions affected by dynamics of marketplace Medtech businesses clearly face many challenges. Getting products pushed through to commercialization is more difficult than ever, and getting proper reimbursement might be even harder to accomplish. How do those who are asked to bankroll device companies make decisions 4
as to where to put their shrinking amounts of available investment dollars? Very carefully, as members of a panel on early-stage versus late-stage investing made it clear. The panel focused on how VCs evaluate potential investment dollars, particularly in a time when far fewer dollars are available for such investments than has been true historically. Josh Baltzell, Managing Director of Split Rock Partners in Menlo Park, CA, said investing in companies in the later stages of their development is preferred. â€œWeâ€™re looking for companies that get products adopted across a healthcare system rather than individually by physician preference.â€? Kirk Nielsen, Minneapolis-based Managing Director of Versant Ventures,
Above, from left to right: Patrice Kloss, Partner of Oppenheimer Wolff & Donnelly, Josh Baltzell, Managing Director of Split Rock Partners, Noah Lewis, Managing Director of GE Ventures, Guido Neels, Managing Director of Essex Woodlands, Kirk Nielsen, Managing Director of Versant Ventures, Michael J. Wasserman, Managing Director of H.I.G. BioVentures and Gregory Grunberg, MD, Managing Director of Longitude Capital
The CE mark is the Holy Grail for us. We look for superportable products that can be brought to the U.S. market.”
— Guido Neels, Managing Director of Essex Woodlands Health Ventures
weighed in from the early-stage perspective. “We look to invest at the intersection of opportunity and success in the clinic. If there isn’t a straight line through the clinic, it’s hard; if there’s a lot more ‘R’ to be done from the R&D equation, it’s hard.” He said VCs need to look at every potential investment with regulatory consideration in mind. “You need to look at the risk. We’re comfortable with engineering risks, but less comfortable with regulatory risk.” Guido Neels, Managing Director of Essex Woodlands Health Ventures in Palo Alto, Calif., said his firm is “most comfortable with longer lead times,” especially when it’s hard to pinpoint clinical value. He said his firm looks for companies “with a clear path to approval. The CE mark is the Holy Grail for us. We look for super-portable products that can be brought to the U.S. market.” 5
Noting that corporate acquirers “are devoting a lot of resources to strategic buys,” he said such buyers are more and more looking at faster-growing markets rather than just fill-ins to their existing lines of business. Michael Wasserman, Managing Director of Miami based H.I.G. BioVentures, said, “We’re situation-specific in terms of looking at value opportunities. The bar is clearly raised, with the key question being ‘Is it [the technology in question] better for patients, better for healthcare systems?’ We evaluate what needs to be done within the timeframe of an investment.” He added: “We have to be prepared in terms of time and capital for the longer term. It can take three or four years longer to reach an exit point than it did previously.”
It used to be that you’d tout something as either better or faster or cheaper; now it needs to be either better or faster and certainly cheaper. You have to be able to help the healthcare system save money.”
— J osh Baltzell, Managing Director of Split Rock Partners
Baltzell agreed, “We think about what dollars are going to be necessary to get the company to an exit.” To which Neels observed, “99% of companies require many more dollars than you ever expected.” The discussion turned to evaluating reimbursement risk. Noah Lewis, Managing Director of GE Ventures in Menlo Park, Calif., said, “You need to look at the economic evidence as well as the clinical evidence. We look for strong companies with great clinical evidence.” Baltzell said, “It used to be that you’d tout something as either better or faster or cheaper; now it needs to be either better or faster and certainly cheaper. You have to be able to help the healthcare system save
Above, from left to right: Buzz Benson, Managing Director of SightLine Partners, Todd Davis, Founding Managing Director of HealthCare Royalty Partners, Mike Carusi, Managing Director of Advanced Technology Ventures and Chad Cornell, Vice President, Corporate Development of Medtronic
money.” Neels agreed: “Payors have to accept the idea.”
Funding & trails, consider the alternatives
Lewis cited the need for a value proposition in whatever the technology purports to do.
Members of two panels reminded their audience to consider the alternatives insofar as financing options and clinical trial strategies are concerned.
For his part, Wasserman said, “What it comes down to is, what is the company trying to do? They have to have a technology that provides better patientcare at less cost. The company has to have an operating plan that works.”
