MAGAZINE Ambassador Barry White: - I am impressed with the technology!
Thesound ultrafairytale
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EDITOR'S LETTER
MAGAZINE
Published by Oslo Medtech www.oslomedtech.no *
Chairman: Carl Christian Gilhuus-Moe ccgmoe@neomed.net *
Editor-in-chief: Kathrine Myhre CEO Oslo Medtech +47 930 69 634 kathrine.myhre@ oslomedtech.no *
Cecilie Nordbø Marketing Communications Manager +47 930 31 593 cecilie.nordbo@ oslomedtech.no *
Lars Rønn Strategic Market Advisor +45 2462751 4 lars.ronn@ oslomedtech.no *
Tone Yrvum Innovation Project Manager + 47 41 3 1 4 891 tone.yrvum@ oslomedtech.no * Oslo Medtech Gaustadalléen 21 0349 Oslo Norway mail@oslomedtech.no A MAGAZINE PRODUCED BY
COVER PHOTO: Kristin Svorte PRINTED IN OSLO BY Kraft Digitalprint AS
Investing in medtech companies In this issue of Oslo Medtech Magazine we have chosen to give you a glimpse of the Norwegian Ultrasound Fairytale. It started more than 40 years ago, when research and development pointed in the direction of a world class technology cluster which has made a revolution in healthcare and diagnostics. As one of our proudest success stories in Norwegian Medtech history, we have a lot to learn from our ultrasound pioneers. It should not surprise that one of the hottest health sector companies quoted on the stock exchange is a Norwegian company with products based on the Norwegian ultrasound technology. Medistim ASA, a company with global presence is prospering with edge technology. As our cover story reveals, the company also challenges the international, conservative healthcare market with refreshingly untraditional marketing strategies. So strong is the Norwegian ultrasound technology knowledge base, that the giant GE Healthcare has chosen to run its ultrasound business from Norway – 15 years after the take-over of Vingmed Ultrasound. As is the case with ultrasound, Norway can offer investors a broad range of choices in different areas of the Medtech industry. That's why you should have a closer look at Norwegian Medtech companies! Kathrine Myhre
kathrine.myhre@oslomedtech.no
Vingmed AS Trondheim Ultrasound Project Nycotron, flowmeter 1970
Arne Wøien
Oslo Ultrasound Project
Liv Hatle
1980
Kjell A. Ingebrigtsen
Medistim Vingmed Sound Arne Grip
Interspec Inc
"Doppler Ultrasound in Cardiac Diagnosis" Hydro investment
To conquer the US, Medistim CEO Kari E. Krogstad has adopted untraditional and provoking marketing strategies in a conservative sector. THE ULTRASOUND EDGE: Last year, CEO Kari E. Krogstad and the Medistim management team went through several deep discussions about how to take the marketing strategy for the company`s ultrasound based products another step forward. The company needed renewed attention to the issue of assessing graft patency during bypass surgery. Medistim's proven blood flow measurement technology was coming of age while at the same time they had a new and unique product in launch phase. - When we finally concluded, we said: We just have to do it! But it felt a bit risky, as well, Krogstad admits. Now, a year later, the new strategy seems to pay off.
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THE CLUSTER: Medistim is a worldwide market leader within intra-operative transit time flow measurements and ultrasound based diagnostics, to be used in cardiac, vascular and transplant surgery. The technology development was led by Arne Grip, a former marketing director in the then Vingmed Sound. Today, Medistim is listed on the Oslo StockExchange with a market capitalization ofapproximately NOK 380 million. Based in Horten, GE Vingmed Ultra-
sound is a part of General Electric Healthcare, which is a global leader in clinical imaging based on ultrasound. Vingmed is by far the leading medtech and ultrasound player in Norway with annual sales of NOK 1,2 billion (2011). - Basically all the companies in this field in Norway, including us, can Medistim trace their roots back to Develops, manufacture and bring to market the quality assessthe ultrasound environment systems VeriQ and VeriQ C for cardiac, vascular and ment in Trondheim, says transplant surgery. Listed on the Oslo Stock Exchange. Sales NOK 1 61 .8 million in 201 1 , profit before tax NOK 22.3 milGE Vingmed Ultrasound lion. CEO Dagfinn SĂŚtre. GE Vingmed Ultrasound Trondheim serves as the Equipment for ultrasound cardiac examinations. In 1 998 GE nucleus for developing ulbought the company for NOK 1 .8 billion. Sales revenue NOK trasound technology in 1 .2 billion in 201 1 , profit before tax of NOK 1 44 million.
Norway. The research and development cluster is centered around Norwegian University of Science and Technology (NTNU), the Medical Imaging Laboratory (MI Lab)which among others is sponsored by GE Vingmed Ultrasound and Medistim, and Trondheim University Hospital - St.Olav`s Hospital.
UNIQUE: Research in medical ultrasound in Trondheim started over 30 years ago, with the development of ultrasound Doppler blood flow equipment. GE Vingmed Ultrasound has one of its main research departments located in
1990
CardioMed Sonotron Vingmed Sound
Anders Wold, GE Vingmed GE Vingmed Ultrasound 2000 Butterfly FDA clearance
Medistim USA Inc
Medistim listed OSE
Medistim aq. Kir-Op
Medistim aq. Meditron Dagfinn Sætre, GE Vingmed
VeriQ C in USA and Canada 2010
Kari E. Krogstad, Medistim
PICTURE:
Medistim CEO Kari E. Krogstad and the management team went through several deep discussions about how to take the marketing strategy for the company` s ultrasound based products another step forward.
GORM K. GAARE
Photo: Kristin Svorte
www.oslomedtech.no
THE LEGACYOF ULTRASOUND
cohabitation with this environment, the research foundation Sintef have on-going collaboration with the ultrasound research groups and several other Norwegian companies are also an integrated part of the ultrasound group. - The ultrasound environment in Trondheim is special because of the combination of both clinical and technological ultrasound research and development. This combination is relatively unique. There are probably just a few other similar environments around the world. Technologically, Trondheim is among the foremost, says Dagfinn Sætre. - On the clinical side, we also have some outstanding researchers at Oslo University Hospital – Rikshospitalet, he adds. A key reason for the Norwegian ultrasound successes has been the close collaboration with the medical clinicians at the hospitals.This has enabled the translation of technology innovations into clinical practice, and formed the basis for new products marketed by companies like GE Vingmed, Medistim and other startup companies. How important is this academic ultrasound environment for GE Vingmed Ultrasound? - It`s very important to us, because we have a lot of research activity in collaboration with this environment, which produces many brilliant new ideas. It is crucial also for recruiting purposes, many of our best and talented people are re-
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- We did stir up some strong reactions!
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Kari E. Krogstad
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cruited from Trondheim, says SĂŚtre. Medistim`s inhouse development activities is based in Oslo and consist of 7-8 people. The production facilities are located in Horten. - As a smaller company, we have limited muscles available to invest in long term research internally. We depend on collaborating with forefront technical and clinical institutions, and that is why we are a sponsor of MI Lab, says Medistim CEO Kari E. Krogstad. Medistims ultrasound scanner is developed in collaboration with a small company called Aurotech, which is part of the ultrasound environment in Trondheim. - They are extremely talented, Krogstad notes. - The input we receive from our partners worldwide underpins Norway as an important and recognized stronghold for ultrasound technology, she says.
THE MARKETING PUZZLE: Both GE Vingmed Ultrasound and Medistim has successfully been able to convert stateof-the-art technology into commercial, globally marketed products. This is the traditional Achilles heel for Norwegian medtech- and life science companies. - One of the dilemmas facing small companies in the go-to-market phase is whether to try to hook up with a bigger company with an established sales network and marketing muscles, or to do it yourself, says Krogstad.
