0. CROs and Cardiovascular Devices
December 9, 2009
Prepared by Rachel Little, Stacee Millangue, Kathlyn Smyer, Cory Welch, & Kirk Yoshida
School of Information, University of Texas
Frost Bank Tower
401 Congress Ave, Suite 2950
Austin, Texas 78701
(512)

1. PROJECT OVERVIEW Objective
Focus on the role of Clinical Research Organizations (CROs) in the medical device industry to help Santé Ventures decide whether or not to invest in or acquire a CRO company
Main Questions
How is the CRO industry structured (key players, key sponsors, services, growth rates and trends)?
Is there evidence of VC firms using CROs for their portfolio companies?
Are there case studies that describe how a key sponsor used a CRO for medical device development?
What is the FDA’s position on offshore clinical trials, including their view of offshore test populations as representative of US populations?
Secondary Questions:
What are the stages in the medical device development process and how do CROs help at each stage in the process?
What are the service offerings that CROs provide and what are the pricing models?
Are there metrics for sponsors to select CROs?
Other Deliverables:
Provide a list of top CROs that either specialize or have known capabilities in the cardiovascular medical device area
Provide a list of top VC firms that invest in medical devices
Links to datasets for clinical trials and medical device submissions
Source: Frost & Sullivan report– press release/TOCs
Sample page:

2. OVERALL CRO MARKET
Current estimated CRO market size: $10.91B (Frost & Sullivan)1 to $23.7B (Goldman Sachs)3
Projected CRO market size: $22.87B (1) for 2015 to $33.7 for 2012 (3)
Current growth rate (2009): 10% (1)
2008 growth rate: 14-15% (1)
1,100 CRO companies worldwide (1)
Percentages rounded up Sources: Frost & Sullivan(1,2)

3. TOP CARDIOVASCULAR CROS
Companies chosen from list compiled through searches in Cap IQ, Google, market research reports
Narrowed down to medical device CRO’S
Narrowed further to those with cardiovascular capabilities
Researched for years of experience
Checked for offices in Europe and Latin America
(CRO spreadsheets attached)
Top Players in CRO market who work on cardiovascular medical devices
CRO
Year Founded
Europe Offices
Latin American Offices
Revenue ($b)
Company Website
Quintiles
1990
Yes 3
PPD
1985
1.57
Covance
1987
1.73

4. CARDIOVASCULAR CRO’S (continued)
Year Founded
Europe Offices
Latin American Offices
Company Website
MDS Pharma Svcs.
1933
Yes
Parexel
1983
ParmaNet
1984
Factory CRO
1998
Clindatrix
2003
Charles River Labs
1947 No
MDCI
1980
Criterium
1991
ClinSys
1992
Integrium
Cidal
2001
Venn Life Sciences
2006
CRO
Year Founded
Europe Offices
Latin American Offices
Company Website
Averion International Corp.
2007
Yes No
GRSworldwide
Clinimetrics
1988
Alquest
1993
MPI Research
1995
Regulatory & Clinical Research Institute
1999
CBSET, Inc.
2006
Symbios Clinical, Inc.
Innoventz
N/A (10+ yrs exp.)

5. Top Cardiovascular Device Companies by FDA submissions, 1976- present
MEDICAL DEVICE MARKET
Types of Cardiovascular Devices
Cardiac Rhythm Management
Cardiovascular Monitoring & Diagnostic
Cardiovascular Prosthetic Device
Cardiovascular Surgery
Electrophysiology
Interventional Cardiology
Peripheral Vascular Devices
Medical Device Market worth $250 billion in 2009
Growth rate 6%-8%
Outsourcing has helped medical device manufacturers reduce product development cost by 10% to 30% (MarketsandMarkets)1
Orthopedics, neurology, cardiology, and cosmetics/aesthetics are the fastest-growing medical device market segments in the United States
Industry produces approximately 100,000 individual products per year
(Devicelink)2
(Global Data)3
Top Cardiovascular Device Companies by FDA submissions, present
MarketsandMarkets:
3 Global Data:
4. Source chart created with search aggregator Boliven.com from FDA data:
(Boliven)4

6. MEDICAL DEVICE INVESTMENTS
Top VC Firms in Medical Device Field ($100+ M in health care capital)
Accuitive Medical Ventures
Golden Pine Ventures
Mayfield Fund
MPM Capital
Three Arch Partners
Versant Ventures
Sierra Ventures
Medical Device investments up (Thomson)1
Medical Device investments fell 2008; increased in Q (Dow Jones) 2
VC firms investing in device companies (1,2, devicelink.com)
Established medical device companies investing in start-ups
Ex: Johnson & Johnson’s investment arm - JJDC group
Evidence of CROs investing in medical devices, drugs, start-ups
Ex: Quintiles takes cut in product revenues (4243B attached)
Ex: Cato Research started investment arm Cato Bioventures4
Ex: PPD investing in Celtic Therapuetics (private equity firm)
VC Investment in MedTech
Source: devicelink.com
Thomson:
Dow Jones:
Devicelink VC list:
Johnson & Johnson investment arm:
Quintiles SEC: Appendices/QUINTILESTRANSN424B pdf
Cato Research:
Cato Bioventures:
PPD investing:
Ernst & Young Pulse on the Industry:
MedTech Field Includes
Nonimaging diagnostics
Research and other equipment
Imaging
Therapeutic Devices
Source: Ernst & Young
Source: Ernst & Young, Capital IQ, Dow Jones VentureSource and Windhover

7. CRO & DEVICE SPONSOR PARTNERSHIPS
What to ask a CRO:
What are the capabilities and capacity of existing clinical personnel?
What are the critical business factors (e.g., time, money, headcount) for the organization?
What are the long-term needs to support clinical development?
Do they substantiate in-house capabilities?
What can be outsourced in conducting clinical trials?
SOP development
Site Protocol development
Monitoring / Project Management
Data Management / Statistics
Audits of internal and external of clinical processes, procedures and personnel
(Source: Kate Giovino, OrganoGenesis Inc. )
Pricing Models
Fixed
Great for small projects
Option for tight budgets
Billable Hours, by service
Current standard for most CRO’s
Allows for some flexibility
Sources: Clinpage: 1,2
Kate Giovino presentation:
Clinpage article 1:
Clinpage article 2:

8. MEDICAL DEVICE TESTING PROCESS
Graphic Source
Major categories under which medical device testing fall aligned with the stages of product development:
1. Research and Development (2-3 years): includes screening and qualification tests that chemically characterize raw materials or medical device components
2. Design and Validation (6-12 months): or functionality testing, usually involves surgical studies that evaluate how well the device performs the intended treatment
3. Biocompatibility (1-2 years): testing uses both in vitro and in vivo models to ensure that the device or component material is biologically safe for its intended use
4. Clinical Trials (1-2 years): scientific studies are employed to evaluate a drug, device, or biologic on patients in the treatment, prevention, or diagnosis of a disease or condition
5. Sterility Assurance & Microbiology (1-2 years): sterilization validation, environmental monitoring, and packaging validation with shelf-life testing (Source)
Source: David Jefferys, Thomas J. Fogarty, Richard E. Kuntz and Martin B. Leon
Aaron V. Kaplan, Donald S. Baim, John J. Smith, David A. Feigal, Michael Simons,
Medical Device Development: From Prototype to Regulatory Approval Circulation 2004;109;
Expanding role of CRO (graphic):
Post-Approval Process:

9. MEDICAL DEVICE POST-APPROVAL PROCESS
FDA charged to seek “least burdensome means” to evaluate data, which necessitates post-market surveillance.
When failure may result in health consequences.
When intended for implantation for more than one year.
When life-supporting devices will be used outside facility.
Device company may choose CRO for post-market testing.
Clarify CRO responsibilities.
Concur on study purpose and data management.
Reviews of milestones.
Sites for trials are determined by sponsor.
Study tracking website developed.
Sponsor legal team and CRO negotiate contract to facilitate study start-up.
Source:
FDA charged to seek "least burdensome means" to evaluate trail data required to establish safety & efficacy of medical devices
The above limits the size and duration of trials, often necessitating additional post-market surveillance on device performance after FDA approval has been obtained
Class II & III (see Rachel's FDA section) device manufacturers are generally required to conduct post-market surveillance under the following conditions:
When the likelihood of device failure would be reasonably expected to have adverse health consequences
When a device is intended to be implanted in the human body for more than one year
When a life-sustaining or life-supporting device is used outside of a device user facility
When a post-market study is required, the device company assesses whether it has the internal resources necessary to conduct the study or if it would be more efficient to outsource that function
Medical device experience desirable but should not be the only criteria
Companies with therapeutic and regulatory expertise in postmarket assessments and solid project management experience may be compatible candidates
Define study scope
Communications plan developed
Clarify CRO and sponsor responsibilities and interdependencies
Concur on study purpose and data management plan
Regularly scheduled reviews between CRO and sponsor when milestones are met
Sites for the trial are determined by the sponsor
Study tracking website is developed
Sponsor legal team and CRO work closely together to ensure timely negotiations of contract language designed to facilitate rapid study start-up
(Source)

10. CLINICAL TRIALS
82,466 trials with locations in 170 countries registered with FDA, 3/ /1/2009
6,731 related to medical devices
3,480 outside U.S.
2,930 actively recruiting outside U.S.
1,945 trials related to cardiovascular conditions and medical devices
975 conducted outside U.S.
(Source: ClinicalTrials.gov)
Clinicaltrials.gov:
Clinicaltrials.gov medical device & cardiovascular map:
Percentages to whole number Source: (Source: ClinicalTrials.gov) 10

11. CRO/MEDICAL DEVICE TRENDS
CRO Industry Trends (Source)1
"Undercurrent of interest" among private equity firms in acquiring CROs
Possible emerging trend: Long-term partnering arrangements between CROs & recruiting firms
Number of CROs has reached 1,100 despite continued consolidation (Source)2
Medical Device Trends (Depends on who you are talking to)
FDA leadership on role of outsourcing: (Source)3
Outsourcing requires more international collaboration on inspections, enforcement, and compliance policy issues. Also, greater regulatory focus on supplier selection, qualification, and monitoring
Market opportunity in fusion pumps – look at recalls
Five new science platforms that apply to the medical device industry: nanotechnology, synthetic biology, tissue engineering, stem cells, and robotics
CRO Industry (Source: Linda Alexander, Alquest CEO)4
Seeing a more cautious, rigorous approach from FDA, but not necessarily scientifically or medically sound
Suggestions for sponsors - Take products abroad first
With longer U.S approval process, companies should develop a strategy for selling their product abroad
Revenue stream can help sustain the company and show VC market that they have a viable product
Europe is best choice right now
Frost & Sullivan:
Global Insights:
Devicelink:
Devicelink2:

12. CRO/MEDICAL DEVICE TRENDS (continued)
Market Potential (Source)1
The CRO medical device industry is smaller than pharmaceutical & biotech but growing
Few blockbuster (>$1B sales) medical devices in the past but cardiovascular drug-eluting stents is game changer
Anecdotal evidence shows firms moving into the medical device area
Some CROs are differentiating themselves by concentrating on cardiovascular medical device testing
Four fastest growing medical device segments are orthopedics, neurology, cardiology, and cosmetics/aesthetics
Fueled by aging populations
Barriers to growth - device recalls & device-related deaths (spiked in 2006 vs 2005)
Small to Medium CROs forming networks or alliances (Clinpage1, Clinpage2, Centerwatch)
Smaller CROs provide better one-on-one service but do not have global presence
Establish standard methodologies to expedite and improve operations
Target sponsors based on specialties
Allow smaller CROs to compete with larger companies
Examples: Pharmaceutical Services Network and Agile Network
Expert Networks & Management Tools
Beginning to see resources for connecting companies to CRO’s (example: GoBalto for pharma)
Online business network for medical device industry and software reduce time & costs
E-Zassi’s database and FDA regulation calculator
M2S’s iMAP for collecting clinical trial images
Management tools are often targeted to both sponsor and CRO’s for conducting trials (Example: StudyManager)
Some CRO’s use multiple electronic data capture (EDC) vendors (Clinpage)
Some CRO’s specialize in in-house management tools for EDC (Contractpharma)
EDC allows smaller CRO’s to compete with larger ones
EDC makes allows for easier management of global clinical trials
Example: Clinipace
Pharmaceutical Services Network:
Agile Network:
GoBalto:
E-Zassi:
FDA Regulation Calculator:
iMAP:
StudyManager:
Clinpage:
Contractpharma:
Clinipace:

13. FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES
Permissible to conduct offshore clinical trials of medical devices.
No FDA jurisdiction over foreign clinical trials, but FDA does set standards for data submitted in support of U.S. marketing applications for medical devices (including Premarket Approvals (PMA) and Premarket Notifications(510(k) ). (Source: FDA’s Total Product LifeCycle: What Clinical Data from Outside the U.S. Does FDA Accept?)
If a clinical trial is conducted overseas pursuant to an approved Investigational Device Exemption(IDE): 
The trial must comply with U.S. FDA regulations (21 C.F.R. §814.15(a))
If a clinical trial is conducted overseas and no IDE is filed, the FDA will accept the study if it conforms with:
The 1983 version of the Declaration of Helsinki
(FDA regulations have not been updated to include the current version of the Declaration) OR
The laws and regulations of the country in which the research was conducted (21 C.F.R. §814.15(b)).
Clinical trials that use host country laws and regulations must state the difference between those laws and the Declaration, and must explain why they offer greater protection to human subjects (21 C.F.R. § (b)). 
Foreign clinical data must be applicable to the U.S. population and U.S. medical practice, clinical investigators must have recognized competence, and clinical data is subject to FDA inspection (on-site or through other means) (21 C.F.R. §814.15(d)).
IDEs place a higher regulatory burden on CROs. Further research is necessary to determine how often they are used in foreign clinical trials.
Source: FDA Guidance – Acceptance of Foreign Clinical Studies. 
FDA’s Total Product Lifecycle:
IDE:
21 C.F.R. §814.15(a) (b) (d):
Declaration of Helsinki:
Current Declaration of Helsinki:
FDA Guidance – Acceptance of Foreign Clinical Studies:

14. BIOETHICAL ISSUES SURROUNDING CLINICAL TRIALS
Lack of foreign government regulation of CROs and human subject research activities.
Lack of strong international standards and legal remedies to protect patients in clinical trials.
Unethical or exploitative conduct by researchers (physician practices may be unacceptable by U.S. standards).
Lack of understanding by patients of purpose of clinical trials.
Participation in clinical trials may be the only way for individuals to access medical care.
Lack of patient consent (and inability of patients to give informed consent).
Risks to sponsors of working with CROs that are inexperienced in a particular market or that do not follow required clinical trial standards.
Liability in U.S. courts under Alien Tort Statute (though risk appears to be fairly limited).
Liability under U.S. Foreign Corrupt Practices Act if U.S. sponsors or their CROs accept bribes from foreign government officials.
Limited FDA oversight and inspections of overseas clinical trials.
Intellectual property theft, limited patent protections (especially in India and China), and trade secret issues with employees who leave CROs to work for competitors.
Source: FDA Research Summary (Appendix).

15. FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS?
The FDA values diversity in clinical trial populations, but acknowledges that various issues that may exist in creating comparable U.S. and foreign test populations. (See Drug Testing Goes Offshore).
Barriers to creating representative test populations: (See FDA Presentation - Total Product Lifecycle)
Demographic variables - race, gender, ethnicity and age.
Clinical variables - prevalence of smoking, obesity, and diabetes; compliance with medical regimen and follow-up; education level of patients (e.g. ability to understand directions), and language/cultural differences.
Medication/device usage - economic factors in medication usage, legal/regulatory factors, and differing standards of care.
Differing physician/medical practices - adherence to study protocol, varying regional practice guidelines, and economic/legal considerations.
Availability of drugs/adjunct devices
Recommendations
Use statistical analysis to draw comparisons between foreign and U.S. populations (Id.).
Consult with the FDA on clinical protocol prior to conducting overseas clinical trials (Id.).  
Create targeted enrollment programs based on geographic region and intended use of product (New England Journal of Medicine).
Use bridging studies to link foreign and U.S. clinical data (Concept is discussed in Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data and Questions and Answers, though this guidance is specifically applicable to drug trials where the safety and efficacy of a drug is linked to ethnicity).
Recommendations are very vague. This topic merits further research and may require discussions with actual CROs to determine how they structure their clinical trials to address this issue.

16. SOURCES Slide 2: OVERALL CRO MARKET
Frost & Sullivan:
Frost & Sullivan:
Goldman Sachs:
Slides 3-4: CARDIOVASCULAR CRO’S
See company website links
Attached CRO Spreadsheet: Appendices/MedicalDeviceCROs_and_Full_CRO_lists.xls
Slide 5: MEDICAL DEVICE MARKET
MarketsandMarkets:
Devicelink:
Global Data:
Source chart created with search aggregator Boliven.com from FDA data:
Slide 6: MEDICAL DEVICE INVESTMENTS
Thomson:
Dow Jones:
Devicelink VC list:
Johnson & Johnson investment arm:
Quintiles SEC: Appendices/QUINTILESTRANSN424B pdf
Cato Research:
Cato Bioventures:
PPD investing:
Ernst & Young Pulse on the Industry:

17. SOURCES (continued) Slide 7: MEDICAL DEVICE PARTNERSHIPS
Kate Giovino presentation:
Clinpage article 1:
Clinpage article 2:
Slide 8: MEDICAL DEVICE TESTING PROCESS
Expanding role of CRO (graphic):
Post-Approval Process article:
Slide 9: POST-APPROVAL PROCESS
Slide 10: GLOBAL CLINICAL TRIALS
Clinicaltrials.gov:
Clinicaltrials.gov medical device & cardiovascular map:
Slide 11: CRO/MEDICAL DEVICE TRENDS
Frost & Sullivan:
Global Insights:
Devicelink:
Devicelink2:

18. SOURCES (continued) Slide 12: CRO/MEDICAL DEVICE TRENDS (continued)
Pharmaceutical Services Network:
Agile Network:
GoBalto:
E-Zassi:
FDA Regulation Calculator:
iMAP:
StudyManager:
Clinpage:
Contractpharma:
Clinipace:
Slide 13: FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES
FDA’s Total Product Lifecycle:
IDE:
21 C.F.R. §814.15(a) (b) (d):
Declaration of Helsinki:
Current Declaration of Helsinki:
FDA Guidance – Acceptance of Foreign Clinical Studies:
Slide 14: BIOETHICAL ISSUES
FDA Research Sumamary (attached in Appendix): Appendices/FDA_Research_Summary.doc
Slide 15: FDA: ARE OFFSHORE TEST POPULATIONS REPRESENTATIVE OF U.S. POPULATIONS?
Drug Testing Goes Offshore:
FDA Presentation - Total Product Lifecycle:
New England Journal of Medicine:
Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data:
FDA Questions and Answers: