Category: Emerging Markets

Coloplast Acquires Kerecis: Key considerations and implications by Diligence Wound Care Global

Coloplast’s acquisition of Kerecis: Considerations and implications

Coloplast’s announcement is the latest large and significant advanced wound care (AWC) industry deal. As the high level details have already been thoroughly disseminated by press releases and news aggregators, our analysis of the Danish multinational’s acquisition of Kerecis will focus on: What makes this deal noteworthy in the context of the current advanced wound care (AWC) landscape and Coloplast’s positioning, especially in the US AWC market? What are the potential tailwinds and headwinds that Coloplast will encounter as they integrate the Kerecis business org, portfolio, and platform? Why is this deal noteworthy? Aside from its 10-figure price tag and a high multiple on revenues relative to other recent AWC transactions, this deal is also a possible tipping point whereby now roughly half of the top wound care MNCs operating in the US now have biologics / skin substitute / allograft / CTPs (cellular and tissue-based products) to their portfolios. (Side note: There is a recent effort, including a consensus paper published in the Journal of Wound Care [JWC], to begin referring to this segment by the more accurate term, CAMPS [cellular, acellular and matrix-like products]). Does this mean that the rest will follow suit? No–and some have intentionally avoided this segment–for very valid reasons as well. On the other hand, it has become clear to most of the major global wound care brands that to simply innovate around the edges of their core dressings and bandages, if they do not have some other competitive advantage (ex: full service logistics, manufacturing, digital health, remote monitoring, etc.), will eventually render them obsolete. However, beyond these relatively surface-level points, this deal is significant for the following reasons: 1. Only a handful of players have successfully achieved commercial penetration at scale There are around 100 advanced wound care CTPs available in the US, which makes up roughly half of the global AWC market overall, and the overwhelming majority of AWC CTPs. However, relatively few players have managed to successfully take this AWC category from concept to successful commercialization in the years since wound care has been on the map with specialized care settings and reimbursement. Indeed, various platforms based on everything from dehydrated porcine, bovine, ovine, and equine (pig, cattle, sheep, and horse) tissues, to autologous cells, cell culture banks, and human cadaver skin, to various amniotic and placental tissues, to collagen derived from bio-engineered plants, to bioactive glass and other synthetic materials have all been shown to contribute to healing in complex wounds and burns. However, of these ~100 products / platforms, only a handful of companies have achieved significant commercial traction to date (some of these companies have multiple AWC CTP products in their portfolios): Organogenesis Smith+Nephew (portfolios acquired from Healthpoint and Osiris Therapeutics) MiMedx Integra Life Sciences Kerecis A few others could be added, depending on the thresholds considered, such as: Convatec (via its acquisition of Triad Life Sciences in 2022) Medline Life Net Health (acquired the combined Bioventus-Misonix-Sol Systems wound portfolio earlier this year) MTF Biologics PolyNovo So out of ~100 technologies, only about ~5-10 have significant commercial traction. Of these, Kerecis and its fish-derived Omega3 platform has been the fastest growing company in this segment for multiple years. 2. International presence + viability Of the CTP companies mentioned above, most of them have virtually no presence outside of the US (OUS), and/or their OUS focus is on a different part of their business (i.e. not AWC / burn care or CTPs). Again, almost the entirety of wound care CTP usage today is in the US. When you attend US wound care conferences, the CTP companies’ booths are among the largest, busiest, and most elaborate in the exhibition hall (and a large proportion of their booth’s footprint if they have multiple product lines). Yet if you attend the increasing number of international wound care conferences (as we do), most of the same companies listed above are nowhere to be found–or perhaps just a small brochure or poster in the corner. Even large multinationals like Smith+Nephew may have a major presence or sponsorship, but they are unlikely to make their CTPs a major commercial focus, in many cases not even bothering to register the products overseas. I won’t go into details here of the many reasons for this, but suffice it to say that they include: Reimbursement / willingness to pay out of pocket Market and stakeholder awareness: of advanced wound care overall, and specifically of CTP use cases for wounds and burns Regulatory, sourcing, logistical, and cultural challenges, for example: some markets require human tissue products to be sourced from local populations, or to undergo a level of material safety processing/testing (ex: heat) that offsets their clinical effectiveness or proper and timely shipping + storage of such products becomes too complex or costly. Sources of cells / tissues may not meet local cultural or religious guidelines However, Kerecis in recent years has been increasingly present in the global wound care markets. Do they make up the majority of their revenues? Certainly not. However, the platform’s pricing elasticity, regulatory, and sourcing characteristics, combined with increased awareness overall, solve many of these issues. As such, in recent years (even pre-Covid), it was not uncommon to see Kerecis–or one of their third party distributors–with a presence at burn and wound care industry conferences across EMEA, APAC, and LATAM. Kerecis also has some complementary, mostly consumer-focused, wound and skin products (that Coloplast can likely competently commercialize through their channels), as well as a pipeline of more complex surgical reconstruction and repair-focused products based on the Omega3 platform. However, the core of their business at the time of the deal is still their fish-derived lines of wound, surgery, and burn grafts. In short, not only was Kerecis the fastest-growing CTP firm in the US prior to Coloplast’s acquisition, but they also were uniquely able to demonstrate at least some initial traction in less traditional and emerging markets where wound care biologics and CTPs

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A figure showing the many clinical, operational, financial, and quality benefits of an advanced wound care program.

Are Advanced Wound Care and Management Services The Next Frontier in Asian (and Emerging Markets) Healthcare?

