SAN FRANCISCO – At the JPMorgan Healthcare Conference which ended here last week, scores of companies vied for the attention of investors and, better yet, their dollars.
One company making a good case for why it should receive both of these was SonoSite (Bothell, Washington), a manufacturer of hand-carried ultrasound (HCU) systems, used in a range of settings: radiology, OB/GYN, emergency medicine, acute and critical care, surgery, cardiology and anesthesia.
According to Kevin Goodwin, president/CEO of SonoSite President/CEO, the new M-Turbo and S Series products, which the company began shipping in December, accounted for more than 30% of the quarter’s revenue, a report he saved to deliver at the conference.
“Market response and uptake worldwide was stronger than we expected in the first quarter of our product launch,” said Goodwin. “This is a particularly encouraging, given that we essentially had only 40 selling days with our new products in the field in the fourth quarter.”
The M-Turbo is the company’s highest end, multi-capability system, while the S Series of products targets application-specific users with four systems: the S-Fast, S-Nerve, S-ICU and S-Cath.
The M-Turbo and S Series products were just two of five new products that the company released in 4Q07, marking its largest ever roll-out. These new devices complement the company’s flagship MicroMaxx system
Rather than attempt to compete with the big boys of diagnostic imaging –such as General Electric (Little Chalfont, UK), Siemens (Munich, Germany) and Royal Philips Electronics (Amsterdam, the Netherlands) – Goodwin said that SonoSite has concentrated on making small ultrasound machines that doctors can easily use for a variety of procedures — guiding a catheter through a vein for example. Its quite reasonable primary message is that, rather than performing these procedures blindly, it’s much better to do them with a clear view inside the body.
What SonoSite specializes in “is developing new markets, and customizing new products for these new markets,” Goodwin said.
The company currently generates 75% of its revenues from the acute care market, about 20% from the private physician market and another 5% from the field medicine market.
Goodwin claims a No. 1 position globally for SonoSite in what he called the “golden triangle,” consisting of emergency medicine, critical care and anesthesia.
Another strong presentation came from Wright Medical Technology (Arlington, Tennessee), a company that appears to be making a comeback after a couple of recent lean years.
Wright is a small-cap orthopedic company with roughly 61% of its business currently stemming from reconstructive implants (hips 35%, knees 26%). The remaining 40% of the company’s business is provided by biologics, implants and other products for extremities such as shoulders, fingers and ankles.
Gary Henley, president/CEO of Wright, said that the company has a history of steady growth, with “a goal of maintaining mid-teens top-line growth and faster growth on the bottom line.”
He said that this is the company’s primary track record, “with the exception of a little glitch that we had back in 2005, 2006. But I think we’ve recovered from that and righted the ship, so to speak.”
Gregory Simpson, an analyst at Stifel Nicolaus & Co. appears to agree with Henley’s assessment, and has added the company to his watch list for 2008. He terms Wright the “best of the bunch” of the smaller orthopedic companies. “Wright had some problems during 2005 and 2006, but has worked their way out of them and is growing very nicely,” Simpson said.
He also pointed to some small attractive acquisitions recently made by Wright’s management.
These included the purchase of certain assets of Metasurg (Houston), focused on development and marketing of surgical fixation and implant devices for foot and ankle surgery for $2.5 million, plus royalties, in October (Medical Device Daily, Oct. 23, 2007).
The company also acquired certain assets of R&R Medical (Pennsylvania), a company providing external fixation devices for the foot and ankle and trauma markets, for an initial cash payment of $8 million, plus milestones in April (MDD, April 9, 2007). The assets acquired included the R&R external fixation product line, consisting of an array of foot- and ankle-focused external fixation devices, including the Circular Freedom Frame, the Hollawell Tomahawk Mini-Fixator, the Patriot Mini-Fixator and the Stealth Fusion System. These products address those external fixation procedures performed by foot and ankle surgeons and surgical podiatrists.
Henley said that the company’s foot and ankle product portfolio is “arguably the best out there today offered by any company.” He noted that many of the products in that portfolio, including those recently acquired from Metasurg and R&R, are not fully launched yet, but should be fully rolled-out on a worldwide basis in 1Q08 and 2Q08.
Speaking on its promising future in the diagnostics market was Scott Garrett, president/CEO of Beckman Coulter (Fullerton, California).
The company sells instruments for clinical diagnostics and life science research and serves, a testing market valued at more than $24 billion worldwide.
Garrett said that the role of diagnostics testing is changing, shifting from reactive testing to proactive testing. “We have an approach to developing a test menu that’s based on unmet clinical needs. And the likelihood of large volumes of repeat testing and employing an overall disease management approach.”
Three aspects of test menu expansion that Garrett described as critical to the new shift in diagnostics are the areas of preeclampsia, prostate cancer and cardiology.
He said that these are the areas in which Beckman Coulter plans to add many “high value” tests in the near future.
On the new technology front, Garrett said that the company’s most critical emphasis is its molecular diagnostics project, and that the company is developing a way “to bring the promise of molecular testing to the hospital laboratory.” He said he said that the molecular market, which is already valued at about $2 billion worldwide, has an opportunity to grow at an even more rapid pace “as the molecular lab market converts from a reference lab market to a routine hospital market.”
The company, he said, is targeting 2010 for the launch of an automated molecular lab solution that targets the hospital market.