I'd like to have a serious discussion about how committed Biotronik is to maintaining a commercial presence in CRM... not Neuro or VI, just talking CRM here.
There are several facts that are not debatable. First, cardiac devices (especially pacemakers) are being treated by most customers as a pure commodity item. CLS is awesome but I personally only have a handful of customers who care and no one willing to pay extra for it. This status even applies to most ICDs and CRTs as well. The average price points on ICMs are now half what they were 2-3 year ago and I'm selling pacers in bulk for the low $2's. Meanwhile, the cost of doing business continues to rise despite all efforts to keep it in check. Service burden increases with devices that last longer and inflation drives up operating costs across the board. And for the first time ever BIO-US is no longer the leader in global CM3 – meaning that the U.S. market is not the most profitable for Biotronik. That’s astonishing considering the tender controlled, mostly capitated pricing paid for cardiac devices in the rest of the world.
In the last 3-4 years, the CRM product development pipeline has dried up almost completely. Two years ago, the successor to the Edora platform which was launched in 2017 was cut from the long-term product roadmap. If leadership decided today they wanted a new pacing platform, the earliest it could possibly be delivered would be 2027, meaning that Edora would have been in the market for a decade. What do you think the ASP of 10-year-old pacemaker technology will be in 5 years? Less than $1000? There’s also no concrete roadmap for a successor to the Acticor/Rivacor platform which is perhaps even more concerning since high voltage devices drive profitability more than pacers. A new Renamic does not help me sell Bio devices. New implantable product is the only way I can remain competitive with any hope to maintain ASP.
Not investing in your product pipeline signals one of two things. Either your intention is to embrace the “decline” stage of the product lifecycle curve to compete in a commoditized market – for Biotronik this would mean a radical shift in its sales/service channel strategy – or you have already made the decision to exit the CRM market. I simply can’t see Biotronik becoming a commodity player, expect perhaps in Brazil and parts of Western Europe where we have significant market share to remain relevant. With under 10% share, this shift would be difficult to impossible to pull off in the U.S. This leaves me to conclude that the decision may have already been taken to transition away from CRM.
I suspect I’m not the only one to see these signs and to wonder if BIO has a future in CRM. What we're hearing from leadership does not jive with what I'm seeing on the ground. I hope that the dialogue created by this post is factual, fair and respectful.
There are several facts that are not debatable. First, cardiac devices (especially pacemakers) are being treated by most customers as a pure commodity item. CLS is awesome but I personally only have a handful of customers who care and no one willing to pay extra for it. This status even applies to most ICDs and CRTs as well. The average price points on ICMs are now half what they were 2-3 year ago and I'm selling pacers in bulk for the low $2's. Meanwhile, the cost of doing business continues to rise despite all efforts to keep it in check. Service burden increases with devices that last longer and inflation drives up operating costs across the board. And for the first time ever BIO-US is no longer the leader in global CM3 – meaning that the U.S. market is not the most profitable for Biotronik. That’s astonishing considering the tender controlled, mostly capitated pricing paid for cardiac devices in the rest of the world.
In the last 3-4 years, the CRM product development pipeline has dried up almost completely. Two years ago, the successor to the Edora platform which was launched in 2017 was cut from the long-term product roadmap. If leadership decided today they wanted a new pacing platform, the earliest it could possibly be delivered would be 2027, meaning that Edora would have been in the market for a decade. What do you think the ASP of 10-year-old pacemaker technology will be in 5 years? Less than $1000? There’s also no concrete roadmap for a successor to the Acticor/Rivacor platform which is perhaps even more concerning since high voltage devices drive profitability more than pacers. A new Renamic does not help me sell Bio devices. New implantable product is the only way I can remain competitive with any hope to maintain ASP.
Not investing in your product pipeline signals one of two things. Either your intention is to embrace the “decline” stage of the product lifecycle curve to compete in a commoditized market – for Biotronik this would mean a radical shift in its sales/service channel strategy – or you have already made the decision to exit the CRM market. I simply can’t see Biotronik becoming a commodity player, expect perhaps in Brazil and parts of Western Europe where we have significant market share to remain relevant. With under 10% share, this shift would be difficult to impossible to pull off in the U.S. This leaves me to conclude that the decision may have already been taken to transition away from CRM.
I suspect I’m not the only one to see these signs and to wonder if BIO has a future in CRM. What we're hearing from leadership does not jive with what I'm seeing on the ground. I hope that the dialogue created by this post is factual, fair and respectful.