Medistim was originally a third party product distributor, which has been a key to both financing the development of its own products and in establishing an extensive sales network. Today Medistim has a global presence with over 50 distributors, as well as subsidiaries in USA, UK, Germany and Denmark. Still, the task of gaining recognition in international markets with new and innovative products is demanding and often very expensive. A central part of the traditional way to enter the markets with new products for both medtech and pharmaceuticals is to gain recognition among key opinion leaders in the health sector, trying to convince them of the benefits provided by the product , and hopefully they will contribute positively to the marketing. - A company need key opinion leaders and the important voices in the industry to talk positively about the product. As a
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company, you don`t have the necessary credibility to do this yourself. This is the way it is, and probably the way it will always be. But at the same time, I believe we have to learn more from consumer marketing, to be more aggressive and innovative in our marketing strategy and techniques. We need to think marketing in all channels, and it has to be implemented through the whole organization, says Krogstad.
DISRUPTIVE AND EMOTIONAL: During her three years as the CEO of Medistim, Krogstad and her company have tried to twist the traditional and classic product and technologically oriented marketing towards more disruptive, emotional messaging, distributed through digital market channels, direct mail and social media. - Companies like Medtronic has vast marketing resources. Our ambition is to
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PICTURES OPPOSITE PAGE:
1 - The ultrasound environment in Trondheim is very important to Medistim . - We depend on collaborating with forefront technical and clinical institutions, says CEO Kari E. Krogstad. Photo: Kristin Svorte 2 - Global imaging: CEO Dagfinn Sætre and GE Vingmed Ultrasound in Horten is a global leader in clinical imaging based on ultrasound. Photo: Tom Arild Dahl/Gjengangeren 3 - Thumbs down. Medistim needs to convince cardiac surgeons that the way they measure blood flow through the grafts, with their finger tip, is outdated.
Picture: SimpliCT, laser guide for image guided interventions.
New image guided procedures combined with new and improved diagnostic systems have opened new market opportunities for NeoRad. The company has taken back the global marketing rights from German company Mavig and secured distribution of their ceiling suspension system. - Building our own distribution network gives us better control, and a closer feel for the market development, says NeoRad CEO Nicolay Bérard-Andersen. NeoRad’s laser guide for image guided interventions is called SimpliCT™. It is a niche product which has to be marketed
globally starting with the major countries. In the longer term, the company plans to exploit the sales network as a third party seller of other companies' products in addition to products developed internally. The company has built up a strong presence in India where the market potential is close to 1800 units. Having introduced SimpliCT to a set of opinion leaders, a distribution network covering the most important regions and 10 demonstration units are being set up. Similarly a US subsidiary based in Minneapolis opened recently and is discussing with major reference centers like Johns Hopkins, MD Anderson and Weill Cornell. Based on the reference centers, a US distribution network will be built up.
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be just as good, and that is actually possible in the digital world, Krogstad says. To get the message across, Medistim has challenged the traditional marketing where the use of pictures of equipment and surgical wounds are commonplace. To be able to sell the transit time flow measurement equipment, Medistim needs to convince cardiac surgeons that the way they measure blood flow through the grafts, with their finger tip, is outdated and does not satisfy today`s requirements. - We have a strong market position in some markets, but we still experience a lack of interest and conservative attitude among surgeons in for example USA. So we have to provoke them a bit, Krogstad says. To that end, Medistim in early 2012 launched an e-mail campaign directed at surgeons in USA the company felt were indifferent towards the Medistim methods and equipment, with messages like “If you`re the best, you`re nothing”, and “Was it patent?”, playing on values like professional pride and the pressure applied on surgeons from the patients family and the outside world. - We did stir up some strong reactions, which proved the campaign’s effectiveness in creating engagement. So far, the overall response has been very good, and we are growing double digit in the US market, says Krogstad. - But you have to consider where to launch campaigns like this. The exact same campaign would be a disaster in Germany. TEXT: Per Gjørvad Oslo Business Memo
LASER GUIDE TO INDIA
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Norway has a lot of excellent research, but Norwegians tend not to be so market oriented as Americans, says US Ambassador Barry B. White.
