Medical Device Daily Contributing Writer

Ask Harry Glorikian to look into the future of medical technology companies and the founder and managing partner of consulting firm Scientia Advisors (Cambridge, Massachusetts) sees opportunity. Make that opportunities – and some threats as well.

The opportunity part of the equation comes from the broader base of covered lives anticipated under whatever final form is taken by healthcare reform, along with, he said, "opportunities to sell products differentiated by cost-effectiveness, faster adoption due to faster standardization, and the opportunity to leverage things like EMR [electronic medical record] data to speed time to market and reduce clinical trial costs."

Add to that the anticipated commercialization of innovative products such as cell therapies, Glorikian said, and you have ready examples of opportunity knocking.

"The threats are where companies are not ready for this, or not willing to make a change," he said, citing in particular "threats to products that are deemed to be not cost-effective, or accelerated penetration of more cost-effective products into an incumbent's market."

Glorikian's comments came during a wide-ranging question-and-answer session, the full version of which will appear as the BB&T Interview in the September issue of Medical Device Daily's sister publication, Biomedical Business & Technology.

He noted that, despite the gloomy economic outlook and the strong potential for regulatory change, "the opportunity for companies is to actively manage their products as portfolios and retool to support a long-term value equation." He added that those companies "can't neglect the sub-segment opportunities, because those are the ones that are going to drive growth and profitability."

Glorikian said that companies "need to dramatically increase their focus on the management of cost and quality/improvement of this healthcare equation, and that's a paradigm shift for most organizations."

He added, "Only the firms that take advantage of this current situation to reposition themselves for the future are actually going to emerge from this crisis with what I would consider a healthy bottom line or a clean bill of health."

Glorikian said that, "given healthcare reform and other forces at work in this environment, companies really need to follow an analytically driven, experience-influenced strategy to meet the specific needs of the market when developing new products."

He cited focused product development efforts to address a specific pain point in the patient care cycle as an example. "We see a lot of companies that don't go through the details of understanding the care cycle. It's a matter of finding an unmet need that is responsible for high costs or poor outcomes."

By truly understanding the need, Glorikian said, "these companies are more likely to be successful in developing a winning solution. To do that, you have to work closely with the customers and caregivers to understand the care cycle, the problem and how well your solution may fit it. Every detail counts when you're looking at this."

He said he would urge companies to be "technology agnostic" whenever possible. "Understand the problem first and then start thinking about the solution."

Glorikian added that firms should ensure that the pain point of what they're looking at isn't just specific to the U.S. healthcare system, because the solution may be relevant to many geographic markets, and will give them access to other emerging high-growth markets.

But he reiterated that the main points for the U.S. are going to be cost-effectiveness and reimbursement. "Kill a project if it's not going to be value-added or will not secure reimbursement," Glorikian emphasized.

Understanding the care cycle is one piece of the health economics puzzle, he said, "but understanding your sales and marketing strategy also is important. What we're seeing is that the good sales and marketing people are those who understand the care cycle and can have a real discussion with providers and the reimbursement system about the treatment paradigms."

A good example of that from a diagnostic perspective, Glorikian said, is Genomic Health (Redwood City, California). "What they found was that salespeople from oncology therapeutic companies like Genentech [South San Francisco, California], who have experience in working with oncologists, were better-suited to selling their Oncotype DX breast cancer test than a typical in vitro diagnostics salesperson."

Saying that companies have to look carefully for opportunities, he noted a recent study done by Scientia Advisors in the area of peripheral vascular disease. "There's a big market in compression stockings," Glorikian said, "but with those, you're not solving the problem – you're essentially putting a Band-Aid on it, and you're creating a long-term chronic problem."

Conversely, "we're seeing the ablation market not only driven by the docs providing the procedure, but also by educated consumers who are saying, 'I don't want you to just put a Band-Aid on it; I want you to get rid of this problem.' When you go in there and ablate, you eliminate the problem and essentially, you become a more cost-effective solution because now that person is not chronically in the system and developing more problems as time goes on."

That's a good example, Glorikian said, of the direction healthcare clearly is taking. "What we're going to see is manufacturers and payers embracing not technology for its own sake, but technology that truly improves the cost-effectiveness of healthcare."