The “Alternative Funding Models” panelists outlined what they look for in companies in which they might invest, and touched on various ways to structure such funding. And a panel on 7
“Alternative Clinical Trial and Product Development Models” emphasized that the clinical path can vary depending on the company, the product and the anticipated regulatory requirements. Moderated, with his usual élan, by Bill Harrington, Managing Partner with Osage University Partners (Bala Cynwyd, Pennsylvania), the Alternative Funding Models panelists talked about the type of companies they look to be involved with, and offered some specific tips to the entrepreneurs in the audience. Buzz Benson, Managing Director of Minneapolis-based SightLine Partners, said his firm is largely focused on what he termed “secondary investing” in late-stage device and diagnostic companies. “Because venture capital investments are getting stretched out” due to much longer pathways to commercialization, he said, SightLine “provides financial alternatives to investors who don’t have the financial resources to carry the company on to the finish line or who don’t want to shoulder the complete risk going forward. We’re focused on providing funding for companies that are within three years of an exit via acquisition, companies that are generating revenues, mostly that have an FDA approval in hand, 8
with technologies that acquirers want to acquire.” Todd Davis, Founding Managing Director of HealthCare Royalty Partners in Stamford, Conn., described a different model. “We typically go to inventors, institutions and the like to acquire patents,” which has resulted in what he termed “a structured inventory in terms of royalties.” He said his firm’s approach has evolved into “synthetic royalties,” giving the companies it works with a way to raise capital for, say, 7% of sales revenues. One big advantage, as far as recipient companies are concerned, is that HealthCare Royalty Partners can and does do deals that often are considerably larger than the usual VC-backed funding. “Our typical deal sizes are $40 million to $50 million, even up to $100 million,” Davis said. He described the firm’s approach as representing “very low-risk opportunities in terms of clinical risk. Our strategy relies on asset value, and we don’t need an exit event for this to be a profitable investment.” Chad Cornell, Vice President, Corporate Development at medtech powerhouse Medtronic of Minneapolis, Minn., said that “the corporate venture landscape is changing. We have a dynamic where strategics like Medtronic are still looking for
O ur company doesn’t necessarily invest only with a view toward eventually acquiring the company where it is putting money. In fact, in most cases we don’t acquire those companies.”
— Chad Cornell, Vice President, Corporate Development, Medtronic
new technologies—it’s a supply-anddemand thing—and are investing in things that are of interest to them strategically.” He said Medtronic does fund some early-stage efforts, offering an alternative financing route for certain companies. And, he said, “Our company doesn’t necessarily invest only with a view toward eventually acquiring the company where it is putting money. In fact, in most cases we don’t acquire those companies.”
Palo Alto, Calif., said his firm’s strategy hasn’t changed much. “We’re still focused on early-stage investments— we think that’s where opportunities emerge.” He said ATV is “focused on big ideas; we look for things where we hope the clinical data will show the technology is an answer to an area of great need.” Carusi said the firm does fewer late-stage investments, although “we do sometimes work with other investors on such deals.”
But, Cornell said, “If it [the technology] works, we’d like to have the opportunity to buy it. If we funded it and it works but we don’t buy the company, then [the entrepreneur] has an asset.”
Asked by Harrington if the fact that VC investments are down gives more leverage to corporate and other investors, Cornell said, “Yes, but it’s a double-edged sword. If we step up to invest in the early stage, we generally want other people around the table. We want good partners in such in-
Mike Carusi, Managing Director of Advanced Technology Ventures of
We try to insert ourselves earlier in helping develop the clinical path.”
vesting efforts in order to protect our downside. We all need each other.” Benson said, “We try to be very creative in putting money to work.” He cited the long road to commercialization by new firms, describing it as “a five- to 20-year event. We look at companies with technologies that we think would have multiple buyers, with a reasonable exit timeline.” Davis agreed, noting that his firm structures its royalty deals over 10 years. “There’s a long runway” for such deals, he said. “We look for situations where everyone can be successful— usually companies that are at or close to commercial stage.” On the “Alternative Clinical Trial Models” panel, which was championed by Conference Co-Chair, Dennis Wahr, CEO of Plymouth, MN based Holaira, discussed where and when it makes 10
— Evan Norton, Director of Venture Investments at Abbott Ventures
sense to pursue a two-step vs. threestep approach to improve success rates on the pivotal study. David Neustaedter, Vice President of Covidien Ventures in Mansfield, Mass., said Covidien “tends to invest for the long term. We do three or four new investments each year, looking for technologies that fit our existing businesses. We’re really focused on strong clinical evidence,” so the ability to gather such data is paramount. Evan Norton, Director of Venture Investments at Abbott Ventures of Lake Forest, Ill., said that in making investment decisions, one of the things Abbott thinks about “are the expectations by the small company and the expectations of the regulatory body, which can be vastly different. If the clinical data is insufficient, that can cause problems.” He said “We try to insert ourselves earlier in helping develop the clinical path.” Kevin Hykes, Executive Chairman of Metavention Dana Point, California, called on his experience with previ-
ous start-ups in noting that “there was significant value in doing a rigorous, controlled trial. When you’re talking about a more innovative product, the more important it is to do a PMA-type trial.” He noted that when one of his companies, Visogen, was sold to Abbott, “the fact that we had done a large trial was one of the key value drivers” in the deal.
