The official tagline of the World Cup that just wrapped up was “a time to make friends”. As I write this column from Munich, I see the colorful signs advertising that slogan are still all around. While the actual play was brutally competitive at times – as in the “Zidane head-butt” and the “Rooney groin stomp” – all indications are that the action outside the stadium was overwhelmingly friendly and festive.

Is the world of biotech and medical technology closer to that of the cutthroat game on the field or that of the convivial scene in the bars around town? It would seem that the med tech industry is evolving toward more of a collaborative culture driven by three important and related trends:

1. The demand by baby boomers for convenience
2. The rise of convergent and combination medical technologies
3. The growing importance of safety

Just last week, Abbott Laboratories announced a three-way partnership between itself, AstraZeneca and Elan Corp. in which two different cholesterol drugs (TriCor by Abbott and Crestor by AstraZeneca) and a nanotechnology delivery substrate (by Elan) are used in a single drug. The advantage to patients of taking a single drug rather than two was cited as a major catalyst for the collaborative deal. With respect to the two principal players (Abbott and AstraZeneca), the partnership was designed to share development costs and profits. Operationally, however, roles were distributed asymmetrically so that Abbott would be responsible for the clinical trial development and associated regulatory submissions while AstraZeneca would conduct the investigational new drug application (IND).

Growing Importance of Convergent Medical Technologies

The April 17 edition of this column – “Perspective Following BIO 2006: The Midwest as Innovation Central?” highlighted the growing importance of convergent medical technologies (also known as combination medical products) and specifically identified some business models to support this new sector in the medical technology market. While there has been some collaboration in the earlier stages of the product development life-cycle (such as Medtronic/Genzyme and this Abbott/AstraZeneca deal), it will be very interesting to see how these play out later on as these drugs and technologies are brought to market. How will two pharmaceutical industry powerhouses such as Abbott and AstraZeneca apportion their sales teams? Especially given the structure of the development deal, it would be difficult to imagine if only one of these companies would take the full responsibility for product sales. On the other hand, parallel sales efforts are a recipe for inefficiency at best and product-killing confusion at worst. It seems this partnership is not about economic efficiency or complementary research strengths. In fact, it can be argued that this partnership would be decidedly inefficient. This is being driven by market need rather than intrinsic business considerations.

Another driver (albeit likely minor) is the need to differentiate intellectual property under pressure from generic manufacturers. Another recent article –“Intellectual Property: Does it Matter?”, proposes that partnership capabilities are more important for value generation than necessarily specific patent rights.

So what is the market need that is driving med tech companies away from “head-butting” and more toward friendly “chin-chin”? Why are convergent/combination medical technologies (CMTs) on the cusp of a major evolution? First, a quick definition: CMT is defined more by what it is not rather than by what it is. What we would call, in medical parlance, a “diagnosis of exclusion.” A single drug, for example, does not constitute CMT. However, drug-device combinations, a “smart device” or a combined diagnostic-therapeutic device (a.k.a. theranostics) all do constitute CMT. Because CMT intrinsically involves elements from disparate industries, partnership capability (in addition to specific intellectual property assets) will characterize successful companies in this growing field.

Companies that are unable or unwilling to partner will consequently be left out of these developments and may lose market share. There are five basic drivers of growth in CMT:

1.      Advances in minimally invasive surgery (MIS)

2.      Miniaturization of electronics

3.      Closing the loop between diagnostics, therapeutics and personalized medicine

4.      Demand for convenience

5.      Growing importance of safety

The first (MIS) and second (electronics miniaturization) points actually go hand in hand in making it possible to implant devices in patients with less risk. As it becomes easier and more accepted for patients to have these devices implanted, new markets, new capabilities and new indications arise for biotech/IT/device combinations of a nearly infinite variety. The “bionic man” is becoming a reality and CMT is a major part of this.

The growth of personalized medicine will go hand in hand with the growth of convergent medical technologies. By definition, personalized medicine must include not only a therapeutic component but also a diagnostic aspect as well. A drug-device combination that embodies both of these functions will in fact be personalized medicine in its most optimal application.

The demand for convenience – the now-classic and well-known characteristic of aging baby boomers – is not an insignificant factor behind the development of CMT. As with the Abbott/AstraZeneca deal, it’s a natural progression to allow a patient to take one pill instead of two. Likewise, if a patient can have the diagnostic procedure at the same time as the therapeutic procedure, that alone will be of great value.

Finally, the growing importance of safety will also drive further development of convergent/combination medical technologies. As outlined in my May 9^th article “Drug Safety Debate to Yield Big Changes, Grow More Controversial,” safety is a huge topic. A number of trends – including greater efficacy of medicine, the coming of age of the baby boomers, the rise of chronic diseases and more aggressive disease prevention – have given safety a much greater significance than what might have been in the past.

All this will play into CMT to the extent that a therapeutic combining an agent that optimizes efficacy with another agent that optimizes safety will be of considerably more value than the single-agent therapeutics. This is particularly true of drug-device combinations where the therapeutic events (both safety and efficacy) take place in a local area. In the area of coronary drug-eluting stents (DES), we may soon see these impacts as outlined two weeks ago in The Future of Drug-Coated Stents: A Big Issue or a Non-Issue. In this view, safety considerations will lead the current generation of DES to likely be replaced by next-generation DES or potentially a combination technology of two therapeutic modalities. Though Johnson & Johnson and Boston Scientific currently dominate the market, these changes may very well bring to fore another company that can master the nuances of partnership in order to bring a safer and more effective combination device to market.

The Future of Partnerships

The future of medical technology will be dominated less by huge behemoths taking a single idea linearly from concept to market but rather by fluid partnerships that take technologies at different stages of development and bring them together. In the 1960s and 1970s, research was king (hence the prominence of Merck as a leading pharmaceutical firm). In the 1980s and 1990s, marketing became increasingly ascendant (hence Pfizer was able to take over the title for the biggest pharmaceutical). As we move further along in the 21st century, the ability to partner will be a key advantage.

Who will be able to most effectively take up that World Cup tagline “a time to make friends” and become the next top dog?  It will be interesting to see how these trends develop and deal flow further increases.

Ogan Gurel, MD MPhil
gurel@aesisgroup.com
http://blog.aesisgroup.com/

Convergent Medical Technology Partnerships Combination Medical Products Aesis Research Group Ogan Gurel MD