Medical Device Link.

Tyco's Breen: Taking the next step.

The January announcement by Tyco International Ltd. (Pembroke, Bermuda) that it plans to split into three publicly traded companies has raised concerns among members of the investment community. In particular, analysts have expressed unease over the $40 billion conglomerate's postsplit performance, particularly in regard to reduced earnings and the estimated $1 billion cost associated with the transaction, which is expected to close a year from now. Following the split, Tyco Healthcare—often referred to as the crown jewel of the conglomerate—will become one of three independent businesses.

Just hours after Boston Scientific Corp. (Natick, MA) nailed down its $27.2 billion acquisition of Guidant Corp. (Indianapolis), the company learned that, in addition to cleaning up the widely reported product-quality problems at Guidant, it now has to get its own house in order. In a particularly strongly worded warning letter to Boston Scientific, FDA cited "serious regulatory problems" regarding the company's quality management system. It was only the third time in FDA's history that the agency had issued a broad-based warning to a medtech manufacturer that called into question the company's entire corporate structure.

Following what FDA describes as a comprehensive, year-long internal inventory of the tools used to monitor the postmarket safety of medical devices, the agency has announced that it is launching a new "postmarket transformation initiative." Developed through FDA's Center for Devices and Radiological Health (CDRH; Rockville, MD), the initiative is designed to "better protect the public health by allowing FDA to identify, analyze, and act on problems more quickly, including alerting the public sooner of potential medical device issues." FDA has released a report, Ensuring the Safety of Marketed Medical Devices: CDRH's Medical Device Postmarket Safety Program, which provides a complete overview of the new initiative.

"Under the leadership of our device center's expert staff, we are working to develop even better ways to evaluate new technologies to maximize benefits and minimize risk, including more-efficient ways to develop more-effective postmarket systems that can support safer medical practices as well as continued innovation," said Scott Gottlieb, MD, FDA deputy commissioner for medical and scientific affairs. [ More ]

Medical device start-ups in the Midwest reported a greater level of venture investments during 2005 than their counterparts in the biopharmaceutical and healthcare software and service sectors, according to a report released by BioEnterprise (Cleveland). Overall, medtech companies in the region reported $205 million in investments last year, or 37% of the total investments reported for all three sectors.

"Midwest states and institutions have made concerted efforts over the last few years to capitalize on the tremendous healthcare research and industry base that exists in the region to grow new healthcare enterprises, and those efforts are starting to bear fruit," says Baiju

Celera's Ordoñez: Driving toward profitability.

In an effort to stem losses from its flagging small-molecule business, Celera Genomics (Rockville, MD) has restructured its Celera Diagnostics (Alameda, CA) joint venture. Under the terms of the deal, Celera Genomics, which had equal ownership of the company with Applied Biosystems Group (Foster City, CA), has taken full control of Celera Diagnostics. The company also plans to sell or find partners for its drug-development programs.

"The contributing value from the diagnostics business coupled with the reduction in our cash consumption positions Celera to reach profitability sooner, while delivering greater value to our customers, partners, and shareholders," said Celera Genomics president Kathy Ordoñez. "We will continue to advance our vision of

Kyphon Inc. (Sunnyvale, CA), a manufacturer of medical devices to restore spinal function using minimally invasive techniques, and an orthopedic surgeon have jointly filed suit against Medtronic Sofamor Danek (Memphis), the spinal business unit of Medtronic Inc. (Minneapolis). The suit, unsealed in mid January, alleges that Medtronic stole trade secrets surrounding inventions for the treatment of vertebral compression fractures. The complaint claims the inventions were developed by Harvinder Sandhu, MD, who recently granted their exclusive license to Kyphon for $20 million.

"We believe this complaint is without merit," said Pete

Medtronic's Wehrly: Complaint 'without merit.'

Wehrly, Medtronic corporate vice president and president of Medtronic's spinal and surgical navigation divisions. "We believe patients benefit when there is competition in the marketplace, and we will defend our right to be in this segment of the spine market." [ More ]

Medical device companies looking to gain a competitive advantage should focus on improving their customer-facing processes, says Dale Hagemeyer, research director for the manufacturing sector of industry advisory services at Gartner Inc. (Stamford, CT). Speaking to a group of medtech executives at the Medical Products Customer Strategy Summit in January, Hagemeyer outlined the benefits to medical device companies of implementing a complete customer relationship management (CRM) strategy. "Medtech companies are often so product focused that they forget the other key lever they have in the marketplace: being customer-centric and executing in such a way that they become the vendor of choice," he says. "Having great products means nothing if they can't execute well."

The two-day summit, held in Marina del Rey, CA,

featured more than a dozen speakers, including representatives from medtech manufacturers that have or are in the process of devising CRM initiatives of their own. For more information on CRM software and implementation for the medtech industry, look for Debra Kurtz's article, "Relating to Medtech Customers," in the upcoming issue of MX. [ More ]

Earlier this month, CCF Innovations, the technology transfer and commercialization arm of the Cleveland Clinic, celebrated the dedication of the new wing of the Cleveland Clinic Innovation Center. The newly expanded facility now houses the operations of CCF Innovations, as well as six start-up and early-stage life sciences companies. The center provides CCF equity partners and spin-off companies with laboratory and office space, as well as access to CCF's core facilities and top staff. According to CCF, companies typically stay in the facility for 24 months and then locate into space adjacent to the CCF campus. [ More ]

Following President Bush's annual State of the Union address on January 31, 2006, medtech manufacturers and industry representatives issued statements recognizing the implications of the president's comments for the future of the medtech industry and national healthcare system.

"AdvaMed strongly supports the president's agenda for strengthening U.S. competitiveness," said Stephen J. Ubl, president and CEO of industry association AdvaMed (Washington, DC). "While America's medical technology industry is already the global leader, additional trade initiatives to open foreign markets are needed for U.S. companies to compete fairly and allow more patients worldwide to benefit from the innovations our industry offers. Making the R&D tax credit permanent is also essential to the continued competitiveness of an industry

such as ours that is made up primarily of smaller manufacturers with heavy investments in R&D." [ More ]