Investigated the market for cardiovascular medical devices and clinical research organizations (CROs) to understand what roles play in the development and FDA approval process for therapeutics.

1. 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) 721-1200
www.santeventures.com
The information contained in this report is posted with permission.

2. 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
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3. 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)
Pharmaceutical and Biotechnology Market: R&D Clinical Trial
Pipeline by Therapeutic Area (U.S.), 2009
Metabolic
5% Respiratory
Cardiovascular
3%
8%
Central Nervous
System Other
10% 37%
Other
Oncology
Infectious Diseases
Central Nervous System
Cardiovascular
Oncology
25% Metabolic
Respiratory
Infectious Diseases
11% Percentages rounded up
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Sources: Frost & Sullivan(1,2)

4. 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!
Year Latin American Revenue
CRO Europe Offices Company Website
Founded Offices ($b)
Quintiles 1990 Yes Yes 3 http://www.quintiles.com/
PPD 1985 Yes Yes 1.57 http://www.ppdi.com/
Covance 1987 Yes Yes 1.73 http://www.covance.com/
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5. CARDIOVASCULAR CRO’S (continued)
Latin Latin
Year Europe Year Europe
CRO American Company Website CRO American Company Website
Founded Offices Founded Offices
Offices Offices
MDS Pharma Averion
1933 Yes Yes www.mdsps.com/
Svcs. International 2007 Yes No www.averionintl.com/
Corp.
Parexel 1983 Yes Yes www.parexel.com/
GRSworldwide 2007 Yes No http://www.grs-cro.com/
ParmaNet 1984 Yes Yes www.pharmanet.com/
Clinimetrics 1988 No No www.clinimetrics.com/
Factory CRO 1998 Yes Yes www.factory-cro.com/
Alquest 1993 No No www.alquest.com/
Clindatrix 2003 Yes Yes www.clindatrix.com/
MPI Research 1995 No No www.mpiresearch.com/
Charles River
1947 Yes No www.criver.com/
Labs Regulatory &
Clinical
MDCI 1980 Yes No www.mdci.com/ 1999 No No www.rcri-inc.com/
Research
Institute
Criterium 1991 Yes No www.criteriumusa.com/
CBSET, Inc. 2006 No No http://www.cbset.org/
ClinSys 1992 Yes No www.clinsys.com/
Symbios
2006 No No www.symbiosclinical.com/
Clinical, Inc.
Integrium 1998 Yes No www.integrium.com/
N/A
Innoventz (10+ yrs No No www.innoventz.com/
Cidal 2001 No Yes www.cidal.net/
exp.)
Venn Life
2006 Yes No www.vennlifesciences.com/
Sciences
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6. MEDICAL DEVICE MARKET
Types of Cardiovascular Devices
• Medical Device Market worth $250 billion in 2009 Cardiac Rhythm Management
• Growth rate 6%-8%
Cardiovascular Monitoring & Diagnostic
• Outsourcing has helped medical device manufacturers reduce product
development cost by 10% to 30% (MarketsandMarkets)1 Cardiovascular Prosthetic Device
Cardiovascular Surgery
• Orthopedics, neurology, cardiology, and cosmetics/aesthetics are the
fastest-growing medical device market segments in the United States Electrophysiology
• Industry produces approximately 100,000 individual products per year Interventional Cardiology
(Devicelink)2
Peripheral Vascular Devices
Top Cardiovascular Device Companies
!
(Global Data)3
by FDA submissions, 1976- present
Intermedics Inc.
Number of Documents
Cordis Corp.
St. Jude Medical Inc.
Medtronic Inc.
Boston Scientific Corp.
0 200 400 600 800 1000 1200 1400 1600 1800 2000
(Boliven)4!
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7. MEDICAL DEVICE INVESTMENTS
Top VC Firms
• Medical Device investments up 2002-2007 (Thomson)1
in Medical Device Field
• Medical Device investments fell 2008; increased in Q2 2009 (Dow Jones) 2
($100+ M in health care capital)
• VC firms investing in device companies (1,2, devicelink.com)
• Established medical device companies investing in start-ups Accuitive Medical Ventures
o Ex: Johnson & Johnson’s investment arm - JJDC group Golden Pine Ventures
• Evidence of CROs investing in medical devices, drugs, start-ups
o Ex: Quintiles takes cut in product revenues (4243B attached) Mayfield Fund
o Ex: Cato Research started investment arm Cato Bioventures4 MPM Capital
o Ex: PPD investing in Celtic Therapuetics (private equity firm)
Three Arch Partners
Versant Ventures
VC Investment in MedTech Sierra Ventures
Source: devicelink.com
MedTech Field Includes
• Nonimaging diagnostics
• Research and other equipment
• Imaging
• Therapeutic Devices
Source: Ernst & Young
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Source: Ernst & Young, Capital IQ, Dow Jones VentureSource and Windhover

8. CRO & DEVICE SPONSOR PARTNERSHIPS
What to ask a CRO:
Pricing Models
• What are the capabilities and capacity of existing clinical personnel?
