BB&T

Most Americans are familiar with call-center outsourcing to India. But in a trend that may be gaining momentum for the medical device industry, more jobs in this sector might be headed overseas. And those jobs aren't just manufacturing components – they run the full gamut from research and development through to product launch.

A survey conducted by Knowledge@Wharton, the online business journal of the Wharton School at the University of Pennsylvania (Philadelphia), and HCL Technologies (Pune, India) says that medical device companies see outsourcing as a competitive and cost-saving advantage.

The survey included 264 responses from medical equipment manufacturers, vendors and other industry experts. Of those, 39% indicated that they were involved in medical device manufacturing or sales, and 35% in consulting or research. A variety of company sizes were represented as well, about half from companies with less than $500 million in annual revenues, and half with more than $500 million.

HCL was prompted to conduct the survey based on customer demands.

"We've been working with medical device manufacturers in the U.S. and Europe now for six years, working with customers based on pure vendor relationships," Pradep Nair, head of HCL's Life Sciences & Healthcare Practice, told Biomedical Business & Technology "Just in the last 24 to 36 months, customers are coming to us asking us to launch a product in India or Asia. There has been an uptick and we wanted to understand more about the market needs."

Previously, HCL clients primarily sought cheaper programmers for technical assignments. "Today," said Nair, based in Florham, New Jersey, "That relationship is changing to a partnership." HCL client companies are moving beyond cost-plus transactions for services on an hourly basis to agreements based on fixed bids or even profit-sharing in partnership agreements.

The survey, intended only to examine outsourcing issues related to India, found that:

• Although 72% of respondents indicated they have never outsourced any product development work, many respondents see relatively potential benefits from outsourcing, particularly in manufacturing (51%) and IT (46%).

• Communications ranked as an issue of concern, partly because of low English skills among vendor employees, and partly because of glitches in telecommunications. "People overestimate the value of global IT teleconferencing and communications. Often, these systems do not work nearly as well as advertised," one respondent said in the survey.

• Most of those surveyed were optimistic about the capabilities of outsourcing partners: 84% agreed with the statement that "an outsourcing partner can appreciate the complexity of your varied supply chain and support you through the consulting and execution piece alike" and 78% said they do not intend to restrict R&D to their home country.

Medical device manufacturers' fears of intellectual property loss seem to be relatively low.

Ronnie Toddywala, of Johnson & Johnson (New Brunswick, New Jersey), said in his response that those fears are often an excuse not to move forward. "Yes, they may be able to steal a circuit, but the question is, what would they do with it? In most cases, the key IP is already filed, and it takes much more than a circuit to bring a product to life. Device manufacturers own the surgeon relationships that are key to developing the right product with the right clinical and economic evidence. That part of development is difficult to replicate."

• Cultural differences exacerbate communication problems. Although only 19% of respondents said that "cultural synchronization" was an extremely important factor in the decision to enter into an outsourcing relationship, a number of respondents said that their outsourcing projects have foundered because of cultural differences.

While the survey paints a positive picture of medical device industry outsourcing, it is a hot-button political issue in the U.S.

Alan Blinder, professor of economics at Princeton University (Princeton, New Jersey), former economic advisor to President Bill Clinton and former vice chairman of the Board of Governors of the Federal Reserve System, often writes and speaks out against sending jobs overseas. He has described outsourcing as a third "Industrial Revolution" that poses a risk to the employment of as many as 42 million workers in the U.S.

"It's going to be painful because our country offers such a poor social safety net to cushion the blow for displaced workers," Blinder wrote in a Washington Post op-ed column.

"Our unemployment insurance program is stingy by first-world standards. American workers who lose their jobs often lose their health insurance and pension rights as well. And even though many displaced workers will have to change occupations – a difficult task for anyone — only a fortunate few will be offered opportunities for retraining.

Nair said the market for medical devices is growing in the U.S. and Europe at a rate of 7% to 8% a year. At the same time, Indian and Chinese markets are growing at 25% a year. Reaching those Asian markets will require substantial changes in product design, user interface and cost structure.

"The biggest [change] is learning to build medical equipment at the right price point," Nair said. "In the U.S., a dialysis machine might cost $1,400, whereas in India, the market will only bear a machine priced below $600." In such a case, Nair said that an offshore partner is really "the only game in town. Who else can help you?"