www.oslomedtech.no
THE BEST WAY IS PERSONTO-PERSON direct people-to-people contact is the In his embassy office at Henrik Ibsens operate with the most successful finanbest way of creating new business opgate in Oslo, the U.S. Ambassador to cial resources, companies and academia portunities, says Barry. B. White. Norway, Barry B. White, meets Oslo in the United States. I encourage your Medtech Chairman Carl Christian Gilcompanies to visit the United States, find How do you work to encourage U.S. huus-Moe and Oslo Medtech Magazine. the right people and start setting up companies to seek out opportunities in Ambassador White is a great believer in meetings. The bottom line is, I believe Norway? person-to-person contact as - U.S. companies tend to a way to create new business look at Norway as a small opportunities. He recently market, so you have to take took the initiative to foster BARRY B. WHITE a Nordic approach. For U.S. closer cooperation between Barry B. White has been companies within life sciMassachusetts Institute of involved in the healthcare ences, in particular Technology (MIT) in Boston sector through various popharma, a main concern is and the University of Oslo. sitions. As a young comthe challenging cost strucmissioned Lieutenant in ture, and regulatory and - I have been travelling the Public Health Service reimbursement issues, says throughout Norway and I he served as a lawyer White. In that sense, there am impressed with the working to implement the is strong competition with technology I have seen. You newly established Medithe other Nordic countries. have top quality research, care and Medicaid programs in the late 1 960s in the U.S. Department of Health, Education and Welfare. especially in oil and energy With a J.D. from Harvard Law School and based in BoYou have experience from fields, but also within life ston, Barry B. White practiced law at Foley Hoag LLP for the U.S. venture capital sciences and medtech. My 40 years, including 1 3 years as a CEO in the law firm. He business. Early stage capital best advice to Norwegian has strong business and corporate experience, and his is not so easily available for medtech and life sciences practice consisted of representing startup companies enlife sciences and medtech businesses would be to seek gaged in information technology, software and life scistartups in Norway. How out opportunities to coences fields, as well as venture capitalists.
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PICTURE: US Ambassador to Norway, Barry B. White. Foto: Terje Pedersen, ANB would U.S. venture capital firms consider these sectors in Norway? - The venture capital business in the United States has changed, it has less capital available and has grown more risk averse with less capital available for startups. But this is cyclical. They are interested, but they also have lots of other opportunities. I believe they are a bit hesitant, and some of them are not quite sure of what they will find here. The venture capital business is a people business, and based on trust. So you have got to meet up with them, and get them to know you.
tion. It has institutionalized the linkage between education, research, commercialization of research and entrepreneurship. This provides an important model for universities interested in helping their students become more effective entrepreneurs, says White.
Boston is a major life sciences hub in the United States, and has a formidable record of spinning new companies out of research conducted in the area`s academic institutions, in particular MIT and Harvard. According to White, an estimated 6,900 companies started by MIT graduates with worldwide sales ofapproximately USD 164 billion are located in Massachusetts alone, and represent 26 percent ofthe sales revenues ofall Massachusetts companies. Another 4,100 MIT alumni-founded companies are based in California and generate an estimated USD 134 billion in worldwide sales. - MIT has created an environment that solves the challenge of bringing the creation of knowledge into commercializa-
The MIT experience is the backdrop when White convinced the President of MIT, L. Rafael Reif, to visit Oslo for the awarding ofthree Kavli prizes to MIT people and to visit the University of Oslo earlier this fall. - The main idea with this initiative is to create and promote cooperation, to explore possibilities in areas such as the transfer of technology and lab techniques, and promote collaboration in research and development. It is about getting people to meet people. Future will tell us where this leads, says Barry B. White.
