Medical Device Daily National Editor

NEW YORK - While sharing the basic blocking and tackling of doing business, the fact that companies of various stripes presented at last week's 19th annual Piper Jaffray Health Care Conference ensured that those who listened to a multitude of presentations were accorded insight into a variety of ways of doing things.

For the front men (and women) of would-be high flyers that are still in the relatively early stages of attracting investor dollars, the "whiz bang" approach was favored, emphasizing either apparent breakthroughs or at least the potential for amazing science.

Others stressed their lengthy records of solid top- and bottom-line achievement and deep, promising pipelines.

One big company that clearly falls closer to the latter category than the former, albeit with some tentacles reaching toward the "golly gee" side, was C.R. Bard (Murray Hill, New Jersey), a firm some would - or at least have in the past - called "stodgy."

The perception of Bard as a "meat and potatoes" company - with product lines not especially exciting — belies a mix of businesses and solid leadership that have ensured a perennial spot on the plus side of the ledger - something not every participant in the medical products industry can claim.

This time around, Tim Ring, president/CEO of the company, painted a picture of a company that not only is a solid performer, but, dare we say, just a little - gasp! - sexy.

Which is saying something, since the firm is a centenarian this year.

Before a substantial crowd in the main conference venue, The Pierre's Grand Ballroom, Ring described Bard's business opportunities most succinctly: "We market primarily to hospitals, but increasingly also to surgical centers. Where the procedures go, we follow."

Bard enjoys, as Piper Jaffray (Minneapolis) analysts described in the conference program book, "Being a large company playing in relatively small markets," mostly in the $200 million to $300 million range.

Within those markets - vascular, urology, oncology and surgical specialty - Bard enjoys No. 1 or No. 2 market position with some 80% of its product line.

Ring noted that Bard's catalog is jam-packed, with some 10,000 line items across about 100 product lines and that the company sells directly in 20 countries, through distributors in another 100-plus.

As for corporate strategy, that too is simple enough: "[It] is all about revenue growth," Ring said. "Make that profitable revenue growth."

That growth, he said, is made possible by "working with clinical decision-makers to solve their clinical problems."

The company's market positions are enhanced by another key strategy. "We expand our sales force ahead of the product line," Ring said, putting enough feet on the street to assure product uptake.

"We try to invest ahead of the pipeline," he said, "look[ing] at it on both a geographic expansion basis as well as a product-line basis."

Another key element behind Bard's revenue gains has been a substantial increase in spending on research and development - from about $50 million a year in 2001 to an annual run rate approximating $130 million in 2007.

"We're focusing on higher-growth opportunities," Ring said, "with a result that it takes longer to get these products to market."

As for business development, he sees it coming either through investments or in what he characterized as "third-party research" or in straightforward M&A activity.

"We think acquiring technologies earlier in their development is better for us than [acquiring] more mature companies," Ring said. "We add a lot of the value through our own processes."

As for its four major businesses, he said vascular has provided particular spark, with Bard seeing "good growth in stent-grafts, peripheral PTA catheters, vena cava filters and products aimed at the huge atrial fibrillation market.

He also noted that the surgical incontinence market has grown by 30% a year for Bard over the last several years, while soft-tissue surgical products, primarily for hernia repair, are also on a substantial revenue incline.

Ring said Bard is currently enrolling 200 patients in a trial involving its endoscopic suturing technology for gastric bypass surgery.

Another company presenting at the Piper gathering, Intuitive Surgical (Sunnyvale, California), likely lies at the other end of the perceived "innovation" scale from Bard, with its da Vinci robotic surgical system being the runaway worldwide leader in that product category.

That perception may have accounted for the turnout for Intuitive's appearance, which looked to be the largest of any audience in the Grand Ballroom over the two days of such presentations.

Aleks Cukic, vice president of business development and strategic planning, said that Intuitive had just under 720 da Vinci installations worldwide as of the end of 3Q07, 545 of them in the U.S. and 119 in Europe, and eight different FDA clearances for that equipment's use.

But even with 70 institutions having more than one da Vinci system installed, Cukic painted a picture of market under-penetration that, even with an average price-tag of $1,3 million per installation, makes it seem like it's a market without a foreseeable top.

He said there are about 1,000 Tier 1 hospitals (325 or more beds) in the U.S., "and we're in about a third of them." In 1,000 Tier 2 hospitals (200 to 325 beds), "we're in about 75 so far."

Subtract the existing installations from those without a da Vinci system yet in place and you see O-P-P-O-R-T-U-N-I-T-Y, in big, blinking capital letters.

"In the U.S., we see the opportunity for 4,000 systems and about 2,000 worldwide," Cukic said.

And even beyond what those sales would mean to company revenues, consider that the "razor/razor blade" nature of Intuitive's business model would bring an average recurring revenue from each system of some $568,000.

Figures like that are why Ben Gong, VP of finance and treasurer, was able to remind he investor audience that Intuitive's revenues grew by 64% last year, and why the company has some $500 million in cash on hand, giving it "flexibility to do technological acquisitions as we see fit."

Two of the higher-growth indications for the da Vinci system are prostatectomies and hysterectomies.

"About 600,000 hysterectomies are done in the U.S. each year," said Cukic said. "About 350,000 are done using 'open' methods - that's our target area." He said the hysterectomy market could provide Intuitive with an opening into other women's gynecological surgery areas.