Tuesday, March 31, 2009
No it's not the title of an 80's Who Album! It's a question that has been raised by many industry professionals regarding the companies that are not part of the exclusive "Seven Sisters of Orthopaedics." These are the companies that make up the bottom 20% of our industry. So who's next? First it was Innovative Spine (IST). Then we heard that Vertebron was on the verge of collapse or would it be called Chapter 7 Bankruptcy Protection. Then there is INION. Rumor (and I am not talking Bruce Willis' kid) has it that they are in the process of shutting down the US office in Florida. Now we hear that Disc Motion (DMT) needs an infusion of capital, and PEGASUS is laying off its direct employees. Since some of these companies are on the verge of collapse or are attempting to make one last ditch effort to salvage themselves, the looming question becomes: WHY DO SOME OF THESE VENTURES MAKE IT AND SOME OF THEM FAIL? Most of you whom read this blog know my feelings about what has happened within our industry. Too many people end up getting positions that they are either not qualified to be in, have been brought in from other industries and think they know our business, or just do not understand the commitment and sacrifice it takes to become successful. Too many people in our industry have had sugar plum fairies in their heads. The day of 5X return on a company is about as distant as the mirage that one sees while driving in Death Valley. With the markets being as unstable and unpredictable as they are, it will be a long time before we see outside speculators want to invest with the same vigor as in the past into an industry that will eventually be effected by a national healthcare plan or some type of single-payer system. In spite of these troubled economic times, this industry has rode the gravy train. Today, we have over 500 different Pedicle Screws, 300 different Cervical Plates, let alone how many different Interbody Devices, and we still believe that we will continue to stoke the engines of profitability. Would anyone invest into a nucleus replacement company after the PDN fiasco? Unless you have the cash flow and infrastructure of a Medtronic, Synthes, J&J, Zimmer, Biomet or Globus your portfolios are limited, and you are competing in a Zero-Sum Market. Zero-Sum equals a commodity market! Despite what the snake-oil salesmen of our industry predict, Spineblogger believes that we are heading into an interesting period where many of these small companies will end up being acquired in fire-sales, if there is any meat in the technology or it compliments the gaps in the Sisters portfolio. Spineblogger wants to know what you think.
Saturday, March 28, 2009
Recently, Orthopedics This Week published an article regarding two Spine Meetings that OTW recommended in attending. Yet, after speaking to many industry professionals, the consensus seems to be that some of THESE MEETINGS ARE GETTING OLD. Meaning: How much really changes clinically on an annual basis, and are these forums nothing more than a platform for an "old boys" club. Let's be realistic when you look at the surgeon panels and the companies sponsoring these meetings, it's more or less the usual suspects. One industry professional even observed how at last years Motion Preservation Meeting in Duck Key everyone agreed that the only thing that they could agree upon was to disagree when the topic of Dynamic Stabilization was tabled. Why is it that a panel of surgeons cannot agree? Does anyone think that their retrospective data is influenced by whomever these surgeons align themselves with commercially? In addition, how much money does a surgeon lose when attending these meetings only to be told more of the same old same old? Besides, has anyone ever seen a clinician get up and challenge any of these findings. It's almost like the audience was served Kool-Aid instead of a Continental Breakfast prior to the meeting. Spineblogger wants to know what you think.
Sunday, March 8, 2009
On March 3rd, 2009 the NY Times reported that the DOJ is ready to bring civil and criminal charges against "surgeons" that have taken illegal inducements from companies in the device and pharmaceutical industries. The prosecutor that will overlook these proceedings believes that it is time to convict and throw some of these offenders into jail and set a precedent so that many of the organizations in our industry (NASS, AANS and CNS) establish some transparency and guidelines. Those of us that had concerns in the past know that this will be a day (if it happens) of reckoning for the Spine Industry. Spineblogger knows that many of you, including myself, are not adverse to surgeons being compensated for legitimate contributions to product development. In addition, most of us believe in a free-market economy where companies should pay inventors an equitable royalty or override for their technology. The problem is how do we police ourselves as an industry? Will any of the mandates that NASS, AANS or CNS be enforced or is this just "lip service?" Let's be realistic, organizations like AdvaMed are a joke! If there is no oversight established by NASS, will it be a matter of time before the Federal Government steps in. The challenge that exists for all parties involved is to identify what is fair and equitable compensation? Legislation must be enacted that defines what a Consulting Agreement really is? Does the industry need a standard agreement? There must be a value placed on the different contributions based on the time and effort of the consultant. What type of honorarium should a surgeon be paid for a speaking engagement? Is there a difference between a sales and marketing presentation, an educational forum or a true clinical presentation? Should distributors act as brokers for their customers? Remember, it's not just the surgeons and companies that are culpable for what has grown to be an industry malaise. And, how do those relationships affect your ability to sell your products in the open-market. Many of you have been approached by surgeons asking if you are interested in using their clinical skills as a consultant and many distributors have approached surgeons asking if they are interested in working as a consultant to win over their business. That's why salespeople don't sell anymore (a topic for a different day). The fact remains, this is a problem that is not going away. Until specific guidelines are put into effect, the industry will be a target of reform. The bigger question that needs to be addressed is; Are we just a by-product of what's brought this once and great country of ours down? GREED! Spineblogger wants to know what you think!
Monday, March 2, 2009
Recently, Spineblogger has heard that some smaller companies are or have "stiffed" distributors from their commissions. Specifically, the companies mentioned have been Spine Wave, Vertebron and Custom Spine. If there is any truth to what is being reported, do any of these companies have any integrity, and can they be held legally accountable for violating the terms of their distribution agreements? In addition to distributors, it has also been reported that Vertebron has also "stiffed" suppliers. Spineblogger's observations are that this type of business practice is uncalled for, and that distributors looking for product lines should BOYCOTT the aforementioned companies. Spineblogger wants to know what you know and what do you think of the new standard that is being established within the industry?