A long-time friend of Tom Fogarty, the Fogarty Institute and the medtech industry, David Cassak is one of the industry’s most well-respected experts, immersed in all aspects as managing partner of Innovation in MedTech, LLC, the publisher of the MedTech Strategist, where he is co-editor-in-chief. He is a frequent speaker at industry events, including hosting the Stanford Biodesign Innovator’s Workbench speaker series and the MedTech Strategist’s conferences, which provide unparalleled access to industry thought leaders, investors and innovators.
It’s quite likely that David knows the ins and outs of the industry better than anyone, given his vantage point of having covered a wide spectrum of companies and technologies and interviewed leaders across the industry. We had the privilege of catching up with David to get his take on trends and growth spots – and what they mean for his company and the industry as a whole.
Q. What are some of the most surprising trends you are seeing in the medtech industry?
There are a number of trends we are tracking very closely.
The first is the tremendous consolidation among the major players in the industry. When Boston Scientific bought Guidant Corporation 12 years ago, the $27 billion price tag they paid dwarfed all other previous deals. Since then, we have seen more $20-billion-dollar-plus deals than we can count on one hand.
Second is the current financing climate for small companies. Although there is no lack of great ideas and talented entrepreneurs, the question is whether these companies will be able to raise capital as investors scrutinize whether they will earn a sufficient return. While we are seeing signals that funding is on the rise — since we are not facing the same regulatory problems we once were — we are seeing pressures and constraints around cost and paying for new technology.
A third major and exciting trend we are tracking is how the digital health revolution will redefine norms in medical technology.
Fourth are the new, emerging markets, characterized mostly by China. While many think of China as a market where they can sell products, it may also potentially be a tremendous source of innovation as we are seeing a lot of Chinese investors coming to the U.S. and Israel to invest in new technology.
Fifth, we are tracking the tremendous challenges we are seeing right now in the changing landscape among hospitals and integrated healthcare delivery systems and how they are approaching this new organizational element.
And finally, there are the themes of the growing power, clout and influence of the buyer and the trend towards value and its implications for cost and cost-pricing pressure. This is driving companies to think more broadly about how their technology fits into the new price-sensitive environment.
As we consider these six trends, it’s clear there is considerable overlap and resulting implications. For example, will the emergence of China as a major economic force be a solution to the financing problems smaller startups face? What will happen to exit opportunities for smaller companies, given the tremendous consolidation of the larger players? What new opportunities will digital technology bring for startups and investors? It will be fascinating to see how these stories play out independently and together.
Q. How did you first become interested in healthcare and medtech?
I started my career in healthcare working with my father, who owned a publication that went to the hospital supply distribution industry. As a result of the writing I did, I was recruited by The Wilkerson Group, a boutique consulting company in New York that published In Vivo, a well-respected journal that looked at the entire life sciences industry and a go-to resource for business intelligence and trends.
I later founded Windhover Information together with my partner, Roger Longman, which spun out of The Wilkerson Group. We continued to publish In Vivo along with several new publications, including Start-Up, which focused on profiling small, interesting, emerging companies in both biopharma and medtech. We also added a conference business.
Over the course of the next decade and a half, financing wasn’t an issue for startups – while there were some drops, on the whole, small companies could often get as much capital as they wanted. But more often than not, biotech and medtech would march in different directions. Therefore, it was easy to write about biotech companies raising capital; and then between 2003 and 2008 when medtech was the favored sector, I focused on that.
In 2008 things changed with the global recession. Windhover was later acquired by Elsevier, where I served as vice president, content director and managing director for medical devices before co-founding my second company, Innovation in Medtech, LLC, which is the publisher of the MedTech Strategist.
Our focus in the MedTech Strategist is to look at companies, both big and small, which are doing interesting things; trends in the industry that are important for companies to focus on and technology spaces that are disruptive and clinically valuable. The common thread through all these topics, as Tom Fogarty always reminds me, is that it is really about patient care and the impact of all these developments on the patient.
