Category: Global Wound Care

Rafael Mazuz recently sat down with Morgan Stanley's US Medtech Equity Managing Director, Patrick Wood, at their NYC global HQ to discuss some of the investment mistakes as well as high level trends and dynamics in the advanced wound care sector.

The MedTech Moment: Wound Care Expert Insights

Earlier this week, Diligence Wound Care Global’s Managing Director Rafael Mazuz visited Morgan Stanley’s Global HQ in NYC to spend some time with Morgan Stanley’s Managing Director of US MedTech Equity Research, the incredible Patrick Wood! Here’s a link to the podcast episode we recorded (12 min): The MedTech Moment – Ep. 6: Woundcare Expert Insights On this special episode of The MedTech Moment, Morgan Stanley’s Pat Wood is joined by Rafael Mazuz from Diligence Wound Care Global to talk about common analyst mistakes, trends, and competition in the Wound Care market. Specific and related companies discussed on this episode include: Solventum (formerly 3M Health Care / Acelity / KCI / Systagenix), Smith + Nephew, Coloplast, Convatec, Medline, Mölnlycke Health Care, and more. Are these the types of insights that make you more confident in your wound care business and investment decisions? Contact us to discuss the advanced wound care medtech, biotech, services, and investment opportunities. Most importantly, don’t get hit with bad wound care business decisions!

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Upcoming Wound Care Conferences & Events (UPDATED 28 March 2024)

Upcoming Wound Care and Related Conferences, Meetings, Exhibitions, & Industry Events There used to be a couple of solid online lists of wound care industry events that are no longer maintained. The current ones are either too US focused, ignore ecosystem conferences (ex: home care), and/or include meetings that are not very relevant, or in some cases of questionable reputation and value…so I decided to make my own! If I am attending / faculty / speaking / moderating a session, and have a discount code, I will put it in the Remarks section. Is there a wound care (or adjacent-yet-relevant) industry event that is relevant to our audience and not listed above? Interested in Wound Care Global’s Rafael Mazuz to attend as faculty, moderator, chairperson, pitch competition judge, or another capacity? If so, contact us, providing as much detail as possible.

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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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Henry Schein and Prism Medical Products Logos after Henry Schein's announcement of a majority stake M&A in Prism (6 Jan 2021)

Henry Schein Acquires Majority Stake in Prism Medical Products

Today (6 Jan 2021), Henry Schein, a top global medical, dental, and veterinary solutions provider / distributor with a global presence, announced its acquisition of a majority ownership position in Prism Medical Products, one of the top US DME (durable medical equipment) providers focused on shipping products to the home. Recent forays into this space by Organogenesis and other product-service hybrid moves, as well as expansion and increased activity from some major SNF wound care supply-services firms, make this one of the more dynamic (though less publicly discussed) growth areas in the AWC (advanced wound care) commercial ecosystem. With a nearly $10B market cap (at the time of this writing), Henry Schein is right up there with Cardinal Health, McKesson, Medline, Owens & Minor, etc. in terms of its distribution scale and presence, albeit focused on private medical, dental, and veterinary care customers in private practice as opposed to hospital, SNF, and other care settings. Traditionally, Henry Schein often focused on more generic / commodity medical products (often tending to be more specialized across dental). However, post deal, the company will now have a hand in a lot more distribution of wound, ostomy, and related specialty product lines. Following this deal, now virtually all of the major medical product distributors have a home healthcare DME presence: Cardinal – acquired AssuraMed (the parent company of Edgepark Medical Supplies) for $2.07B in 2013 McKesson – acquired Sterling Medical in 2006, with other relevant acquisitions (such as home infusion, etc.) in subsequent years Medline – acquired medical billing firm PFS in 2017 to bolster their existing DME business Owens & Minor – acquired Byram Health Care for $380M in 2017 Henry Schein – has now entered the space with this Prism deal For those less familiar with the intricacies of the wound care / DME space, Prism and firms like it typically act as a third party biller, submitting bills and supporting documentation directly to payers, while facilitating fulfillment of orders for wound care, ostomy, incontinence, breast pump, and other supplies. Most of the top global AWC and related (medical compression, etc.) brands are distributed by Prism Medical Products and similar firms, including 3M-KCI, ConvaTec, Coloplast, Medline, Smith & Nephew, and many more. There are also commercial incentives to build out and commercialize private label AWC brands within the DME space, with several firms doing so successfully. Although is not typically encountered in hospital-based settings (even outpatient ones), they are a massive force in freestanding private clinic settings, where a material proportion of advanced / chronic wounds are treated in the US and overseas. Not to mention…Guess which wound clinic type was the fastest growing in 2019-2020, and into 2021 and beyond?… We’d love to hear your take on this important wound care corporate M&A development. Or maybe you’re interested in discussing how product-service strategies can help you differentiate in this crowded space, and learn the best practices (and most dangerous mistakes to avoid). Contact us to discuss your unique wound care business situation. Most importantly, don’t get hit with bad wound care business decisions.