alignment in terms of their clinical development plans. We have a bias toward a clear vision of clinical data needs.”
Rajeev Dadoo, PhD, Partner in SR One of West Conshohocken, Penn., said the key question to answer in designing a clinical trial strategy is, “How do you best serve patient needs?”. Noting that you need to have a handle on what data will be required for approval, he cautioned: “You usually need more data than anticipated.” And part of what will be required lies in what’s needed for reimbursement.
Edward Andrle, Vice President of Business Development & Strategy at the Sorin Group in Milan, Italy said, “You want to build a body of clinical evidence,” but added: “Small companies shouldn’t spend their time doing pivotal trials—leave that to larger companies, which are better suited for such trials in terms of funding and experience in conducting such trials.” He said smaller companies should “build enough clinical evidence to prove safety and efficacy, but leave the pivotal trials to the big guys.”
Dadoo said his firm “tries to invest in companies with the right kind of
Lisa Earnhardt, President and CEO of Menlo Park, Calif.-based Intersect ENT, said, “Having strong clinical evidence is so important. You need to be able to start discussions with payors early.”
Small companies shouldn’t spend their time doing pivotal trials—leave that to larger companies, which are better suited for such trials in terms of funding and experience in conducting such trials.”
— Edward Andrle, Vice President of Business Development & Strategy, Sorin Group 11
Lifetime Innovator Award presented to Dale Spencer SciMed exec turned serial-entrepreneur, Minnesota based Dale Spencer was recognized for churning out such successes as ev3, Velocimed and medtech incubator Protostar, that later created and spun off CVRx, Anulex and Vertex. The Lifetime Innovator Award was presented by longtime counsel and friend, Bill Kaufman from Oppenheimer, 12
Dale Spencer, Managing Director, JDC Spencer Investment Co., LLLP
Wolf & Donnelly. In Kaufman’s remarks he stated, “Dale’s legacy is not only the companies that he launched but the impressive list of people that he was instrumental in getting started in the MedTech business, including: Mike Berman, Dan Sullivan, Ed Andrle, Tom Hektner, Tom Ressemann, Pete Keith, Bob Atkinson, Chad Kugler, Mike Winegar, Dennis Wahr, Josh Baltzell and Dave Milne. In Dale’s acceptance speech, he made a few touching comments about his 38 years in the medtech industry being a lucky journey that enabled him to help other people.
Medtech adapting to changing world, says Covidien executive Stacy Enxing Seng, President of Covidien’s Vascular Therapies unit (Plymouth, Minnesota), who has spent 26 years in the medtech sector, said during her keynote speech, that medtech is a “constantly changing business, but I remain optimistic about it.” She referenced Christine Legarde, Director of the International Monetary Fund, who has cited the existence of what she terms “a threespeed economy. First, you have
the BRIC—Brazil, Russia, India and China—countries with double-digit market growth. Secondly, you have the companies whose economies are on the mend—the U.S., Canada, Australia, Sweden, Switzerland among them—that are growing, but at a decelerated rate. Third are the countries with some distance to travel.” Seng said slowing growth rates for medtech and pharma reflect two fundamental overall implications: “The costs of healthcare have become unsustainable,” and both providers and payors are reacting to that reality; while “patient empowerment means that they are having much more engagement in healthcare decisions.” She said the U.S. spends a whopping 17.5% of GDP on healthcare, and “is certainly an outlier compared with the rest of the world.” There is no question, Seng said, that the Accountable Care Act represents “sweeping changes in reimbursement and regulation.” It also presents opportunities and challenges, especially as medtech companies address what she termed “the change in the value proposition for devices from ‘What does it do?’ to ‘What does it achieve?’” 13
Clearly, she said, “Reimbursement now is one of the most critical aspects of product development. Among payors, there is an intense focus on accountability and effectiveness.” Because of the emphasis on reining in healthcare costs, Seng said hospitals “are going to get on board with the Accountable Care Organizations” movement. She listed four key changes impacting the device industry: 1) The thought process around the clinical pathway. She cited industry colossus Medtronic, for instance, directing its efforts toward a solutions-focused portfolio, emphasizing the entire continuum of care.
