An informative weekly newsletter that shares insights into building a medical device business, in the hopes to inspire and educate others. It also explores new innovations in the field of obstetrics & gynaecology, how these products were developed, and the inventors behind them.

A brief note on the author - Nish Varma

After several years working in finance, I partnered with my father, an obstetrician who invented a medical device (Fetal Pillow) to solve an important clinical problem in his field (detailed in issue one).

After initially launching into the UK market in 2011, several years (and clinical publications) later, Fetal Pillow was cleared by the FDA in 2017. We would now focus our efforts on bringing our product to the US market.

I spent the next few years building our US business and in early 2021, our company (Safe Obstetric Systems) was acquired by CooperSurgical, a leading global player in Women’s Health. I spent one year post completion working for the company during an earnout period to support the national launch strategy.

Since the company sale, my father and I have started developing a new obstetric product and hope to bring this to market in the near future. I also consult for early stage medical device companies looking to expand their operations internationally.

Let’s get into the newsletter!

What should you consider when launching your medical device in the US market?

Below are a few important considerations, from our experience in launching a medical device in a new market.

Should you consider selling directly in your new market?

This is a key consideration when entering a new market. You will likely have had experience selling directly in your home market, either through your own sales force, or through distribution partners. When entering the US market, given the structural differences compared with the UK (for example, private vs. public) we understood the importance of being on the ground and learning intricacies of the market ourselves. We could take the knowledge and experience of our product and bring this to clinicians in the US. Even if we ultimately planned to build a local team or work with distribution partners, face to face conversations with clinicians to understand their needs and challenges would undoubtedly position us well to manage the dynamics of a new market.

For instance, we understood the sales cycle when selling into the NHS, but would need to have a deep knowledge of how to sell into the US market. We would need to understand who makes decisions within the obstetrics department, which department meetings we would need to attend, what internal processes and approvals would need to be obtained by the hospital, what literature and materials would need to be provided, and how clinicians would need to be trained once the product was approved. Taking the example of learning about the key decision makers - here in the UK we would typically need to speak with the Labour Ward Lead. In the US, it would be the Chief or Chair of the Obstetrics department. By understanding the department hierarchy, we were able to target the appropriate individuals who could drive adoption of a new device, thereby significantly shortening the sales cycle.

In practical terms, we travelled from the UK to the US to sell directly and generate interest in our product. I personally sold directly into the New York market. Consistent engagement with clinicians and working through the sales cycle with knowledge already built from several years of selling into the UK meant I was well prepared to articulate the value behind our product and start building the US business.

Ultimately, this wouldn’t be the most cost-effective or best approach long term, and we would need to find local partners in the form of direct hires or distribution partners. We used a mix of the two over the years and this allowed us to maintain a lean cost base whilst ensuring national coverage with representatives on the ground in all the major states. From a financial perspective, direct sales also meant margins were not being diluted through distribution. But if you’re able to find successful distribution partners, then this is a price worth paying.

How do you build an effective distribution network?

Building a direct national sales force would require substantial funding, in a market we were just entering. We decided a better commercial decision would be to build an independent distributor network. We were able to develop several important relationships over the years - through direct market presence and attending national conferences. We would meet with national distributors, large corporate players in women’s health (some looking for new products to add to their portfolios), individual sales agents looking for new products to represent, and independent groups.

These relationships opened up the door for introductions to potential partners - typically stocking distributors who would purchase devices from us and sell to the end customer (taking a share of the profit for their efforts). These groups would typically cover several states, with their own reps (often 1099s or sales agents) and teams working locally to represent a product.

This would be effective in that local reps would be selling and promoting our device to key hospital systems in their territory, a limitation of what we could do from the UK ourselves. Once our product was approved at a hospital, they could continue to provide training and local support.

Because these distributors would purchase stock from us and then sell to the end customer (hospital), this was beneficial for us from a working capital perspective - we would not need to spend substantial resources in trying to promote our product in such a large market.

It sounds like the perfect arrangement but it did come with several challenges that would need to be managed. We were effectively trying to replicate our personal experience, knowledge and skills in each of the reps representing our device. We would need to spend substantial time with each rep training them on the product, no easy feat when we lived in the UK. We made a decision that we would be in the field for the initial customer presentations so they could learn from our approach. We would then need to trust that they could also articulate the value behind the product when left to their own devices. In the end, some reps and distributors did an excellent job and were successful in selling our product. Others did not perform and we would need to spend time managing this, or consider looking at other partners in those territories.

Some of the key questions I would consider when appointing an independent distribution partner:  

What experience do they have selling obstetric (insert your niche) products? Do they already have key relationships (as mentioned above)? Do they have a successful track record in products currently being sold? Does the size of their team sufficiently cover their territories? Do they have the right attitude in terms of passion and belief behind the product? How many products are they already selling, and will they devote enough time to your product, a new innovation which will likely require more time upfront?

Unfortunately, you would not always have full visibility of these answers until you had spent time working together, and some distributors did not always perform as expected. We would need to support them - largely by spending time in the field and educating them on our product. I would suggest carefully vetting your partners by ensuring they have a network in place so they can engage with key decision makers and customers from day one. Make sure you spend a huge amount of time in the field with them to set them up for success.

What marketing initiatives did we use to build national awareness of our product?

There are a host of marketing materials to be used when creating awareness of your product and many of these will reference the clinical literature available on your device - below are some specific initiatives we used when launching into the US market.

International conferences - a key part of our marketing strategy, as a UK based company looking to enter the US market. There are a handful of national conferences focused on our niche area of obstetrics, and these would become a priority in terms of allocating our resources. Two national meetings we made sure to attend were the annual ACOG and SMFM conference, where there would usually be thousands of clinicians in attendance. It was an excellent opportunity to meet with clinicians from key hospital groups throughout the country and meant we could start collecting contact information and build our future customer database. It’s also an opportunity to engage with industry more widely and open up other partnership opportunities. Our eventual acquisition was driven by long-term relationships built over the years.

National advertising - how could we get thousands of eyes on our device in a cost effective way? One option was advertising in national journals that would often have around 50k readers per month. For example, we advertised in the “Green Journal”, the official publication of the American College of Obstetricians and Gynaecologists (ACOG). If presented correctly, this would create a huge amount of interest nationally. Managing this inbound activity would of course have its own challenges and we would need the right infrastructure in place - for example, if a clinician from Florida read the journal and wanted to meet with a local representative, would we have a distribution partner in place or would we need to travel from the UK. We would of course need to filter this interest by the size of the opportunities - for us, this meant the size of the institution by number of babies being delivered.

Online marketing opportunities - our efforts to build US business coincided with the pandemic. Travel restrictions (from the UK) meant we needed to pivot temporarily and find other avenues to reach end users. We used and created several effective tools. One would be an online training platform - for hospitals that had recently approved use of our device, but where could not physically be there to train clinicians, the online platform provided an alternative. We also created a regular newsletter to share updates on our product to clinicians nationally and ramped up our online presence through use of social media.

Given the nature of our business - selling a medical device to clinicians nationally, we would be limited in how far we could take it without face to face contact. Clinicians would want to see the device in their hand, understand how it would be used in their practice, and the clinical data behind it. Sometimes all you need is 5 minutes with a clinician to share your story, build awareness, and create excitement. That was always our priority from a marketing perspective.

Cooper Companies announces $300m acquisition of select Cook Medical product lines

Back in February 2022, Cooper Companies announced their planned acquisition of Cook Medical’s Reproductive Health business for a staggering $875m, another example of their focus on growth via acquisition to strengthen their women’s health portfolio. Unfortunately for Cooper, The Federal Trade Commission launched an investigation into the proposed deal and determined that it would undermine competition within the reproductive health markets and ultimately could lead to higher costs for patients and a lack of incentive to innovate for other players in the market. Several months later in August 2023, Cooper would announce its termination of the acquisition as it would be unable to satisfy regulatory competition concerns. There would also be a $45m termination charge to pay.

Fast forward to earlier this week (Wednesday 2nd November), and Cooper Companies announced their acquisition of select Cook Medical assets, for a purchase price of $300m. This would be substantially less than the original announcement and would exclude fertility products contemplated in the original deal back in Feb 2022.

Specifically, Cooper would be acquiring minimally invasive medical devices including the Bakri Postpartum Balloon, Cook’s Cervical Ripening Balloon, the Doppler Blood Flow Monitor portfolio, and other select surgical products. This would add to their ever expanding portfolio of OBGYN products, which include Fetal Pillow, MityOne, and Insorb.

The assets purchased generated c$56m in trailing twelve-months revenue as of 30/09/23, implying a multiple of 5.4x sales, broadly consistent with the 6x sales multiple paid for OBP Medical (developer of single-use LED illuminated vaginal speculums) back in May of 2021.

This is substantially lower than the multiple paid for Safe Obstetric Systems (Fetal Pillow), and likely reflects the more established business and products being purchased - revenues from the transaction would be expected to grow 5-7% per year going forward as per the press release.

From a commercial perspective, it will be interesting to see how these products track against their anticipated revenue growth forecasts. The Bakri Balloon for instance was FDA approved back in 2006 and is now widely used for the management of PPH. As detailed in last week’s newsletter, the Jada System, a new technology in the management of PPH is gaining traction in the US market, underpinned by recently published real world observational data. Undoubtedly this will become a point of conversation for reps on the ground implementing adoption and increased utilisation of the Bakri Balloon. Price (Bakri significantly cheaper), efficacy (what does the data show), and competing with a brand new innovation will all become important points of focus. In my experience in New York recently, there seems to be much excitement about the Jada System, particularly as it’s where some of the real world data has been collected.

The cook cervical ripening balloon is also widely used for labor induction. From recent conversations with US clinicians, there appears to a trend towards outpatient induction. One device I’ve been hearing of is an osmotic dilator called Dilapan (FDA approved for cervical ripening in 2015), which seems to be gaining traction recently, given its potential benefits in an outpatient setting (largely increased patient satisfaction, compared with a foley catheter for example).

Given my personal experience working with Cooper during an earnout period following our company sale, I have no doubt their sales force will be well placed to managing challenges around competing products and will be able to drive adoption in this market. I would also assume a large proportion of the Cook sales team will be part of the journey, especially during the upcoming earnout period - $100m is still to be paid (two $50 million annual instalments) on the deal which I’m sure will incentivise both sides to maximise the commercial opportunity. Watch this space.

Thank you for reading

I appreciate you taking the time to read this week’s newsletter. We’re just getting started - the world of medical devices in women’s health is ever evolving in a historically underserved market. I look forward to sharing many more insights into the innovative technologies being developed, the companies and individuals at the forefront of these advances, and how we were able to make a lasting impact on the field of obstetrics.

Any questions or comments, feel free to mail me at: [email protected]

Have a great weekend!

Nish Varma

Cofounder - OBSolve Ltd

Consulting Services - OBG Access Ltd

Previously - Safe Obstetric Systems (Fetal Pillow)