Daniel Starks told entrepreneurs and investors that there are big opportunities for well-targeted technology.
The CEO of St. Jude Medical Inc. said Thursday that there’s still room for innovation in the device industry at the intersection of cost-cutting and improved patient health.
“That’s always been the sweet spot for medical device technology,” Daniel Starks said Thursday in Minneapolis. “There are significant challenges, and it has gotten more expensive, and the timelines are more uncertain, but the payoff for a well-targeted technology, going after the right disease state, can be just huge.”
Speaking to about 350 entrepreneurs and investors at the Collaborative’s Minnesota Venture and Finance Conference, Starks offered an upbeat assessment of the future for medical devices that solve the most expensive and burdensome medical problems.
U.S. companies that make medical devices dominate the global market, and Minnesota is a hub of the industry, which provides tens of thousands of well-paid jobs.
But Starks criticized the Food and Drug Administration and said a new 2.3 percent medical device excise tax will be a problem specifically for up-and-coming firms. Both issues are helping to tilt the playing field against American companies, and threatening U.S. leadership in medical innovation, he said.
“In the United States, the regulatory environment has tended to swing on a pendulum,” he said. “Under the current administration, the tone of the FDA is different from the tone of the FDA under the prior administration. We are at a point in the regulatory cycle where the regulatory requirements are more difficult than they typically have been.”
Early in Starks’ career, the quickest St. Jude was able to get a medical device from conception to putting it into a patient was eight days. That’s an extreme example, Starks said, but the contrast with today is instructive.
His company has a new algorithm it wants to use in an existing pacemaker. The technology is already on the market in most of the world, but in the United States, St. Jude has to run a 5,000-patient trial and may have years to go before it gets FDA clearance to introduce the product.
“No new hardware at all, it’s just additional data-capturing software into the device,” he said. “It doesn’t make sense.”
Beyond the regulatory environment, which has long been a complaint in the industry, medical device companies are now paying an excise tax on all sales, a key provision of the federal health care overhaul. Starks said this is “not trivial,” despite the perception in some quarters that profitable med tech companies are whining.
“When I hear this kind of thing, it reminds me of blind people who are working to describe an elephant, and everybody’s smart and everybody’s in good faith,” he said. “If someone fails to appreciate the level of impact that the medical device excise tax has on our global competitiveness, it’s because they’re thinking U.S. only.”
Starks gave the speech at the 27th annual Collaborative venture and finance conference. The gathering of entrepreneurs and investors highlighted the work of 18 up-and-coming companies, many of them in medical technology.
Gov. Mark Dayton spoke in the morning, and the day was full of panel discussions on start-up financing, entrepreneurship and the future of the Minnesota economy.
Adam Belz • 612-673-4405 Twitter: @adambelz