2) What she termed a “wakeup call” regarding the potential for vertical integration by companies in various aspects of the industry. “We’re now seeing distributors emerging as medtech competitors.” 3) Technologies that are coming out of developing countries such as China. “They’re doing ‘good enough’ products for developing, cost-conscious countries and bringing them to developing markets.” 4) The rise of comparative effectiveness “is causing purchasers of products to think more carefully about whether or not they’re willing to pay for innovation. They’re expending a lot of energy on how these technologies fit into the overall picture.”
Reimbursement now is one of the most critical aspects of product development. Among payors, there is an intense focus on accountability and effectiveness.”
— Stacy Enxing Seng, President of Covidien’s Vascular Therapies unit
Turning to patient empowerment, she said, “Patients are learning that they are an important decisionmaker on new technologies. They are better-informed and much more involved,” Seng said, noting that WebMD, for instance, registered an astounding 8 billion page views last year. Seng added: “We need to reduce costs and reinvent the commercial model. Those technologies that require a lot of physical training of healthcare providers and a lot of sales rep support aren’t the best investment. Medtech suppliers are being asked to improve the support part of the cost/benefit question for their customers.” She said Covidien’s approach to the new business model builds on its vision: “Deliver unmatched value in ensuring that our solutions improve outcomes and healthcare delivery through clinically relevant and economically valuable innovations.” Turning to acquisition strategy, a topic of much discussion at the conference, she said Covidien is “reallocating our funds to make strategic bets on our core growth drivers.” Noting that the company has made five acquisitions in the vascular space over the past 18 months, and continues to look for “tuck-in op-
portunities,” she also cited that the company looks for structural deals where it feels it can apply Covidien’s resources “to navigate clinical and regulatory pathways on the way to commercialization.” Seng closed with some comments on innovation. She said there’s a new definition: “Can you take costs out of the healthcare system? Can you dramatically improve outcomes? Can you improve the patient experience? Those are the fundamental questions to answer.” She said that while there are a lot of challenges facing the industry, she sees plenty of opportunity as well. “I have a lot of optimism.”
Audience shows how attitudes toward FDA are a-changing The positive interplay between those involved with the medical device industry and the hierarchy of the sector’s traditional foe, the FDA, was in great evidence during a long-distance “fireside chat” that was a feature of the conference. Medical Device Manufacturers Association President and CEO, Mark Leahey, spent a half-hour or so at the podium, peppering Jeffrey Shuren, MD, Director of the FDA’s 15
Center for Devices and Radiological Health, with a series of questions about policies and procedures. Shuren’s participation came via a video feed from his office in Washington, D.C., the very positive nature of the exchange was noteworthy. Conference attendees heard a discussion of views on key issues in the regulator/regulated relationship, and Shuren was given a round of considerable applause by his long-distance audience at the close of the session. Shuren listed three key priorities for CDRH this year, saying they’re all interrelated: Implementation of the reauthorized Medical Device Users Fee Act, moving a number of the agency’s draft guidances into final form, and working on the establishment of a national medical device post-marketing registry. He said of CDRH repackaging: “We put forth our updated vision for the center about a year ago, so we’re now in the implementation phase. As for MDUFA, “that has made for some real improvements in our goals,” he said. “It provides important resources to help us make those improvements, and we’re already seeing results.” Talking about performance by the agency, Shuren said, “It’s really the tale of two decades. In the first 10 16
years of this century, we had a steady worsening of performance, but when you look at the past two years, all of the indicators have either stabilized or improved.” He noted “the backlog of 510(k)s is coming down to the lowest it has been in about a decade. Same with PMAs.” He pegged the improvement rate at about 25%. Leahey said that MDMA is hearing “positive feedback from our members on what Jeff is saying. They’re clearly getting back to companies earlier than they were previously.” Shuren’s take is that the agency “is trying to give you better advice before you come to us for approval.” Shuren said the top three areas of administrative improvement at the agency are smart business practices; improvements in organizational structure to, for instance, provide “a much more rational staff-to-manager ratio in order to improve how managers work with their staffs; and continued strengthening in provision of guidance documents. Shuren said, “We need to make the clinical trial environment in the U.S. much easier, taking steps to reduce both time and costs. If we can reduce the premarket burden on companies, shifting some of that to the post-mar-
W e’re trying to focus on reducing the time and cost of approvals in the U.S.”
