Artificial replacement heart developer Abiomed (Danvers, Massachusetts) last month began a variety of organizational changes it said were necessary "to achieve its short- and long-term goals." The company reported reduction of 21 positions from a workforce of 166 but also the expectation of new recruitment efforts to obtain expertise in specific areas, defined as necessary to meet "strategic focus."
The organizational changes were rolled out in early January, shortly after the seventh successful implant of the company's AbioCor replacement heart, continuing the 15-patient trial that had seen nearly a nine-month hiatus. (An 8th patient had failed to survive the implant procedure). Then, later in January, the company reported one more implant. These latest implants were both carried out by heart surgeons Laman Gray and Rob Dowling at Jewish Hospital (Louisville, Kentucky), the site of a majority of the implants. Maintaining a communications policy established for the trial, neither the company nor the hospital released any details concerning the latest implants.
An Abiomed spokesperson told The BBI Newsletter's sister publication, Medical Device Daily, that the company hopes to have enrollment in its 15-patient clinical trial for the AbioCor completed by the middle to end of 2003, "and hopefully, a submission to the FDA with initial commercialization approval from the FDA by the middle of 2004."
Abiomed said that its reorganization initiatives follow a year-long review process. It said that it plans to outsource most of the manufacturing of electronics components in order to increase scale-up capabilities and reduce costs. Additionally, the company is centralizing its plastics manufacturing; restructuring the design assurance, quality assurance, materials management and engineering departments; and improving internal systems for budgeting, project management and financial performance metrics.
David Lederman, PhD, Abiomed's CEO, said the restructuring was necessary to enable a transition from emphasis on development to product production. "These actions prepare us for the next stage of Abiomed's business growth," Lederman said in the statement. "The challenges ahead are changing, and our resource requirements are evolving." He said the company's management and staff "are now increasingly deployed to achieve our principal goals, which include: clinical and commercial introduction of the AbioCor Implantable Replacement Heart; development and commercial introduction of substantive add-ons to our BVS product line; and development of our next-generation, smaller replacement heart, to fit a larger proportion of the population."
He added that he believes these initiatives will put the company "firmly on a path, during 2003 and 2004, toward business growth and profitability."
BD enters glucose monitoring ...
BD (Becton, Dickinson and Co.; Franklin Lakes, New Jersey), heretofore focused on the drug injectables, surgical supplies and lab instruments markets, has introduced its first products in the blood glucose monitoring sector. The entry could alter the share figures in this large market, since BD comes with some heavy hitters as partners to provide initial backing.
The company recently introduced the BD Logic Blood Glucose Monitor and the BD Latitude Diabetes Management System. Those product launches were rolled out in conjunction with two separate new relationships: one with Medtronic MiniMed (Fullerton, California), the diabetes management business of Medtronic (Minneapolis, Minnesota), the other with Eli Lilly and Co. (Indianapolis, Indiana).
While teaming with Eli Lilly will drive BD's overall presence in the diabetes care arena, the partnership with MiniMed will promote BD's marketing presence in the monitoring subsector. With this backing, BD is predicting first-year penetration of 1% in this large disease monitoring and management category. While one percentage point may seem slight, it extrapolates to at least $40 million and as high as $50 million a year, considering the sector's size from $4 billion to $5 billion annually, according to analysts.
Ryan Rauch, medical technology analyst for Adams, Harkness & Hill (Boston, Massachusetts), issued a report calling the rollout announcements "the most important product launches in [BD's] history." The report praised the "speed and accuracy" of the technology employed in the new monitors. Rauch specifically pointed to the marketing push that the MiniMed pact will give the new products, which he characterized as "not best in class" but "as good as the others" in this sector. "BD in general has always lacked that home run market product," Rauch told BBI, and he projected that for BD the new products "will drive their top-line growth going forward."
The tie-in with MiniMed provides some heavy artillery as the company goes up against the major players, which Rauch described as being Roche Diagnostics (Mannheim, Germany), with 30% to 45% of this monitoring sector; Johnson & Johnson (Franklin Lakes, New Jersey), at about 28%; Bayer (Leverkusen, Germany), 16%; and Abbott Laboratories (Abbott Park, Illinois), 10% to 11%. Rauch projected a continuation of a 15% annual growth in this sector overall, thus providing plenty of incentive and a hot competitive scramble for added position.
... and Centerpulse exits cardiac devices
Centerpulse (Zurich, Switzerland) in January reported closing on the previously announced sale of its Carbomedics (Austin, Texas) and Mitroflow (Richmond, British Columbia) mechanical and tissue heart valve businesses to Snia SpA (Milan, Italy), as planned, for about $116 million. The deal value includes $80 million in cash and a subordinated note of $36 million. Centerpulse said that the closing represents its "successful exit" from the cardiac devices market. It now will emphasize its "core sectors" of orthopedics, spine und dental implants, it said. Centerpulse had previously announced that the sale of Carbomedics and Mitroflow would include assignment to Centerpulse of a contractual right to payments of up to $28 million from ATS Medical (Minneapolis, Minnesota). The $80 million cash portion of the sale value will be used to redeem a portion of the credit facility that Centerpulse used to finance the settlement of class-action claims related to faulty hip and knee implants.
Snia, a manufacturer and distributor of medical devices with major positions in a variety of cardiovascular sectors said at the time the acquisitions were announced that the Carbomedics buy, in particular, will enhance its U.S. penetration and the purchases overall will increase global sales of its medical devices to more than $750 million annually.
Previous spin-offs of Centerpulse's cardiovascular interests included its vascular unit, Vascutek Ltd. (Glasgow, Scotland), and Intratherapeutics (St. Paul, Minnesota), for $265 million.