Saikat Chaudhuri, assistant professor of management at the Wharton School, said one of the most surprising survey findings was that he expected to see a lot more conservatism when it came to doing things like R&D abroad. "I thought there would be a lot more resistance. As you go upstream, it's hard to do these kinds of jobs from a distance."

But he points to major U.S. firms that already are involved in major outsourcing endeavors.

"Look at Cisco, they use a lot of vendors, but they are also creating another entity in India," Chaudhuri said. "You have to see where you can get more work done. Look at the Japanese auto industry. Look at how the Japanese have created jobs in the U.S. It's part of the global economic cycle. If you protect jobs [when it might make more sense to outsource overseas] then those firms become less competitive and they can end up like a General Motors and that would be a catastrophic" to the U.S. economy.

New human genome variants discovered by deCode

Researchers at deCode genetics (Reykjavik, Iceland) say they have discovered two common, single-letter variants in the sequence of the human genome (single-nucleotide polymorphisms, or SNPs) that the company said regulate one of the principal motors of evolution.

Their paper, titled "Sequence Variants in the RNF212 Gene Associate with Genomewide Recombination Rate," was published in the online edition of Science.

According to deCode, versions of the two SNPs, located on chromosome 4p16, have a genome-wide impact on the rate of recombination — the reshuffling of the genome that occurs in the formation of eggs and sperm.

"Recombination is largely responsible for generating human diversity, the novel configurations of the genome that enable the species to adapt and evolve in an ever-changing environment," the company said in a news release.

"Remarkably, the versions of the SNPs that increase recombination in men decrease it in women, and vice versa," deCode said. "This highly unusual characteristic may enable the variants to help to maintain a fundamental tension crucial for evolutionary success: promoting the generation of significant diversity within a portion of the population but keeping the pace of this change within certain bounds, maintaining it relatively constant overall and so supporting the stability of the genome and the cohesiveness of the species."

Kari Stefansson, CEO of deCode, said, "This is the latest in a series of landmark papers ... in which we have utilized our unique capabilities in human genetics to elucidate some of the key mechanisms driving human evolution. We are also excited that we can now immediately enable individuals to see if they carry such variants, by folding the findings announced today • and others we expect to publish in the near future — into our deCODEme personal genome analysis service."

The deCode team say that they identified the SNPs through a genome-wide analysis of more than 300,000 SNPs in about 20,000 participants in the company's gene discovery programs. The SNPs, referred to as rs3796619 and rs1670533, are within the RNF212 gene, and are estimated to account for roughly 22% of paternal variability in recombination and 6.5% of maternal variability. Little is known about RNF212, though it is a mammalian homolog of a gene called ZHP-3 known to be crucial for the success of recombination in other organisms.

deCode is applying its discoveries in genetics to the development of drugs and diagnostics for common diseases. It said its population approach and resources "have enabled us to isolate key genes contributing to major public health challenges from cardiovascular disease to cancer, genes that are providing us with drug targets rooted in the basic biology of disease."

20th annual CHINA MED set for April 3-5 in Beijing

The 20th International Medical Instruments and Equipment Exhibition, CHINA MED, will take place from April 3–5 at the China International Exhibition Center in Beijing. The event is jointly organized by Messe Düsseldorf China, China World Trade Center Co. Ltd., Hui Tong Xingye International Exhibition Co. Ltd. and the Health Department of the General Logistics Department of the Chinese People's Liberation Army.

Messe Düsseldorf, the organizer of the huge MEDICA trade fair held in Germany each October, will support CHINA MED 2008. The organizers said CHINA MED 2008 will feature the latest medical equipment showcased by more than 500 exhibitors. Exhibit categories will include medical diagnostics and imaging equipment, surgical instruments and medical software, as well as electro medical technology and hospital equipment.

A highlight will be an exhibit hall for medical consumables, IT technology, rehabilitation devices and dental products. The event's organizers expect more than 20,000 visitors to take part in the three-day congress.

"The need for new equipment will ensure rapid growth in the Chinese medical appliances market over the next 10 years or longer," they said.

