Evolve or Die: Versant’s Beckie Robertson on Four Ways Med Device Companies Can Survive

4/8/11Follow @xconomy

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a new device designed to prevent dangerous hospital catheter injection errors.

3. Outside-the-U.S. opportunities. The challenges with getting clinical trials going in the U.S. and dealing with the FDA have created an opening for entrepreneurs to think about going to other countries, especially in Europe, first with new devices. There were plenty of words of caution about this, as Michiels noted that Europe isn’t one single market but actually 27 separate countries with different languages, policies, and cultures that need to be considered. But Robertson says there is opportunity here, noting that Versant has recently paired up with Sofinnova Partners, Sorin Group, and Medtronic (NYSE: MDT) to support an incubator in Switzerland called MD Start.

4. Late-Stage recapitalizations. This is a jargony way of saying medtech investors can sometimes “make lemonade out of lemons,” Robertson says. Often, this happens with medical device companies that were founded before healthcare reform, and before the economy tanked, and have hit the wall. “These are companies that have terrific products, but they don’t have enough money to go through the FDA or to get reimbursed,” Robertson said. Companies in this situation can either wither away and die, or get re-financed (I’m guessing at terms that make early investors gnash their teeth).

The take-home message was a sobering one. Medical device companies used to be able to succeed if they could show in clinical trials that they offered a benefit to patients, but that’s not enough anymore, Robertson said. Companies now have to do that, while also showing they can save the healthcare system money, not just add new costs. This isn’t the kind of thing that venture investors really asked about in the past, and didn’t used to be part of their due diligence process before making investments. Now, it definitely is, Robertson said.

“If you aren’t taking costs out of the system, it’s not going to fly,” Robertson said.

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  • jimmy

    Ross Creek medical was a great example of an entrepreneur who by passed the Vulture Capitalists and sold very nicely to SYK.