Ravi Vij - Convergence in Mx space, paradox of choices and health on demand A Seemingly opportunistic news of Medtronic and Eli

Lillys (by WSJ Link here) collaboration for developing a treatment for Parkinson's disease, heralds the beginning of a new collaborative order in the myopia afflicted Lifesciences industry. But doesn't every opportunity come with its territory of challenges? Yes, it does. Lets explore them in detail. Traditionally, pharmaceutical and medical device sectors had done away with any camping together; except in the case of drug delivery systems. This was due to diverse business models, incompatible resources set and distinct regulatory practices. The launch of drug eluting stents (DES) in early 2000 was the defining moment for the perfect marriage between drug and devices. This was so historic that FDA set up office of Combination Products (OCP) for the first time. Today, as defined in 21 CFR 3.2(e) (3), a combination product: is a product comprised of any combination of a drug and a device; a biological product and a device; a drug and a biological product; or a drug, device, and a biological product. Convergence of medical device and pharma is not opportunistic but as seen from escalating combination product application data (from 100 applications in 2003 to 344 applications in 2009) it looks like a strategic move by the dual side attacked life sciences industry. Burgeoning M&A activities of conventional pharmaceutical companies acquiring biological strong houses further substantiate this strategic move.

Due to this convergence, many medical device firms are shifting from an engineering-oriented focus to gain expertise in biologics and vice-versa, some examples of convergence affected therapeutic areas include: Chronic pain Age-related macular/neural degeneration Heart muscle regeneration Orthopedics (Orthobiology) Drug eluting stents

Any shift in the business model, comes with its associated nuisances. Pharmaceutical and medical device companies are further aggravated by the following paradox of choices: Structural Fault lines o Cooperation between pharmaceutical and medical device companies is difficult due to different profit structures and different financial time frames o Large vs. limited opportunity set o Diverse vs. manageable infrastructure requirements Risk analysis and mitigation o Convergent technologies will combine the risks of drug development with the very different risks of device development without decreasing overall risk o Higher immediate returns to attract investors vs. sustained long term returns Unstructured core:

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Difficult to determine whether pharmaceutical or medical device possess the valuedefining technology; potential for disagreement Partnership evolution pathway

Owing to the above stated challenges 21 CFR 211 convergences with 21 CFR 820 is still premature. In order to monetize and sustain this theoretical convergence, organizations will have to adopt an alternate strategy to provide health on demand.

But that is a topic for a different time.