Moving Health Ahead

Financing realities are also influencing how device companies grow. “The way they get money has substantially changed,” Gerhardt says. “There are fewer IPOs now than just five or six years ago. So the small company has to either find ways to partner, to merge, or to get acquired if they are going to grow themselves substantially.”

Gerhardt notes the obstacles to taking companies public. “Time to market is slower than it used to be,” he says. “There’s more money that is required to get a product from a commercialization stage to an IPO stage. A lot of that delay is regulatory and [due to] reimbursement decisions from the government, so as that lengthens or gets more rigorous or the technology gets more specialized, it takes a longer time.”

Some local companies are struggling to find the staff needed to support rapid growth. “The thing that is most challenging is continuing to hire engineers and salespeople as fast as we need to,” Jay Miller says. “Last year we hired almost 50 engineers and increased the size of the team to over 110 engineers, and this year we’ll probably hire another 30 or 40 engineers.” The company increased its staff by more than 60 percent in 2006, from 180 people to 290.

“One of our biggest challenges is people,” Longhini agrees. “As you can imagine, there aren’t a lot of other urology or gynecology companies. So when you’re hiring technical people, clinical people, marketing people, you’re having to hire them and train them.”

“It’s a very competitive environment; there’s a lot of movement of people,” says Fulvio Renoldi-Bracco, president of Bracco Advanced Medical Technologies, the parent company of Acist. “My feeling is that, particularly in these small companies, you want to avoid high turnover because this causes significant disruptions. It can really put the company at risk. Small companies have fewer resources. It’s more difficult to replace people in a very short time.”

Confronting Challenge

Indeed, despite the success stories, medical device companies do face obstacles—such as the U.S. Food and Drug Administration and other government regulators. “One of the more difficult challenges that we face is the regulatory environment,” Curt Miller says. The rules are complex and make it necessary for device companies to have specialized staff to deal with them. The process of putting a device through clinical testing to demonstrate its usability and safety and then presenting this data to the government can take years, depending on the type of product.

“We are an international company and we sell all over the world, and there are FDA regulations, European regulations, Canadian regulations, Australian, Korean,” Curt Miller notes. “In every country we sell in, we face regulatory issues, and those change all the time. They’re different almost every year.”