Working on the edge

If you are looking for a place to play, check the interface.

In my technology business development consulting practice, I work with several interface technology companies. Interface technologies are those that have products intended for non-medical use but overlap or bump up against medicine in the sense that they have potential medical or healthcare applications or seek to penetrate medical markets. There are several such overlapping industries that include nanotechnology, aerospace, photonics, telecommunications , financial services and information technologies.

Take Sentegra , for example (http//ww w.sentegra.com). Sentegra invents, develops and sells secure mobile electronic transaction products for payment, ticketing or authentication. I was asked to help identify and build an application for third party medical, dental and veterinary billing.

Or, consider NVOQ (www.nvoq.com). They are a software-as-a-service voice to text company, primarily serving customer call centers, exploring  uses in medical transcription. Likewise, I am the Chief Medical Officer for Pluralsoft (www.pluralsoft.com) , an IT company started by a management team with extensive experience in the telecommunications and financial services industry. Their focus now is data analytics and business intelligence for healthcare systems, payer and health information exchanges.

Non-medical innovation is often the tail that wags the medical dog. Telemedicine products were video-conferencing products adapted to the medical market. As a result, they are incomplete. They don't embed the interaction into medical records , create a clinical note or generate a bill. We all use the credit card industry to process patient payments, but there are gaps or crevices in servicing healthcare payments because of the unique medical , third party payment environment. Again, as a result, the solution is incomplete. Travel agencies are trying to penetrate the medical travel market and build another revenue generating vertical, like Medvoy (http://www.medvoy.com)

Playing in the interface involves networking with people who are not doctors or healthcare experts, learning more about emerging interface technologies , and , identifying healthcare problems that might be solved by applying value added interface solutions originating in other industries.

Get out of your box. If you keep your eyes open and allow yourself the freedom to play in unfamiliar territory, great opportunities will come your way.

3 Early Stage Money Myths

Don't believe everything you read about early money.

While the funding environment for early stage life science companies can best be described as challenging, there are several myths that should not dissuade you from moving ahead with your idea. Early stage development money is never easy to find, but is there if you know where to look..like India or Israel.

Myth 1: Investors don't want to be more that an hour from their investments

Contrary to the convention wisdom that the smart money is only on the US coasts in Boston and San Francisco, pundits note that foreign investors are scanning the world for biotech and other life science opportunties. This is another example of how biomedical companies are born global, sourcing resources from around the world.

In contrast with global trends in other industries, foreign investment activity in the life sciences industry marked a steadily growing path. With more than 32,000 new announced jobs by international companies abroad – representing a 10% increase compared to 2008 – the pharma, medical and healthcare industries entered the global top sectors ranking for foreign investment. (http://www.life-science.se/se/74)

Myth 2: Biotech has taken a back seat to clean tech and software.

Close, but no cigar. The trouble is clean tech wasn’t even the largest investment category in the second quarter. It did top software and biotech in the third quarter. But for the year, clean-tech investments added up to between $1.9 billion and $2.6 billion while spending on software start-ups was at least $3.1 billion and biotech funding came in at about $3.5 billion. http://www.facebook.com/note.php?note_id=309979893364

Myth 3: Pharma companies are spending lots on R/D

The former head of Smith Kline Beecham observed that "Large pharmaceutical conglomerates spend 25-30% of their earnings on sales and marketing,and then spend 15% on R/D. They will need to swap these two items if they want to create earnings in the future". What's more, whilst it is widely acknowledged that the clinical development of medicines costs time and money, it should also be borne in mind that, according to a February 2000 NIH study, “public researchers often tackle the riskiest and most costly research, which is basic research, making it easier for industry to profit.”

Erythroprotein (Epo) was discovered after two decades of work by a university biochemist called Eugene Goldwasser at the University of Chicago. Marketed as Epogen by Amgen, it has gone on to become one of the world´s best-selling biotech drugs. But a large proportion of the basic R&D was paid for by the US taxpayer. http://www.eaepc.org/parallel_distribution/myth.php?n=2

The world is changing. Be aware that yesterday's truth is today's myth.

Bending The Healthcare Cost Curve

6 areas that get investors attention.

Everyone is looking for ways to bend the healthcare cost curve. I recently received something from a private equity firm looking for acquisitions. It will give you some ideas about which businesses seem to be hot.

• Claims review services, which include
  • Bill auditing and review to help identify and mediate excessive charges from healthcare providers
  • Subrogation services that examine healthcare claims and identify cases in which other third party payers have responsibility for paying the charges
  • Dependent eligibility audits in which claims are reviewed to ascertain if employees' dependents meet the necessary eligibility requirements
• On-site employer health clinics which offer employees easier access to primary and preventive care, thereby keeping them healthier and out of the hospital
• Specialized PPO or healthcare networks that enable employees to access healthcare services at discounted prices
• Specialized care management services to coordinate care for high cost / high risk employee populations
• Wellness management services that include screenings, immunizations, health risk assessments and ongoing coaching and self-management tools to help employees stay healthy
• Consumer directed healthcare tools such as health savings accounts (HSAs), consumer decision support tools, and other services that empower consumers to take greater control over healthcare decisions

I'd throw in medical travel companies like Medvoy.

If you are looking to create an innovative healthcare delivery company, think about offering ways to reduce the costs to employers desparately looking to bend the curve.

Fulbright's Fantasy: How I Spent My Summer Minding The Gap

Everyone has their own war. Like a lot of baby boomers, my war was Vietnam. I can remember sitting in a deadly silent fraternity house while birthdates and draft numbers scrolled by like some sort of life lottery.

Other memories, like people fleeing to Canada, the National Guard Game, the 2-S tango, still stick in my mind. I  have vivid memories of the hearings held by the chairman of the Senate Foreign Relations Committee, J. William Fulbright, in 1966, questioning the wisdom of the war and our interventionalist polices. This was particularly ironic given that Fulbright was one of two Senate sponsors of the Gulf of Tonkin resolution just two years earlier.

Forty years later, like a lot of things that come full circle, I had the opportunity to spend the summer at Kings College London as one of the 280,000 other "Fulbrighter's" who have participated in the program since its inception in 1946.

The Fulbright Program is offered by the US State Dept as a global cultural and scientific exchange program. (http://www.cies.org). There are several types of Fulbright Scholarships. I was selected for the Senior Scholars program which is designed for faculty who want to spend between 2 and 6 weeks teaching and learning at a foreign host institution in their specialty discipline, like mine, bioentrepreneurship. Senior Scholars are eligible to do two tours in a 5 year period and this was my first.

The Senior Scholars application and acceptance process involves three steps. As the first step, you apply to be included on the Senior Scholars Roster. Following that, your availability is announced to potential host countries and they apply for your expertise. If there is a match, you are required to submit a program plan describing what you will do, when you will do it and what the expected outcomes and goals will be. And before you know it, you're on your way to a once-in -a-lifetime adventure.

The State Dept pays for your transportation and pays you a weekly stipend. Let me take this opportunity to thank all of you taxpayers. The host institution, in my case Kings Business, the technology commercialization office of Kings College London, pays for lodging, transportation in the country and a per diem meals allowance. That's why I stayed in the student dorms while I was there. Did I mention it had its own bathroom and was across the street from the Pig in the Poke pub?

I worked with about 35 technology transfer and business development managers under the tutelage of my sponsor, and now lifetime friend, George Murlewski, a former long term BP manager, who went to the ivory tower and took a crack at getting academics to understand how to create life science spin outs.

My days were spent networking, working with faculty and staff, lecturing, doing assessments and most weekends visiting other technology transfer programs in the UK including some in Glasgow, Edinburgh, Southampton, Oxford and Cambridge. I also spent some time at the London Business School and Imperial College. If you are ever in Deal on the East Coast of Kent, I highly recommend visiting the Hole in the Roof pub, run by the brother of the British Consulate in Denver.

I've been home several months now and continue to work with people I met, am collaborating with my faculty colleagues , and continuing to build the bridges that Fulbright envisioned when he created the program.

If you ever want to spend your senior year abroad, it's never too late and I highly recommend it. Cheers.

Keeping Track Of Your New Nonclinical Life

Things to do when you're not in the clinic

If you decide to do some non-clinical work-consulting, writing, or starting a side business- you'll want to be able to keep track of your revenues and expenses and present yourself and your new business http://www.smallbusinessbrief.com/articles/taxes/003797.html Here are some New Year's resolutions to get you started.

Create an LLC for your new business

Creating a Limited Liability Corporation for your new business allows you to keep track of revenue and expenses and do business independently from your medical practice. LLC's can usually be formed inexpensively by going to the website of the Secretary of State Business section and filing the form. Be sure the name of your new business is not already taken by someone else . Following that, contact your accountant and apply for an employer ID number (EID) from the IRS so you can use it when you file subsequent tax returns. Revenues (or losses) are passed through as personal income but will be accounted for separately.

Start a separate business account and get a credit card or debit card in the company name

Use the cards when you are buying things that are business related or spending money on business related expenses. If you really want to get fancy, integrate your account with Intuit (http://www.intuit.com) or online accounting software so you won't have to rummage through the proverbial shoebox at the end of your tax year.

Get separate business cards for every new business

Your medical professional business cards simply won't tell someone the new story. Get new ones and feel free to give yourself whatever title you'd like. Try not to get too cute. There are already lot's of Chief Innovation Officers and Directors or Imaginative Thought already out there. Also, keep the cards simple and easy to read with large font type that makes then usable in digital card readers. My favorite business card boo-boos are:

1. You have no idea what this person does because the card is so cutesy,
2. The person who gives it to you didn't include their e-mail addresses on the card, and
3. The card has so many colors, designs and gimmicks that you can't use an optical character reader to enter it into your CRM (customer relations management) tracker.

Create a website

This is your chance to get really imaginative in creating your new identity. Readers of these posts have already been sent to the websites of my co-authors who are writers, kick-boxers and wine afficianados. Again, templated website services that are inexpensive, easy to design and maintain, and readily updatable are a good way to start (maybe the topic of another posting stream?) For an example of what I mean, check http://www.the-international-entrepreneur.com/

Craft your new pitch

At first it might seem awkward to introduce yourself as a business development consultant, not a head and neck surgeon. But, remember, the idea is to get people interested in what you do. After all, wasn't that the whole point of venturing out into a non-clinical interest?

Start a SEP

An article in the WSJ recently noted that profits can be sheltered in qualified retirement plans, and the 2010 rules remain relatively unchanged from 2009. For example, a corporate owner or self-employed person whose salary or net earnings are sufficient can contribute a maximum of $49,000 to a SEP (Simplified Employee Pension) plan, scoring a tax deduction while saving for one's golden years. For more information, read  "Retirement-Plan Options for Business Owners."

http://online.wsj.com/article/SB10001424052748704156304576003882845889172.html?mod=WSJ_SmallBusiness_LEFTTopStories

Up until now, you have probably organized your financial and professional affairs around your medical career. When you step out of the clinic, step into your new life with a new set of tools to keep track of your inevitable success.

So you want to buy stock in a biotech company, eh?

You know that drugs can be risky. So can drug stocks.

How do you make $10M in biotech? You start with $50M.

