The $2 billion acquisition of Instrumentarium (Helsinki, Finland) by GE Medical Systems (Waukesha, Wisconsin) was completed last month, nearly 10 months after it was initially proposed. Officials of both companies and outside clinicians said they expect the combination to accelerate development of noteworthy healthcare technologies.

Dr. Hans Kerkkamp of the University Medical Center Utrecht (Utrecht, the Netherlands), who also is president of the Dutch Society of Anesthesiologists, said, "Both companies have long track records of technology innovation. The combination will definitely contribute to better patient care."

Instrumentarium will become the European headquarters for GE Medical's $2.6 billion healthcare information technology unit, and will continue to provide significant contributions to the global business, including advanced research and development and manufacturing, among other focus areas, GE said in a statement. As part of the regulatory approvals necessary to bring about the acquisition, GE Medical will divest Instrumentarium's Spacelabs Medical (Redmond, Washington) patient monitoring unit and Ziehm surgical C-arm business.

Joseph Hogan, president and chief executive officer of GE Medical Systems, said, "The people and businesses of Instrumentarium are highly regarded and respected at GE Medical, and they will contribute in major ways to the company's future, especially in the areas of product innovation, quality and service, and overall customer commitment."

Olli Riikkala, president and CEO of Instrumentarium, said his company's customers and employees "will benefit from the tremendous strengths of GE, especially in the areas of research and development, expansion of our offering and globally local support."

Instrumentarium manufactures products for the anesthesia, critical care, diagnostic imaging and infant care sectors. GE Medical's products serve the medical imaging, interventional procedures, healthcare services and information technology segments.

IsoTis-GenSci OrthoBiologics deal completed

The merger between IsoTis (Lausanne, Switzerland) and GenSci OrthoBiologics (Irvine, California) was completed in late October, resulting in the formation of IsoTis OrthoBiologics. The new company, which has about 150 employees, has its corporate headquarters in Lausanne and operations in Bilthoven, the Netherlands, and Irvine. It has a product portfolio containing six orthobiologic products on the market and nine in development. Pro forma product sales totaled about $23 million in 2002.

Management of the newly combined firm said it expects full-year 2003 sales to "slightly exceed" the 2002 combined sales figure of $23 million, adding that it expects to achieve profitability during 2005.

Jacques Essinger, chief executive officer of the merged firm, said, "We have a strong product range on the market, with substantial distribution power; we have a near-term pipeline and the development expertise to keep introducing new orthobiologics solutions; we have access to one of the world's largest research groups in our field to fuel long-term growth; and we have the organization and the financial resources to put the company on a steep growth curve in the years to come."

IsoTis reported earlier in the month that it was transferring its in-house orthobiology research group to the University of Twente in Bilthoven, where it will become part of the university's Biomedical Technology Institute. The research group will focus on the biology and repair of musculoskeletal tissues, with IsoTis owning the resulting technology or products in exchange for financial support of the research program.

The company said the integration of the sales and marketing functions and the research and development activities of the two firms leaves IsoTis well positioned toward establishing itself as a world market leader in orthobiologics, which it described as "the fastest-growing segment of the orthopedics market." IsoTis added, "Driven in large part by an aging, increasingly active population, [the sector] is expected to keep growing at double-digit percentages for the next several years."

EU procurement policies bring challenges

HBS Consulting (London), a business development and marketing consultancy serving the healthcare industry, has issued a report saying that new tendering policies and e-procurement technologies being adopted across the European healthcare market pose "serious problems" for medical device suppliers. The HBS Strategic Review identifies the main influences affecting procurement as European and national regulatory policies, changes in hospital funding practices, group purchasing and electronic procurement.

The consulting firm said the European Union's (EU) standardization of procedures and practices for public procurement, while a necessary step in the war against corruption, has resulted in a massive increase in bureaucracy. "It is this tangle of red tape, exacerbated by widely varying national policies, that is of great concern to medical device companies and other suppliers to the healthcare sector," HBS said in a press release.

The Strategic Review cited three areas it identifies as both threats and opportunities:

A more "price-driven" market forged by a move to new policies in hospital funding as purchasers become more cautious in their spending. A key change, HBS said, "is the move toward case-mix based systems where a hospital's funding provision is based on the profile of cases that a hospital encounters and treats." The most commonly used form of such funding in Europe is diagnosis-related group (DRG)-based funding, which covers the treatment given to a patient while staying in a hospital. HBS said such a focus "offers opportunities for suppliers, since the improved monitoring made possible by these programs can focus attention on the longer-term cost savings offered by some technologies."

The advent of group purchasing programs, which HBS said is "widespread across the market." In the UK alone, the consulting firm said it is predicted that massive National Health Service supply confederations, covering all hospital and primary care trusts in a given area, will manage 80% of all procurement by March of next year. The HBS Strategic Review warns: "Although this will streamline negotiations to the benefit of suppliers as well as purchasers, it will lead to overwhelming pressure for lower prices and higher service provisions."

The introduction of electronic purchasing, which HBS said offers "perhaps both the biggest threats and the most attractive opportunities." The report predicts that it is the companies who work with their customers to develop "mutually beneficial systems" who will be the winners in this arena. "It is those suppliers who continue to maintain personal relationships in parallel with the electronic systems who will hold the advantage," the report said.

HBS said the med-tech industry would be challenged by the need to achieve a balance between customers' needs for lower cost and new procedures with the suppliers' needs to maintain profitability.

Improvement effort focused on cutting delays

The National Health Service (NHS) is rolling out a hospital improvement program aimed at cutting delays and delivering better patient care. The NHS Modernization Agency has designed the Improvement Partnership for Hospitals (IPH) program to improve the quality of care, address shortages in specialist staffs and develop better systems for controlling patients into and within those hospitals.

David Fillingham, director of the modernization agency, said the aim is "to give patients better care without delay." The agency will spend 30 million to push the program forward over the next three years. The IPH program was launched following successful pilot efforts in four NHS hospitals.

Fillingham said early results from what he termed an "improvement partnership" have been "extremely encouraging, showing some simple, common-sense changes can make a big difference to patients' experiences in hospitals." He said that as a result of the improvement program, waits for patient transport have been eliminated and the number of patients discharged on the same day after assessment and treatment has risen from 17% to 37%.

In a separate announcement, the Department of Health said heart patients in the UK will have shorter waits for treatment in the most modern facilities after an additional investment of 93 million in three hospitals. More than half the money will be used to create a cardiac center at Basildon Hospital, at a cost of 56.2 million.

Other portions of the 93 million spending plan include 20.9 million for the cardiac center at Nottingham City Hospital and 16.6 million for an expansion at Glenfield Hospital (Leicester, UK).

On-line system for recalls, adverse incidents

The UK's Medicines and Healthcare Products Regulatory Agency (MHRA) has launched a new on-line reporting system for medical device manufacturers to report adverse incidents and device recalls. The Internet-based Manufacturers' On-Line Reporting Environment known as MORE is accessible through the MHRA web site. Manufacturers can electronically submit full details of any device-related adverse incident or device recall direct to the MHRA Adverse Incident Center via the site. The information will then be transferred automatically into the agency's incident-tracking database.

Along with the on-line adverse incident report form, MORE will provide manufacturers with a searchable library of all their draft and submitted incident reports using the new system. MORE was developed for the MHRA by Charles McKenzie Consulting and Unipart Advanced Learning Systems at a cost of about 30,000.

The MHRA says the new system is a time- and resource-saving program that will enhance the adverse-incident investigation process and increase the proportion of agency business that is transacted on-line.

Gordon Aylward, director general of the Association of the British Healthcare Industry, said his trade organization "anticipates that MORE will be a useful tool for medical device companies ... we will encourage our members to use the system and feed back on their experiences to assist with its development over time."

The MHRA was formed on April 1 from the merger of the Medical Devices Agency and the Medicines Control Agency. Last year the two agencies that now make up the MHRA received nearly 9,000 adverse incident reports, about 23% coming from device manufacturers.