Medical Device Link.

Originally Published June 2000

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Top-of-the-Line Medical Innovators Discuss Bottom-Line Success

The 2000 Medical Design Excellence Awards competition recognizes the best new products of this year; what business strategies made these outstanding product development efforts possible?

For a medical device firm, creating a product that dramatically advances the quality of healthcare available to the world is the highest measure of success, higher even than profit. A Medical Design Excellence Award (MDEA) recognizes such an achievement, demonstrating that a company has developed a product that not only exhibits outstanding quality and innovative design, but also offers a solution to a critical medical problem.

Although this year's winning companies earned their awards with their outstanding technological and product development abilities, the companies could be equally commended for overcoming the many business hurdles that can keep such innovative products from ever reaching the market.

Today's market for medical device innovation is, by many accounts, an extremely difficult one. Funding for new ventures that don't offer the quick payoffs of the Internet world is growing ever more scarce. Medical device companies must subject new products to an almost prohibitively expensive round of tests to attain necessary regulatory approvals, and even with such approvals, the companies may find it difficult to convince the wary medical establishment to adopt their tested products.

Companies that have won MDEAs represent a wide range of business realities and offer a variety of perspectives on the business challenges facing medical innovators today. The companies range from very small start-ups with less than five years of experience to multibillion-dollar enterprises that have been leaders in their markets for decades. Some companies have just become public or are planning to do so while others prefer to remain private. Some are partnering with large firms while others are adamantly independent. In fact, almost the only commonality among the MDEA winners from a business management perspective is their success in developing innovative products.

Medical Device Executive Portfolio recently talked with these medical innovators to learn about some of the business challenges they have faced and some of the reasons behind their success. Their stories offer valuable insights into the state of the industry today.

Money Makes It Possible

The most critical challenge for any product development project is probably attaining adequate financing. In the medical device industry, plagued by very high development costs and relatively slow returns, funding is an issue of special concern for every innovation effort, although, of course, this concern takes on a greater sense of urgency for start-ups than for large, established firms.

"You can never have too much money," says Mark Wagner, president and CEO at Altiva Corp. (Minneapolis). Altiva, a privately held company founded in 1996, has won a gold medal with its NTR Natural Tooth Replacement system, which reduces a six- to eight-month process involving numerous dental office visits to a one-day tooth replacement procedure with one follow-up visit.

The NTR Natural Tooth Replacement system by Altiva Corp.

Wagner says "it's a requirement for both early- and late-stage companies always to be adequately capitalized." Start-ups, especially, should "bear in mind that in many cases, the outcome is longer than the business plan initially suggests. It just takes longer than most people realize to develop companies."

With years of financing experience, Wagner now chooses to approach investors directly rather than through investment bankers, although he says that help from bankers can be invaluable for less-experienced entrepreneurs.

How does an entrepreneur successfully present a proposal to investors? "It must be crisp," says Wagner. "You have to be able to explain in about 5 to 10 minutes why this proposal is relevant and meaningful and why it represents a very large return on investment opportunity. If they don't get it in 5 to 10 minutes, they're not going to get it over the next couple of hours.

"I always lead with the punch line, the take-away line," he says. "Then we get into more depth. Some people call this the 60-second elevator pitch. If you find yourself on an elevator standing next to a venture capitalist and you have 60 seconds to tell your story, what would you say to turn his head?"

What is Altiva's punch line? "In my case," says Wagner, "I would say '200 million American adults are missing 100 million teeth, and Altiva intends to fill all of them in one day.'"

Selling a compelling story to investors has also been one of the keys for the product development efforts of Sonic Innovations (Salt Lake City), says Orlando Rodrigues, vice president of the company's consumer development division. The company's gold-medal product is the Natura digital hearing device, which has a tiny chip that processes sound 50–90% faster than traditional hearing aids, making it possible for users to hear virtually at the speed of sound. The company, founded in the early 1990s, is presently in registration to go public.