A. What is your favorite part of the job and most rewarding moments?
Anyone who finds a role in the medtech industry understands the rewards and value that are inherent in being surrounded by bright, inventive folks who are developing the next generation of technologies. Working with the entrepreneurs and investors and interacting with executives at larger companies who are acquiring and investing in these companies has been very rewarding for me.
But really one of the best aspects of my position is that it reinvents itself every day, because I am constantly looking at new areas, new companies and upcoming trends. It’s the people in this community who are coming up with ideas for technologies and bringing them forward and then the investors who back them that make it so interesting, with fresh stories to tell. I am also very fortunate to be part of Stanford Biodesign Innovator’s Workbench series where I have interviewed fascinating industry leaders and met extraordinary young folks in the program.
It has also been rewarding to see the growth in the medical device industry — and not just domestically. When I first got into this space, the startup community in Europe was small, and it’s been interesting to watch it blossom over the past decade, replicating to a degree what has happened in the United States. Although not yet as robust as the U.S. market, there has been strong growth throughout Europe, including Paris, Dublin, Tel Aviv and Munich, and I am looking forward to seeing the same thing happening in China, Singapore and other places in Asia.
Q. What implications has that growth had on your company?
As the European market has flourished, so have our two conferences in which we are involved, the most recent one held in Dublin, which was very well attended with approximately 500 people this year. In the early days of this conference, the meetings were very small as the industry was primarily U.S.-centric, and there was no critical mass of European investors and strategics. If you go back a decade, the top 10 to 15 medical device companies were U.S.-based, so it has been interesting to watch the conference grow along with the market.
Likewise, the early meetings of the Bohemian Medical Device Summit, which we co-sponsor along with several other partners, were initially very small, but the community in Europe has now taken on a life of its own.
We see a lot of indicators that the same may happen in China, which will be our next destination. They have an extensive base, and although it is currently more biopharma-oriented than medtech, there is a huge population and a lot of activity, with numerous Chinese representatives coming to the U.S. to invest in companies.
Q. Which small- and medium-sized companies are you closely tracking?
I’d like to think that we’re open to any and every small and mid-sized company; highlighting a couple is hard. Our only real criteria is that we’re looking for companies that have compelling technology, an interesting and novel business model, and/or one that has faced a daunting challenge and come back to success.
And it may surprise some folks when I say that though we often do write on the large medtech multi-nationals, they’re actually the hardest companies for us to write about, only because they are widely written about elsewhere and because their status as publicly-traded companies make them cautious about what they can say. Our real goal is to find companies whose stories are not well-known or often told and highlight them.
Q. What’s next for Innovation in Medtech?
Our conference business continues to grow, with upcoming events in Minneapolis and San Francisco. We craft the conference agendas to showcase hand-selected emerging technologies from around the world, along with candid onstage interviews and panel discussions from key influencers who span the global medical device industry.
But we still see our publication as the cornerstone of the company, which at three-and-a-half years old continues to gain traction in the market with an impressive roster of subscribers. We are at an interesting stage that many startups get to, where we have proven that our “technology” works and that we have something that provides value, and now we can afford to look ahead. So of course, you keep one eye on what you have always done well – that core business – and the other on where you see your next opportunity.
As the industry evolves, we, like everyone else, hope to incorporate in our business a focus on the key trends in the industry, such as the growth of China and digital health. We think we have created a unique niche where we can focus exclusively on medical devices and try to tease out what is different and special, separate to what is happening in biopharma.
As part of that, we are 100 percent committed to the medical device world. For all the challenges that this industry faces, it will remain strong because of the folks who work so hard, as entrepreneurs, investors and strategics bring valuable technology to the forefront that will enhance and improve patients’ lives, just as Tom Fogarty always emphasizes. It’s what makes the industry both critical and special, and it’s a real privilege to be part of it.