• What are the critical business factors Fixed
(e.g., time, money, headcount) for the organization? Great for small projects
• What are the long-term needs to support clinical development? Option for tight budgets
• Do they substantiate in-house capabilities?
What can be outsourced in conducting clinical trials? Billable Hours, by service
• SOP development Current standard for most CRO’s
• Site Protocol development Allows for some flexibility
• Monitoring / Project Management
• Data Management / Statistics
• Audits of internal and external of clinical processes, procedures and Sources: Clinpage: 1,2
personnel
(Source: Kate Giovino, OrganoGenesis Inc. )
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9. 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)
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10. MEDICAL DEVICE POST-APPROVAL PROCESS
FDA charged to seek Device company Sites for trials are
“least burdensome may choose CRO determined by
means” to evaluate data, for post-market sponsor.
which necessitates post- testing.
market surveillance.
• Clarify CRO • Study tracking
responsibilities. website developed.
• When failure may • Concur on study • Sponsor legal team
result in health purpose and data and CRO negotiate
consequences. management. contract to facilitate
• When intended for study start-up.
• Reviews of
implantation for more milestones.
than one year.
• When life-supporting
devices will be used
outside facility.
(Source)!
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11. CLINICAL TRIALS
• 82,466 trials with locations in 170 countries
registered with FDA, 3/2000-12/1/2009
• 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)
Percentages to whole number
Source: (Source: ClinicalTrials.gov)
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12. 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
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13. 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
o E-Zassi’s database and FDA regulation calculator
o M2S’s iMAP for collecting clinical trial images
• Management tools are often targeted to both sponsor and CRO’s for conducting trials (Example: StudyManager)
o Some CRO’s use multiple electronic data capture (EDC) vendors (Clinpage)
• Some CRO’s specialize in in-house management tools for EDC (Contractpharma)
o EDC allows smaller CRO’s to compete with larger ones
o EDC makes allows for easier management of global clinical trials
o Example: Clinipace 13
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14. 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. § 814.15(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. 14
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15. BIOETHICAL ISSUES SURROUNDING CLINICAL TRIALS
1. Lack of foreign government regulation of CROs and human subject research activities.
2. Lack of strong international standards and legal remedies to protect patients in clinical trials.
3. Unethical or exploitative conduct by researchers (physician practices may be unacceptable by U.S. standards).
4. Lack of understanding by patients of purpose of clinical trials.
5. Participation in clinical trials may be the only way for individuals to access medical care.
6. Lack of patient consent (and inability of patients to give informed consent).
7. Risks to sponsors of working with CROs that are inexperienced in a particular market or that do not follow required
clinical trial standards.
8. Liability in U.S. courts under Alien Tort Statute (though risk appears to be fairly limited).
9. Liability under U.S. Foreign Corrupt Practices Act if U.S. sponsors or their CROs accept bribes from foreign
government officials.
10. Limited FDA oversight and inspections of overseas clinical trials.
11. 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).
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16. 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)
1. Demographic variables - race, gender, ethnicity and age.
2. 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.
3. Medication/device usage - economic factors in medication usage, legal/regulatory factors, and differing standards of
care.
4. Differing physician/medical practices - adherence to study protocol, varying regional practice guidelines, and
economic/legal considerations.
5. Availability of drugs/adjunct devices
Recommendations
1. Use statistical analysis to draw comparisons between foreign and U.S. populations (Id.).
2. Consult with the FDA on clinical protocol prior to conducting overseas clinical trials (Id.).
3. Create targeted enrollment programs based on geographic region and intended use of product (
New England Journal of Medicine).
4. 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.
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17. SOURCES
Slide 2: OVERALL CRO MARKET
• Frost & Sullivan: http://www.clinpage.com/article/frost_report_on_cros/C15
• Frost & Sullivan: http://www.reportbuyer.com/pharma_healthcare/therapeutic/u_s_cro_markets_key_therapeutic_areas.html
• Goldman Sachs: http://www.centerwatch.com/cwmonthly-complimentary/00x00x00x00_ThisMonthPDF.pdf
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:
http://www.prnewswire.com/news-releases/service-outsourcing-opportunities-in-medical-device-market-worth-us2677-billion-by-2014-69837522.html
• Devicelink: http://www.devicelink.com/mddi/archive/09/08/017.html
• Global Data: http://www.researchandmarkets.com/reports/835265/united_states_cardiovascular_devices_market
• Source chart created with search aggregator Boliven.com from FDA data: http://www.boliven.com/medical_device_analytics?q=cardiovascular
Slide 6: MEDICAL DEVICE INVESTMENTS
• Thomson: http://www.morgenthaler.com/content/Ventures/Articles/Articles%20documents/Robin%20Bellas%20on%20investements%20taking%20off.pdf
• Dow Jones: http://mediligence.com/blog/2009/07/20/medical-devices-other-healthcare-driving-vc-investment/
• Devicelink VC list: http://www.devicelink.com/links/venture.html
• Johnson & Johnson investment arm: http://www.medicaldevicestoday.com/2009/10/pfizer-jj-see-promise-make-investment-in-cancer-device-company.html
• Quintiles SEC: Appendices/QUINTILESTRANSN424B3-20040330.pdf
• Cato Research: http://www.cato.com/
• Cato Bioventures: http://www.catobioventures.com/
• PPD investing: http://www.clinpage.com/article/ppd_divests_acquires/C15
• Ernst & Young Pulse on the Industry: http://www.ey.com/Publication/vwLUAssets/Pulse_of_the_industry_2009:medtech_review/$FILE/Pulse_Final.pdf
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18. SOURCES (continued)
Slide 7: MEDICAL DEVICE PARTNERSHIPS
• Kate Giovino presentation: http://www.massmedic.com/docs/kate07.ppt
• Clinpage article 1: http://www.clinpage.com/article/clinipace_data_visibility_manifesto/C15
• Clinpage article 2: http://www.clinpage.com/article/billable_hours_as_curse/C15
Slide 8: MEDICAL DEVICE TESTING PROCESS
• Expanding role of CRO (graphic): http://www.devicelink.com/mddi/archive/05/04/009.html
• Post-Approval Process article: http://www.circ.ahajournals.org/cgi/content/full/109/25/3068
Slide 9: POST-APPROVAL PROCESS
http://www.devicelink.com/mddi/archive/09/08/017.html
Slide 10: GLOBAL CLINICAL TRIALS
• Clinicaltrials.gov: http://clinicaltrials.gov/
• Clinicaltrials.gov medical device & cardiovascular map: http://clinicaltrials.gov/ct2/results/map?term=cardiovascular+medical+device
Slide 11: CRO/MEDICAL DEVICE TRENDS
• Frost & Sullivan: http://www.clinpage.com/article/frost_report_on_cros/C15
• Global Insights: http://www.globalbusinessinsights.com/content/rbcr0001m.pdf
• Devicelink: http://www.devicelink.com/mddi/archive/09/11/006.html
• Devicelink2: http://www.devicelink.com/mddi/archive/07/03/028.html
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19. SOURCES (continued)
Slide 12: CRO/MEDICAL DEVICE TRENDS (continued)
• http://www.devicelink.com/mddi/archive/09/08/017.html
• http://www.clinpage.com/article/cro_network_expands/C15
• http://www.clinpage.com/article/new_global_cro_network/C10
• http://www.centerwatch.com/news-resources/clinical-trials-today/headline-details.aspx?HeadlineID=209
• Pharmaceutical Services Network: http://www.psn-europe.com
• Agile Network: http://www.healthdec.com/page/agilenetwork
• GoBalto: https://www.gobalto.com/
• E-Zassi: http://www.e-zassi.com/Default.aspx
• FDA Regulation Calculator: http://www.ipmarketingadvisor.com/content/fdarc/
• iMAP: http://www.m2s.com/content/m2s-announces-new-clinical-trial-product-imas-medical-image-collect-and-hold-solution
• StudyManager: http://www.clinicalsoftware.net/Home.aspx
• Clinpage: http://www.clinpage.com/article/edc_firms_cro_strategies/C23
• Contractpharma: http://www.contractpharma.com/articles/2009/11/edc-focus-cros-edcs
• Clinipace: http://www.clinipace.com//Guidances/ucm129314.htm
Slide 13: FDA POSITION ON OFFSHORE CLINICAL TRIALS OF MEDICAL DEVICES
FDA’s Total Product Lifecycle: http://www.ilsi.org.il/data/7%20Rhodes%20What%20Clinical%20Data%20Does%20FDA%20Accept.pdf
IDE: http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/HowtoMarketYourDevice/InvestigationalDeviceExemptionIDE/default.htm
21 C.F.R. §814.15(a) (b) (d): http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?CFRPart=814&showFR=1
Declaration of Helsinki: http://www1.va.gov/oro/apps/compendium/Files/helsinki83.htm
Current Declaration of Helsinki: http://www.wma.net/en/30publications/10policies/b3/index.html
FDA Guidance – Acceptance of Foreign Clinical Studies: http://www.fda.gov/RegulatoryInformation/Guidances/ucm124932.htm
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: http://money.cnn.com/magazines/fortune/fortune_archive/2005/08/08/8267653/index.htm
• FDA Presentation - Total Product Lifecycle: http://www.ilsi.org.il/data/7%20Rhodes%20What%20Clinical%20Data%20Does%20FDA%20Accept.pdf
• New England Journal of Medicine: http://content.nejm.org/cgi/reprint/360/8/816.pdf
• Guidance on Ethnic Factors in the Acceptance of Foreign Clinical Data:
http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm073117.pdf
• FDA Questions and Answers: http://www.fda.gov/RegulatoryInformation/Guidances/ucm129314.htm 19
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