OUTSTANDING OEM: VOLCANO CORP.
It's not easy to shrug off the recent controversies questioning the safety of drug-eluting stents. It's also not easy to compete with the likes of Boston Scientific in the marketplace. Companies in the stent and catheter segment of the industry have had their share of adversity, but Volcano Corp. (Rancho Cordova, CA) has blended innovation and business savvy to combat the hard times, which is why MD&DI has selected the company as an Outstanding OEM for 2008.
Best known for its intravascular ultrasound (IVUS) platform, Volcano's technology centers around a catheter-based system that enables physicians to examine diseased vessels from inside the artery. The system provides detailed measurements of critical elements such as vessel and lumen size and plaque area and volume.
“The industry itself has been built around an angiogram, which doesn't tell you how much disease is there, whether [a particular] lesion is causing the chest discomfort, or [whether it's] another lesion farther down the vessel,” says Joe Burnett, associate vice president of marketing for Volcano Corp. “In the past, we've focused on resolving the blockage, and we haven't been as focused on treating the disease.”
The s5 system is built directly into catheterization labs for added convenience.
So that's what Volcano is helping to do—not only to understand how to better treat the disease but also to make sure that the treatment is taking place at the right location. So far, Volcano seems to have made all the right moves. Earlier this year, Volcano received FDA approval to add several diagnostic options to its s5 system, an imaging console that enhances a physician's ability to diagnose vascular and structural heart diseases and to find the most appropriate therapy.
"In the last 4-5 quarters, companies that do business in the cath lab have suffered, what with the drug-eluting stent issues and the COURAGE trial,” says Thomas Gunderson, managing director and senior research analyst with Piper Jaffray & Co. ( Minneapolis ). “But Volcano has continued to grow 25–30%. One good way to tell whether a company is doing the right thing is to see how well they are doing in bad times, because anybody can do well in good times."
While other companies are experiencing meager boosts in this segment, if any, Volcano has flourished. Over the four-year period ending December 31, 2007, the company's revenue had a compounded annual growth rate of 29%. Its second-quarter revenue this year was $41.5 million, an impressive 40% jump over revenue for the same period last year.
We Can Do That Too
Volcano's success is somewhat surprising for a new player on the market. It started in 2001 as a 15-person software company in Laguna Hills, CA, that was dedicated to vulnerable plaque research and related software. Its virtual histology software offered detailed, colorized images of plaque in the arteries.
“Virtual histology itself was originally a postprocessing software,” Burnett says. “And Volcano would do the analysis and try to find, based on algorithms, where the high-risk lesions were in the body. At the end of the day, Volcano didn't own a system and didn't own a catheter. [We just offered] postprocessing software,” Burnett says.
Volcano's console enables physicians to use several different imaging modalities to diagnose and treat patients.
In 2003, Volcano started work on its own rotational IVUS catheter, similar to Boston Scientific's system. At the same time, the firm purchased all of the intravascular assets of Jomed Inc., a subsidiary of a Netherlands-based device company that went bankrupt. The acquisition transformed Volcano from a small company into a firm with enhanced technology and staff numbering around 350.
“It was kind of a fish-eating-the-whale type of acquisition,” Burnett says. That's when Volcano moved farther upstate from its Laguna Hills headquarters to Rancho Cordova. By 2006, the company had introduced a device that transformed it into a player in the medical device arena: the s5 imaging system.
Volcano had to work diligently to change negative perceptions about IVUS systems. Even if caregivers believed in the clinical value of such systems, the devices roused the ire of physicians became a four-letter word for them and their staff, Burnett says. The time required to do an IVUS procedure, about 15 minutes, was time that most U.S. interventional cardiologists were not willing to wait. And IVUS systems tended to be large and inconvenient. For example, if a physician saw a hazy angiogram and wasn't sure which therapy to select just based on the x-ray, it would take 15 minutes before IVUS could paint a clearer picture. That's because the system itself was a large, 400-lb behemoth, and access was sometimes limited because another physician was using it.
“Once the physician got access to it, the system had to be wheeled in, plugged in, and booted up, and it sounded like a helicopter taking off in the room. It was very loud and disruptive. And once the procedure was finished, the images were difficult to interpret,” Burnett says.
Volcano solved the problems surrounding conventional IVUS systems by developing the next-generation IVUS console, the s5, which is physically built into the cath lab. It is compatible with the x-ray equipment of GE, Philips, Siemens, and Toshiba. Virtually all of the elements that added to the overall time in the procedure disappeared. The time for using the IVUS system dropped from 15 minutes to two or three. In addition, Volcano recently added key diagnostic tools to the system to bring the device to the next level.
The Next Steps
Developing a system that is easy to use has been a big factor in the firm's growth, says Joe Burnett, Volcano's associate vice president of marketing.
The firm has integrated three primary intravascular diagnostic tools into the s5 console: the basic IVUS; high-frequency rotational IVUS; and pressure-based fractional flow reserve (FFR), a diagnostic tool that uses guidewires to evaluate pressure and flow in vessels. Having these options on one machine makes it easier for doctors to guide stent placement or measure plaque burden, for example. Not only does the bundle of options speak to Volcano's push to keep itself relevant and growing, but it has also helped to counter perceptions that IVUS is cumbersome and inconvenient.
“The fact that the procedures are faster and the systems are easier to use has certainly been a huge component in our growth. And in the last five years, the use of IVUS has doubled,” says Burnett.
The company plans to maintain its focus on this core of technology that can be built into the cath lab, and eventually offer users access to 10 different imaging modalities.
“One central hub will run all of the technologies, and they will have the same control point and workflow,” Burnett says. “At that point, Volcano will layer on certain therapeutic devices as well.”
In the meantime, Volcano continues to trumpet the clinical benefit of its technology and turn IVUS into a six-letter word: growth.