Advanced Wound Care Global, our vehicle for bringing advanced wound care to areas of the world where the need and opportunity are greatest, was recently invited by Asian Hospital & Healthcare Management to share our thoughts on the potential for advanced wound care in Asia. Here is a brief excerpt from the intro: Asia has developed some of the highest quality, patient-centric, cost-effective, and value-based medical services in the world. From specialty1 ophthalmology, cardiovascular, and orthopedic care, to organ transplants, plastic surgery, and dental procedures–excellent healthcare, the same or better than in the West, is available to locals and medical tourists alike. But access to one critical, fast-growing service line in particular is mostly untapped across Asia: Advanced wound care and management. Click here to continue reading the full article on the Asian Hospital & Healthcare Management website. Contact us to discuss wound care management services in areas of the world where the need and opportunity are greatest. Most importantly, don’t get hit with bad wound care business decisions.

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Bioventus-Misonix M&A: AWC Continues “Bleed” Into Adjacencies

Yesterday (29 Jul 2021), Bioventus and Misonix jointly announced an M&A. This deal is particularly significant in the advanced wound care (AWC) space for three reasons: The combined entity will be a “new” relatively large advanced wound care player (though similar to Misonix pre-deal, not necessarily with AWC as its sole focus). This is also part of a trend whereby companies (including mega-sized ones) have been realizing that to focus on wound healing is not only a huge opportunity, but also a space they may already be playing in without even being fully aware of it. M&A consolidation in the AWC space resumes, after an inorganic growth hibernation period, mostly related to Covid-19 uncertainty. I’ll end this post by highlighting the key questions that I think the combined Bioventus-Misonix entity will need to carefully consider, which will drive their success in AWC (if they choose to make that space a focus for their growth) in the years ahead. The potential creation of a new large AWC player? On yesterday’s joint conference call, Bioventus CEO Ken Reali highlighted the potential for cross-pollination between the customers and care settings of the respective companies. He also cited significant diversity and scale across a range of care settings, geographies, and therapeutic areas…with leading technologies and specialized sales forces, serving a $15B total addressable market across the hospital, ambulatory surgical center, and office care settings.” He also pointed to orthopedics, lower extremity, and neurosurgery as key focus areas that will be served by the combined entity, as well as the ability to service new customers and realize cost synergies. Bioventus’ core solutions and markets are largely focused on orthobiologics, and include HA (hyaluronic acid) for osteoarthrtitis, ultrasound bone growth / fracture treatment and rehab, non-pharmaceutical nerve pain relief, and others. Misonix has regenerative medicine cellular and tissue product (CTP) solutions for wound and related indications, with the traditional core of its portfolio being its neXus ultrasonic platform. neXus (the instrument attachments are BoneScalpel, SonicOne and SonaStar) is used across multiple surgical and wound indications–mostly cutting / removing bone, tumor, nonviable soft tissue, and other ortho-plastics needs. More recently, they also added Sequel for external fixation. On the joint call, Misonix CEO Stavros Vizirgianakis noted, “We believe we can enable new proprietary procedural solutions with the Bioventus portfolio,” and also spoke to the ability of Bioventus to accelerate Misonix’s international growth. Integra Lifesciences, Organogenesis, Smith & Nephew, and Wright Medical (acquired by Stryker in late 2020) are illustrative examples of firms who have in recent years begun to increasingly blur the lines between advanced wound care / tissue regeneration and orthobiologics / orthopaedic hardware / sports medicine. On this point, it is important to note: There exist differences in approach depending on whether the “core” of the company is embedded in AWC / tissue regeneration, branching out to the ortho / sports med world, as opposed to the other way around. Typically, such companies still maintain separate commercial teams–in many cases all the way up to the senior management level, highlighting how tricky it can be to leverage wound care and ortho-plastics / foot and ankle call point synergies without neglecting the vast number of other specialties and decision makers involved in wound healing. These include: internal medicine, endocrinology, vascular, and nursing–as well as the often neglected yet critical administrative / managerial decision makers that are responsible for everything from clinical outcomes management, to clinical-operational flow, to reimbursement, to staffing / competencies, and in many cases full P&L responsibility of the program. The most successful companies who leverage AWC / tissue regeneration competencies to drive ortho-plastics / ortho-biologics results (and vice versa) have developed competencies and allocated resources to address all of the above. “The ‘New’ Bioventus” as presented on yesterday’s call is below: While Misonix had been organized by surgical (~54% of revenue) and wound (~46% of revenue) divisions, the combined entity will be structured as follows: Pain Treatments: Comprised of Bioventus and Bioness (acquired in Mar 2021) existing product lines Restorative Therapies: Biovenuts and Bioness bone rehab, together with Misonix soft tissue debridement and CTP portfolio; This is where wound care will sit as well. Surgical Solutions: Bioventus bone grafting products, together with Misonix’s bone cutting solutions, as well as the the Misonix neXus console / control unit itself. Broadly speaking, the proposed new structure makes sense. Indeed, Bioventus’ primary objective is and should be to maximize their stakeholder value and results overall–not necessarily to become a top global wound care player. Yet with their expected $170M 2021 revenue within the combined Restorative Therapies business unit, that is a non-trivial part of the AWC market–even if they expect it to make up just 34% of their total 2021 revenue. Should AWC become a priority, it may benefit from additional refocus and structuring, together with any future inorganic growth ambitions. But for an initial post-deal structure, it indeed strikes a reasonable balance between wound care and the more traditional segments. Trend: Medtech firms “bleeding” into wound care, whether intentionally or unintentionally We need to appreciate that most companies miscalculate–or perhaps it’s more fair to use the term “oversimplify” the AWC medtech market. Depending on the source, you may see the TAM (total addressable market) for AWC listed in the $2 to $50B range. Generally speaking, I think $5 to 15B is about right, but this really depends on the specific context and analysis being considered. But to be clear: Any company involved in the creation, resection, repair, implant, infection management, perfusion, protection, stimulation, closure, and/or support of most tissue types, is to some extent involved in the business of wound healing. Whether resecting a tumor, performing reconstructive surgery, postpartum care, or placing a stoma, orthopaedic fixator, or vascular access port, when clinicians and medtech solutions “touch” (physically or figuratively) one or more of the phases of healing, they are intentionally or unintentionally involved int he advanced wound care space. If you’re looking to further deepen your understanding of this point, It’s covered in

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What We’ve Been up to in 2018 Q3 – Q4 and What It Means for the Global Wound Care Business Outlook

What We’ve Been up to in 2018 Q3 – Q4 and What It Means for the Global Wound Care Business Outlook A tour around the wound care world The past few months of 2018 have been quite packed and exciting for us at Diligence Wound Care Global. We wanted to share some of what we’ve been doing and learning during Q3 and so far in Q4 this year (while keeping in mind that most details of our business activities are highly confidential). Most importantly, we’ll highlight relevant insights along the way which will help empower you to be confident in your wound care business decisions. Kicking it off with education, networking, investment, and innovation in the US… Following an educational yet fun conference during The American Podiatric Medical Association (APMA)‘s national meeting in Washington, DC, we were tapped for multiple wound care due diligence cycles throughout the mid and late summer. In between, we found time to contribute to the September edition of Today’s Wound Clinic. We also conducted strategic advisory sessions with a relatively new client in the Midwestern US to assess and consult on their commercial strategy and next moves. With the availability of so many different wound care products for treating etiologies and symptoms, a new-to-wound-care, Asian client who once attended a conference with me joked, “It’s like a night market! So many options!” He may have been new to wound care, but his assessment was spot on. Even for experienced wound care clinicians, the options can seem overwhelming. But with the right strategy, positioning, and execution, it’s possible for a strong product to rise above all the noise. Taking that approach, we’re excited to be working with this new American innovation to get it in the hands of as many clinicians–and in the wounds of as many patients–who might benefit from it. …to Europe for a new perspective on an old problem… When we conduct portfolio assessments, advisory sessions, and workshops for our corporate strategy and business development clients, we stress that the focus should be on solving stakeholders’ clinical, operational, and financial needs, as opposed to purely filling gaps based on traditional product categories. It was with this principle in mind that we traveled to Europe to meet with a very early stage startup client in the university incubator/fellowship environment. One of the things that is most exciting about the need their new solution is addressing is that it helps to solve one of the areas of wound care delivery that has not received much attention or innovation for many years. As we work with them to hone in their development and commercialization life cycles around the true market needs, we can tell that by the time it’s ready for launch, it will be very much on point. We’re looking forward to sharing more details in the coming months. …then Eastward to Asia… Those who know and follow Diligence Wound Care Global’s work are aware that aside from North America and Europe, we are heavily involved in the evolution of wound care across Asia Pacific, with engagements throughout the region at any given time. Q3 (and Q4) this year was (and will be) no different: Internal and external stakeholder competency development We began this leg of the trip by supporting a well-respected, MNC industry client in building and developing their wound care competencies across multiple markets. This included the creation of best-in-class training assets, face-to-face facilitation of “zero to hero” wound care ecosystem training, and interactive role playing and similar exercises. We delivered this for both the sales and marketing teams (field and corporate), as well as the key support roles involved with each market such as medical affairs, training, and regional leadership. Yet our planning and groundwork activities do not end there. At the same time as we’re delivering value for internal stakeholders, this particular client has the foresight to also drive value for its external stakeholders. In other words, beyond simply selling the “features and benefits” of its products (which are great ones), our role is to support our client in “raising the bar” on wound care services management and delivery throughout the region. Important everywhere, but especially in this part of the world, the goal of creating long-term relationships and partnerships has been at the core of their success. To further that goal, we met with C-Suite executives, physicians/surgeons, and nursing staff in every market we visited. The internal stakeholders we trained each morning and afternoon duly benefited from joining for the external stakeholder meetings in the evenings–via both a deeper appreciation of their customers’ ecosystem and pain points, as well as the stronger rapport that goes along with that. Although unrelated to the above engagement, this vision of furthering the clinical-operational-financial delivery of wound care was also articulated to us during a recent meeting with the CEO of a leading global product firm. In fact, from where we sit, most of the top-performing wound care executives are viewing the future of the industry through this trend (though the road maps they are each developing are unique). These and other concepts for wound care global success will be presented and discussed in greater detail during our session at SAWC Fall 2018 (see below for details and a registration discount code). “Raising the bar” for wound care delivery One particular activity during this recent trip was especially memorable and instructive: Participating as faculty for The Philippine Orthopedic Wound Care and Diabetic Limb Society, which is the newest of 12 sub-specialty groups under The Philippine Orthopaedic Association (other sub-groups include sports medicine, spine, trauma, hand, shoulder, and pediatric ortho). What I experienced there left me with a sense of optimism about the future of wound care in this part of the world: From the effectively delivered presentations from interdisciplinary perspectives, to the motivation of attendees to setup their own wound care centers, the prospects are indeed bright. …and full circle back to the United States (around the globe). By mid-September, some crucial M&A scouting, exciting

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Urgo’s M&A of SteadMed: Here’s What You Need to Know