INTERVIEW: Per Gjørvad Oslo Business Memo
www.oslomedtech.no
White considers Boston his backyard, and talks with great enthusiasm about the feverish startup activity in the area, which serves as a brilliant example of how collaboration between universities, finance, companies and government can create hundreds of thousands ofjobs. - Boston is in many ways similar to Oslo: Both cities have 600,000 inhabitants, the sea, the hills and the recreational areas - and with a strong
technology base. Norway has a lot of excellent research, but one important difference is that Norwegians tend not to be so market oriented. I also believe that you could encourage your venture capital business to be a bit more innovative and risk taking, he says.
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MedtechWatch
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A SUCCESSFUL EXIT
NeoMed Management, the international venture capital investment firm exclusively focused on the healthcare industry, has agreed to sell the US-based medical technology company Vessix Vascular Inc. to Boston Scientific for up to 425 million USD. Vessix Vascular (Laguna Hills, CA, USA) has developed a novel percutaneous radiofrequency balloon catheter technology for the treatment of hypertension. The Vessix V2 Renal Denervation System received marketing approval in Europe and Australia earlier this year and is currently in a 120 patient post-market approval clinical surveillance study, the REDUCEHTN study, which is expected to be completed in mid-2013. NeoMed, with offices in both Norway and Switzerland, is the largest shareholder in Vessix Vascular through NeoMed Innovation IV L.P., following its investment in a Series A financing in 2007 and in subsequent financings. NeoMed, which was the first institutional venture capital investor in Vessix with a shareholding of approximately 24 percent, has served on Vessix’ Board of Directors and has been closely involved with the company and its strategic development. - We are very pleased with this transaction with Boston Scientific. In NeoMed, we are committed to building companies with lasting value. Boston Scientific acquires the whole company, including the organization, the established production system with subcontractors, the quality controls, R&D department and so on. We look at this as a seal of approval from Boston Scientific, says Erik Amble, Managing Partner at NeoMed. - At the same time, Boston Scientific has in place the marketing organization necessary to start marketing Vessix`products in the areas where Vessix has been approved. This means Vessix will be able to reach the markets a lot faster. And as part of the deal, Boston Scientific has committed to spend up to 30 million USD in marketing of the Vessix concept, says Amble. The agreement with Boston Scientific, a leading US headquartered medical device company, calls for an upfront payment of 125 million USD on closing, and up to 300 million USD in clinical and sales related payments. The acquisition place Boston Scientific as a number two player in this market, behind Medtronic. The Vessix transaction is the biggest within the medtech sector this year. - There are several reasons why this transaction turned out so successfully: We didn`t have to sell the company, we were ready to continue to run Vessix ourselves and had done all the necessary preparations for a commercial launch. The product was fully developed, and Boston Scientific could not have done it any better. We hired industrial designers to get the wow-factor and the product is easy to use with hardly any learning curve at all. We also had in place the positive
clinical studies from influential clinical environments, says Amble. The sale of Vessix Vascular is the fourth successful realization in NeoMed Innovation IV L.P., the 2005 venture capital fund with total committed capital of 104 million euro. The transaction potentially returns up to 74% of the fund’s total committed capital. Previous realizations of NeoMedinclude Novexel (France), PregLem (Switzerland) and EUSA Pharma (UK). In total these four realizations have the potential to return up to 152% of the fund’s total committed capital. - Hypertension is a major global healthcare challenge, affecting more than one billion people worldwide. Renal denervation represents a potential breakthrough therapy for the treatment of uncontrolled hypertension and is an important part of Boston Scientifics growth strategy. The acquisition of Vessix adds a second generation; highly differentiated technology to our hypertension strategy while accelerating our entry into what we expect to be a multi-billion market by 2020, says Mike Mahoney, president/CEO at Boston Scientific.
