Surmodics Announces Realignment of Business

Posted by Josh Simon on Thu, Aug 25, 2011 @ 09:36

Surmodics' latest news release tells of a realignment, which by my count is the second such one in the last couple of years.  I could be off.  Read the release here. 

My humble opinion is that they tried to spread themselves a little too thin by getting into the pharma business, and now they want out.  Maybe now they will focus on their hydrophilic coatings, drug releasing materials, and perhaps their in vitro business.

A kid once asked me, "if you are so smart, how come you aren't rich?"  He had a point.  My own personal wisdom and business sense have not made me rich yet, so take the following for what it is.

I think that the idea of creating a business out of making various drug delivery coatings for medical devices is not sustainable, on a contract basis, licensing basis, or otherwise.  Here's why:  in order to get ONE good drug releasing coating verified and onto the market on a product, you need a whole company.  Even then, your chances of failing are huge.

If you spread yourself out thinly and try to make numerous drug delivery coatings, you increase your chances of failure for each coating.  Surmodics got lucky by creating the coating for the Cypher stent (with Cordis' help), and Cordis represented over 30% of their revenue until just a few years ago.  Once they started to branch out and offer this for everyone, I think they got ahead of themselves.

In a previous article on poorly made hydrophilic coatings, I barely scratched the surface of what sort of development time and effort it takes to make a good hydrophilic coating.  If you want that coating to release a drug, multiply that by 10.  Then if you want to switch from drug A to drug B, throw away everything you know about releasing drug A from the coating, and do it all over again.  Each drug or agent in a coating will act differently as far as kinetics of release and chemical interaction with the matrix are concerned.  It takes a lot of work and people (scientists) who know what they are doing.  This is why the Medtronics, Boston Scientifics, and J&J's of the world spend millions per year to do this: an amount probably equal to most of Surmodics market capitalization.


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Tags: advanced coating, news, business of hydrophilic coating, Surmodics, drug delivery coating, reports, coatings supplier