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A visualization of the reduction in weekly wound care clinic patient volumes in early 2020 vs. 2019

COVID-19: Preliminary Operational and Commercial Wound Care Insights

Advanced wound care’s position in the evolving COVID-19 landscape Global economies have been slammed by COVID-19 in the first part of the year. Some biomed sectors, such as PPE, respiratory, and telemed solutions, have seen unprecedented demand for increased production/availability and new innovation alike. On the other hand, orthopedics, plastics, and other service lines with a traditionally large mix of elective consultations and procedures, have absolutely been hit hard. Generally speaking, healthcare systems have taken a hit as they shift clinical resources from their most lucrative revenue drivers to critical care preparedness and treatment. However, when it comes to the supply and demand interplay of COVID-19 on the advanced wound care industry, the results are more nebulous. Even across geographies, the question of whether wound care is an “essential” service line is currently being interpreted differently, depending on who you ask. For example, in several countries across Europe, most wound care clinics are closed. In the US, most wound care clinics remain open–though a significant number are operating on a part time (ex: Tuesdays and Thursdays only, or only half-day hours). Of those operating on a full-time schedule, many are seeing significant patient volume reductions compared to the same period in 2019. From both operational and commercial perspectives, the implications are significant. Forward-thinking executives and investors need to understand and actively plan for the possible scenarios and consequences of their actions (or lack thereof). The operational data, on-the-ground insights, and their implications [T]he keenest wound care executives and investors use real world data not just for making claims about physical products (though that is important, too). By combining data analytics with on-the-ground insights to stress test operational and commercial hypotheses, firms can stay one step ahead of the news cycle. The result is the ability to out-plan, out-invest, and out-compete in the wound care arena, and to be prepared for the possible consequences of their moves. Anecdotally, year-over-year (YOY) volume reductions range from 10% to 40% or more. The figure below shows data, collected and analyzed by Tissue Analytics from across several US clinics that use its wound care measurement and assessment software. It shows a very clear YOY reduction in weekly patient visits of around 5% in early March 2020, steadily growing to 25% as of 17 April 2020 (the most recent data published as of this writing): According to Tobe Madu, the Tissue Analytics data scientist who conducted the analysis, “For this analysis we looked at outpatient clinics since these are the facilities most likely affected by the COVID-19 lockdown mandates. Only clinics that were fully integrated with Tissue Analytics as of the first week of 2019 were considered. The data points presented in weekly intervals corrects for daily fluctuations and reveals a clear decreasing trend for patient visits.” Of critical importance is also the notion of whether the reductions in patient encounters are among existing patients who may be told by their providers to come at less frequent intervals (ex: fortnightly instead of weekly), or perhaps the patients themselves decide to skip appointments, ostensibly due to COVID-19 fears. Likewise, relaxed US telemed reimbursement and restrictions allow for easier remote monitoring and consultations even as clinic-based visits dip. In such cases, we might expect to see a short-term stabilization once a new comfort level in terms of visit frequency vs. COVID-19 risk is met. Clinically, wounds may heal more slowly (lower frequency of debridement, fewer advanced product applications, less utilization of HBOT, etc.), but would supposedly still allow for effective patient triage in most cases. Alternatively, are patient volume reductions driven by a reduction in new wound care patient admissions to the clinic? In other words, are patients in treatment during the early months of of 2020 continuing to come as normal until healed (around ~8 to 15 weeks on average, depending on the case mix and clinical outcomes of the particular facility), yet new wound patients are hesitant to schedule their first appointment? If this is the case–which my gut told me is more likely–then we might expect a continued patient volume free-fall, combined with a major risk of tragic clinical outcomes (including amputation, sepsis, and death) from delayed treatment in the coming weeks and months. Many of these patients will eventually burden emergency rooms, inpatient acute care units, and SNFs, who will inevitably treat the fevers, weakness, elevated white blood cell counts, and other presentations as COVID-19 until test results and a full clinical assessment confirm that the patients’ neglected wounds are the more likely root cause of the symptoms. I asked Tobe from Tissue Analytics about my hypothesis: That patients already receiving treatment pre-pandemic may be likely to continue, but that new patients with wounds may not be scheduling new admissions. If so, then the drop in patient visit volume would be likely to continue beyond the current 25%. Tobe was able to work his data analytics magic to dig into this, too: Tobe further articulated what the above data visualizations tell us: “When we compare the pre-lockdown (wks. 3-11) and post-lockdown (wks. 12-16) period, new patients account for 15% of the decline in average outpatient clinic visits per week. Last year, for the same time period, new patients represented a mere 3% of the increase in total patient visits. The decline in new patient visits appears to be a legitimate concern moving forward even though new patients only represent ~10% of the patient population.” Of course, a larger facility sample size and a few more weeks of data would be beneficial. Likewise, Tissue Analytics’ outpatient customer base may skew towards larger, IT-resourced health systems. Having said that, the data pattern suggests one of two possibilities, either: We may not yet have seen a bottom for outpatient wound center visit volumes. Wound care center operations are fueled by new patient admissions. If new patients are not being admitted to post-acute settings (a good amount are likely ending up in acute settings), then we might expect an ~8-15 week lag for the most severe

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Live polling from the AAWC-Desert Foot 2019 track on Digital Health and Clinical Operational Best Practices

Underappreciated Advanced Wound Care Opportunities in 2020 and Beyond

Despite the overwhelming majority of R&D, regulatory, sales, marketing, and corporate finance focus in the advanced wound care (AWC) sector being on physical advanced wound care products, many of the greatest opportunities to drive outcomes–and profitability–exist in the realm of wound care service delivery. This concept was further developed by senior management from several of the leading global AWC brands in the well-received executive panel session we facilitated in Gothenburg, Sweden earlier this year at the EWMA Conference. Keeping with this theme, several of the speaking engagements, articles, partnership explorations, and related advisory we have performed towards the end of this year have revisited this idea. We will share some areas of particular interest below. Calling all forward-thinking AWC professionals Whether you’re in AWC or an adjacent sector (dialysis, diabetes, vascular, ortho, plastics, home care, etc.), or affiliated with a service provider and/or payer organization (ACO, IDN, HMO, CCG, VA)…if you’re seeking to partner with like-minded, forward-thinking executives, payers, health systems / facilities, clinicians, and investors on the types of initiatives discussed in the remainder of this article, get in touch to describe your unique approach and what you and your colleagues stand to gain and could bring to the table. We’ll confidentially use this to explore if there are existing or future collaboration opportunities to accelerate your goals within the Diligence Wound Care Global network. When you have the wound care “Hardware,” but what you need is the “Software” This concept was eloquently articulated a couple of years ago by one of our Singaporean clients…During a tour of several large, well-equipped, generously-staffed, high volume wound care facilities in several countries as part of the early experience program, he witnessed firsthand the lack of administrative support, uniform processes, data analytics, and relative ability to influence key (external) decision makers among the potential customer sites. Immediately after one such customer visit, he turned to me and exclaimed, “They have plenty of ‘hardware,’ but what they need is ‘software!’” In addition to the educational and networking opportunities, we had the opportunity to contribute as faculty at The Association for Advanced Wound Care (AAWC)’s track at The 2019 Desert Foot Multi-Disciplinary Limb Salvage Conference in Phoenix, Arizona earlier this month. One of the topics, Bringing Together Best-in-Class Clinical, Operational, and Technological Approaches to Delivering Advanced Wound Care: An Interactive Panel Discussion, leveraged live polling of the AWC clinicians and administrators in attendance to draw attention to some very surprising yet highly relevant and underappreciated stakeholder pain points and related market needs. Barriers to adoption of new products and technologies Firstly, if you were to ask the average commercial or medical affairs AWC (or more broadly speaking, medtech) professional about the key activities needed to gain adoption, they would likely list the following product-centric factors among their top three replies: Presenting and communicating scientific and clinical evidence Education and training of staff Initial trialing and feedback Strikingly, the live polling results as articulated by actual AWC users and customers suggest exactly the opposite, with their top three barriers overwhelmingly being: [Navigating] administration and bureaucracy Financial pressures to always choose the cheapest or on-contract option Logistics (too many supplies to order, stock, etc.) The audience-reported feedback is consistent with our experience as both an AWC customer and strategist, and is equally as relevant in the non-US markets as it is in the US. Stated differently, even when discussing a topic such as adoption of new AWC products, the key barriers are ironically related to services (management, administration, logistics, etc.). This concept was eloquently articulated a couple of years ago by a Singaporean client, a seasoned global marketing executive in the midst of a best-in-class product pre-launch across nine Asian markets. During a tour of several large, well-equipped, generously-staffed, high volume wound care facilities in several countries as part of the early experience program, he witnessed firsthand the lack of administrative support, uniform processes, data analytics, and relative ability to influence key (external) decision makers among the potential customer sites. Immediately after one such customer visit, he turned to me and exclaimed, “They have all of the ‘hardware,’ but what they need is ‘software!’” The phrase stuck with us throughout that engagement and beyond, anytime we encountered care delivery that was inconsistent, inefficient, unscalable, or otherwise not meeting its full potential despite adequate physical resources (in other words, the vast majority of AWC facilities and providers) . In fact, improving stakeholders’ “software” for delivering care then became a critical parallel activity alongside the traditional “hardware” sales and marketing activities during the actual launch phase, with major dividends in terms of building customer trust and branding for the distributor and their products alike. Clearly, the misalignment on AWC “hardware” (tangible facilities, products, and staffing) vs. “software” (intangible processes, protocols, tech, analytics, business/financial models, and other enablers) is something holding the sector back from its full potential on a global scale–and thus represents a phenomenal opportunity for non-AWC and AWC firms alike. Barriers to adoption of digital health (mobile assessments, diagnostics / imaging, telemed, analytics, etc.) Another highly instructive live audience poll from the event specifically zoomed in on the top barriers to adoption of digital health (literal “hardware” and “software,” not to be confused with the figurative “hardware” and “software” described above). The results are here: Once again, just like with physical product adoption, the most pressing challenges to adoption of digital health faced in the real world are overwhelmingly managerial, administrative, and financial in nature. This begs the question: Why do so few digital health initiatives in AWC actually address these gaps? One might even argue that the majority of AWC digital health creation and marketing activities are not even taking aim at the right problems to solve. But even putting that point aside, can these issues of how to secure budgeting, viable business / financial models, and integrations (both technical and practical) be effectively tackled by individual corporations and health systems alone? At what point does there need to be more cross-pollination beyond just

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EWMA 2019 and Executive Industry Forum: Unlocking the Commercial Potential of the US & Asia

The European Wound Management Association (EWMA) conference in Gothenburg, Sweden earlier this month was a great success. We witnessed several important advanced wound care innovations and announcements: From new approaches for addressing nonviable tissue and infection, to CTPs (cellular and tissue-based products) which are financially viable in non-US markets, to sensors and other digital health approaches, to further exploration of companion diagnostics and strategic pivots by leading companies–the signs were all there to those who knew what to look for. Each one of these topics could be the subject of a lengthy analysis. Yet this post will focus on the EWMA Executive Industry Forum, which is one of the few (perhaps the only) setting where top executives from multiple leading firms get the chance to interact live and share their visions with the broader business and investment community. Executive Industry Forum Interaction Report We incorporated live polling of our executive and investor audience throughout the forum. So let’s begin by sharing the actual Event Interaction Report (note that not all options add up to 100% because poll participants were able to select multiple responses): Click here to view the Event Interaction Report or scroll down in the embedded version below: Some takeaways: United States Advanced Wound Care Trends, Challenges, and Opportunities: Poll participants were most concerned with the reimbursement, healthcare economics, and regulatory frameworks. This was followed by a perceived lack of clinician education / training / specialization. Challenges related to language, culture, and local competition were of least concern. Some of our panelists articulated the unsustainable nature of the US fee-for-service model, and how that must change. Others expressed less concern regarding the sustainability of the system as a whole, but acknowledged the reality of new dynamics. In the words of one executive on our panel, “It used to be that in the US, you could have a better product, and charge a premium price, or you could have a slightly inferior product, but at a slightly lower price. Now, the expectation is that your product will be both better and less expensive.” There was some optimism from the panel around the HEOR (healthcare economics and outcomes research) models which have been built out in Europe and other markets, which may get some mileage in the US given the recent market forces trends; However, overall there also seemed to be quite a bit of hesitation as to whether the AWC industry as a whole has figured out / made enough progress in this area to “put their money where their mouths are” and actually take their products and protocols to the payers with a guaranteed outcome. One area where most of the panel agreed (at least those who spoke to this topic) is on the need for some better standards in the industry–whether for product claims, clinical trial design, or others. On the topic of recent high levels of M&A and digital health activity/investment, the consensus from the panel is that it is not just a fluke, and will absolutely continue into the foreseeable future. Asia Pacific Advanced Wound Care Trends, Challenges, and Opportunities: Poll participants were most concerned with local competition (distribution, price points, established relationships, etc.) and the lack of / difficulty in establishing a regional presence by the principal firm (i.e. needing to rely on local distributors for sales, marketing, and support). Interestingly, intellectual property (IP) concerns were cited by a minority of survey participants. Yet our executive panel did seem to express significant concern about it, explaining how such risk impacts all decisions, from product design to partnership selection. Compared to the poll on the US a few minutes prior, the challenges concerning Asia were much more varied (no individual option reached a 50% majority), implying that participants view AWC challenges in Asia as more diverse and dynamic. A majority (52%) of poll participants considered China (followed by Japan) to be the greatest mid to long term AWC opportunity in Asia–a perspective that the panelists seemed to echo–yet there was still enthusiasm around all of the Asian geographies given as options. We discussed the demographics of an aging population and the practical remnants of the “One Child Policy” on healthcare needs such as advanced wound care: A couple (two people) caring for four parents plus their own children, and how that impacts the time and financial resources to deal with conditions such as chronic wounds. In addition to aging, the sheer size of the population (China and India alike), the socioeconomic trends, and the potential for local partnerships were all highlighted by the panel as drivers they consider when evaluating the commercial potential of specific Asian markets. The concept around what is allowed in Asia from a legal and regulatory perspective was discussed: For example, it is not uncommon in many Asian markets for healthcare providers to be proprietors of product distributorships, or for product manufacturers to openly own and operate their own healthcare / wound care service lines. Still, even our executive panel admitted to fundamentally struggling with wound care in Asia. They all appreciated the opportunity, and some offered up some victories in terms of establishing local partnerships and driving educational efforts. Yet admittedly, none have managed to “crack the nut.” One of the executives who came from a pharma background remarked how for most big pharma companies, China is their second or third largest market–with many times more sales and marketing reps there compared to countries in Western Europe. When it comes to advanced wound care, however, the relationship is totally flipped. We discussed some of the digital and educational initiatives each company has explored in recent years, and which components might be leveraged to drive AWC in Asia (and in other markets, too). Each of the participating firms have some form of digital strategy and presence, but they have begun to manifest themselves in different forms at each respective organization. Final Thoughts All in all, our Executive Industry Forum was extremely well received. Several companies hold global team meetings

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Consolidation, M&A Integrations as a Competitive Advantage, and Other Advanced Wound Care Industry Insights from 1H 2019 and SAWC Spring [Video]

At the recent Symposium on Advanced Wound Care (SAWC Spring 2019), there were several interesting developments and companies to watch (scroll down for a video interview we did with one of them). But without a doubt, the major advanced wound care (AWC) industry theme in the first half of 2019 has been consolidation. Given the increasing size and frequency of recent deals in the sector, it also may be time to discuss if, when, and how executives and investors might potentially begin to look at companies’ handling of post-M&A integrations as a core competency–and perhaps even an opportunity to develop new competitive advantages? Recent corporate activity To be clear, M&A activity in this space has been ramping up for years. To recap just a few: 2017: Integra Life (IART) Science’s acquisition of Derma Sciences Organogenesis’ (ORGO) acquisition of NuTech Medical Essity (ESSYY)’s acquisition of BSN Medical 2018: Acelity’s acquisition of Crawford Healthcare Mölnlycke Health Care’s acquisition of SastoMed Urgo Medical’s acquisition of SteadMed Medical Yet both the quantity and scale of activity in just the fist half of 2019 alone is essentially unprecedented. At least six deals, three of them mid-to-large (by AWC industry standards, not necessarily when compared to medtech or pharma overall), and all of them strategic, occurred: 1H 2019: 3M Company’s (MMM) acquisition of Acelity (KCI + Systagenix) for $6.7 billion including assumption of $2.4 billion in debt (expected to go through later this year) Smith & Nephew’s (SNN) acquisitions of Osiris Therapeutics for $660 million and Leaf Healthcare for an undisclosed amount Misonix’s (MSON) acquisition of Solsys Medical for $97 million in stock, plus assumption of $20 million in debt Mölnlycke Health Care’s acquisition of M&J Airlaid Urgo Medical’s acquisition of Realm Therapeutics (Vashe) Perspective and significance The 3M-Acelity and S&N-Osisis deals are both considered very large relative to historical activity in the AWC sector. In particular, 3M and Acelity were both “Top 6” AWC players before the acquisition, and the combined entity will command a very significant scale, particularly in the US (about half of the global AWC market), but also in the rest of the world, where Acelity traditionally lagged but had impressive growth leading up to the acquisition, and 3M already has a solid presence. The S&N-Osiris deal pulls a top regenerative medicine company (with a particular AWC focus) into the portfolio of a “Top 6” AWC firm. Before the acquisition, S&N already had what we might casually be referred to as “tissue growth acceleration” products like Oasis and Regranex, in addition to active healing assets such as PICO (single-use NPWT) and Santyl (collagenase ointment for enzymatic debridement). While clinically different, those products shared similar sales call points, reimbursement support infrastructure, and other considerations to the Osiris portfolio. The Leaf acquisition, while certainly much smaller in size, is in line with strategic trends in the AWC space overall: Pressure ulcer prevention and offloading is among the skin and AWC product segments with the most focus in recent years. Moreover, it put S&N particularly head-to-head with Mölnlycke (who acquired patient turning, positioning, and offloading device firm Sundance Systems in 2016), with both companies claiming their respective foams, adhesives and turning/offloading systems as a three-pronged approach to pressure injury prevention and care. Pressure ulcer prevention and treatment has become such a key battleground in the AWC sector that it was the subject of a lawsuit filed by Mölnlycke in 2017, claiming misleading and unsubstantiated advertising. As of May 2019, both firms continue to assert their respective skin and pressure injury portfolios, even as multiple new entrants have launched solutions for prevention, early detection, and treatment. Prior to this new round of major acquisitions, if there were such as title as “most comprehensive and sophisticated AWC portfolio,” Acelity and S&N would likely have been the top contenders. After all, both companies boasted solutions for most key categories of AWC therapies, and each had several assets with significant market share in their respective categories (debridement, traditional NPWT, disposable NPWT, etc.). The timing of the above acquisitions couldn’t have been more exciting, as each firm bolted on multiple asset classes which too enjoyed significant account penetration and market share (single-use compression, film dressings, CTPs, etc.). The developments were almost like watching two racers neck-and-neck, when both simultaneously increase their pace. At the same time, the “rules” of the sport are evolving in real time, with reimbursement and pricing pressures, continuum of care, digital health and wearables, prevention, diagnostics, and the global markets shaping the terrain ahead. Although overshadowed by the massiveness of the 3M and Smith & Nephew deals, Misonix’s purchase Solsys Medical was also significant. Why? Because traditionally, most of the major cellular and tissue product (CTP) / biologics / allograft / “skin sub” product firms’ portfolios are pure plays in that space (they might have different formulations or sizes). Likewise, debridement is a crucial wound care need, with relatively few options on the market considering how important proper wound bed preparation is for wound healing. Almost none of the other advanced products–CTPs, NPWT, dressings, ointments, rinses, and even diagnostics, are effective if they cannot come into contact with viable tissue (and if the “chronic” wound is not turned into an “acute” wound). At the same time, selling debridement products, especially those involving a capital equipment component like Misonix, can be complex. In this sense, at least on its surface, the combination is a good fit that significantly expands the reach and offerings of two companies that each benefit from the others’ portfolio and team. Although a smaller deal than the 3M and S&N ones above, care must of course be given to the actual integration efforts as well. The last two deals listed (Mölnlycke-M&J Airlaid and Urgo-Realm Therapeutics) are smaller and appear to be driven by control of sourcing, protection of intellectual property (IP), and other vertical integration considerations: Important roll-ups, but likely not to be viewed as game-changers. However, they also come just months after other important M&A activity by both Mölnlycke and Urgo alike–and

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Perspectives on Smith & Nephew’s Announced Acquisition of Osiris Therapeutics Today

What happened? Smith & Nephew (NYSE: SNN) will be acquiring Osiris Therapeutics (NASDAQ: OSIR) for $660M. The investment, announced today, potentially repositions Smith & Nephew within the CTP (cellular and tissue-based products) space. If the deal goes through, it will be Smith & Nephew’s most significant M&A deal within that space since the acquisition of Healthpoint (Santyl, Regranex, and Oasis were the key products) for $782M in 2012. Speaking of Santyl, Israel-based MediWound–a firm that is also developing topical debridement products to compete with Santyl–has also announced news today: CEO Gal Cohen will be stepping down, after 12 years with the company. He will be replaced by CFO and COO Sharon Malka. Many are watching closely as MediWound–and some other players/products in the space–prepare to launch products which would compete with Santyl. Santyl has largely been considered a cash cow in the wound care space. But back to the Osiris M&A news: The CTP (also casually referred to as “graft” or “skin substitute”) space has been growing very fast over the past decade, virtually entirely driven in the US. The emergence of different technologies to extend the shelf life of such products has simplified logistics during this period as well. One of the major breakthroughs has been Osiris’ own development and implementation of Prestige Lyotechnology to keep living cells viable without the need (and cost/logistical hurdles) involved with cryo-preservation. What are some of the underappreciated points to consider? Most of the focus about the M&A announcement has been on: Existing sales/sales growth Strong R&D Clinical trial assets and know-how Potential synergies with S&N’s other divisions The above points are fair game and relevant for sure. Especially for non-wound care/regenerative experts, they look great on a whiteboard or slide deck. But digging a bit deeper, we can take a slightly more nuanced look at the potential pros and cons for S&N: Underappreciated points encouraging the acquisition For the types of products they focus on, the Osiris sales and marketing apparatus is among the best in the wound care and regenerative medicine industry. The ability to drive case-based (as opposed to tender-based) sales in both the surgical/acute and post-acute settings with complex, high-margin products, is not one to take for granted in this sector. With the proper integration, structuring, and execution, sales executives with those specialties could in theory accelerate sales of other advanced S&N products, including single-use NPWT (PICO) and some of the former Healthpoint portfolio as well. Much of S&N’s PICO commercial team in recent years has been made up of former Healthpoint executives. Side anecdote: perhaps the best wound care sales representative that called on me when I directed US-based wound care centers was a Healthpoint rep who joined Smith & Nephew as part of the 2012 acquisition. He stayed with Smith & Nephew for some time, and grew his territory’s business significantly. He eventually left S&N due to a perceived lack of advancement opportunities in line with his performance. S&N had among the most full-service and diverse advanced wound care portfolios pre-acquisition. Even compared to some of the other “Top 6” wound care companies, they have been able to offer deeper discounts in exchange for higher utilization of their portfolio. In some cases, they have offered orthopedic and wound care products together “at risk,” guaranteeing replacement products for surgeries at no charge, should the wound fail to heal. In the mid to long term, today’s acquisition may be used to further strengthen that offering. Despite being a multi-billion dollar segment and one of the fastest growing in healthcare, there are not many firms with significant revenues and commercial footprint, yet who are small enough for a major player to acquire. In other words, there are several large, and many, many small players, but not many mid-sized ones to feed an acquisition. Often, the ones who might be otherwise attractive targets find themselves caught up in legal, regulatory, reputational, or other crises. At the time of this announcement, Osiris does not seem to have any such issues. Underappreciated points challenging the acquisition As mentioned above, the Osiris commercialization team has an excellent reputation in the industry. S&N sees the Osiris workforce, of about 360 people, as relatively easy to integrate. Again, this may be a case of everything lining up nicely on the presentation and spreadsheet, but it could be more difficult in practice. Over the past couple of years, Smith & Nephew has lost many of their most talented executives, who often cite a slow-moving, bureaucratic, and risk-averse corporate culture as the reasoning. This corporate culture many not mesh well with the drive that is ingrained in so many Osiris account executives and managers. On the other hand, Smith & Nephew has gone through a senior leadership change in recent months as well. If the acquisition goes through as announced, it will be interesting to see how many of the top-performing Osiris sales and marketing executives are still around in the next few years. Perhaps the biggest unknown in the wound care regenerative medicine space is the issue of reimbursement. Recently, there have been some small but potentially foretelling reimbursement developments pertaining to CTPs in the US. Government and payer policy can be extremely tricky to predict, but this is a segment which is heavily influenced by it. Companies like Osiris Therapeutics, Organogenesis Inc. (NASDAQ: ORGO), Integra LifeSciences (NASDAQ: IART), and Acelity [update: 3M (NYSE: MMM) announced it would acquire Acelity less than two months after news of this S&N-Osiris acquisition broke] have historically led the sector with investment in R&D and post-market surveillance trials. However, regulators and payers alike are increasingly asking the question, “Is it enough?” Among industry, this is a tough one: On the one hand, most wound care patients have so many comorbidities that traditional pre and post-market clinical trials in this space are designed such that they exclude vast amounts of patients because traditional investigators otherwise do not know how to control for those variables. The result is that the enrolled patients–both in

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2019 AAWC Pressure Ulcer Conference 2019 Feb - Diligence Wound Care Global

Debrief: Association for The Advancement of Wound Care (AAWC) 2019 Pressure Ulcer Summit [Video]

The Association for The Advancement of Wound Care (AAWC) has just wrapped up its pressure ulcer summit in Atlanta, Georgia. Highlights included: The patient journey International participation and sharing of approaches (Switzerland, UK, Ireland, Mexico, and others) A pressure ulcer workshop Technical and scientific discussions Challenges and opportunities across the continuum of care Advocacy for policy changes (lobbying) Administration, operations, billing, and related session Showcasing of new technologies for prevention, early detection, and treatment Many attendees shared very positive feedback that they appreciated being able to dive deep into the pressure ulcer diagnosis, etiology, and treatment delivery, as opposed to covering many types of advanced wounds at a basic, surface level. In keeping with this approach, the next AAWC conference/education series will be a Wound Infection Summit to dive deep into the unique considerations for prevention and management of those wound types. Immediately following the summit, I had the opportunity to sit down with Kara Couch MS, CRNP, CWS. In addition to her active clinical role at The George Washington University Hospital’s Wound Healing and Limb Preservation Center and multiple scientific and editorial advisory board positions (including Today’s Wound Clinic together with Diligence Wound Care Global Managing Director Rafael Mazuz), she is also a board member and Secretary of The AAWC. We discussed a range of topics, including product standardization, organizational structures and collaboration models for wound care programs, KPIs and metrics, digital health, and prevention. Watch the full interview below:

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Investing in Advanced Wound Care? Avoid These 3 Costly Mistakes

We are frequently tapped by analysts, fund managers, investment banks, and other financial and investment professionals–from small independent funds through the largest global institutions. At the same time, our engagements are also filled by biotech, medtech, life sciences, and digital health executives, as well as provider and clinic networks, payers, hospitals, IDNs, and other healthcare services providers. Whether seeking to make an investment, or to plan and execute to increase stakeholder value, advanced wound care is among the highest potential healthcare subsectors, with no sign of that changing anytime soon. So why all the interest in advanced wound care? This is why… Demographically, this segment is poised to explode, as a plethora of projected global demographic and epidemiological trends contribute to difficult-to-heal wounds, including: aging populations cardiovascular disease (heart, arteries, veins) renal (kidney) disease diabetes and other endocrinology-related disease oncological (cancer) disease rheumatological disease dermatological issues obesity and malnutrition immobility and sedentary lifestyles immune system compromise chronic pain medication side effects hundreds of other health conditions related to infection, hereditary, environmental, psycho-social, and other factors The prevalence and projected growth of these conditions drive a large, unmet demand for advanced wound care that make for an attractive investment opportunity. Yet at this time, there are multiple areas where the deployment of capital to this space is greatly under the current and future potential. This article is primarily intended for healthcare, medtech, and related services and technology investors who seek to either explore advanced wound care opportunities, or to refine assumptions and investment theses. If you’d like to explore the concepts below further or wish to discuss a your specific investment strategy, get in touch to schedule a consultation. What exactly is advanced wound care? The first key to successful wound care investing is to wrap your head around the core concept of, “what is advanced wound care?” Healthcare executives and investors who are not strictly focused on wound care are certainly reading this article. Many are already exposed to this space (whether they know it or not). Unfortunately, many damaging wound care due diligence and investment choices are related to a fundamental misunderstanding of what even makes up the segment. Following that initial misstep, even highly intelligent, thorough, and experienced business people have a higher chance of running into major problems that could have been avoided. Before anything else, a solid advanced wound care investment foundation depends on correctly grasping these four core concepts on at least a practical level: The phases of wound healing The difference between simple vs. advanced wounds Local vs. systemic problems with healing A working definition of advanced wound care Finally, we’ll apply that foundation by exploring common investment mistakes made by both rookie and experienced advanced wound care investors alike. So here we go… The phases of wound healing and “simple” vs. “advanced” wounds Let us suppose a healthy person accidentally cuts his finger while cooking. Assuming the wound is not large, the knife was clean and not rusty, and no major surprises (like slicing an artery), the wound is likely to close on its own. If so, we can classify the above example as a “simple wound” because we neither anticipated nor experienced any healing complications making healing take longer than expected. On a very basic and practical level, there are four (or five) overlapping phases of wound healing: Hemostasis – a blood clot forms to stop bleeding, prevent further damage / contamination, and sends signals to trigger the next phases of the healing cascade Inflammation – increased blood flow; removal of debris and neutralization of bacteria that may have entered the wound Proliferation – (often categorized as two separate phases, granulation and epithelialization), where the wound bed and skin fill in; When this is complete, most clinicians (including for clinical trial endpoints) refer to a wound as “healed,” even though there is technically one more phase… Remodeling – (also referred to as maturation), where the underlying cells continue to restructure and strengthen over time (months or years). This phase not only impacts the cosmetic appearance, but also range of motion and propensity for reinjury or recurrence of the wound, due to factors such as the type, quality, and location of scarring / collagen formation. Each of these phases actually consists of dozens–even hundreds–of complex chemical, biological, and physiological processes. A video animation + explanation with more detail can be viewed here, and although there are often new discoveries at the microscopic level, there is no shortage of academic discussion discussing each phase in detail, as well as factors affecting wound healing. The key takeaway for business and investment professionals looking at this space is that for a wound to heal properly, it must pass through and complete all phases in the above order (though as stated, there is overlap). When the above process does not-or is not expected to–occur within four weeks, we can refer to it as an “advanced wound.” Some use that term at five, six, or eight weeks…there is no consensus on the precise timing, nor is the precise timing crucial to this discussion. If there are no problems with the healing phases, the wound will follow its natural trajectory, which is to heal. However, there are literally hundreds of reasons wounds might take (or be expected to take) longer than normal to heal. More often than not, multiple factors contribute in parallel. Nonetheless, once again for the purpose of keeping this article simple and focused on investors (not scientists), we might categorize the factors into two broad types: Local – Examples: The wound is deep, in a region susceptible to dirt and bacteria, on an area of pressure / friction / shear / reinjury, and other factors. Systemic – Examples: The patient is elderly, malnourished, underweight / overweight, taking medications with side effects or has one or more conditions affecting their ability to heal (cardiovascular disease, kidney disease, diabetes, cancer, or anything else that might possibly affect the body’s natural processes). So even a very

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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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