— Jeffrey Shuren, MD, Director of the FDA’s Center for Devices and Radiological Health
ket environment, that’s good. We’re trying to focus on reducing the time and cost of approvals in the U.S., with part of that represented by trying to get clinical testing started earlier.” He said companies should talk with the FDA in advance about their plans for gathering clinical data in Europe and other international locations. “We may have suggestions that would help leverage that data for use in winning approval in the U.S.”
Shuren said that in terms of postmarket surveillance, “we’re not talking about an FDA system, but rather a true national system that has representatives from across the shareholder universe. We’re going to establish a ‘Final Rule’ this year on electronic health information in order to help reduce the premarket burden.” He said electronic registries that report adverse events will be used as part of the approval process. 17
Above, from left to right: Richard Migliori, MD, EVP Health Services of UnitedHealth Group, Ken Paulus, President & CEO of Allina Health, James W. Eppel, Jr, Former Chief Operations Officer of BlueCross BlueShield of Minnesota and Ed Pezalla, MD, MPH, National Medical Director, Pharmacy Policy and Strategy of Aetna
Demystifying the puzzle of how coverage decisions are made Another panel at the conference focused on reimbursement decisions by private payors. Richard Migliori, MD, Executive Vice President of Health Services at UnitedHealth Group in Cypress, Calif., said, “We have a technology evaluation group that makes decisions based on clinical outcomes, which
patient population benefits from the technology. We evaluate the impact a given device will have on the total cost of care. We look closely at the economic data; we want our customers to have full disclosure on costs.” Edmund Pezalla, MD, National Medical Director for Pharmacy Policy and Strategy at Hartford, Conn.-based Aetna, said coverage decisions are made based on “clinical outcomes and how we want to pay for a device and/or a procedure. We look for solid
clinical evidence, wanting to know if studies have been validated. We make decisions based on clinical results. And we don’t necessarily make ‘no coverage’ decisions based on economics.” James Eppel Jr., Former Chief Operations Officer with BlueCross BlueShield of Minnesota, said a growing emphasis on transparency “is shining a bright light on costs.” As for outside of coverage decisions made by the Centers for Medicare & Medicaid Services (CMS), Pezalla said, “Our decisions probably are not too different from theirs.” For his part, Migliori said, “CMS is very influential, but that’s not the only factor.” Ken Paulus, President & CEO of Minneapolis-headquartered healthcare system Allina Health, said, “The question is how to manage risk; there is more standardization now and fewer choices. We do want to take a realistic look at outcomes, at what works in real life rather than just an academic study. If you have something that helps us save money, that’s important. The question we ask is, ‘How can you help us run our system more efficiently?’ We want to better manage healthcare delivery.” Similarly, Eppel said, “Payors are looking for high-quality, lower-cost solutions. They need to take down the
We make decisions based on clinical results. And we don’t necessarily make ‘no coverage’ decisions based on economics.”
— Edmund Pezalla, MD, National Medical Director for Pharmacy Policy and Strategy, Aetna
overall cost structure.” Pezalla talked about working with medical societies, saying Aetna “works closely with the professional societies, looking at their clinical guidelines, which can help us in making coverage decisions.” Eppel said the role medical societies can play “is in defining quality. Their experts can step up and help in that regard.” 19
Race to file now key for patents
1) File early and often. “Don’t sit on your invention.”
Cyrus Morton says the America Invents Act that went into effect earlier this year has brought huge changes to the way life science inventors and companies need to think about patent law.
2) Don’t publicly disclose your invention before filing. No foreign use or sales before filing in the U.S.
The partner in the Minneapolis office of Robins, Kaplan, Miller & Ciresi said the dramatically changed laws represent a “new frontier.”
4) Documentation is key. “Clear and convincing evidence is required.”
The biggest change, he noted, is from a “first to invent” system to a “first to file” system, which he characterized as setting off “a race to the patent office.” He offered several tips for living with the new system;
3) Closely monitor applications and patent filings in your field.
5) Use virtual marking in listing patent numbers. 6) Be careful about statements of value.
Europe & China: Different opportunities The closing session of the conference, which focused on opportunities for
Above, from left to right: J.P. Peltier, Managing Director, Healthcare of Piper Jaffray & Co, Andrea Venturelli, Co-founder of Invatec, Chen Yu, Managing Partner of Vivo Ventures/Chief Business Officer, China KangHui (Former) and Luke Harada, Vice President, Business Development of C. R. Bard
medtech companies in Europe versus those in China and elsewhere in Asia, maintained an impressively robust crowd, given its position on the tail end of a long day. Chen Yu, Managing Partner of Vivo Ventures in Palo Alto, Calif., said, “We look at the Chinese market differently. We look at what we call ‘premier domestics,’ which represent the growing middle class.” He said, “There’s a lot of money there, and they’re looking for deals. Any deals are possible. I think it will be a crowded sector for a lot of little companies looking to China.” He said a lot of larger domestic companies in China “are right on the brink; they’re ready to come to the U.S. Orthopedics is one particular growth sector, he said, particularly the trauma and reconstruction segments. “The question for them is how to price lower-cost products.” Luke Harada, Vice President of Business Development for Murray Hill, NJ-based C.R. Bard, said, “Rapid urbanization is a factor in China. Because of the vast size of the market there, it’s obviously a matter of economics. China as a nation has a 10-year plan to elevate the standard of its system of healthcare. The real opportunity there is in serving the 80% of the people who are currently underserved.”
There’s a lot of money there, and they’re looking for deals. Any deals are possible. I think it will be a crowded sector for a lot of little companies looking to China.”
— Chen Yu, Managing Partner, Vivo Ventures
Panelist Andrea Venturelli, Co-Founder of Italy-based Invatec, a cardiovascular products company acquired by Medtronic, said that insofar as Europe is concerned, “I see potential if you are meeting a major need. You need to start working on the real value of your product right from the very beginning.” This report was written by Jim Stommen. 21
Making the right hire is key for companies People make a company—making it either good or not so good. A breakfast breakout session preceding the official start of the conference drew a substantial audience of coffee-lugging attendees to hear three executives in the medtech field discuss what they look for in new hires. Julie Allen, Founder and Managing Partner of Allen Executive Search, Onomowoc, Wis., led the “Winning the War on Talent” session, which was focused on how to build and grow a team of employees through the various stages of a company’s evolution. Bob Paulsen of Maple Grove, Minn.based NxThera said hiring the right people is much more of an art than a science. “The kinds of people you need early often are different than you need later, so that transition is a real challenge. Knowing how to make change is very important going forward.” Matt Likens of Ulthera in Mesa, Ariz., agreed. “The quality of the people you hire is just so important. You need to court people who are emotionally involved and committed to the cause.” He said he wants people “who come in and mesh well with the existing team. They have to have passion and a start-up mentality.”
Speaking from a big-company perspective, Jeff Mirviss, President of Boston Scientific’s Peripheral Interventions unit, said, “in companies like ours, you need to hire people who are very focused on specific goals. You want them to be able to help you drive forward on the path you have set, but also have innovative views.” Allen said she has found that CEOs of early-stage companies “spend an extraordinary amount of time finding the right people for their companies.” She said that one of the keys in the hiring process is defining the need, and getting a good handle on personalities is particularly important for start-ups. “The skill is in finding a person with a start-up mindset and will.”
MedTech Executive Summary Report SPONSOR S Medical Technology represents one of the most significant, high-growth technology industries in Minnesota and has been a cornerstone of Oppenheimer’s practice for more than 40 years. Our MedTech client base includes more than 75 MedTech firms—ranging from start-ups to established public companies. We also represent more than 25 venture-backed, emerging companies and numerous industry-leading venture capital firms. PwC’s Pharmaceutical and Medical Technology Industry Group is dedicated to delivering effective solutions to complex strategic, operational and financial challenges facing pharmaceutical, biotechnology and medical device companies. PwC provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 180,000 people in 158 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. Piper Jaffray is a full-service investment bank and asset management firm serving clients in the U.S. and internationally. Founded in 1895, the firm is headquartered in Minneapolis with 39 offices globally. Piper Jaffray offers a full suite of products to serve our clients’ business lifecycle needs, geographic reach in an increasingly global market, and deep expertise in our core sectors. Our investment banking group offers a range of advisory and financing services to clients involving M&A, equity and debt underwriting, private placements, restructuring and corporate & venture services. For more information, visit www.piperjaffray.com. 23
This report was sponsored by:
Published on Aug 9, 2013
On May 8, 2013, International Business Forum and LifeScience Alley, presented the 12th Annual MedTech Investing Conference, a gathering for...