Investing in biotech stocks can be risky business. Here are some sobering facts:

• Only 11% of drugs make it from pre-clinical work to approval by the FDA
• 45% of drugs fail Phase II trials
• The FDA approved 26 new drugs in 2009

http://www.minyanville.com/businessmarkets/articles/biotech-somaxan-mankind-pharmaceutical-drugs-drugmakers/3/25/2010/id/27472

As a practitioner, you might have better insights into the science and markets for a new drug or device. In the final analysis, however, the market will punish or reward a stock based on clinical trial results that can make or break the company. Other things to keep an eye on are:

Important announcements or developments

Check the EDGAR database of SEC filings at http://www.sec.gov/edgar.shtml Every public compnay is required to file reports on a quarterly and annual basis. These are a goldmine of information.

Stay connected to websites, newsletters and reports online

Subscribe to free online resources from investment firms, research houses and industry organizations that track the industry like http://www.bio.org

Personal clinical experience

Be careful. There is a difference between buying and selling stocks based on your clinical observations and insider trading. Just ask Martha Stewart and Sam Waksal of Imclone fame.

Forget it and just buy a few to round out your portfolio

Do you really think you can outsmart the pros and consistently pick the winners? If not, then just buy some higher quality rated biotech stocks as part of your asset management strategy

Ernst and Young calls biotech the most difficult relay race in human history. Don't get caught dropping the baton.

The 12 Steps To Biomedical Innovation

The 12 step path from an idea to a successful innovation or commercial venture.

We’ve all had great ideas. Whether the insight comes to you in the shower, while driving to work, or in a dream, a new concept or thought pops into your mind and begs for attention. Very few ideas, however, actually see the light of day. The difference between an idea and innovation is what happens after you think of the new idea. Innovation is about inventing something that can create economic value in the marketplace. Ideas are commodities, but innovation is about finding and validating the business opportunity that both the leadership of the organization and its culture embrace and commit to and which is connected to its business strategy.   Implementing innovation is the hard work that goes into conceptualizing an idea to take advantage of a market opportunity and executing a commercialization plan that gets results.

 Today in health care, whether it be drugs, devices, diagnostics, healthcare IT or alternative care models,  successful innovation is about both predicting and observing patients’ wants and needs and satisfying them with new products and services.

 Now, more than ever, industry and health care entities need physicians to help them innovate to stay competitive. Our post-capitalist economy is driving leaders to harvest new ideas and the intellectual capital of their knowledge workers. Success depends on using processes for creating and analyzing new ideas.  Limited time and competition for resources requires prioritization.

The 12 Step Roadmap to Innovation

The path from an idea to a successful innovation or commercial venture is lined with mine fields that can sabotage success at any step. At Venturequest (http://www.venturequestltd.com ), my colleague, Courtney Price, and I have worked with multiple organizations in industry, academia and government labs.  We have developed and applied a 12 step process to increase the success rate for implementing innovation and creating new revenue streams. http://www.ncbi.nlm.nih.gov/pubmed/16615405 The process is designed to quickly eliminate ideas that don’t have a high likelihood of market success, that don’t fit with the strategic mission of your health care organization, or that involve too high a level of market, technical, intellectual property or implementation risk for the proposed return on investment. Our 12 Step Innovation Roadmap provides a framework for screening, incubating, commercializing, and benchmarking the success of new ideas and tested including tools and protocols for health care providers.  At each step of the process, a Go or No-Go decision is made about the opportunities. Sometimes the opportunity skips some of the steps based on the market and stage of development.  Below is a brief description of each step.

Idea generation consistent with the strategic plan

Ideas are a dime a dozen.  The challenge is finding ideas that match the business strategy, connect with senior management, and are embraced by the organization’s culture.  Such ideas leverage the core competencies of the organization as well as build on its intellectual assets including intellectual property, branding, new technologies, etc.  They both build upon sustainable core competencies as well as forecast future breakthroughs. Brainstorming or collecting new ideas that don’t match your facilities culture or its strategic plan will have a limited chance of success. 