Showcase of innovations set by Japanese group for Philly

Japan Technology Group will present a showcase of Japanese innovations in the fields of medical and physical sciences, food, cosmetics and web/software in the U.S. on March 18 at the Science Center (Philadelphia). The showcase will feature Japanese research institutions and graduate schools specializing in the biosciences, as well as material and computer sciences, among them Nagoya University, Tokyo University of Science and Kyushu Institute of Technology. Aside from universities, companies such as Ogawa & Co, BITS Co., Red-Ion Medical and BioMatrix Research will be showcased.

Japanese Technology Group said that the event grows from the Japanese government's recent deregulation that makes it possible for researchers at national universities to seek out alliances with the private sector, including those abroad. Among the 16 technologies to be showcased during the event are ones dealing with inflammatory diseases and obesity, medical devices and diagnostics, and a system for monoclonal antibody production.

Taro Yaguchi, president of Japan Technology Group, said he hopes this showcase will set a precedent for Japanese universities and their spun-off companies and start-up efforts.

"This is the first time several Japanese companies and universities are actively promoting their out-licensing portfolio technologies in search for collaborative partners outside of Japan," Yaguchi said. "This event signifies the beginning of a trend where the Japanese start-up businesses and research institutions are attempting to globalize their operations to the U.S."

Medicexchange to acquire online business in China

MGT Capital Investments (New York), a holding company focused on the healthcare information technology sector, reported that its subsidiary, Medicexchange (London), has signed a preliminary agreement to acquire the Chinese online business Maydeal.com.

The acquisition will extend Medicexchange's current on-line and off-line business offerings in China. The combined business will provide one of the largest online sources of Medical products, news and services to Chinese Medical Imaging professionals, hospitals and manufacturers.

Medicexchange provides Western medical equipment manufacturers with a service to enter the Chinese marketplace, including regulatory, translation, marketing and sales services. Medicexchange has existing offices in Beijing and the acquisition of Maydeal.com will extend this with offices and teams in Shanghai.

MGT Capital is a holding company focused on investments in the global healthcare information technology market. The company has two subsidiaries, Medicexchange PLC and Medicsight PLC.

Medicexchange provides medical imaging professionals with a global web portal containing an online sales, jobs and information channel for diagnostic, treatment and surgery planning solutions. This combined with a variety of relevant clinical papers, training materials and content gives these professionals access to information and products that they otherwise would have difficulty accessing.

Medicsight is a research-driven developer of computer-aided detection (CAD) and image analysis software for the medical imaging market.

The CAD software automatically highlights suspicious areas on computerized tomography (CT) scans of the colon and lung, aiding in the identification, measurement and analysis of the early indicators of disease.

Medicsight said that its CAD software has been validated using one of the world's largest and most population-diverse databases of verified patient CT scan data. The company says that its ColonCAD and LungCAD software products have been integrated with the advanced 3D visualization workstations of "several industry-leading imaging equipment partners."

Textile specialist Fenner to acquire Prodesco and subsidiary

Prodesco (Perkaskie, Pennsylvania), a designer and manufacturer of engineered textile structures for industries ranging from aerospace to industrial and medical, said earlier this month that its board had agreed to the company's acquisition by Fenner (Yorkshire, UK), which it termed "a worldwide leader in reinforced polymer engineering."

The UK firm's products include conveyor belts for the mining and power generation markets, precision motion control products for the computer, copier and mechanical equipment markets, and sealing products for the mining, hydraulics, and oil and gas industries. The purchase included all outstanding shares of Prodesco and its wholly-owned subsidiary in the medical fabrics market, Secant Medical (also Perkaskie).

Nick Hobson, managing director of Fenner's Precision Polymer Division, said the acquisition was a "logical extension" of Fenner's core expertise in textile engineering: "Both Fenner and Prodesco have strong and long-standing reputations in specialized technical markets," he said. "We look forward to welcoming Prodesco, its employees, and its customers into our worldwide company."

Both Prodesco and Secant will continue to operate with current staff and leadership from existing facilities in Perkasie. No employee reductions or facility consolidations are anticipated.

Fenner has other U.S. locations, including production facilities in Manheim, Pennsylvania.

