Market Challenges Transform Traditional Paths of Innovation
By: Brian Verrier, President, Peripheral Vascular, Covidien
Increasingly rigorous regulatory and reimbursement environments have a significant impact on the innovation cycle for both small and large medical device firms. The United States Food and Drug Administration’s (FDA) review process for medical devices is a necessary safeguard that provides strong protection to patients. However, over the past decade the time and cost to bring a device to market has increased dramatically as further clinical data requirements and regulations have been put in place. Additionally, as reimbursement continues to move from a fee-for-service to an outcomes-based model, the “innovation paradigm” continues to shift.
The path to innovation is less defined and in many cases is dependent on a company’s culture, resources and stakeholders. Larger medical device firms are expanding their investment in smaller inventors who can more efficiently drive development, clinical and economic evidence, and potentially market access. These ventures are growing more attractive as acquiring technology, even at a premium, helps to mitigate the time, cost and risk associated with bringing product to market in today’s environment.
Larger device firms many times also serve as investors for early stage startups to further foster and support development of new technologies. This can prove to be a beneficial relationship for both parties. For example, drug coated balloons for peripheral artery disease have a very attractive growth potential given the prevalence of the disease, and their ability to restore blood flow and reduce re-interventions. Covidien acquired CV Ingenuity in 2013. However, prior to the acquisition Covidien was an early investor in CV Ingenuity, providing the company with investment needed to bring its drug coated balloon technology through development.
Organic development of products also has advantages. Developing the product internally often has a higher return on capital and allows for greater control of the development process, which may result in fewer late-stage surprises as the product gets closer to launch.
There are advantages and challenges for both organic and acquired technology. For most organizations, the best results include broadening their portfolio through both.
Covidien: Investing in Innovation
Covidien’s innovation culture is centered on customer focused innovation, which aims to deliver clinically relevant and economically valuable solutions to providers and patients. With this focused commitment, Covidien continues to invest significant time and resources into research and development and has bolstered an extremely broad portfolio with organically developed product launches in the vascular space. Furthermore, Covidien has acquired strategic technology platforms such as ev3, CV Ingenuity, and BridgePoint’s peripheral Chronic Total Occlusion (CTO) products. These acquisitions were essential in building the most robust portfolio in the peripheral vascular space, enabling a global competitive advantage.
Another example is the acquisition of VNUS Medical Technologies and the company’s treatment for chronic venous insufficiency (CVI). The ClosureFast™ radiofrequency ablation technology enables clinicians to effectively treat patients with CVI, an often debilitating medical condition that affects roughly 30 million people in the U.S. alone.
The acquisition was critical, as it propelled Covidien’s strategic vision of becoming a leading peripheral vascular company. At the time of acquisition, ClosureFast was already approved in the U.S. and Europe and was a successful product. However, CVI was significantly under diagnosed and undertreated, presenting an opportunity for needed investment to develop the market.
Covidien made several additional investments in:
- Clinical evidence
- Global physician training
- Next generation product development
Additionally, Covidien continues to invest in market development to drive disease state awareness and the health risks of CVI. The investment in educational campaigns to encourage those suffering from CVI to learn more about their condition and speak to their doctor about treatment options is critical. Hence, in collaboration with several society partners, including Society for Vascular Surgery® (SVS), American College of Phlebology (ACP) and American Venous Forum (AVF), Covidien launched Rethink Varicose Veins in 2011.
The result of the commitment and investment to this market has been both amazing and inspirational. Today thousands of people who suffer that would not have been cared for are now being treated. This commitment to enhance the quality of life for patients and improve outcomes is at the very core of Covidien’s mission.
In the medical device industry, survival depends on your ability to stay ahead. With new challenges and an ever shifting global health care landscape, the successful companies will strike the balance between organic development, early investment and acquisition with the goal of bringing forward new technologies, which drive better outcomes at a lower cost.
Brian Verrier has 25 years of experience in the medical industry. In his role as President, Peripheral Vascular, Verrier is responsible for the Peripheral Vascular division of Covidien.
 Proebstle T, et al. Three-year European follow-up of endovenous radiofrequency-powered segmental thermal ablation of the great saphenous vein with or without treatment of calf varicosities. JVS; July 2011.
 Gloviczki, P., MD., Comerota, A., MD., Dalsing, M., MD., Eklof, B., MD., Gillespie, D., MD., Gloviczki, M., MD.,Wakefield, T., MD. The care of patients with varicose veins and associated chronic venous diseases: Clinical practice guidelines of the Society for Vascular Surgery and the American Venous Forum. J Vasc Surg. 2011 May; 53(5 Suppl): 2S-48S.