Orlando P. Rodrigues, vice president, consumer development division, Sonic Innovations.

For Sonic Innovations, the strength of its story is in numbers. "We were successful in attaining venture capital funding," says Rodrigues, "because our story plays very well with investors who understand that in the United States there are almost 30 million hearing-impaired people, and only 6 million of them have hearing aids."

The Natura digital hearing device by Sonic Innovations.

Being able to define the market in a succinct and compelling way for investors has helped Sonic Innovations in its efforts to become public. "The numbers start telling a really nice story," says Rodrigues. "There's a lot of dissatisfaction associated with older hearing aids, and we are in a position where we can deliver something that really gets to the next level." With the aging of the population, he notes, "We've got not only a good market now, but one that will grow as the demographic shift occurs."

The Advantage and Challenge of Size

The MDEA winners run the gamut in terms of size, yet both large and small companies point to the advantages of their size as a factor in their success, and both types of companies also note that their size has offered particular business challenges.

Donald Musinski is vice president of Diamond General Development Corp. (Ann Arbor, MI), a small, private enterprise. The company's silver-medal product, the Diamond Probe/Perio 2000 periodontal disease evaluation system, is able to easily detect periodontal disease at the point of care, leading to greater awareness of a disease that is often undetected and untreated.

The Diamond Probe/Perio 2000 periodontal disease evaluation system by Diamond General Development Corp.

"If you're a small organization and you're competing against big companies, you don't have many options," says Musinski. "You cannot outspend them and cannot outwork them. The only thing left for you to do is to out-think them." He notes that "sometimes the lack of resources and lack of ability to put a lot of manpower on a problem works to your advantage; it forces you to exercise more critical thinking on the front end. That can go a long way toward eliminating blind alleys."

A key to such critical thinking for small companies, says Musinski, is anticipating market opportunities well before others do. To do this, the company's timing must be precise. If a product is too far advanced, the market will not accept it, and if it is not advanced enough, the smaller company will be thrown into suicidal competition against much larger organizations. "The key is to project where the market is going to end up before anyone even recognizes that it's going in that direction," says Musinski. "You are betting that by the time you have pulled it all together, the world will become aware that they need the product."

According to Jude Sauer, president and CEO of LSI Solutions (Rochester, NY), even though being a small enterprise has been a constant challenge, small companies also have some advantages. LSI's silver-medal products, the Sew-Right SR-5 and Ti-Knot TK-5 instruments for minimally invasive surgery, allow physicians to place sutures remotely with precision and minimal trauma.

The Sew-Right SR-5 and Ti-Knot TK-5 MIS instruments by LSI Solutions.

In the past, working as a contract developer with much larger firms, Sauer found that several of the products he developed were not brought to market because the companies could target only very large and profitable business opportunities. "If the product didn't have a potential for a huge market, then they weren't interested," says Sauer.

To ensure that his developments would reach the public, Sauer has recently expanded his business from research to manufacturing. "With us controlling the product now, we can build it faster and cheaper. We don't have to have $100 million in sales on every product for us to be very successful. We're not encumbered with that much responsibility and bureaucracy and we can make decisions based on the product's impact on patients."

GE Medical Systems (Milwaukee) is one of the world's largest suppliers to the diagnostic imaging industry. Its silver-medal product, the Logiq 700 Expert Series ultrasound system, offers all-digital operation.

The Logiq 700 Expert Series ultrasound system by GE Medical Systems.

The success of the ultrasound system represents a conscious effort on the part of GE to combat the tendency of very large companies toward slower, more conservative approaches. Brian McEathron is the program manager for the ultrasound division at GE Medical Systems. Although GE is a market leader, says McEathron, "this has primarily been in the areas of x-ray, CT, and magnetic resonance. The ultrasound division of GE Medical Systems (which received this award) has really been in existence for only about the last nine years. At that time, the CEO of GE, Jack Welch, challenged the medical systems team to develop a product that could win in the ultrasound market against long-established competitors.

