Originally Published
MDDI July 2001
Editor's Page
Where Have All The Dot-Coms Gone?
Perhaps the Internet is just too good an idea. When something that spectacular, that promising, comes along, it's very difficult not to become irrational.
Looking
back a year or so to our last Internet issue, we can only shake our heads in
wonder. An entire constellation of companies has vanished, or dimmed so much
that few are even aware of them anymore. The Internet was once the Next Big
Thing. Is it now the Last Big Flop?
Though we are hedging our bets, we don't think so. True, the facts aren't pretty. As Cliff Henke notes in our lead feature, some of the losses have been staggering. Take, for example, Ventro, the owner of the medical supply marketplace Promedix. Its shares have fallen from a high of $234 to well under a dollar, its staffing has been cut by 80%, it is battling shareholder lawsuits, and it lost some $618 million in 2000. On the bright side, it's still in business, unlike many of its smaller competitors.
What went wrong? Perhaps the Internet is just too good an idea. When something that spectacular, that promising, comes along, it's very difficult not to become irrational. The classic example of this phenomenon is the tulip-bulb craze that afflicted Holland in the early seventeenth century. Not long after being introduced to the country from Turkey, these beautiful flowers were in such demand that people began to speculate in tulip futures. As Burton Malkiel writes in A Random Walk Down Wall Street, "People who said the prices could not possibly go higher watched with chagrin as their friends and relatives made enormous profits. The temptation to join them was hard to resist; few Dutchmen did." Sound familiar?
The market inevitably crashed, of course. But the flowers were not all gone; indeed, tulips became a fixture of Dutch gardens.
Likewise, the Internet will become a fixture in the medical device industry. As described in Henke's article and those that follow it, the possibilities created by on-line technologies remain very exciting. While the business models for e-commerce exchanges may go through bewildering changes, medical device companies will certainly continue to explore the many ways that Web-enabled technologies can improve their business.
The signs suggest that device manufacturers may discard the use of common exchanges or other Internet services, gravitating instead toward solutions individualized for them. In fact, many of the original Internet exchange companies have already morphed into providers of software and developers of private Internet sites for individual clients.
This trend may be even more pronounced in the medical device field than in other, more monolithic industries. One of the comments that we used to hear from developers of on-line marketplaces for the medical device industry was that they saw the fragmented nature of the industry as an opportunity for them to "rationalize" it through their sites. Maybe, though, the industry is fragmented for a good reason. Can an orthopedics manufacturer and an in vitro diagnostics manufacturer really be served effectively by the same one-size-fits-all approach?
It is still very possible that undertakings such as the Global Healthcare Exchange or Ventro's offspring, Broadlane, may succeed where so many others have failed. But even if they do not, the technology will move ahead without them. One way or another, the Internet will still have a profound impact on this industry.
The Editors
mddi@cancom.com
Copyright ©2001 Medical Device & Diagnostic Industry
