Saturday, March 27, 2010

New Medical Device Opportunity: You can benefit from empty threats made by companies that don't like healthcare reform

So, healthcare reform was passed. In the tradition of Vice Presidents who use the "F" word, it is a big F*ing deal.

Trashing Healthcare Reform

Some companies obviously did not like that. Take 3M for example. According to Star Tribune, 3M's public spokesperson said this, "it could prompt the company to stop making certain devices or pass the tax on to patients or providers in the form of higher prices" (Not a direct quote, mind you).

What will happen now?

It is simple. Someone else will simply do one of the following:

1. Carefully observe the products on which 3M passes the cost to patients and start a price war.

2. Simply take over whatever 3M has stopped producing.

Yeah, what about patents and such? Sure, imagine a situation where a company stops producing medical devices because it wants to feed to a "tea party" syndrome respite with uncivilized, drivel. Top that off with them going after competition that wants to take over where they left off. PR Disaster, anyone?

Simply because you are a big, glorified sticky-note manufacturing company doesn't mean you can get away with crap. Yeah, of course, if you watch some of the inane comments on the article whose link is supplied at the end of this blog, obviously this feeds to people who have a lot of time to comment on articles.

These people, "with a lot of time to comment on articles" do not usually tend to be "share holders". Let's try to watch 3M and some of these other naysayers whine their way out of a market because they don't like progress.

What can entrepreneurs do?

1. Be on the prowl: Watch for unreasonable price rises by companies that make devices. This is 2010. People have very little tolerance for nonsense based on political whims. Hospitals, clinics and even direct consumers everywhere would only be too happy to take up a better offer from a competitor who offers quality products at better pricing and consistency of delivery.

2. The IP brouhaha: Look for gaps in the intellectual property of such large companies. As such, you should be doing this routinely. While patents are great business weaponry, they are essentially double-edged swords. It is not uncommon knowledge that unreasonable application volume, a lack of leadership and patent examination skills has the USPTO issuing a larger number of patents than they should be. Look for freedom to operate and opportunities to exploit existing patents.

Do not worry yourself about examples such as the nonsensical patent battles on stents. The irony there, I believe, is none of the devices work and the companies fight each other in court over IP, but gang together whenever a new study comes out showing they just aren't effective.

Every patent has an expiry date associated to it, and yes, the period can be extended, but you can brainstorm, examine and if you pick on the details enough you can fight your "market leaders" by diluting their patents alongside blocking them off with derivative work and your own patents.

The basic requirement? Understand IP better and hire a good lawyer.

3. Not just cheaper, better: I know I said cheaper is good, but how about better as well? When was the last time you looked at the tongue depressor and said how can we make this better? There are a lot of "medical devices" out there, that are very basic and with a few changes could definitely inject new energy in their marketing and sales.

Not every device needs a major revolution. High volume, low margin products can represent an opportunity for you to quickly innovate, sell them to a larger company that can extend it's product line and move on to other avenues.

Helmets: For example, helmets are medical devices. Can you make them more convenient to use, and maintain or improve on safety? Every day there are newer materials, newer manufacturing processes and other innovations. Incorporating these innovations can make your product functionally better, more accessible or maybe even simply lighter. When you inculcate such changes into high-volume products, you can easily recover any minor cost increases involved in such devices.

Blood Glucose Monitors: Let us take one of my favorite devices for example. There are so many devices out there in the market. Companies are constantly trying to innovate by making lances less painful, the blood volume required lesser, eliminating coding for strips and so on and so forth.

Yes, the holy grail lies in a possible non-invasive meter, or a move toward Hb1Ac meters. You could still brainstorm small innovations that lead to big change. Of course you need to make sure you don't become the Blockbuster while Netflix forges ahead either.

4. Do not fear regulation, embrace it: Look, regulation is not going to go away. Do not buy into the fear mongers. If they had their way, you could simply make anything you want and poke any patient with anything you cook up, regardless of effectiveness or side effects. How would you feel if your device ended up on a few thousand patients and you woke up one day to find that your device had left them blind, hurt or otherwise impaired because of sloppy oversight? How would you feel if you lobbied for such sloppiness to begin with?

Why is it so hard to do proper testing for the devices that you want to put out there? Because the VCs may not fund this? Let's get a few things straight:

4.1 Innovation is expensive, and is not happening at the rate at which new markets should or can be forged. For the VCs or other investors to simply turn their back on the cost to success is not going to be an option for long. This has happened in the past and the consequences have not been good. I am sure everyone is a little wiser from past experience.

4.2 Regulation reform, as weak as it may be, is here to stay. So, all your angels and VCs have to go with the flow - there is nowhere else to go. Don't buy into this crap that medical device innovation will leave the US shores. Barely anything happens outside the US, and how many guesses do you want to name the world's largest device market?

4.3 The pharmaceutical market and the biotechnology market and the companies involved went through this problem. They did turn their back on innovation. The result? Stagnation.

It is charming to think that someone will toy around with some frozen meat and a hammer in a garage and make the next "big bang" happen, but it is going to be harder, it is going to take more effort and more money. None of the stakeholders can take a chance on "Yeah, this thing is going to take more money than it used to, so let's drop it". And the real VCs are not waiting for this to happen.

So when someone tries to sell you tea, go for a latte instead.

Regulation will change, if it overreaches it will be dialed back. Make it a part of the business planning and execution process. Don't wait there looking for Obama's birth certificate - that does not have your medical device roadmap.

5. Embrace progress: Seriously, what would be the point of being in the medical devices industry if you are not committed to people's health? If you are not committed to Universal Health, you cannot even get into the mindset of finding a "cure". You will be stuck in a rut that involves simply fighting change - regulation, reform and such.

You will simply be replaced. Just like 3M would be if it stopped making devices.

So, what would you rather do?


Monday, March 22, 2010

So you want to be a medical device entrepreneur? Part I

Alright, so history got made! Thank you Obama! It may not be all that we want (definitely not what the Republicans want), but it is a good starting point! Of course, there is a post coming on all this, but let's wait till the Senate version passes and El Presidente signs it...

On to other things. Today, I was contacted by someone in India. He wanted to know if there was some reading material on what it takes to be a medical device entrepreneur. I told him it is highly unlikely that there is one (good) resource exclusive to this topic, but I told him to read some great blogs like meddevice and some of the others that roll on by the sidebar.

I did promise that I will try to put some resources together. I realized that trying to do so in one single post would be rather insurmountable. So, I am trying to do this one, maybe a few parts. If you guys have ideas on what I may have missed, please chime in.

The 12 (thousand) step program to becoming a medical device entrepreneur

0. The Premise: First off, an "entrepreneur" can work on any aspect of the device business - you could start with great marketing and/or sales skills cleverly packaging and reselling devices in emerging markets for instance, or a Doctor who has identified a niche, an engineer who perceives a disease condition in a specific manner and so on. It is also not important for every entrepreneur to have an innovative product with remarkable revenues and so on.

Risks and Realities: To begin, you need to be clear about your goals, your limitations and your vision. Having said that, I need to warn you, this is very tough. You also need to be flexible enough. Every vision, goal and ambition will need to go on a path of constant change. Look at a certain young 44th President and his ambitions and the adjustments he has made over the year. The two important aspects to his success are perseverance and flexibility. Yes, he has charm and vigor of speech, but that would not be enough.

Entrepreneurship is mostly about minimizing risk. Wait, what? Isn't it about taking huge risks? Yes, it is. But, these risks have a way of multiplying over time. So, you will be playing a constant game of minimizing them, or trying to do so. Over time, your goal is to catalyze gradual risk minimization with mature products, increasing revenues and market share.

1. Failing Successfully or Successfully Failing?

When you hear of a 23 year who sold a soft porn social network or some other dilettante garbage, you need to realize that they are the exception rather than anything else.

Without mincing any words, I would like to say - be prepared to fail, and be prepared to learn a few lessons from it, dust yourself off and go at it again, and again and well, you get the idea. Develop this single attitude and you pretty much have it made. If this scares you, you may want to think of other things to do.

2. Be passionate about ...

Anyone who develops medical devices has at least two customers - the doctor who uses the device on the patients and the patients themselves. Your devices should be about patients, not about markets, strategic placements, verticals, channels or, "Yeah, our device failed it's primary endpoint (rather miserably), but, look, see, we ...".

You, your device, and everything should be about a singular passion - the safety and ultimately, the health of your patients. This passion will dictate everything you do, and eventually your success!

3. Be ethical: Be ethical, because this one aspect will differentiate you from some of those intriguing device companies out there which have engaged in, among other acts of joy and wonder - price fixing, cooking up device data, ghost writing, hiding adverse events from the FDA and many, many such things.

Just be ethical. Don't be like them. You have no need to. They don't either - but they are just too big to fail, right?

4. Be political: Say what? Yes, you heard me right. What would be the fun of designing all those life saving devices, if no one can afford them? Find an appropriate stance, and stick by it - this for me, would involve not joining shady tea parties, or even shadier "non profit" organizations that double up as lobby groups.

Any industry needs to associate and fight for what it stands for. The same industry should make sure it's stance is not stolen by a vested few. You cannot deem yourself an entrepreneur - essentially an agent of change and revolution, without wanting to be participatory.

5. Find your market - volunteer at a hospital! By now you have realized that there are two primary customers you are looking at - the Doctors and the patients. To be exact, it should be "Health-care professionals and providers" to include nurses and other folks who are part of the health care matrix. It will also include patients and their care givers. Yes, broadly defined, a patient is not an island. They are the cynosure in a large system...

But wait, volunteering means just that. It should give you the opportunity to be closer to your customers. Do not abuse your position and make a nuisance of yourself. Simply observe.

6. Become an intern - unpaid or otherwise: Yes, as an intern in a new industry, especially in a start-up company, you can be a double-edged sword. You can learn a lot while being a valuable contributor to an organization. Again, be respectful. Just because you are not paid, does not mean you should not be responsible.

7. Take a class in anatomy and physiology: Actually, there are many classes available that can sharpen your skills. Your community college could provide you with a great opportunity to study anatomy and physiology. There may University extensions, such as the ones we have in the San Francisco Bay Area which may have courses and certificate programs tailored to your needs.

8. Network! Put down the facebook - well maybe not. Be sure to network both online and offline. Get to know people, attend talks and lectures, organize an event, read blogs, socialize, facebook-ize and do otherwise. Follow up with people, and go beyond collecting business cards and connections.

When someone asks for help - help! Yes, do the favor, pass it on and see the power of networking in action, started by you.

9. Take chances! - embrace opportunity Every time I see someone post an ad that says, "Join a young organization that is about to change the gold standard...must have 8 years of catheter experience designed at 14 French.." it makes me wonder. If I have done that for 8 years and I come work for you and do the same thing for the next 8, exactly what is "young" about your organization and what the heck will I learn over the next 8 years?

Be original. Take a disease by it's horns. Bring real change. Hire fresh blood, bring some new perspective. If you simply start a company because you believe some VC will fund it - what will happen when they simply don't? Or how, is that passion towards a cause?

How about a new disease? Or a new perspective to a known disease? Did you know MRSA could be more devastating than the AIDS epidemic has been? Did you know that despite decades of research, atrial fibrillation is still a holy grail of sorts in cardiovascular disease treatment?