Concept development and initial testing

Once ideas are selected that meet the above criteria, it is necessary to describe their uniqueness and determine if there could be a sustainable competitive advantage. A clear value proposition, i.e. the worth, importance or usefulness to your customers, should be clear early in the process.  As you obtain more information about the opportunity, the business concept will change over time in response to newly discovered market, competitive, and patient information. The next steps involve a series of iterations designed to refine your idea.

Seven-Step Opportunity Evaluation

After the concept is developed, it is time to quickly assess the potential opportunity by using a quick Seven-Step Opportunity Evaluation which takes less than 30 minutes to complete.  It addresses the problem being solved, the potential opportunity, and the market for the opportunity, potential revenue, required funding, intellectual property creation and protection, and stage of development.  It also identifies potential customers, competitors, and commercialization viability.  This quick analysis will help you define whether the business, industry or markets you propose to enter are appropriate. It will also help you define what kinds of people you will need to make your venture successful.

Model Opportunity

Once the concept is evaluated using the Seven-Step Opportunity Evaluation, it is time to discover the inherent strengths and weaknesses of the opportunity.  This software tool is based on 24 distinctive characteristics to objectively evaluate the opportunity.  The purpose of this protocol is to identify the Achilles’ heel of the concept. It was designed to assist physicians and researchers without a business education to objectively evaluate the opportunity.  As weak areas of the concept are improved, the better chances it has for success. If you identify potential risks or threats that cannot be address, then the idea should be abandoned. 

Business Opportunity Assessment

The  Business Opportunity Assessment is a more in-depth review of the opportunity including market research and due diligence that includes IP analysis, opportunity development timing, legal liability issues, applications of the opportunity, barriers to entry, industry trends, growth potential, market positioning, competitive analysis, financial projections and pricing, resource requirement analysis, and licensing potential to name a few.   These are the important considerations to address if it looks like the opportunity has a strong commercialization potential.  This software tool is designed in a question and answer format which make it easy to complete a 360 degree assessment.

Market Validation

Once you have completed the Business Opportunity Assessment and have decided to proceed, the Market Validation process focuses on obtaining feedback on how the opportunity addresses specific market needs as well as taking a hard look at your competition. This step helps differentiate the opportunity from competing opportunities based on patient needs.  This process maximizes perceived patient benefits and eliminates extraneous features that increase costs.  This experience-based market learning is critical to market success and helps develops better business judgment for a Go or No-Go decision.

Revise Business Opportunity Assessment

Based on the results of the Market Validation, you can now revise your Business Opportunity Assessment and build a commercialization strategy.

Finalize the Commercialization Plan

By this time, you should have a good idea about whether you have a viable innovation. Since your idea will be competing for resources with other ideas, however, you will need to prioritize and decide which has the best odds for success. You will need to carefully hone your business model. You will now write your business plan that succinctly describes the story of your proposed business.   The good news is that by this time approximately 70 % of your business plan has been written.  

Write the Business Plan

Now it’s time to write your final business plan. Unfortunately, most entrepreneurs go immediately to this step first without using appropriate filtering systems.  This results in a business plan that has unvalidated assumptions and is rejected or leads to an enterprise that fails.

Solicit feedback and revise the Business Plan

After the business plan has been written, it is time to solicit feedback from respected advisors who will provide realistic options about the potential of commercializing the new opportunity.  Their opinions and suggestions should be incorporated into the final business plan. 

Present the Business Plan.

It is now time to present the Business Plan and get stakeholder approval and resources to launch new venture.

Execute the Business Plan

Congratulations. You’ve got the go ahead for your new idea. Now the work begins. Fortunately, your winning business plan based on the 12 step pathway will provide an operational road map to track and benchmark the efforts to commercialize the opportunity.  Your plan will provide you with the timelines and metrics for success. A strong Executive Summary should be distributed to the review board before the presentation and a succinct Elevator Pitch should be developed. 

Whether you are considering a product or service or process improvement, the 12 Step Plan is a useful guide to getting your idea to market quicker, for less cost and with more success.