Showing all posts written by Christian Boettcher
The 3M Company announced on July 26th that it will spin off its health care business into a separate, publicly-traded company. The health care business will focus on wound care, oral care, healthcare IT, and biopharma filtration. The current health care business lines include bandages, skin adhesives, oral aligners, air purifiers, optical lenses, and the Bair Hugger™ surgical warming system that is currently the subject of nearly 6,000 lawsuits.
3M’s health care business generated $8.6 billion in 2021, which amounted to about one-quarter of the company’s total revenue. 3M confirmed that the non-healthcare main company will retain liability for all non-healthcare-related litigation, including the Combat Arms Earplugs litigation and PFAS litigation.
3M expects the move to increase the companies’ agility and focus to better position both companies for long term success and ability to tailor capital allocation strategies. In discussing the proposed move, 3M chairman and chief executive officer Mike Roman stated:
Disciplined portfolio management is a hallmark of our growth strategy. Our management team and board continually evaluate the strategic options that will best drive long term sustainable growth and value. The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities.
This move comes off a string of similar moves from multi-national conglomerates, including General Electric Co.’s separation of its power, aviation, and healthcare businesses; Johnson & Johnson’s spin-off of its consumer health company; and United Technology’s spin-off and subsequent merger with Raytheon. The trend towards spinning off various businesses within these conglomerates comes as consensus grows among investors that businesses perform best when streamlined, according to Reuters.
The U.S. Food and Drug Administration (FDA) published on February 23rd, 2022, a rule proposal to overhaul medical device quality control regulation. According to the FDA, the proposed rule change would “amend the device current good manufacturing practice requirements of the Quality System Regulation to align more closely with the international consensus standard for devices by converging with the quality management system requirements used by other jurisdictions.”
The proposed rule, titled Medical Devices; Quality System Regulation Amendments, would incorporate by reference International Organization for Standardization ISO 13485:2016, which is the international consensus standard for medical device manufacturers. The FDA claims that finalizing the proposed rule “will continue our efforts to align our regulatory framework with that used by other regulatory authorities to promote consistency in the regulation of devices and provide timelier introduction of safe, effective, high-quality devices for patients.” The FDA is also proposing to amend other aspects of its regulations to more closely align with the Food, Drug, and Cosmetics Act, as well as clarify good manufacturing practice requirements for co-packed and single-entity combination products.
Since early 2018, the FDA has said it is considering how to harmonize its regulatory requirements for medical device quality systems contained in 21 CFR part 820 with ISO 13485:2016, amid the international standard’s three-year transition period. This proposal would become effective one year from the publication date of February 23rd, 2022, and would result in the replacement of its current inspection approach for medical devices, the Quality System Inspection Technique (QSIT), with an inspection approach that will be consistent with the requirements of the Part 820 as finalized.
Beyond the harmonization with international standards, the FDA estimates that this rule change will save between $439 million to $533 million over the next 10 years. At the same time, it is expected that the expenditure for all companies to get up to speed with the proposed rule change will total $7.6 million.
The FDA had announced last week a March 2, 2022 meeting of the Device Good Manufacturing Practice Advisory Committee to “discuss and make recommendations on the current good manufacturing practice requirements for medical devices . . . to align more closely with an international consensus standard for medical devices used by other regulatory authorities.”
The text of the proposed rule change can be found here.
Current Health is the developer of an AI-powered upper-arm wearable and related software platform that measures a patient’s respiration, pulse, oxygen saturation, temperature, and movement. The real-time measurement device received Class II clearance from the FDA for post-acute care, marking the first time that an end-to-end, passive RPM wearable and platform has received clearance from the agency.
In discussing the agreement between Best Buy and Current Health, Christopher McCann, CEO of Current Health stated:
Over the coming decade, significantly more healthcare can be delivered in the home. We started Current Health to make that exciting transition radically easier for healthcare providers to achieve . . . Best Buy has unparalleled physical reach, world-class supply chain logistics, and trusted support services–allowing us to provide a high-touch consumer experience, at scale. We’re excited to join with Best Buy Health to move safe and effective healthcare into the home globally.
This acquisition will continue Best Buy’s investment in consumer-side health care technologies. For example, Best Buy previously acquired GreatCall Inc. (now Lively Inc.), a personal emergency response subscription service, for $800 million in 2018 and acquired Critical Signal Technologies, Inc., a senior-focused remote patient monitoring provider, for $125 million in 2019. The significant investment into the healthcare technology space for the consumer electronics company follows what Best Buy sees as a major growth opportunity. In a March 2021 earnings call, Corie Berry, CEO of Best Buys, stated, “We plan to invest in people, product development and the ongoing development of our health technology platform and our data analytics and intelligence engines.” Deborah Di Sanzo, President of Best Buy Health, further elaborated by stating:
The future of consumer technology is directly connected to the future of healthcare. We have the distinct expertise in helping customers make technology work for them directly in their homes and by combining Current Health’s remote care management platform with our existing health products and services, we can create a holistic care ecosystem that shows up for someone across all of their healthcare needs.