In Spine, a New Kind of Corporate Venturing
This article was originally published in Start Up
Innovative Spinal Technologies was founded in 2002 by the Texas Back Institute and spine surgeons Stephen Hochschuler, MD and Barton Sachs, MD, to bring together inventors, clinicians, and industry partners to help stakeholders in the spine industry get to rapid proof of principle of early stage intellectual property in spine. Corporate partners provide investment capital and industry expertise. The corporate partnerships take different forms, but generally, partners get the right of first bid for technologies emerging from IST in defined fields of use that don't overlap among partners. IST thus gives companies a foothold in spine that's less risky than an outright acquisition and a broader scope than venture capital investments in selected companies.
You may also be interested in...
Today, the market for spine surgery is growing by more than 20% annually based on fusion technologies alone, despite the fact that those technologies are decades old and flawed. However, a heightened awareness of the clinical drawbacks of fusion is fueling prolific company creation in a new spine motion preservation segment of the industry. Some 118 start-ups in spine are dotting the landscape. Many hope to offer new devices that address spinal joint reconstruction; artificial discs, disc nuclei, annulus repair, facet joint replacement, and dynamic or flexible stabilization of the spine.
Zimmer's acquisition of Implex Corp. for slightly greater than $100 million is, in some respects, the natural culmination of a standing alliance between the two companies. But it's also interesting for the way in which it seems to embrace all of orthopedics' hot spots. Building on Implex's innovative Hedrocel biomaterial, Zimmer has already developed hip, knee, and shoulder implants, as well as trauma products, out of the collaboration, and has announced that seven development projects are underway. At the same time, this is also clearly a spine play: Implex had developed a line of spine products out of its material, which have already begun to be implanted in Europe and the US, and Zimmer said in announcing the deal that it intends to expand that spine business by incorporating it into Zimmer's own spine division.
The vitality and dynamism in spine surpasses any other medical device segment. Although it's still early in the field, there's a clear first mover advantage, given the long development cycle of spine devices. The time to place bets is now.