Inverness says it will close j-v Unipath facility in UK

Inverness Medical Innovations (IMI; Waltham, Massachusetts), a developer of rapid point-of-care diagnostic products that has been expanding rapidly via acquisitions in the past year, reported its intention to close its joint-venture Unipath facility in Bedford, UK.

The company plans to transfer its Bedford manufacturing operations to its low-cost production facilities, which are mainly located in China.

IMI said Unipath will begin discussions with employee representatives as part of a consultation process required under British law. Inverness said it anticipates that the closure and transfer could be completed by year-end 2009.

During the second half of 2007, Unipath manufactured about 53 million tests, of which roughly 46 million were supplied to IMI's 50/50 consumer diagnostics joint venture.

The intention to move the UK manufacturing operations to other locales represents an acceleration of what Inverness called its "ongoing plans to significantly reduce product cost, increase margins and extend product life cycles for [our] women's health and professional diagnostic product lines.

Unipath employs more than 400 in the UK. If the intended closure takes place, Inverness Unipath will reduce its current need for 130,000 square feet by approximately 100,000 square feet, and any remaining company business at that site would be relocated elsewhere.

The company said a charge of about $37 million is anticipated for all costs associated with the facility closing, including but not limited to write-off of equipment and leasehold improvements, severance cost and rent obligations through the lease termination in 2011.

It said about 80% of this amount will be borne by the partners in the joint venture and/or their parent companies, with the balance borne solely by Inverness.

Study of nanotechnology funded by grant from EC

Researchers at the London School of Economics (LSE) and several other groups have been awarded a $587,000 European Commission grant to conduct an international research project on regulating nanotechnologies in the European Union and U.S.

The project will be coordinated by Dr. Robert Falkner at LSE, who said, "High-profile controversies such as those concerning genetically engineered crops have highlighted how important it is for policymakers to identify potential risks associated with new technologies and to promote international cooperation in the early stages of the policy process."

He added, "There are known gaps and inadequacies in existing regulatory approaches to nanotechnology that must be addressed if we are to effectively promote innovation while ensuring safety and enhancing public acceptability. This project aims to examine current practice and provide recommendations to policy makers on both sides of the Atlantic on how to promote best practices and avoid future trade conflicts."

Large IMRT prostate cancer trial is launched in UK

Clinical treatment in the UK's large-scale trial for treating prostate cancer with intensity-modulated radiation therapy (IMRT) began at the Cancer Center of Belfast City Hospital in Northern Ireland, using the dose-shaping Oncentra device from Nucletron (Veenendaal, the Netherlands).

More than 2,000 men throughout the UK will participate in the Conventional or Hypofractionated High-Dose Intensity Modulated Radiotherapy for Prostate Cancer (CHHiP) clinical trial expected to return its first findings in 2012. The Phase III multi-center, randomized trial is being conducted by the National Cancer Research Network (NCRN) and National Cancer Research Institute (NCRI) and is sponsored by the Institute of Cancer Research.

Nucletron's Oncentra Optimizer with Direct Step & Shoot capabilities was used for the first procedures.

Prostate cancer patients undergoing radiotherapy locally usually have up to 37 treatments, or fractions, over eight weeks. IMRT allows higher doses to be given over a shorter time period, reducing treatment time.

The CHHiP trial aims to compare the standard 37 fractions with 20 fractions given in four weeks.

Dr. Vivian Cosgrove, clinical scientist at the Cancer Center, said the conformance of dose required for the trial presents "very challenging dose-volume constraints," and the Oncentra MasterPlan was a key to assisting the planning and targeting of treatment that combines computed axial tomography, magnetic resonance and positron emission tomography scanning.

RaySearch Laboratories (Stockholm) software for radiation therapy also was used for the treatment.

High-energy ultrasound device wins CE mark and $1.9M grant

French start-up Theraclion (Paris) has won the CE mark for its Thyros high-intensity focused ultrasound (HIFU) device for non-invasive reduction of thyroid nodules and secondary hyperparathyroidism. The company also announced receiving a €1.3 million ($1.9 million) grant from OSEO Innovation, a French state innovation agency.