10. Storm that brain - innovate! As an entrepreneur, your biggest asset is intellectual property. While we will discuss intellectual property in much detail later, let us focus on one thing - brainstorm. Cook up those ideas. Think of the craziest ways in which you could solve a problem, and remember the rules of brainstorming:

1. There are no rules, except the following:

2. Any idea, no matter how crazy needs to be noted. Craziness, and out-of-the-frikking-boxiness need to be encouraged...

3. Do not be judgmental while brainstorming. The judging will happen later.

Try to come up with as many different ways of to solve the problem as you can. And then,

11. Dig in, build, build, build! While it is great to come up with all kinds of ideas, it is really important that you start getting your hands dirty. Define the market, define the competition, propose a solution, create a theory, hypothesize and more importantly - make! build! prototype! Without this key step, you will have very little to convince your investors or yourself as to how things will work.

There is of course, much much more to come!

Until next time

Friday, March 19, 2010

Washington Hospital Center - A role model for how not to be....

First off, I apologize for the hiatus. In February, I became involved in two top secret projects, one of which I can now proudly show off - my photography website:

The other project - you will hear from me soon enough. Moving quickly on, let's get to the topic of the day.

Why bother with hospitals on a medical device blog?

Maybe you were going to ask this, maybe you were not. The important thing is this. Where do medical devices come from? Apart from barely functional bare stents and bare stents coated with crap, most functional medical devices come from the clinical setting where someone identifies a need.

So any good medical device designer who is worth his salt, and is not looking to re-jig a combination of body parts and catheters, stents and balloons, will look at the hospital and/or clinical setting to understand diseases much better.

The disease that afflicts Washington Medical Center

The disease that affects this hospital that fired 21 employees for not showing up to work during a blizzard does not appear to be all that uncommon. With a recession and more people than jobs out there, spineless employers have plenty of opportunity.

What is appalling is, this is not unique to this hospital. It may have faded rather quickly from public memory but a Doctor and a Sheriff from Texas (a state that knows history, science nor the meaning of facts) that harassed a nurse for being a whistle-blower, preceded this nonsense.

The Defense

The defense from the Hospital's "old boy's club" is that a lot of other employees showed up to work. I think there is a different reason. I think too much golf, disconnection from reality and a cold blizzard caused a stroke of genius in these guys.

In case you haven't read or watched the news recently, you will be surprised to know that there is a deep penalty for some folks if they fail to show up for work during blizzards. These would be the 21 employees who were recently fired by a hospital here in Washington D.C.

The consequences of being an uncaring employer

True, you could fire and hire at will right now. But, what do you think will happen six months from now? What will be your reputation in the long run?

Maybe you did not learn how to design the brand new, spanking medical device from this post. But, I do hope you learned something more important. And that, is how not to be like the folks over at Washington Hospital Center.

Defending the indefensible - Snow Angels and other diversions

Instead of trying to understand how bad the situation is, it appears that one of the managers in the upper "echelons" of the hospital decided to divert the attention of the Washington Post which has been writing about the firing (links at the end of the post).

Through a missive aimed at the editor, she called to attention the fact that the employees that showed up and a lot of people got treated.

Yes, we are all happy.

However, those 21 people who could not come (and did not simply goof off) because of the blizzard. How about them? Where is their miracle?

What happened to good faith and mutual trust? How are we to proceed forward with innovations in health-care if employees have to live and work in fear?

I hope the union gives the hospital management the good roasting it deserves.

A final note - innovation and success

A lot of people mislead themselves that success has to do with Excel charts, Powerpoint presentations, strategic acquisitions, seamless integrations and such.

All that nonsense aside, success and innovation have to do with mutual trust and faith. The right environment for all this is one where the term employer is just a blur. Only when everyone in the organization feels a sense of belonging will success ensue.

Cannot believe this?

Well, you will never succeed. Yes, you can fire 21 people and feel mighty. But the world is puking with disgust. Eventually, that will be your biography - that will be the mark you leave.

Feel successful?

It is not easy to create an open environment. Nothing else in life, is easy either.


1. The story:

2. The Kool-Aid: