Friday, April 24, 2009
Recently, the SpineBlogger was having a discussion with an industry professional that is employed as an Area Sales Director for an early-stage spine company. The topic of The Art of Selling was tabled for discussion. The question was: Do distributors and salespeople know how to sell anymore? Our consensus was that there are fewer salespeople than there are sales service people and that relationships play an integral role in generating sales since our industry has more surgeon consultants than K Street has lobbying groups. So, why has the art of selling died in our industry? Could it be that there are no features and benefits to sell anymore? Could it be that with over 500 Pedicle Screws, an estimated 275 Cervical Plates, hundreds of interbody devices, a motion preservation market that reminds the SpineBlogger of the early years of the automobile industry (1st Gen, 2nd Gen, 3rd Gen when does the marketing stop for TDA and the truth prevail), a Dynamic Stabilization Market that no one can agree upon its efficacy, synthetic bone grafts with more buzz words than a Stryker Total Hip commercial, is it possible that our industry has commoditized itself into a selling coma? Let's be honest, how long does our industry believe that it can continue to generate 80-92% gross margins in light of what is transpiring in the financial community along with an Administration that will eventually pass some form of a single payer system? For those of you that are managers at companies with Independent Distributors, when was the last time that you spent a day making sales calls? How many times have you heard, "I have a surgeon that would be interested in using your product but would like to be involved as a consultant?" Could it be that the commission are too high? In all likelihood, market forces will eventually force a contraction. This will result in some of the smaller companies aligning themselves with others, or these companies will eventually shut down. Of course, the only caveat is that if these companies revenues are generated by surgeon investors they will only prolong their misery until these investors realize that the tax write-off outweighs the aggravation of dealing with an inexperienced CEO's. What about Commission Rates? How long can some of the smaller players continue to exist when they offer 35-50% in commissions? In addition, if these companies have outside investors, how long is it before the investors want their ROI? Distributors have become "mini-WalMarts!" How can you focus on selling when you carry 2-3 Pedicle Screws, 2-3 Cervical Plates, 2-3 bone grafting options along with other products? There is something to be said of a "Direct Sales Model." Unfortunately it only works for the full line portfolio companies. This is not an attack on distributors, this is an observation about an industry that is out of control. Let's be honest with one another, "The genie is out of the bottle." It is only a matter of time before companies cut commissions and consider remodeling their distribution opportunities. The SpineBlogger wants to know what you think!
Saturday, April 18, 2009
So where does it all lead to? On April 14th, Michael Sullivan, the US Attorney for the DOJ announced a guilty plea to felony misbranding of OP-1 by a third Stryker employee. Or should I say former employee? As usual I will spare #3 the press. The felony misbranding of OP-1 is based on off-label promotion with the use of Calstrux, a bone graft extender that is a combination of porous beta tri-calcium phosphate and carboxymethylcellulose. So why is this happening at Stryker? You know that squeaky clean organization with its Brooks Brothers suits and power ties? Could it be that after spending $200MM for the licensing rights from Creative Biomolecules in addition to countless millions to get the product to the market the company is feeling the heat from the board to generate a ROI? In all likelihood, the powers to be will announce on April 20th, that the organization is "cooperating fully" with the government and that they are taking the initiative to "cleanse" the organization of these "renegade salesmen, oops, I forgot territory managers. As usual, we will probably hear the standard "mea culpa" stating that it wasn't managements fault that these salesmen took it incumbent upon themselves to act in a criminal manner. Yet, why is this happening? Who is the Captain of the Ship? Could it be that when all you are concerned with is that 20% growth to appease the analysts and the Street, sometimes you lose your way home and start to stretch the rules? SpineBlogger wants to know what you think?
Monday, April 13, 2009
Recently, the Spineblogger was able to speak with industry sources regarding the status of a few companies in the industry. Primarily our discussion centered on the viability of Hydrocision. Let's look at Hydrocision. This company has been around since its inception in 2002/2003. Why is a company that has raised $28MM seem to be having difficulty in developing traction after a six-year run? Even successful Broadway plays eventually close. In December the company fired most of its sales managers, leaving regional sales management in Texas and New Jersey. In addition, there has been rumors that the company is desperately seeking an infusion of capital (AGAIN?) and is experiencing cash-flow problems. So why is this company floundering? Could it be that an inexperienced management team and antiquated board still have not realized that a product needs a billing code so that hospitals can be reimbursed? And who are the usual suspects involved with this organization? Could it be that commissions are mediocre at best for a product that everyone asks; Is it new? Is it true? Does it really make a difference? For some of these members life has passed them by. The consensus seems to be that company leaders have missed the bus a long time ago when they failed to market the technology properly. Maybe one of the Seven Sisters will be able to buy this company for pennies on the dollar. Spineblogger wants to know what you think?
Thursday, April 2, 2009
On March 26th, the Finish based company Inion announced that it is finished!!! Kaput! No longer to go on! Unable to secure sufficient funding, Inion is looking for an investor to provide the company with an INFUSE-ion of capital. Yet, Spineblogger wants to know who will bail them out? In all likelihood, if there is any merit to the technology, Stryker would be an ideal candidate (Spine and General Ortho Company). Danek's been there, done that! In addition, the company is not going to succeed with the current CEO and US management team! Expectations must be realistic. Here is another company that did not have enough of a strategic and tactical plan. The word on the street was that they were too conservative with their commissions and the management team was selling futures. Inion also had an Anterior Lumbar Plate and a general orthopaedic line. Spineblogger has heard that at the next AANS and NASS meeting there will be an Auction Hall where industry companies that are floundering will be looking to sell their failing companies to the lowest bidder. Do I hear $5, $5, $5 as a starting bid?