Chief Executive Ismaël Nujurally, MD, said the next two years will be dedicated to additional clinical trials to demonstrate efficacy, winning reimbursement for the outpatient procedure as an alternative to surgery or pharmaceutical therapy in Europe, and accessing new markets primarily the U.S.and Japan.

"The U.S. is the biggest market," he told BB&T, "thanks to a concentrated population under a single regulatory authority and homogenous healthcare system."

He said an FDA 510(k) submission will be filed based on an equivalent predicate HIFU device approved for InSightec (Tirat Carmel, Israel) for uterine fibroids, or for EDAP (Lyon, France) for localized prostate cancer.

Theraclion received the CE mark for head-and-neck therapies using the HIFU treatment. While the initial indication is for thyroid nodules, the company can expand to other indications in the same area.

The Thyros stereotaxic acoustic surgery device is made up of the generator for HIFU, an ultrasound imaging screen, a screen for targeting the intervention, and a stand-up station housing the computer and proprietary software for managing the procedure. The key technology is contained in the visualization and treatment head mounted on a robot arm that contains the ultrasound imaging sensor and the HIFU emission device in order to define the target and deliver the high-energy beam.

"The beauty of what we have done is to start with a very small focal point, targeting lesions smaller than a grain or rice (2 mm x 2 mm x 8 mm)," said Nujurally. "Having done that with precision three-dimensional targeting makes it easier to move to larger targets. The cooling technique is considered a shining star in our intellectual property portfolio according to independent analysts in the U.S."

Launched in 2004 through a technology transfer from EDAP and the Institut National de la Santé et de la Recherche Médicale to company chairman Fran ois Lacoste, Theraclion attracted €4.1 million ($6 million) in first-round financing from Truffle Capital (Paris).

The company is targeting a worldwide market estimated at over $850 million annually and expects to be ready for full commercialization of the device, or preferably a sale of the company to a larger manufacturer, by 2010.

• Cepheid (Sunnyvale, California) and Instrumentation Laboratory (IL; Lexington, Massachusetts) reported the release of the Xpert HemosIL FII & FV assay as a CE-mark product under the European Directive on In Vitro Diagnostic Medical Devices.

The assay, which delivers results in just over 30 minutes with a single GeneXpert cartridge, detects Factor II (FII) and Factor V Leiden (FV) genetic variations associated with thrombophilia, an increased risk of blood clots.

Developed and manufactured by Cepheid, was to be made available in early March 4 by IL, the exclusive worldwide distributor for the Xpert HemosIL FII & FV assay.

Xpert HemosIL FII & FV is the first test to be commercialized under the exclusive development and distribution agreement for hemostasis molecular diagnostic tests entered into by Instrumentation Laboratory and Cepheid in April 2007.

The companies said FII and FV are the most common hereditary risk factors for venous thrombosis and "are key in the determination of genetic predisposition to the condition and the need for prophylactic treatment in high risk patients."

• Nfocus Neuromedical (Palo Alto, California) reported receiving CE-mark for the CardioVasc Stent-Graft and delivery system, a minimally invasive device for treating patients with saphenous vein graft (SVG) lesions from a previous coronary bypass, vessel perforations and coronary artery aneurysms. Martin Dieck, president/CEO of Nfocus. "This is an important first step in what we hope to be a series of regulatory approvals in the coming year."

Saphenous vein graft disease has been a problem facing the cardiologist since the early days of coronary artery bypass graft (CABG) surgery. In CABG surgery, a segment of the patient's own leg vein (the saphenous vein) may be removed and used to create an artificial conduit to bypass areas of blood flow blockage that have built up in the patient's coronary artery.

After CABG surgery, the SVG bypass itself may become blocked over time by the same type of disease that affected the patient's original coronary artery. The result is a need to reopen the diseased SVG vessel and restore flow. This second treatment again can be yet another surgery — or alternatively, the SVG may be treated via angioplasty and stenting procedures using less-invasive endovascular techniques.

The CardioVasc Stent-Graft device is a permanent implant delivered via a less-invasive catheter procedure for patients that have a diseased SVG from a previous CABG surgery.

Nfocus is focused on treating hemorrhagic stroke, with development programs aimed at rapid treatment of aneurysms and fistulas in the brain. The device is not approved in the U.S.