"In order to overcome the dominance of the competition," McEathron continues, "the Logiq 700 team began a yearly rhythm of significant technological upgrades for ultrasound. These events, called 'breakthroughs,' showed that a big company like GE could move faster than the smaller, established competition. The Logiq 700 Expert System was the 1999 breakthrough."

McEathron says that GE was also able to take advantage of its wide range of resources when it came into this new market. "I think a major trend in the industry is a shift from smaller companies that offer only ultrasound to larger companies that can offer an entire range of diagnostic imaging solutions," he says.

Dan Barton is marketing manager for Agilent Technologies Inc. Healthcare Solutions Group (Andover, MA). Agilent, a multibillion-dollar company and subsidiary of Hewlett-Packard (HP), designs and manufactures test, measurement, and monitoring systems, and semiconductor and optical components. Agilent's silver-medal entry, Interactive Healthcare Services, is a system of instruments and Web tools that electronically connect patients and physicians in order to better manage cardiac care from the home.

A clinical counselor explains patient use of one element of the Interactive Healthcare Services system by Agilent Technologies.

Like GE's entry into the ultrasound market, Agilent's product development efforts in creating its winning system required redefining the company's market. According to Barton, "Traditionally, HP's, and now Agilent's, healthcare business has been exclusively focused on in-hospital solutions. As a result, our sales and marketing efforts have been directed to clinical and administrative targets within these hospitals."

By contrast, he says, Interactive Healthcare Services is targeted at managed-care and disease management organizations. "While we have an excellent reputation in our traditional markets," says Barton, "we've had to introduce ourselves to our new target audience and establish a presence. In addition, Interactive Healthcare Services takes products directly into the homes of patients. We've had to design products and documentation directly for the end-user patient."

The Need for Speed

Large or small, nearly all companies agree that in developing a revolutionary product, time is of the essence. If one company cannot act quickly on a promising business opportunity, another, or several others, certainly will.

Companies are able to achieve enormous amounts of work in a very limited time by handling several aspects of the development process concurrently. Such a model can cause difficulties, but the alternative is to risk losing out on the opportunity altogether.

Michael W. Jacobs is the founder of Pyng Medical Corp. (Vancouver). The company's gold-medal product is the FAST 1 adult intraosseous infusion system, which provides safe, reliable, and rapid venous access for infusion of vital fluids and medications through an infusion tube into the top bone of the sternum. The company, formed in 1992, is a research and development firm with 10 full-time employees.

 

Design team from Pyng Medical: (rear, from left) Judy Findlay, CEO; David Johnson, president; Michael Jacobs, founder; (front, from left) Jim Tam and Fedja Mulabdic, project engineers. At right, the company's FAST 1 adult intraosseous infusion system.

"The most difficult challenge has been to use a limited number of people to identify the critical milestones to success and address them concurrently so that development of all designs and processes occurred when expected," says Jacobs. In a very short period, he says, the company had to cover "definition of the medical problem, identification of performance requirements, patent searching, prototype concept development, proof- of-principle prototyping, patent applications, regulatory submissions (FDA and Canada), pilot production development, field trials (company initiated) and test marketing, production engineering, and more."

"When you are in start-up mode, you've got to move fast—faster than a lot of people are used to going. But that doesn't really mean that you can cut corners, particularly in the medical device industry," says Jens Quistgaard, vice president of product development at SonoSite Inc. (Bothell, WA). The company's gold-medal product is the SonoSite 180 portable ultrasound system, a 5.4-lb device that offers image quality comparable to a 300-lb system. The company is a spin-off of ATL Ultrasound.

"You've got to compress time somehow to get everything done," says Quistgaard, "because you've still got to do all the work, but it all has to happen a lot faster."

According to Quistgaard, "companies have to bring up manufacturing in parallel with the last stages of product development, and there is a very fine balance between creating throwaway products because you are trying to get into manufacturing too quickly, and trying to have everything done before you get into the factory."

