Medinol’s announcement that its had signed a strategic cooperation agreement with W.L. Gore and Associates of the US surprised no one. Medinol’s separation from its first US partner, Boston Scientific (NYSE:BSX), was accompanied by a legal battle and mutual acrimonies that hurt both parties. During the struggle, Boston Scientific lost a substantial share of the stents market (dropping from 30% to 10%), while Medinol lost its main marketing channel.
The surprise was the identity of Medinol’s new partner, W.L. Gore. It had been thought that Medinol would seek to hook up with one of the giants like Johnson and Johnson (NYSE:JNJ), Medtronic (Nasdaq:MDT) or Guidant (NYSE; XETRA:GDT), which have been specialists in medical equipment for decades. These companies’ powerful marketing and sales positions could easily and effectively sell Medinol’s stents. Two aspects of Medinol’s profile lay behind this opinion: its advanced patented stents, and its patented stent production method that had cut costs by almost 90%.
In the end, Medinol found a relatively unknown partner. It may be that the giants didn’t really need Medinol, since they already had stent development and production facilities, and Medinol might not have wanted a powerful partner after its bitter experience with Boston Scientific. Instead it apparently preferred a “value-oriented” family business, as described by Medinol CEO Dr. Judith Richter.
W.L. Gore is a private company specializing in R&D and marketing or advanced technology products. Founded in 1958 by William Gore, it seems to have preserved an intimate family atmosphere to this day. The company has six divisions that generate $1.23 billion in revenue a year. Gore Medical Products Division, which specializes in cardiovascular products, signed the global strategic agreement with Medinol. The agreement has two aspects: Gore Medical will distribute Medinol’s NIRflex stent product portfolio worldwide, and the companies will cooperate to combine their respective technologies and capabilities to develop and distribute new, innovative, high-quality stent solutions.
“Globes”: Why Gore?
Richter: “It was coincidental, as often happens in the business world. For Gore, a strategic agreement with us complements their business strategy. They wanted to expand their long-standing and successful experience in treatments for the vascular arteries field to the coronary arteries field. For us, this is an exciting opportunity for technological cooperation, because Gore has extensive and developed intellectual property rights in field paralleling our own. I want to emphasize their developments of materials that support and can even replace damaged arteries. The innovation of their products is that they are not based on metals, but other materials. For us, this is an invaluable opportunity.”
Did you try to reach strategic agreements with one of the medical equipment giants like Guidant or Medtronic?
“No”
Why?
“It was not part of the definition of our strategy.”
What is the definition of your strategy?
“To ensure that we produce the best and most innovative stents, and that everything associated with them is of the highest quality and as innovative as possible. I don’t know how well aware you are of this, but Medinol has a much greater than ordinary reservoir of patents, many of which are for breakthrough developments in the stent industry. This is our reputation. We have ownership to some stent industry milestones. An example is the flexible closed cell design stent that is one of the ancestors of the innovative stent models. Many of our competitors would love to integrate this design into their stents, but Medinol owns the patent. We want to preserve our unique stent designs for the future.”
How different is this agreement from the one signed with your previous partner, Boston Scientific?
“This agreement includes some very interesting things from our perspective, and it guarantees the entry of new products into the market.”
In other words, this agreement opens up fields beyond stents?
“Medinol was already in these fields, based on its strategy to use stents to enter new fields. We planned to use stents to enter new parts of the body. We started with cardiology stents, then developed stents for peripheral arteries to the legs and brain. We developed them long ago, but they haven’t entered the market for reasons beyond of our control.”
What is the market potential for these arteries?
“I can't precisely estimate the potential, but it’s no less than the potential for our existing heart artery stents.”
One of the fields thought to have potential in your field is a drug dispensing stent. Do you have a product on the way to the market?
“Medinol has a franchise with another company that represents a completely different approach to the subject of coated stents. At this stage, we have no plans to use the common method of drug-coated stents to enter this market. We are planning a revolutionary approach that doesn’t use the stent for drug delivery purposes, but uses another, more effective way to deliver drug treatments to the arterial system. We will present this revolutionary approach at a conference on Thursday.”
Does Medinol own this development? Does it have exclusive marketing rights?
“At this stage, Medinol is not marketing nor has intellectual property rights, only a franchise to present the approach and first stage research results of the group.”
Is it an Israeli company? How far along is their research?
“The group includes Israelis. We expect specialist MDs to lead the way in accepting this revolutionary method. However, it will be a long time before the method’s efficiency will be proved on humans. At this stage, the animal research results seem promising.”
So you’re expanding beyond stents?
“Not exactly. Medinol is solely a stent company by definition. In order not to mislead you, I state explicitly that the subject of pharmaceuticals is in no way a part of Medinol’s mandate. Medinol’s business is solely stents.”
If that is the case, what are your sources of growth?
“Medinol expects to grow in two main directions: innovative stent design and additional applications of stents in the body. We’ve moved beyond the heart and plan to design stents for other organs, such as for the legs, and later the head.”
Published by Globes [online] - www.globes.co.il - on September 26, 2002