Medical Device Link.

Originally Published MX January/February 2006

MARKET ANALYSIS

Smaller suppliers of traditional wound care products will face a bumpy road in light of the expected sales decline in this sector over the coming years. For those looking to maintain or increase their profit margins, innovative product development in the advanced or active wound care markets is the appropriate focus.

When products near or reach launch, establishing a strategic partnership with a larger player is often a good option. This is especially true if the smaller company has a broad intellectual property portfolio and a pipeline of products in development, in which case a partnership can be struck for product- or market-specific rights while rights to broader assets are retained.

If capital is available or can be raised, however, smaller companies may want to resist the partnering option. By remaining independent through product launch and early sales ramp-up, substantial value can be built. Once products have been validated by the marketplace, an initial public offering or a sale of the company becomes increasingly viable, and partnerships remain an option. For many medical device companies, corporate value is highest after product approval and demonstrated sales, but before peak sales are reached. Pursuing an exit too early is likely to result in leaving money on the table, but waiting too long can yield a similar result.

Copyright ©2006 MX