One of the key reasons for SonoSite's success, says Quistgaard, is the company's prevailing attitude of "let's go do it rather than having another meeting."

Partnerships and Acquisitions

One of the secrets to the success of some MDEA winners has been the development of mutually beneficial partnerships with other companies that provide invaluable resources, such as technical expertise, marketing experience, and, of course, money.

Jim Bracke is president at Lifecore Biomedical (Chaska, MN). The company's silver award–winning Intergel adhesion prevention solution is a liquid gel that is poured directly into the wound site at the end of gynecological surgery to facilitate the reduction of abnormal scar formations, known as adhesions. The company's marketing partner is Ethicon Inc. (Somerville, NJ), which is a Johnson & Johnson company.

Lifecore Biomedical's development team for the Intergel adhesion prevention solution: (rear, from left) Jim Hall, operations manager; Phil Sticha, manufacturing supervisor; Dan Marxer, development engineer; Julie Kaiser-Braden, project manager; (front, from left) Georgiann Keyport, director of regulatory and clinical affairs; Harvey Wilgus, technical development manager; Larry Hiebert, director of operations.

According to Bracke, one of the key benefits provided by the Ethicon partnership was access to a large store of proprietary Johnson & Johnson research into gynecological adhesions. There was very little public information into this surprisingly large medical problem, in part, says Bracke, because adhesions were not acknowledged to be the possible results of well conducted surgeries, but were seen as mistakes made by a few surgeons.

Not only did the Johnson & Johnson research help to convince potential investors about the importance of the medical problem and the viability of the product, says Bracke, but the backing of Johnson & Johnson enabled investors to have greater confidence in a small company like Lifecore.

According to Bracke, there are special considerations for start-ups in forming successful partnerships with large companies like Johnson & Johnson's Ethicon. "It's like the mouse sleeping with the elephant," says Bracke. "The elephant may have nothing against the mouse, but if it rolls over in the night, it's all over."

The key to ensuring that the partnership will be successful, Bracke says, is maintaining open communication. "Big companies tend to change people fairly frequently," he says. "In this business, a lot of agreements are based on oral intent, rather than written. If someone leaves, a lot of the intent may be lost."

To keep communication open, Lifecore works closely with Ethicon, says Bracke. Many of Ethicon's quality procedures have been adopted at Lifecore, and the company is inspected regularly by its larger partner. Ethicon also had to make adjustments to make the partnership successful. "They had to be very flexible," Bracke says. "They had to do things they weren't used to. Where they would have an entire department for a particular function, we would have only one person. They had to adjust to that."

A partnership with a small company, Misonix Inc. (Farmingdale, NY), was one of the keys to the successful development of the MDEA prizewinner for U.S. Surgical (North Haven, CT). The company's silver-medal product is the AutoSonix ultrasonic cutting and coagulating system, which offers a small diameter that minimizes patient scarring and trauma. Doug Cuny is project manager at U.S. Surgical.

U.S. Surgical's development team for the Autosonix Ultrasonic cutting and coagulating system: (from left) Ernie Aranyi, Bill Lewis, Mike Primavera, Doug Cuny, and Earl Zergiebel.

"The device is in the ultrasound area, which we had no experience in," says Cuny. "We partnered with a company that did have that experience. We had experience making disposable medical devices, so the two companies worked very well with each other. We both fulfilled a need for each other. Neither company could have done the project without the other."

According to Cuny, "partnerships are common all over now. People are seeing the benefit of using someone's existing knowledge rather than creating something themselves."

Cuny says that what made the partnership with Misonix successful was a very open sharing of information between the companies. "There were no secrets and we were accessible at all times," says Cuny. "I, as the project manager here, and another project manager at Misonix were the direct lines of contact for the program," he says. "For a while we were talking two or three times a day. Progress was monitored very closely."

