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Medical Device Suppliers Unite to Form the WCDA
The West Coast Device Alliance members are Eagle Medical, West Pak, Pacific BioLabs, Blue Line Sterilization Services, and Steri-Trek.
By Omar Ford
Throughout the past few years, a significant number of mergers and acquisitions in the medical device supplier’s space have occurred. The consolidation has created headwinds for some of the smaller companies in the market making it more difficult to compete.
Earlier this month, during MD&M West, five suppliers in the medical device industry, as a response to the mass consolidation efforts in the industry, formed the West Coast Device Alliance (WCDA).
Roy Morgan, president and CEO of Eagle Medical, spoke to MD+DI about the impetus behind the WCDA.
“The impact these consolidations have in our industry has to do with the power of brand recognition that these large multi-national conglomerates can create,” Morgan told MD+DI. “They have the marketing budgets and the advertising budgets that are of such scale that they can eclipse other players in the marketplace. It creates this … bright light in the industry that makes it hard for smaller players to achieve this sort of brand awareness.”
The founding members of the WCDA are Eagle Medical, specializing in FDA-compliant assembly, packaging, and in-house Hydrogen Peroxide Gas Plasma (HPGP) specific sterilization; West Pak, a 3rd-party, independent-laboratory specializing in package validation and product testing; Pacific BioLabs, a contract research organization specializing in microbiology, services for living organisms in vivo as well as analytical chemistry and cell-based bioassay culture samples in vitro for the medical device and pharmaceutical industries; Blue Line Sterilization Services, ethylene oxide sterilization services, and Steri-Tek, a high-volume E-beam and X-ray contract sterilizer as well as R&D innovation center.
“The simple virtue of combining many different types of businesses with the clarity of end-to-end provision for product realization in the medspace … you’re able to give the uninitiated in our industry a sense of clarity of pathway,” Morgan said. “When you’re one component in that landscape like an Eagle, Pacific BioLabs or WestPak, as the independents are that are part of this WCDA, it is more difficult to work with the uninitiated in our industry to give them that same degree of clarity. A big part of why we wanted this was to educate each other and give each other that same level of clarity of pathway.”
There’s potential for more companies to join but that’s definitely in the future Morgan, noted.
“A membership aspect of the WCDA is definitely in the cards,” he said.
Medtronic Exits Ventilator Market, Raises FY24 Outlook
The company said its decision to exit the product line comes down to an ‘increasingly unprofitable’ environment.
Medtronic has decided to exit its ventilator product line in what the company said is an “increasingly unprofitable” environment.
At the beginning of COVID-19, Medtronic’s ventilators placed the company at the front lines of pandemic relief. The medtech giant swiftly answered reports of shortages by ramping up manufacturing at its Ireland facility, announcing partnerships to boost production, and even publicly sharing the design specifications of its Puritan Bennett 560 ventilator.
“Medtronic recognizes the demand for ventilators in this environment has far outstripped supply,” said Bob White, executive vice president and president of the minimally invasive therapies group at Medtronic, at the time. “No single company will be able to fill the current demands of global healthcare systems. However, with all manufacturers increasing their production and through partnerships with governments, hospitals, and global health organizations, Medtronic is committed to getting more ventilators into the market and to the right locations in the world to help doctors and patients dealing with COVID-19.”
Then at the end of 2021, the company’s Puritan Bennett 980 series ventilators — which were inherited from the acquired Covidien — were recalled due to an error in the technology’s manufacturing assembly. According to the Class I notification, a capacitor used in the ventilator had been incorrectly assembled which could potentially cause the device to stop working mid-use.
Previously, the device, which won CE Mark and FDA approval in 2014, had seen other recalls including two Class I notices that same year. The first 2014 recall involved a dimming screen and a burning smell coming from the device and the other detailed a software defect.
Now with the announcement of its exit from the portfolio, Medtronic said it will continue to honor existing ventilator contracts “to serve the needs of its customers and their patients, and expects that existing manufacturers, who today account for the majority of the market, can meet customer demand for new ventilators moving forward.”
Announced as part of the company’s Q324 financial results, Medtronic highlighted the portfolio axe while also reporting it will retain and combine its remaining patient monitoring and respiratory interventions (PMRI) businesses into one business unit named Acute Care and Monitoring (ACM). Combining the two businesses, according to the Q324 report, will “allow for increased investment in ACM with a focus on profitable growth.”
The decision capitalizes on the company’s focus on demonstrating its profitability to investors. A year before this announcement, Medtronic said it would spin off its PMRI businesses as part of an ongoing portfolio assessment to allow for more focus on investments. Ultimately, however, Medtronic leadership has decided to end the ventilator business. Additionally, company CEO Geoff Martha said in January that the company was closing at least five manufacturing sites, consolidating distribution centers, and stopping business with approximately 200 suppliers to help improve operations and supply chain issues.
Medtronic raises FY24 outlook
The financial report also highlighted that the company saw a revenue of $8.1 billion in Q324, an increase of 4.7% as reported and 4.6 organic. “The company's organic revenue results reflect continued momentum across the company, driven by strong growth in diabetes, core spine, cardiac surgery, structural heart, and cardiac pacing, as well as strength in international markets,” according to Medtronic.
Additionally, Q324 reported GAAP diluted earnings per share of $0.99, an 8% increase, and non-GAAP diluted earnings per share of $1.30.
In response to the company’s Q3 outperformance, its full-year 2024 revenue growth and earnings per share guidance have been raised from the prior 4.75% to a range of 4.75% to 5%. The FY24 diluted non-GAAP earnings per share guidance has been raised from $5.13 to $5.19 to the new range of $5.19 to $5.21.
"In addition to delivering durable sales growth, we also drove improvements to our margins, as our cost efficiency programs helped to offset the impact of inflation, tax, and currency, contributing to our EPS and cash flow performance in the quarter," said Karen Parkhill, Medtronic EVP & chief financial officer, in the press release announcing the Q324 results. "Based on our year-to-date performance, including another solid financial performance this quarter, we are raising our full-year guidance on both the top and bottom lines. We remain focused on restoring our earnings power and creating value for our shareholders."
领英推荐
Philips BrightView Imaging System Hit with Class I Recall
The SPECT machine’s detector and support components have the potential to fail and not be able to complete the image or fall and harm the patient.
Philips is once again in the crosshairs of a Class I recall, this time pertaining to its BrightView Imaging system, including the BrightView X and BrightView XCT.
The BrightView system is a single photon emission computed tomography (SPECT) machine used to take images for medical review showing biological activity in the human body. The BrightView XCT model combines SPECT and CT imaging.
On Dec. 16, 2023, Philips sent out an Urgent Medical Device Correction Letter requesting users to not position a patient’s lower limbs directly under the machine’s detector as it’s support component may unexpectedly fail, fall, and not be able to move to complete the imaging.
The letter described two possible scenarios, one with the detector positioned below the center of the gantry and one above the center of the gantry.
In scenario one, Philips wrote “If the patient’s lower limb(s) is directly below the lower detector and the support component fails, the detector may descend downward in an uncontrolled manner and contact the patient.”
In the second scenario, Philips wrote, “If the support component fails, the detector will remain in place, and will not move as intended for clinical imaging, resulting in an interruption to normal system operation. A rescan or re-injection of radiopharmaceutical to the patient may be required.”
Now considered a class I recall, Philips said that if the detector fails, it may fall and cause the patient aa neck injury, contusion, traumatic brain injury/concussion, death, crush injury, fracture, laceration, muscle or ligament sprain/strain.
Effected devices were manufactured between September 2007 and June 2013, and distributed between Nov. 29, 2007, and June 5, 2013. Currently, there has been one reported incident from use of the device and no reports of injuries or deaths.
Of note, the recall is considered a correction, not a product removal. Philips wrote in the notification that it will contact customers to schedule a time for a company field service engineer to visit the customer site and correct the system if necessary.
"The BrightView systems may continue to be used in accordance with their instructions for use and the instructions in the field safety notice," said Steve Klink, head of global external relations, in a statement provided to MD+DI. "Philips is contacting customers to schedule an inspection of the system, implementation of an additional safety mechanism, and if necessary, replacement of the leadscrew. Philips stopped producing and selling the BrightView product family in 2014, and the field safety notice encompasses the remaining approx. 1,000 systems in use."
3M’s Healthcare Business to Stand on Its Own in April
Solventum will focus on wound care, healthcare IT, oral care, and biopharma filtration.
By Omar Ford
3M Healthcare will complete the spin-off of Solventum, its healthcare business, on April 1. The St. Paul, MN-based company filed a form 10 registration statement with the Securities and Exchange Commission.
3M first announced the spinoff in July of 2022. Solventum, which had sales of $8.2 billion in 2023, will focus on wound care, healthcare IT, oral care, and biopharma filtration. 3M said it would retain a 19.9% stake in the business.
The spinoff received its name in November of 2023. 3M said Solventum originates from two words: “solving” and “momentum.” 3M said "Solving" captures the company's dedication to finding breakthrough solutions, while "momentum" symbolizes swifter, nimbler innovation. 3M said the name represents how the independent healthcare company will focus on solving big healthcare challenges and emphasizes the impact it can make on the world.
In August of 2023, Bryan Hanson stepped down from his post at the helm of Zimmer Biomet to serve as CEO of 3M’s healthcare spinoff.
?The Spin is still in
About three years ago a trend emerged in medtech that had larger companies engaging in divestitures and spinoffs. The mega-merger or large-scale mergers began to take a back seat to the spin-offs.
Since then, companies such as GE Healthcare, ZimVie, and Embecta have stepped onto the scene making a strong impact in healthcare.
3M’s spinoff plans came at a time when there were lawsuits from military members who used the company’s allegedly defective earplugs, according to a report from Reuters.
However, there has been one company to somewhat go against the trend - Medtronic.? Earlier this week, the Dublin-based company nixed plans to divest its patient monitoring and interventions businesses. ?Medtronic began shopping around the idea of spinning off the businesses in October of 2022.
MORE WEEKLY NEWS
?? FDA Urges Independent Verification of Third-Party Testing Data: The agency is reminding medical device companies to evaluate reliability of third-party testing before FDA submission citing uptick of fabricated, duplicated, and unreliable data.
?? AngioDynamics Continues Move Away from Manufacturing with Divestitures: The Latham, NY-based company shed its Picc and midline product portfolios to Spectrum Vascular.
?? Freudenberg Medical to Open Second Production Facility in Costa Rica: The new facility will eventually span 100,000 square feet, quadrupling the company’s total footprint in the country.
?? Yes, SPAC Mergers Still Exist in Medtech: Adiago Medical, a company focused on catheter ablation technologies for the treatment of cardiac arrhythmias, is going public through a special purpose acquisition corporation merger.
?? Medtronic Doubles Down on Sustainability Efforts: The Dublin-based company has tapped Raman Venkatesh to be its first VP & Chief Sustainability Officer.