There has just been another significant wound care acquisition. French MNC Urgo Medical just announced the M&A of Texas-based SteadMed Medical. The resulting entity will be known as Urgo Medical North America. If you’re an advanced wound care stakeholder inside North America, you may be wondering, “Who is Urgo Medical?” If you’re an advanced wound care stakeholder outside North America, you may be wondering, “Who is SteadMed?” Most importantly, the executives and investors reading this are likely wondering, “How will this affect the market?” Who is URGO Medical? Attend almost any major wound care or surgical conference in EMEA, APAC, and even LATAM in recent years, and you’re likely to have seen an Urgo booth side-by-side with other major international players such as Mölnylcke, Convatec, Smith & Nephew, 3M, Acelity, Coloplast, Medline, Integra LifeSciences, BSN Medical (Essity), HARTMANN, L&R, and B. Braun (and depending on the market, larger booths than the others). Likewise, Urgo products can frequently be found in healthcare facilities and pharmacies across those markets: Many–perhaps most–wound care companies have their own “algorithms” or slogans (the difference between the two is often blurred) which typically map out to corresponding products in their portfolio. Urgo is no different, with their, “Prepare–>Clean–>Accelerate–>Close” marketing, correlated to product packaging: Specifically, Urgo manufactures and distributes about 40 advanced wound dressings, prevention, compression, and related products across most of the major categories, including: UrgoClean and UrgoClean Ag UrgoStart UrgoTul UrgoCell UrgoK2 (compression) TRIACT technology (had been licensed by Hollister and used in the Restore brand) Multiple other tapes, films, gels, etc. Notably, Urgo is not currently involved in the “active healing” segment: As of this writing, they have no NPWT, allografts, oxygen enhancers, etc. Whether they introduce one or more active healing “anchor products” into their portfolio remains to be seen. In Europe particularly, they are considered one of the market share leaders across certain care sites (France, where they are headquartered, being one of the larger European wound care markets). Who is SteadMed Medical? SteadMed is a Texas-based wound and skin care product distributor who has over the years become a major player in the US, with operations in Canada and Mexico as well. As they have over 40 employees and a presence in virtually all major US regions, in addition to their activities in Canada and Mexico, we at Diligence Wound Care Global have sometimes referred to them as “the most significant North American distributor who is not also a principal” (in other words, they license products developed and/or produced by other companies for sale within a specific geography). SteadMed has historically not attempted to develop a full-line of advanced wound products (foams, alginates, collagens, allografts/xenografts, etc.), instead focusing on certain niche products. They especially established themselves with Drawtex (hydroconductive dressings), and a few years ago launched Vashe (hypochlorous acid cleanser and wipes), which they quickly grew to the overwhelmingly top US cleanser by market share–across a diverse range of clinical care sites. For several years, they distributed XPansion, a single-use split thickness skin grafting kit, which they recently relinquished to the Maryland-based acellular matrix producer, ACell. And just this summer, they announced that they are taking over distribution of Hollister’s Restore and TRIACT lines since the announced wound care divestment. The impact of the Urgo acquisition on distribution of Restore and TRIACT is to be seen, as there is significant overlap between those brands. Following are the brands distributed by SteadMed pre-acquisition: Drawtex hydroconductive dressings Vashe hypochlorous acid cleanser and wipes Resta moisturizer and antimicrobial moisturizer TRIACT and Restore (some of which were actually tech licensed from URGO) XPansion autografting kit distribution passed on to ACell earlier this year Clearly, there is some overlap between some of the the Urgo and SteadMed / Restore product lines. However, this is a bit misleading, since Restore TRIACT products were actually leveraging an Urgo technology. So in essence, the Restore brand’s transition to SteadMed was more of a stepping stone than anything else. Urgo products will need to move through the FDA approval process, inventory must make its way into the supply chain, and the sales and marketing teams will need to understand the new products and how they fit in with the existing ones, too. This will all need to be sorted out for the rest of 2018 and into 2019. As a result, the portfolio is likely to be fluid during the integration period, with changes to be expected. SteadMed Founder, President, & CEO Michael Steadman will continue to lead the firm, and its main office will remain in the Dallas-Forth Worth, Texas area. Why is this significant? Although Urgo is a major global wound care player, they were clearly latecomers to the largest market in the world, The United States. US wound care sales channels can be especially difficult to navigate, and customer intimacy has traditionally been a key success factor for firms in this space. Beyond the unique sales and marketing considerations, the healthcare payment and reimbursement systems in the US are complex and evolving. Finally, the regulatory landscape can be challenging, though for Urgo’s current portfolio this should not present much of a challenge (though it may be for future products in their R&D and M&A pipelines). For Urgo, the acquisition of SteadMed allows them to play “catch-up” in the US. They’re gaining access to a relatively sizable and competent sales force with existing relationships and channels spanning advanced wound centers, physician offices, the operating room, inpatient wards, home healthcare, and skilled nursing facilities. On the one hand, breaking into new accounts with primary and secondary wound dressings is difficult. On the other hand, adding them to the “bag” of existing sales teams (and their existing relationships) can exponentially decrease cost of sales and boost sales force effectiveness and ROI. Recently, there have been trends of renegotiation and consolidation of contracts as well as increased movement towards alliances and consortia, which we have analyzed as well. Most importantly, just like with Integra’s acquisition of DermaSciences, this news means the landscape has gotten all the more

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Why Mölnlycke’s Acquisition of SastoMed Is a Big Deal