Mike Canon is president of Acuson Corp. (Plymouth Meeting, PA), a large, public company that recently acquired Ecton, a start-up company Canon founded that developed the silver medalist Cypress portable ultrasound system for cardiac imaging. Ecton was founded with the intention of becoming part of a larger company. "The way we ran the business was that we believed we could do the product engineering and manufacturing, but we felt that the ultrasound industry in particular is really well served and dominated by larger companies," says Canon. "Our strategy from the beginning was not to try to duplicate the large companies, but to build a product that would make sense within the product line of one of the established companies."

The Cypress portable ultrasound system by Acuson Corp.

"We looked for a larger company with the name, market, infrastructure, and global distribution that would be able to do the sales and marketing and service for the product," he says, "and that's what we accomplished when we sold the company to Acuson."

The buyout of Ecton by Acuson has been successful for a number of reasons, says Canon. "We chose Acuson because we felt that Acuson has a corporate culture that is very close to ours, their strategy in cardiology really attracted us, and their sales and marketing and service organization was probably the best in the industry."

Going Public

At some point in the development phase, many companies must choose whether or not to go public. While some companies elect to remain private and avoid the host of complications that such a step can produce, many do make the often-difficult transition. Several of the MDEA winners are either in the process of going public or have recently done so.

According to Jim Koch, chief financial officer and vice president of Careside Inc. (Culver City, CA), going public "is a chance for many more people to participate in deciding what the company's value is, not to have it driven by one or two large private investors or investment funds."

The Careside Analyzer blood testing system by Careside Inc.

Careside's gold-medal winner is a blood-testing system that delivers test results at the point of care, decentralizing many lab functions. Careside was founded in 1996 and completed its initial public offering (IPO) in 1999.

"I think we traveled more than 60,000 miles total," Koch says of the exhausting process. Raising the funds for the IPO required two road shows and five months of work.

One of the difficulties Careside encountered was finding backers who were receptive to the company's mission. "The first group of bankers we went out with was focused on selling to institutional investors, money managers, pension funds, people who manage large funds," says Koch. "We conducted three-and-a-half weeks of presentations, and at the end the institutions met the Careside story with the response that maybe this product is too speculative."

The company regrouped and found another set of bankers, who focused more on individual investors, says Koch. "The investors ranged from medical technologists and physicians to people who were just interested in a new medical technology," he says. Koch recounts that the company had to prove to these investors that its management team was sound and that the promises made in the business plan would be kept. Careside was successful with this group of investors and completed the offering.

For a public company, the IPO is only the beginning of a new phase of business management challenges. "Being public means that you now have all of the public reporting responsibilities, complying with Securities Exchange Commission regulations, meeting American Stock Exchange regulations," says Koch. For example, he says, "I answer 30 to 40 investment calls a week, people who have trusted their investment to us or are evaluating an investment in us."

But with the IPO complete, says Koch, the company is now able to focus on the next phase of its development, moving away from reliance on investment funding for capital and toward using resources from sales to continue growth.

Finding the Best and the Brightest

In today's tight labor economy, MDEA winners, like all businesses, are struggling with the difficulties of finding the talented, knowledgeable people critical to innovation efforts.

Like many other businesses, Amira Medical (Scotts Valley, CA), is seeking to attract new employees from a dwindling supply. Amira Medical's silver-medal winner is the AtLast blood glucose testing system, which is designed to minimize discomfort by sampling blood from a patient's forearm, thigh, or upper arm, which have fewer nerve sites than fingertips. Dave Hasker is director of new product planning at Amira.

 

Amira Medical's design team for the AtLast blood glucose monitoring system (from left): Dave Hasker, Ryon Bordoni, Ping Pan, Mark Wechsler, Jane Young, Greg Fisher, Ralph Nikolas, John Gleisner, Dwayne Dupree, Ryszard Radwanski, Marcel Goetz, Ed Leung, Shilpa Gwalani, John Preist, and Charles Raney. At left, lab technician Carmella Arallo tests the AtLast system on a patient.

According to Hasker, "One of our biggest challenges as we're growing—and we are more than 200 employees now—is hiring. We are located in the Silicon Valley, where unemployment is almost nonexistent."

