Medical Device Daily
NEW YORK — The cardiovascular field is hardly a niche market.
Two relatively smaller players have decided that broad- er rather than narrower is the best strategy in this already broad opportunity that continues to widen.
This was one of the central messages delivered by both Zoll Medical (Chelmsford, Massachusetts) and Abiomed (Danvers, Massachusetts) in their pitches to investors during this week's Piper Jaffray Health Care Conference.
Zoll is one of the key firms making automated external defibrillators (AEDs), but its 12% share is far from market-leading. And so, “with a long way to go,“ Zoll is extending its reach by “diversifying into pulmonary resuscitation,“ Richard Packer, company CEO, told a roomful of attendees.
That move was recently made with Zoll's purchase of Revivant (Sunnyvale, California) for $50 million, thereby adding the AutoPulse resuscitation device as a complementary piece to its AED line (Medical Device Daily, Oct. 6, 2004).
Packer said that new knowledge concerning defibrillation indicates that “more than 50% of [heart attack] patients need something else — circulation, blood flowing through their bodies,“ before shocking their hearts to normal rhythm.
The American Heart Association (AHA; Dallas), he said, is “redoing its protocol right now, changing from shock first, pump second, to pump first and shock second,“ thereby likely to advance the AutoPulse.
Essentially an instrument for pulmonary compression, the AutoPulse is strapped onto the chest of the cardiac arrest patient and then automatically provides increased and improved compression to boost circulation. According to Packer, 60% of heart attack patients need CPR, but doing this manually provides hemodynamic benefits that he termed “inadequate.“
Backing the value of the AutoPulse, he cited the newest studies in resuscitation — terming previous research in this area a “backwater“ — demonstrating the benefits of the AutoPulse, and supporting its $11,000 price tag. Citing two EMS-based studies, he said that one had shown a 35% increase in survival using the Autopulse, the other a 75% increase.
“The market for assisted circulation technology makes sense if you come across a victim in cardiac arrest . . . half the time you need circulation therapy initially, and it only makes sense that you're going to want sophisticated technology to provide that part of treatment.“
Packer said Zoll already has found 100 customers for the AutoPulse, and he estimated producing $30 million in sales in 2005. The technology, he noted, “will go every place the professional defibrillator market goes,“ including expanded sales to the international market.
While Zoll is preparing a “broader agenda“ of products “beyond shock,“ Packer noted that it remains targeted on defibrillator technology in three spaces: hospitals, emergency services and public access. The latter, he said, offers the best chance for expansion, driven by “a lot of legislative and regulatory activity“ to get defibrillation to people more quickly.
He bannered the company's AED Plus as a device differentiated from other AEDs in that it that it “helps you with things you need to do before and after“ applying a shock. “If helps people get through more of the steps of resuscitation. With better resuscitation, you have the chance of moving enough blood in someone's body.“
Packer used a video clip of a Duracell battery commercial — “a $10 million media buy“ that mentions Zoll “actually twice,“ he noted — highlighting that the AED Plus can be powered by commercially available batteries, a further differentiator.
Zoll, he said, “has the most superior medicine“ out of “a smaller, lighter, brighter box. Our biphasic [shock] works better than the 'gold standard' biphasic waveform.“
Packer acknowledged that a loss by the company in the recent quarter was “less than stellar bottom-line performance.“ But he said that Zoll is “making adjustments and we're going to move forward.“
For its part, Abiomed is probably best known as the company attempting to bring to market the AbioCor, a totally artificial, totally implantable heart, but President and CEO Mark Minogue told conference attendees more than once that the company is most focused “on wanting you to go home with your own heart“ rather than the artificial kind.
And Minogue emphasized that the “profit-generating revenue“ for the company is coming from sale of its BVS heart support technology and pushing its other heart “recovery“ products and services.
He said that in taking the helm from company founder David Lederman, he had set a variety of goals, including double-digit product revenue, “margin improvement“ and “new products introduced“ and that the company is accomplishing these goals. Minogue noted that the last quarter was profitable for Abiomed “for the first time in years.“
Though he noted that company losses had been driven largely by heavy R&D costs to develop the AbioCor, he put this investment in positive rather than negative terms. That technology platform “gives us a great depth of knowledge“ in heart pump technology, Minogue said, adding that this had produced “lots of patents, patents pending and lots of trade secrets“ still remaining unpatented.
Besides selling the BVS system, the company sees large potential value in two other heart support devices that provide extended support to failing hearts.
Its AB 5000, for example, is a system that has gone “about a year in the lab, in patients beyond 90 days of support,“ he said.
Using its “hearts outside the body,“ Minogue said, these longer periods provide bridge to recovery and “longer support of the heart“ beyond the five to 10 days of support provided by the BVS. “It's a critical element for keeping people alive.“
For all of Abiomed's heart-support products, he said, “Everyone in this room is a [potential] customer; you want to go home with your own heart.“
Ongoing, the company awaits FDA approval of its humanitarian device exemption for the AbioCor so that it can start sales “in a very controlled rollout.“ That, Minogue said, will be followed by a second-generation AbioCor.
The AbioCor 2, he said, will be 35% to 40% smaller and serve as a “five-year device.“