Innovative medical devices—such as the San Clemente-developed S-ICD implantable cardioverter defibrillator from Boston Scientific Corp. and the Edwards Sapien transcatheter heart valve from Edwards Lifesciences Corp. in Irvine—could prove immune from industry price pressures.
That’s the view of Boston-based investment bank Leerink Swann, whose research unit MedaCorp. issued a report on hospital efforts to cut device costs.
It’s not all rosy. Companies such as Natick, Mass.-based Boston Scientific (see related story, page 1) and Minnesota-based Medtronic Inc. and St. Jude Medical Inc.—which both also have Orange County Operations—may see declining prices and shrinking market share on some other products.
But a doctor cited in the report said that continued “innovation” of products such as S-ICD and Edwards Sapien could help them keep an edge on pricing.
S-ICD is considered a breakthrough in its market because it does not have lead wires that could fracture and cause other problems.
Boston Scientific got S-ICD when it acquired San Clemente-based Cameron Health Inc. this year.
As for the Edwards device, the report noted transcatheter valves are expensive procedures but “attract a significant flow of patients to the hospitals and drive incremental surgical procedures, which are very profitable.”
The doctor cited in the report estimated only one of every 10 patients his hospital screens for potential transcatheter aortic valve replacement is eligible for the procedure. But two or three will be eligible for surgical aortic valve replacement, “which will more than pay for the [transcatheter] procedure,” the report added.
Leerink’s report also warned that premium pricing will be hard to justify in the current cost-conscious hospital environment.
“Just a few years back, medical device companies were able to get premium pricing each time an innovative product was launched,” the report said. “However, in the current cost-conscious environment, it is becoming a reality that most patients don’t need the latest and greatest technologies—especially if the improvements are only marginal.”
The trend “removes a key lever that the manufacturers can pull to offset declining volumes,” Leerink said.
$16M Funding
A San Diego-based dermatology drug developer working on technology licensed from the University of California, Irvine, has raised $16 million in funding.
Thesan Pharmaceuticals Inc. said it has received a first round of funding to work on agents to treat inflammatory skin disorders that can be moved into quick development.
Thesan’s initial target use for its drug candidate is atopic dermatitis, a form of eczema.
The company said the prevalence of atopic dermatitis has tripled in the last 30 years and is experienced by 20% of children and 2% of adults in industrialized nations. It said topical steroids and calcineurin inhibitors—two primary treatments for the disease—have side effects that limit usage.
Novartis Venture Funds, the investment arm of Swiss drug maker Novartis AG, and Novo Ventures, part of Denmark-based Novo Nordisk AS, provided Thesan’s funding.
Thesan, a newly formed company, licensed the potential drug technology from UC Irvine professor Daniele Piomelli. Piomelli is the Louise Turner Arnold chair of neurosciences at UCI and also serves as the director of drug discovery and development at the Genoa, Italy-based Istituto Italiano di Tecnologia.
Thesan said that the drug candidate is expected to enter the clinic in 2013.
UCI has a relatively sparse track record of fostering companies compared to other public and private universities in California. The website for the university’s Office of Technology Alliance says 37 companies, including many in the health sector, have grown out of the school.
The University of California, San Diego, says 600 companies have grown out of its research.
Bits and Pieces
Irvine-based patient monitoring device maker Masimo Corp. said Cherry Hill, N.J.-based Kennedy Health System has renewed a systemwide pulse oximetry contract. … Irvine-based medical-office software maker Quality Systems Inc. was included in Forbes magazine’s annual list of “America’s 100 best small companies” for a 12th consecutive year. … The Healthcare Businesswomen’s Association’s Southern California chapter in Huntington Beach honored Ericka Crawford, director of quality assurance at Abbott Laboratories’ Ibis Biosciences division in Carlsbad, with the group’s 2012 leadership, excellence and dedication award.