Hasker reports that hiring is problematic at all levels of the organization. What can be done in this economy? "You just have to try all the traditional things," says Hasker. "You look, scout, go to job fairs."

The Trials of Testing

Medical device development, of course, poses many special challenges compared with the development of other types of products. One challenge unique to the healthcare industry is the high level of often very difficult clinical testing required for regulatory approvals and also for acceptance by the healthcare industry.

Trials that involve human or animal testing can be not only expensive, but also difficult logistically. Jeffrey Parker, MD, is president and CEO of Parker Medical (Englewood, CO). Its silver medal–winning product is the Parker Flex-Tip endotracheal tube, which has a centered, tapered, flexible distal tip that minimizes intubation trauma to the human airway.

Jeffrey D. Parker, MD, president and CEO of Parker Medical and inventor of the Parker Flex-Tip endotracheal tube.

"Our most difficult challenge was to find a reliable source of unembalmed cadavers that could be used for research purposes in developing accurate, anatomically contoured, intubation-related equipment," reports Parker. "Despite the medical benefits and lifesaving implications of this research and the fact that it would not result in any alteration or mutilation of bodies, many people in this country who have official custody of newly deceased individuals have been spooked by a wave of lawsuits over the sale of body parts from cadavers."

Overcoming this obstacle to development and acquiring enough data to prove the efficacy of the product took Parker three years.

Customer Education

Many developers of innovative devices find that one major hurdle to overcome in product success is to educate customers. Overcoming the reticence of the public in trying a new process or product can require a great deal of effort.

Anne Roesler Becker is the design and market research manager at Coloplast Corp. (Marietta, GA). Coloplast's silver-medal Amoena Luxa contact breast prosthesis adheres directly to the chest wall with a silicone adhesive, offering an alternative to nonattachable devices, which are held in place with a mastectomy bra. Coloplast is a large company that provides ostomy, wound-care, incontinence, personal-care, and postmastectomy products. Becker reports that "probably the most difficult challenge we faced in bringing the product to market from a business management perspective was in the formulation and implementation of a specialized education program."

Coloplast Corp. design team for the Amoena Luxa contact breat prosthesis: (rear, from left) Larry Prosser, CAD technician; Robert Halley, senior materials development engineer; (front, from left) Anne Roesler Becker, design and market research manager; Leslie Amick, designer.

"The Amoena Luxa education seminar program was developed to give the information and training retailers would need to sell the product successfully to their customers," says Becker. "To reinforce the importance of the education program, seminar attendance was required before a shipment would be made to a retailer."

Becker describes a very thorough and extensive effort to educate the retailers. "Each seminar featured a spokesmodel who was recruited, fitted, and trained by a sales territory manager. These women all wore the prosthesis prior to the seminars, which enabled them to share their personal experiences with the retailers. In-house personnel held a train-the-trainers seminar to teach sales managers how to conduct the seminars for retailers."

After the initial campaign, the company continues its education efforts. "If a retailer decides today to carry the Amoena Luxa prosthesis," says Becker, "the sales territory manager goes into the retailer's store and conducts in-store training."

Distribution

Distribution issues also pose challenges to many manufacturers. Such issues can include difficulties in competing with bundled product suites and difficulties in ensuring that the products will be available to the consumer at all.

Roy Carr is vice president and general manager at Ferris Manufacturing Corp. (Burr Ridge, IL). Its silver-medal product is the Ferris PolyMem wound-care dressing, which contains agents that allow wounds to heal without requiring cleaning between dressing changes.

Three members of the design team for Ferris Polymem wound-care dressings with a display board of multipatented products: (from left) Richard Rodzen, senior engineer; Roy Carr, vice president and general manager; and Ranier Schemeichel, research engineer.

"We are currently struggling with the issues smaller companies face," says Carr. "Because we have focused and become expert on polyurethane wound-care dressings, but do not provide the complete line of wound-care types or other hospital products (and therefore cannot bundle our products), we are excluded from the group purchasing organization type of contracts."

