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Perspective Following BIO 2006 the Midwest as Innovation Central

Perspective Following BIO 2006 the Midwest as Innovation Central

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Published by ogangurel
© Ogan Gurel (All Rights Reserved)

Perspective Following BIO 2006: The Midwest as Innovation Central?
Posted by Ogan Gurel MD MPhil at 17 April 2006, 7:59 PM and is filed under Bristol Myers Squibb,Innovation,Biotechnology,FDA Reform,GE Healthcare,Medtronic,Abbott,Boston Scientific,Pharmaceuticals,Midwest,CMT,Eli Lilly

BIO 2006 in Chicago has come and gone and it was quite the event. More than 19,000 attendees – anywhere from Bill Clinton to biotech graduate students – teemed throughout the cavernous halls of McCormick Place.

Dozens of countries sent their delegations and you could hear strains of French (including the Belgian variant), Spanish, Italian and Korean in every corner. How does one go about summarizing such a huge and expansive extravaganza in a single, biweekly column?
Convergent Medical Technologies (CMT)
The Economist (“Devices and their Desires” – April 12th) did so by highlighting just one topic: the growing importance of combination (convergent) medical technologies that mix the world of biotech and devices. This MedTech Futures column featured that very subject two weeks ago. In the user poll accompanying that piece, nearly 75 percent of you indicated that this is an “exploding sector that’s critical today and to the future”.
Congratulations to those of you who answered affirmatively. It looks like you were thinking two weeks ahead of our colleagues at The Economist. Drug-device combinations, smart devices, “soft” devices and medical nanotechnology are increasingly becoming an important part of the health-care innovation landscape.

http://www.linkedin.com/in/ogangurel
© Ogan Gurel (All Rights Reserved)

Perspective Following BIO 2006: The Midwest as Innovation Central?
Posted by Ogan Gurel MD MPhil at 17 April 2006, 7:59 PM and is filed under Bristol Myers Squibb,Innovation,Biotechnology,FDA Reform,GE Healthcare,Medtronic,Abbott,Boston Scientific,Pharmaceuticals,Midwest,CMT,Eli Lilly

BIO 2006 in Chicago has come and gone and it was quite the event. More than 19,000 attendees – anywhere from Bill Clinton to biotech graduate students – teemed throughout the cavernous halls of McCormick Place.

Dozens of countries sent their delegations and you could hear strains of French (including the Belgian variant), Spanish, Italian and Korean in every corner. How does one go about summarizing such a huge and expansive extravaganza in a single, biweekly column?
Convergent Medical Technologies (CMT)
The Economist (“Devices and their Desires” – April 12th) did so by highlighting just one topic: the growing importance of combination (convergent) medical technologies that mix the world of biotech and devices. This MedTech Futures column featured that very subject two weeks ago. In the user poll accompanying that piece, nearly 75 percent of you indicated that this is an “exploding sector that’s critical today and to the future”.
Congratulations to those of you who answered affirmatively. It looks like you were thinking two weeks ahead of our colleagues at The Economist. Drug-device combinations, smart devices, “soft” devices and medical nanotechnology are increasingly becoming an important part of the health-care innovation landscape.

http://www.linkedin.com/in/ogangurel

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Published by: ogangurel on Nov 17, 2008
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06/16/2009

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Thinking about Life Sciences
http://blog.aesisgroup.com
Tuesday, April 18, 2006
Perspective Following BIO 2006: The Midwest as Innovation Central?
BIO 2006 in Chicago has come and gone and it was quite the event. More than 19,000 attendees – anywherefrom Bill Clinton to biotech graduate students teemed throughout the cavernous halls of McCormick Place.Dozens of countries sent their delegations and you could hear strains of French (including the Belgianvariant), Spanish, Italian and Korean in every corner. How does one go about summarizing such a huge andexpansive extravaganza in a single, biweeklycolumn?
Convergent Medical Technologies (CMT)
TheE conomist
(“Devices and their Desires” – April 12
th
) did so byhighlighting just one topic: the growingimportance of combination (convergent) medical technologies that mix the world of biotech and devices.This
MedTech Futures
columnfeatured that verysubject two weeks ago. In the user poll accompanying thatpiece, nearly 75 percent of you indicated that this is an “exploding sector that’s critical today and to thefuture”.Congratulations to those of you who answered affirmatively. It looks like you were thinking two weeksahead of our colleagues at
The E conomist
. Drug-device combinations, smart devices, “soft” devices andmedical nanotechnology are increasingly becoming an important part of the health-care innovationlandscape.
Geographical Bias in Medical Technologyand Biopharma
What’s interesting about all this is how it plays out given the significant cultural divide between thebiopharma and devices worlds. Pharmaceutical and biotechnologycompanies are largelybased on the eastand west coasts. While there are exceptions (most notablyAbbott Labsin the Chicago area andEli Lillyin Indianapolis), the majority of biopharma companies are situated in the Bay Area, along Route 128 inBoston or in the “pharma corridor” spanningNewJersey, NewYork and Pennsylvania.History accounts for some of this geographical bias. The pharmaceutical industry has origins dating back to the 19th century. The pioneering biochemical research that emerged from many of the east and westcoast universities also played a role in establishing this distribution along the coasts.In contrast to these coastal developments, many of the nation’s leading medical device companies havetheir roots in the Midwest where manufacturing excellence combined with strong clinical institutions (suchas theMayo Clinicand theCleveland Clinic
 
) have provided a strong background to their development.With a total market cap exceeding $300 billion (not including conglomerateGE Healthcareand Cook Medical, which is private), the top companies include:
Thinkingabout Life Sciences: Perspective Following BIO 2006: The Mi... http://blog.aesisgroup.com//2007/07/04/perspective-following-bio-2006-...1 of 4 11/17/2008 12:55 AM
 
Cultural Differences between Biopharma and Medical Devices
With their different histories and different geographical distributions, these two industries (biopharma andmedical devices) have largely developed independently of each other. This is even reflected on theregulatory level as two entirely different FDA divisions (CDRHandCDER) are responsible for biopharma and device approvals respectively.Likewise, marketing teams are oriented along completely different lines with drug companies focusing ondoctors offices and direct-to-consumer channels while device companies send their representativesdirectlyinto the operating room.Time-to-market is by and large considerably more protracted for a drug compound, which generallytranslates into a longer-term outlook and a more aggressive innovation stance for pharmaceuticalcompanies. The bottom line is that biopharma companies are very different than their medical devicecounterparts. These differences are summarized in the chart below:
Evolving Business Models for CMT
Back in the 1990s (before the currently growing era of combination technologies), it made sense forbiopharma companies to spin off their device-oriented divisions.
Thinkingabout Life Sciences: Perspective Following BIO 2006: The Mi... http://blog.aesisgroup.com//2007/07/04/perspective-following-bio-2006-...2 of 4 11/17/2008 12:55 AM
 
In this vein,Pfizerspun off Howmedica to Stryker (based in Kalamazoo, Mich.) in 1998 andBristol-Myers SquibbdivestedZimmer(based in Warsaw, Ind.) in 2001. The ultimate spin off was Eli Lilly’s divestment of Guidantin 1994. What a world of difference we now have with the recentBoston Scientific multibillion-dollar purchase of Guidant.With the rise of these combination technologies, the tide has turned and we are certainly seeing morecollaboration among these two groups. It is becoming clear, however, that this trend is increasingly beingdriven by the device companies rather than biopharma. Given the culture differences, how is thishappening?Three models appear to be developing:
1
. Direct acquisition,
2
. Joint research, and
3
.
D e novo
convergent technologycompanies.
The Direct Acquisition Model
One example of the direct acquisition model is General Electric’s acquisition of Amersham in 2004. GEHealthcare is a major producer of imaging equipment. Amersham (a British company) was a leadingproducer of biological markers and imaging contrast agents. This merger seems to be working as GEpositions itself for the next generation of biologicallydriven and personalized imaging applications.Direct acquisition also appears to be the strategy of Abbott Laboratories as it pursues a goal of being atrulyintegrated medical technologycompany. Though conventionallythought of as a pure pharmaceuticalcompany, Abbott has assembled a formidable group of orthopedic and vascular technology groups. Infact, one of the terms of the Boston Scientific deal with Guidant was that Abbott Labs (specificallyAbbottVascular) would acquire the stent component of Guidant’s business.
Joint Research Deals
An example of the joint research deal can be seen in the ongoing collaboration betweenGenzyme(aleading biotech firm) andMedtronic(a leading multi-disciplinarydevice company). Though where this willlead is not yet clear, it seems as though the cultural differences between such companies maybe too greatto make this veryfruitful.
De Novo CMT Companies
The third model is that of 
de novo
companies, which specificallydedicate themselves to the development of combination technologies. Leveraging the phenomenon that the “world is flat,” these companies utilize orlicense technologies from multiple sources to produce a combined product. Theyessentiallyoutsource thedevice components, outsource the drug components and pursue in-house development of only the mostcrucial, unique and proprietaryelements of the technology.They represent a development that not only embraces the new technology (and its diverse components)but also the new business models of the 21st century. They then bring these together and aggressivelymove toward approval and market entry.One major example is Conor Med Systems, which is based in Menlo Park, Calif. In the end, though, myprediction is that manyof these
de novo
companies will be acquired bythe larger device firms that are basedin the Midwest. Might Abbott or Medtronic eventuallyacquire a companylike Conor Med Systems?Whilethat would be pure speculation at this point,it’s not out of the question.Out of all this, we can discern some underlying themes:
1
. Convergent medical technologies will be a major source of medical innovation for the future,
2
. Collaborative deals (whether theyare pure acquisitions or research agreements) are largelybeing driven bythe medical device companies, and
Thinkingabout Life Sciences: Perspective Following BIO 2006: The Mi... http://blog.aesisgroup.com//2007/07/04/perspective-following-bio-2006-...3 of 4 11/17/2008 12:55 AM

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