SPINCHIP PARTNERSHIP
Tronrud Engineering based in Hønefoss has developed, engineered and built manufacturing equipment for both Nycomed and Axis Shields. Now the company is involved in projects with partner SpinChip Diagnostics. Tronrud has also invested in the medtech startup. SpinChip Diagnostics AS was founded February 2012 as a spinoff from SINTEF. The company's concept is an immediate reliable in vitro diagnosis in point of care settings. A fraction of a blood sample is drawn directly from a finger prick into the small disposable chip. The chip is then inserted into the small desktop apparatus. Results of a variety of advanced analyses will be obtained automatically within a couple of minutes. -The starting point for this venture was that we were asked to contribute to the development of this concept, and that led us toinvesting in the company as well, says Geir Atle Ekaas, R&DManager in Tronrud Engineering. Tronruds share in SpinChip amounts to about one third of the shareholding. - It is an exciting company, and we are delivering project management,as well as engineeringservices to the company. Hopefully, we will be able to build machines forhigh volumeassemblyofthechipsin the future, says Ekaas.
NOK 20 BN EXPOSED IN HEALTHCARE
Healthcare is a prioritized area within DNB's international strategy. The Norwegian bank has a loan portfolio of approximately NOK 20 billion to healthcare companies, and is ranked as the 10th largest bank on new healthcare loans in the American market. - DNB has had exposure toward the healthcare industry for
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PICTURE:
Øyvind Westby Brekke, senior advisor, DNB.
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decades, and decided to expand the international efforts in 2007 to take advantage of the competence built up over many years, says Øyvind Westby Brekke, senior advisor in DNB. The healthcare sector is typically less cyclical than other industries and offers a positive diversification for the bank’s other lending business. The key growth drivers are stable, like the aging population and the growth in life style diseases. DNB has approximately 50 Healthcare products customers in its loan portfolio, with 1/3 in Europe and 2/3 in USA. - Our business is geared toward the middle and large sized companies, which means we have relatively fewer Norwegian customers. In the Norwegian medtech sector, most of the companies are still in the developing phase, says Brekke. Still, DNB keeps a keen eye on the Norwegian medtech sector. - There are quite a few interesting small medtech companies, you will typically find them among Oslo Medtech`s members. We hope they will be able to get their products out in the international market, and obviously we would like to help them with our services when they grow bigger and more mature, says Brekke. How do you rate the Norwegian medtech sector? - Historically, there have been some key technologies developed in Norway, in particular ultrasound technologies which have been very successful. We have traditions and competence, which new companies can benefit from. But it`s not a big sector in Norway, says Brekke. The amount of available risk capital for startups is a big questionmark, though. Both in Norway and The Nordic countries as such, the access to seed and venture capital is limited, and the competition for early phase capital is tougher than ever. If you compare the available capital versus the needs, it just don`t add up. Although the best projects probably will get the necessary capital, we still believe that it is not sufficient to exploit all the good ideas that are out there. Hence, the work in both Norway and other Nordic countries to get more involvement from the governments, says Brekke. What is your advice to medtech entrepreneurs? - Don`t be to discerning. If someone is willing to invest, consider it seriously, even if it`s not quite what you had in mind. And do the right things in the right order; like you have to do a thorough research on market potential, intellectual property issues and reimbursement strategies. It will strengthen your case when you meet investors, says Brekke. Remember, the investors hold the best cards.
OSLO BUSINESS MEMO
De to norske nasjonale klyngeprogrammene Norwegian Centres of Expertise (NCE) og Arena har som formål å utløse og forsterke innovasjonsprosesser i norske næringsklynger og -miljøer. Dette skjer gjennom et nært samarbeid mellom bedriftene i klyngen, forsknings- og utviklingsaktører og relevante offentlige partnere.
NCE retter seg mot de mest dynamiske næringsklyngene, som har forutsetninger og ambisjoner om å bli anerkjent som ”world class clusters”. Arena er tilbudet til miljøer som er i en tidligere utviklingsfase, men som viser sterk utvikling og potensiale for å forsterke innovasjonssamarbeidet i sin region og næring.
Det er i dag 12 Norwegian Centres of Expertise og 20 klynger tilknyttet Arenaprogrammet, klyngene er valgt ut på grunnlag av åpne nasjonale konkurranser. www.arenaprogrammet.no www.nce.no