What happened? Today (2018.07.02), Mölnlycke Health Care announced its acquisition of SastoMed GmbH. Mölnlycke is of course known in the industry as a top global wound care (also wound prevention and surgical) product brand, particularly in Europe and the United States. SastoMed, a much smaller German firm, was a subsidiary of SanderStrothmann GmbH, a company which assesses, formulates, and produces cosmetic, skin, and medical products for hundreds of well-known global brands. SastoMed has developed and commercialized two wound care products at the heart of this acquisition: Granulox, a hemoglobin spray that delivers oxygen from the surrounding air into to the wound bed via facilitated diffusion (see this article for a video + discussion). Granudacyn, a hypochlorous wound irrigation solution for cleaning, moistening, and rinsing of acute, chronic, and contaminated wounds, and 1st and 2nd degree burns. Why is it important? There have been multiple wound care M&A and JV deals in recent history, including: Integra’s acquisition of Derma Sciences Acelity’s acquisition of Crawford Healthcare The formation of Appulse as a JV by the principals of Hollister’s divested key wound care products (Hydrofera Blue and Endoform) …and several others (with more expected!) Yet despite the volume of wound care activity, this deal is unique and significant for a variety of reasons: Innovation Significance Both Granulox and Granudacyn are innovative products beyond what we normally see in the industry. Let’s briefly recap why: Granulox There exist dozens of negative pressure wound therapy (NPWT) devices, over 80 allografts, and hundreds of dressings and pressure offloading solutions. Clearly, not all wound care products in each category have the same levels of efficacy, quality, and cost-effectiveness, yet as a whole, these categories are clearly becoming increasingly saturated and sensitive to reimbursement and other economic factors. But what about solutions for delivering oxygen to hypoxic wounds (most chronic wounds are hypoxic)? Historically, the only options for these patients have been: Vascular procedures (bypass surgery, stents, etc.): These overcome blood vessel blockages and are important procedures not going away anytime soon. Indeed, the other options listed below are not substitutes for improving the underlying circulation addressed by vascular procedures. However, such procedures and are both invasive and expensive, so not every patient is a good candidate. Revascularization benefits also apply primarily to the large blood vessels, often having less impact on microvasculature, which is a key challenge for many types of chronic wounds (such as diabetic ulcers and pressure ulcers). Systemic medications (blood thinners, diuretics, etc.): These are and will continue to have important roles in cardio-vascular management (circulation, edema management, etc.), and they aim to help balance negative impacts of certain co-morbidities. Still, many chronic wounds will require additional oxygen to optimize healing–especially at the wound surface and surrounding microvasculature. Hyperbaric oxygen therapy (HBOT): Thousands of patients receive and benefit from this treatment daily (the vast majority are in the US). However, it requires proper functioning of the patient’s blood vessels in order to be effective (and to be approved for reimbursement in the US), and there is a steep drop-off in perfusion between treatments. The high cost, long treatment time (~2-3 hours per day for ~20-60 days), contraindications, low availability (outside of the US), limited indication coverage, and recently heightened regulatory scrutiny and cost pressures mean that while HBOT is and will continue to be an important wound care tool, it is not enough to meet the large and growing need for wound oxygenation solutions. Topical oxygen devices (besides Granulox): The growth of this category in recent years underscores both the increasing awareness and need for tools to combat wound bed hypoxia. On the other hand, the existing alternatives have the following limitations: Difficulty overcoming the exudate (moisture) barrier: A thin layer of just 0.1mm of moisture, such as is found on most wounds and between the cells, blocks 99% of oxygen diffusion from the air to enter the wound bed (hemoglobin molecules such as in Granulox can break that barrier, which is why the mechanism of action is referred to as “facilitated diffusion [of oxygen]”). Incompatibility with many other treatments: Application of most topical oxygen products limits clinicians’ choices for which dressings can go on top (often, the dressing is part of the delivery mechanism). Granulox can be used together with most standard and advanced wound care products. Granulox is the only hemoglobin-derived oxygen transfer product for wound care. But most importantly, Granulox complements all of the above treatment options. So it does not disrupt clinical practice, but rather is a readily available adjunct treatment to initiate oxygen delivery which overcomes many of the hurdles making wound oxygenation such a challenge. The ~100% reduction in slough buildup and ~50% reduction in pain for Granulox patients across all wound types are two more underserved clinical needs (in addition to the increased oxygenation / 50% faster healing) that make this a very innovative development. Granudacyn Natural and pH balanced: Hypochlorous Acid (HOCl) is produced by the human body as part of the immune system, and innocuously breaks down into water and a salt. As such, Granudacyn can be used inside body cavities and will not impact cellular tissue products (CTPs), which makes it complementary to Mölnlycke’s surgical business in addition to wound care. The importance of balanced pH in wound healing is also well documented. Excellent stability: Many otherwise high potential wound cleansers suffer from a relatively short shelf life. Granudacyn can be stored for a minimum of 18 months, which is plenty for any typical wound care setting. Strategic Significance Prior to this acquisition, the focus of Mölnlycke’s wound care business had primarily been on prevention (offloading, reduction of wound/periwound trauma and irritation) and passive healing (moisture balance, infection management, etc.). Granudacyn of course strengthens their wound management (and surgical) portfolio(s), but with Granulox, it can be said that Mölnlycke has now established a significant position in the field of active healing. Stated differently: Pre-acquisition Mölnlycke had products to optimize the wound bed and surrounding area via the body’s own healing process. Post-acquisition Mölnlycke can now offer its customers active acceleration of tissue regeneration,

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Wound Care in Malaysia and The Emerging Markets: Interview w/ Dr. Mogan Naidu (2 of 2) [Video]

Back for Part 2… Wound care executives, investors, and specialists from all over the world enjoyed Part 1 of our visit with Dr. Mogan Naidu of MediAsia Advance Wound Care & Tissue Repair Center in Penang, in northern Malaysia. I have especially enjoyed witnessing an increased number of our colleagues and clients actively commenting and contributing directly to Dr. Mogan’s LinkedIn discussions since then. At the the recent SAWC Spring and EWMA 2018 conferences, both new and old acquaintances pulled me aside to express appreciation for exposing them to wound care in other settings, or to ask how they might become involved in emerging markets wound care. The conversation turns to wound care services and future plans… Whereas Part 1 of our discussion focused more on wound care product price points, adoption, and usage in Malaysia (and developing markets in general), in Part 2 we shifted to the wound care services ecosystem, the patient journey, challenges, telemedicine / mHealth (mobile health), and investment opportunities. Dr. Mogan also shared with me his team’s plan for a private wound care hospital to treat patients from Malaysia and the surrounding region (Indonesia, The Philippines, and others). I even got a chance to tour the site (the land has already been purchased), and they took me on a buggy tour of the grounds and surrounding village. Although the focus of our conversation was wound care in Malaysia, many of the needs articulated also exist across the emerging–and even developed markets. As such, we are actively synthesizing new business models for global advanced wound care, which is an area of great interest to our stakeholders–wound care product, service, digital health, and investment professionals alike. Topics we discussed included: Although advanced wound care in developing markets does not yet have the same level of awareness or infrastructure as in developed markets (which is not very high, either), the volumes at a specialty care setting such as MediAsia (and other wound centers we have visited in this part of the world) is on par with the top 10 percent of US-based wound care centers. In addition to the challenges faced by wound care services providers globally (clinician education, patient compliance, lack of resources, etc.), Dr. Mogan explains how many patients turn first to traditional healers can further delay the time until a patient arrives to a specialty wound care center (if at all), and will likely use up patients’ funds that otherwise might be used for specialized wound care. This is consistent with what we have seen in our wound care work across many other markets, including Latin America, Africa, and across Asia (and even among some medical tourists and immigrants to the US). We also discussed this phenomenon in our previous article, The Case for Emerging Market Wound Care. Due to the distances traveled for wound care, as well as the international medical tourism component, there are opportunities for telemedicine and mHealth that are equally if not more attractive than those in the developed markets (indeed, we have been deeply involved in many such initiatives at Diligence Wound Care Global). Wound care patients (international and domestic) are prepared to spend cash when they come to receive treatment, which gives providers some more flexibility in terms of the therapies and payment models incorporated. Watch the interview (closed captions available): Become a keener wound care executive. Are you currently considering investing in, launching, or expanding a wound care business in the emerging markets? Get in touch to discuss how we might empower you to reach your goals.

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Key takeaways from the 2018 European Wound Management Association Conference (EWMA 2018)

EWMA 2018 (9-11 May) has just come to a close in beautiful Krakow, Poland. This annual global wound care conference is wonderful, bridging scientific, clinical, and industry stakeholders from around the world (most other annual wound conferences tend to draw from relatively regional audiences). Here are four key takeaways: 1. Less influence from reimbursement dictates With a global audience, the relative importance of product reimbursement diminishes (but doesn’t disappear), and there is a higher emphasis on product innovation, practicality, and cost-benefit trade offs. Clinicians visiting the exhibition booths were interested in many less-conventional treatment options than we typically see with those focused on North American and Western European settings. For example, I observed an in depth discussion between a group of Indian clinicians and a vendor at the booth of a new technology that is struggling with reimbursement in the developed markets. Since all of their patients pay cash for advanced wound care–whether a cleanser, advanced dressing, NPWT, allograft, or this particular new therapy–the value proposition to these clinicians was on a relatively level playing field with other treatment options, and they therefore demonstrated considerable interest. Even Poland (where the conference was hosted this year) is an emerging market, with many similar cost considerations. Accordingly, there was an abundance of Polish wound care providers and distributors attending, and I spent a lot of time learning from their discussions and which clinical, operational, and financial challenges and solutions had their attention. I often find that observing interactions between clinicians and vendors yields more valuable insights than discussing with each party separately. 2. What’s on industry’s mind… For those of us who know senior management and investors in the industry, it’s always enlightening to pay attention to which sessions and booths they show up to (and their level of interest / engagement). When one looks around the room and sees key decision makers from several major companies attending the same session, it reveals an implied interest in particular clinical solutions, therapies, or companies. This was apparent in Krakow this year. Wound care executives were also eager to learn how to better commercialize existing products internationally, especially in the emerging markets–with a renewed openness to new business models. 3. Creative approaches to existing and new technologies Dr. Huei-chun (Josephine) Tang, Chief of both Plastic Surgery and Wound Care at An-Nan Hospital in Tainan, Taiwan presented a very compelling e-poster series of patients with PAOD (peripheral arterial occlusive disease) who received KCI’s VAC NPWT at the regular -125 mmHg pressure setting after revascularization. In my experience, some wound care providers I worked with are concerned about using NPWT in PAOD patients–and that’s quite understandable, as ensuring adequate oxygenation is a top clinical goal and many worry that the various NPWT components or mechanics might interfere with local perfusion or create minor skin injuries that can deteriorate into complex wounds. But as Dr. Tang demonstrated in her series, together with revascularization, debridement, and especially an emphasis on good multidisciplinary communication among the care team, certain patients with arterial ulcer diagnoses may still benefit from NPWT at the normal pressure setting. None of the patients in the series had a major amputation after receiving the therapy. Dr. Colin Krueger, Head of Surgery and Robotic Surgery and at Immanuel Klinik in Berlin, Germany discussed a novel use for hypochlorous acid (Granudacyn). While it’s most frequently used as a wound cleanser solution, he has also been applying it during cases of necrotizing pancreatitis. Since the solution turns into water and salt, he creatively uses it as a lavage during laparoscopic surgery, and in doing so has seen the mortality rate for his patients drop from around 30% to 0%. He walked the audience through a recent, complex case, including the diagnostic, medical, and surgical approach taken to achieve the positive outcome. The audience was impressed by the innovative yet sensible use of the product beyond just open wounds. Likewise, Dr. Borripatara Wongpratchum (“Dr. B”), plastic surgeon at World Medical Center in Bangkok, Thailand impressed the audience by demonstrating how aggressively yet holistically treating necrotic toes in a very complex patient, he was able to regenerate virtually all of the tissue! The audience was in awe, because even “top” wound care clinicians would accept as fact that the necrotic regions of the toes must be totally amputated (hopefully addressing the underlying causes in parallel), with the actual wound care only beginning post-amputation. Yet with debridement, moist dressings and NPWT, application of hemoglobin spray (Granulox), IV antibiotics, offloading, PRPs, and an acellular dermal matrix, Dr. B and his team were able to “resurrect” the dead toes, eliminating the need for amputation. I didn’t believe it until I saw it–so for those who missed the session, I’ll let the photos speak for themselves: 4. The Innovation Symposium At Alira Health’s Advanced Wound Care Innovation Symposium, one of my favorites among all global wound care conferences, all four companies participating presented innovative solutions to key wound care challenges–from practical usage to gene editing and other novel microbiological approaches. After the presentations, a round of questioning by the judges, and deliberations, the €20,000 first place prize was awarded to SastoMed, who presented their Granulox hemoglobin spray (used on over 65,000 patients in over 40 countries, but not yet registered in the US). If you missed Alira Health’s EWMA session, you can get the flavor of the first-place winner from my interview with SastoMed Founder and CEO Michael Sander at SAWC Fall 2017 below: We’re already looking forward to EWMA 2019 (5-7 June, 2019…not next month!), which will be held in Gothenburg, Sweden.

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Wound Care in Malaysia and The Emerging Markets: Interview w/ Dr. Mogan Naidu (1 of 2) [Video]

Do you feel confident in your command of global wound care? This video may cause you to reconsider… Much of our time at Diligence Wound Care Global is spent with wound care product and services CEOs, CMOs, CCOs, VPs, directors, and managers for global strategy, busdev, marketing, finance, R&D, and other functions related to commercial planning and execution. More often than not, these individuals are based in a corporate office in an established market, yet have responsibility for large geographies such as APAC, EMEA, LATAM, or even titles which include words like, “emerging markets” or “global.” True, they may indeed visit these markets, such as to attend a company-sponsored event, industry conference, or to meet with a distributor. And true, they’re typically sharp, experienced, accomplished executives from across the scientific, biomedical, healthcare, and commercial spectrum. But do they truly understand where and how their wound care solutions are evaluated and used? Unfortunately, if they have not really invested the time and resources on the ground (in actual patient care settings), the answer is usually, “no.” The opportunities and challenges for emerging market wound care are well documented. Increasingly, both clinicians and industry have been gaining interest in these regions. I’ve already been invited to speak on the topic on Nov 3rd, 2018 at SAWC Fall in Las Vegas, and will present at events in the developing markets themselves between now and then. Yet overall, most outside stakeholders are still lacking a true grasp of how to offer solutions to wound care needs in such regions. I recently visited with Dr. Mogan Naidu, a very passionate wound care provider, head of MediAsia, and founding chairman of The Malaysian Diabetic Limb Salvaging Society (MDLSS). Part 1 (below) focuses on wound care products, and Part 2 (to be released later) focuses on wound care services, including a new private wound care hospital planned for the region. Although Malaysia is just one of many emerging markets, and each market is unique, many of the themes and lessons can be applied to other regions, as well. Here’s the interview (closed captions available): Some of my key takeaways from the discussion: Despite all the talk about moving to “value based health care” in the developed markets, in many ways, Dr. Mogan and his team have already implemented a version of it: The patients are directly involved in the cost of care, but the pricing is determined by the severity level of the wound (which they divide into zones: red, yellow, green). Rather than charge the patient for each piece of product or procedure, they bill based on zones, which in many ways better aligns the incentives of the parties than either traditional fee-for-service or socialized public health care. Although resources in this environment are lacking, there is indeed access to most categories of advanced wound care products (foams, alginates, etc.). This is consistent with what I have seen across most emerging markets, especially in APAC. Not only based on the interview, but from the entire day I spent with the MediAsia team at their clinic, they do an excellent job of addressing holistic factors in patient care: Diabetes management, cardio-pulmonary status, kidney function, offloading, nutrition, and even the psychosocial status of the patient. They give more attention to these critical healing factors than literally 95%+ of wound care facilities that I have visited–and that includes countless facilities across North America, EMEA, LATAM, and APAC. True, there are certain technologies and specialists their patients cannot easily access compared to markets with more developed healthcare infrastructure: vascular imaging/interventions, HBOT, and others can be problematic–especially for financially challenged patients such as those discussed above. However, many of these are precisely the scenarios and opportunities that innovations such as hemoglobin oxygenizers, disposable NPWT, mobile assessment and analytics platforms, and many more are able to address, resulting in potentially fast adoption in such regions, where leapfrogging entire generations of technology is already the norm. Become a keener wound care executive. Are you currently considering investing in, launching, or expanding a wound care business in the emerging markets? Get in touch to discuss how we might empower you to reach your goals.

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The Case for Emerging Market Wound Care

Demographic and economic trends, combined with the sheer magnitude of the unmet needs in the emerging markets represents the largest untapped opportunity for advanced wound care products and services globally. Introduction As the business of advanced wound care in North America and Western Europe has boomed for the past two decades, most major wound care product and services firms, which are overwhelmingly based in those markets, have made comparatively little investment in the developing world. To be clear, the complex wound epidemic in the developed world is far from over, and it will remain a high growth healthcare opportunity for years to come. Yet trends such as new market entrants, insurance consolidation, increasingly cumbersome documentation requirements, and the commoditization and market saturation of certain product types, combined with overall pressures to cut healthcare costs, have at a minimum impacted per-unit/per-patient profitability in the West, even as the total market size continues to soar. Emphasis on prevention, bundled payments, and other risk-sharing trends on the horizon will further challenge the lucrativeness of wound care in the developed markets. At the same time, aging populations, wound-related comorbidities, and increasing purchasing power and overarching demand for advanced healthcare in the emerging and frontier markets have created tremendous opportunities for specialized wound care in these regions. Of course, unique challenges and obstacles exist as well. Still, demographic and economic trends, combined with the sheer magnitude of the unmet needs in the emerging markets represents the largest untapped opportunity for advanced wound care products and services globally. In line with this, greater than 50% of our 2016 engagements and related advisory at Diligence Wound Care Global involved the emerging and frontier markets. This trend has continued into 2017 as well. In this article, we will explore: The current state of advanced wound care across the developing world. Global demographic and financial data, cultural-religious considerations, and real-world, on-the-ground international wound care experience and information I have gathered from my wound care colleagues and during my extensive travels. The reader will gain a keener appreciation of evolving opportunities for wound care (and other healthcare) executives, specialists, startups, and investors. Why look to the emerging markets for wound care? With between 6 to 7 million complex wounds, estimated market sizes of between USD $8bil to $15bil for advanced wound care products, and $40bil to $60bil for wound management-related services in the United States alone (depending on which specific wound etiologies, products, and services are included), why should executives and investors even consider placing valuable resources in the emerging and frontier markets? The following figures provide an answer: 1. Population size and distribution 2. Overweight, obesity, and other malnutrition As if overweight and obesity were not enough of a challenge, due to evolving demographic, economic, and cultural factors affecting diets (e.g. urbanization, a shift to processed foods, etc.), many emerging markets have simultaneously overweight/obese yet undernourished populations. The lack of protein, micro-nutrients, and other consequences–even as average BMIs soar–is yet another comorbidity associated with delayed wound healing. This phenomena is well-documented in the 2016 World Bank paper, The Double Burden of Malnutrition in East Asia and the Pacific: Evidence and Lessons for a Multisectoral Response. 3. Diabetes 4. Kidney disease 5. Smoking Despite an overall reduction in smoking across the developed markets, 80 percent of the world’s 1 billion smokers are in low and middle income countries (WHO), with double-digit increases in smoking rates across dozens of developing nations. Indonesia alone is home to 70 million smokers, a nearly 30 percent increase over 15 years. During the same period, the percentage of Jordanian smokers rose from 25 to 40 percent. Similarly, rates in Bahrain rose from 12 percent to almost 30 percent, and in Cameroon from 7 percent to 22 percent. The CDC reports that overall, smoking in the developing world is increasing at a rate of 3.4 percent annually. As anyone who has worked in wound care services knows, smoking (and the resulting cardiovascular and pulmonary complications) is one of the most difficult clinical challenges faced by the wound care provider. While for most patients (in theory), wound bed moisture can be balanced, microbial counts (infections) reduced, albumin/pre-albumin levels raised, and blood glucose controlled, the damage that years of smoking does to the body’s ability to deliver oxygen required by healing tissue is extremely difficult to reverse in both the short and long terms. Noninvasive therapies to improve tissue perfusion are only effective if there is a certain amount of underlying vascularization. Yet invasive revascularization procedures are both medically complex and financially costly. In this sense, the colossal, growing rates of smoking in many of the world’s developing nations simultaneously contributes to both the clinical challenges and business opportunities for advanced wound care in these markets. The connection to chronic wounds Thanks to firms such as Net Health, it is possible to access real-time data comparing the effects of both individual and multiple comorbidities on wound healing. Such data is sourced from hundreds of thousands of wound outcomes across hundreds of US wound care centers. The following figures show that the chronic diseases and related factors that plague the developing markets are precisely the ones that have the most profound impacts on delayed wound healing: The comorbidities found to have the most acute impacts on patients in the US are also the most prevalent and fastest growing conditions in the emerging markets. Clearly, from the perspectives of both absolute and relative population sizes, as well as factors associated with non-healing wounds, the current and future needs in the developing world are immense. As we will see, despite these figures, specialized wound care in these regions has traditionally been the focus of disproportionately low levels of investment. We will dive deeper into just how massive the opportunities are in future articles and posts. Wound care products and services: “Chicken-and-egg?” Which should come first–emerging market wound care products, or services? Having been first introduced to advanced wound care in the developed markets (as a director for a leading wound management firm), I had always been exposed to a plethora

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Assessing and selecting medical device distributors in the emerging markets requires a unique approach.

Assessing and Selecting Wound Care Distributors in the Emerging and Frontier Markets

The following is an excerpt from the original article, published in MedTech Intelligence on 3 Apr 2017: The attractive opportunities for medtech product firms to drive growth in the emerging and frontier markets are well-known: Rising disposable incomes and an expanding middle class, aging populations, and chronic disease prevalence (diabetes, cancer, obesity, hypertension, etc.), combined with increased access to healthcare diagnostics and services, all feed demand for advanced medical technologies in those regions. However, despite the strong desire of firms to capitalize on these trends, the precise strategies and tactics to achieve their goals are elusive to most executives seeking to do so. In recent quarters, corporations seem just as likely to fall short of earnings goals due to missed targets in the emerging markets as they are due to slowdowns in the developed markets. Therefore, a key question that clients ask is: How might we quickly yet sustainably capture and grow our market share in the developing markets?… Click here to continue reading the full article… Also check out or sister company, Advanced Wound Care Global, which focuses on equipping and delivering advanced wound care services in the emerging markets.

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