"We have the right product at the right time and have it available on the Internet and through the large medical distributors," Carr continues, "yet many institutions still tell us if it's not on contract they can't buy it."

Handi-Craft (Bonne Terre, MO) also reports problems with distribution. Handi-Craft's gold-medal product is Dr. Brown's Natural Flow baby bottle, which has an internal venting tube to facilitate continuous positive pressure during feeding, simulating the flow of breast feeding. Charles Miller is vice president of Handi-Craft, a subsidiary of Swing-A-Way. The parent company is a manufacturer and distributor of educational toys.

Craig Brown, MD, inventor of Dr. Brown's Natural Flow baby bottle.

According to Miller, one of the biggest challenges that the company is facing is getting the bottles out on the market. "The product is good and it works well," says Miller. "Our challenge is getting it accessible to the public. We get letter after letter praising the bottle. Our number-one consumer complaint is that they can't find it."

Patients First

What is strikingly similar among the MDEA winners is their orientation toward helping patients, not just making profits.

One example of this patient-first perspective is Kinetic Concepts Inc. (KCI; San Antonio, TX). The company's silver-medal winner, the NuPulse mechanical compression device, enhances lower extremity circulation for patients with arterial or diabetic foot ulcers, which helps prevent foot amputation. KCI provides a range of products designed for patients who are confined to their beds for long periods.

The NuPulse mechanical compression device from Kinetic Concepts.

According to director of research and development Dave Tumey, KCI has been faced with the challenge of trying to sell prevention in a reimbursement climate that is focused on waiting for problems to develop before allocating money. In the case of diabetic foot ulcers, waiting to see whether a patient will develop a problem can mean a future of multiple amputations for the patient.

Also according to Tumey, KCI has a history of supporting products that are good for patients even when they are not profitable. "KCI has always been a kinder, gentler company," says Tumey. The company carries a product called the Roto Rest, which is designed to turn bedridden patients, but is appropriate for only a small number of patients. According to Tumey, the product is inherently unprofitable. "But the company has provided the Roto Rest for more than 20 years, and it continues to do so because it's the right thing to do."

First, Patience

Finally, perhaps the most ubiquitous challenge for companies developing revolutionary medical devices that will change society is simply to persevere. Medical device development is notoriously long and difficult. For small companies in particular, the period before profitability can be interminable.

Paul Loughnane is president of Infusion Dynamics Inc. (Plymouth Meeting, PA). The company's silver-medal product is the Infusion Dynamics Power Infuser portable electronic infusion pump, which is able to deliver fluids very quickly in a variety of settings. The start-up was founded in 1995.

 

Developers of Infusion Dynamics's Power Infuser portable electronic infusion pump: (rear, from left) Ken Cook, Paul Loughnane; (seated) Michael Loughnane.

"Simply surviving and staying motivated through the long development phase, prior to FDA approval and prior to sterile, production-quality product, has been a challenge in itself," says Loughnane. "During that four-year period, we had no revenues, so cash flow was tight, and we had little customer feedback as a motivator, because we were not yet shipping product. Staying lean and focused as an organization has been the key to success."

"Developing new medical devices takes a tremendous amount of patience," Loughnane says. "Healthcare cost pressures driven by insurance companies create a bias against new technology, capital for new companies has been diverted to Internet opportunities, and the time lag from product concept to market entry created by FDA and other regulatory bodies can be discouraging to inventors. It's amazing that we see as many new products as we do."

Diamond General's Musinski offers some advice to would-be innovators. "Never give up. If you believe in something, don't give up. Small companies are sometimes not sure they are going to keep their doors open the next day, yet if you let that bother you, you are not going to make headway. That's just the norm for all small organizations, and every successful company goes through it. History is written in a way that tends to minimize the harrowing early days of the company. It seems in hindsight like everything fell neatly into place, but, in reality, that rarely occurs."

Leslie Laine is a freelance writer based in Southern California.

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