Nonprofit, independent journalism. Supported by readers.


U of M students to assess Chinese medical technologies

The University of Minnesota will soon be evaluating Chinese medical technologies for business potential in  Chinese, U.S. and other markets.

The University of Minnesota will soon be evaluating Chinese medical technologies for business potential in Chinese, U.S. and other markets.

Earlier this month, Carlson School of Management’s Stephen Parente signed a memorandum of agreement between the Medical Industry Leadership Institute, where he is director, and the School of Medical Instrument and Food Engineering at the University of Shanghai for Science and Technology.

Under the agreement, the school will send projects to be evaluated by University of Minnesota students. The two parties also agreed to explore the possibility of developing a joint training program that would allow Chinese professionals to learn about the U.S. regulatory system, among other offerings.

The Medical Industry Leadership Institute was established by the U of M and Carlson back in 2005, but it is the Medical Industry Valuation Laboratory, officially kick-started three years later, that will be judging technologies from the University of Shanghai for Science and Technology.

Article continues after advertisement

The course has come a long way since it was created in the summer of 2008, said Parente, noting that it was his brainchild and that of Randy Nelson. Nelson, who also teaches that course, is CEO of Evergreen Medical Technologies, a device development and production firm in St. Paul. That summer, the course and its students looked at two projects. Three years later, the lab has put a valuation on more than 80 technologies, Parente said in a recent phone interview.

The reason the Valuation Lab was created is simple: Nelson and Parente felt that many great technologies languished within universities and were not being commercialized fast enough. That led to the Valuation Lab, where groups of students provide a qualitative judgment and a detailed report on the promise of a technology.

Parente contended that such a course is unique nationwide.

“It has a memorandum of agreement by eight collegiate deans and that I can guarantee you no other university has at all,” Parente said. “There may be a joint program by a school’s engineering and business schools, or one between the medical and business school.”

While most taking the course are MBA students, there are students from nursing, medicine, law, engineering and information technology programs, too.

In a four-week period, students guided by Parente, Nelson and a third faculty member, go from meeting the inventor to producing their final report. Some critical elements they look at are:

Intellectual property — Trained by Twin Cities intellectual property lawyers who advise the class, students look at the patent landscape for the project they are assessing. Parente said many times the students are able to find patents in the same space that the inventor has not found before. That is usually a death knell for the technology’s business prospects.

“Sometimes what the students may find [is] that there is no explicit patent for what’s being discussed, but the space around the technology and what is going to be required for the inventor to license from other patents is so convoluted that that’s going to really damage the ability for it to be commercialized and that will probably spook an investor.”

User evaluation — Depending on the technology being studied, students talk to practitioners in the field, be it cardiologists and endocrinologists, in an attempt to figure out whether users will truly use such technology to treat a disease. Parente clarified that because nondisclosure agreements are in place, students can only talk roughly about the technology.

Article continues after advertisement

Reimbursement — Whether Medicare and Medicaid and insurers will pay for new technologies is a critical issue for med tech firms, and students talk with hospital billing offices of the university and other hospitals to identify how such a technology may be reimbursed and whether existing CPT and other codes are available.

Failure analysis — Engineers taking the Valuation Lab course step in here to judge the failure rate of a technology if it’s a medical device and ask the inventor if they have considered failure possibilities.

The students also look at market size by looking at the prevalence of the disease and the class of patients who could stand to benefit from such a technology, as well as do a financial analysis of the technology.

Based on the above and other parameters, students provide one of four verdicts:

  • Run, don’t walk. Get this thing funded
  • Let’s wait and see, but hurry up on some things
  • Let’s wait and see, and really think seriously about it
  • Stop

Parente said no more than 15 percent to 20 percent of technologies assessed ever get the thumbs up and the bar is deliberately set high. He noted that as word of mouth has spread, not only Minnesota companies, but companies from other states have come to the lab for help on reviewing technologies. The university’s own Office for Technology Commercialization has farmed out some work to the lab. Most of the work is done for free, but the lab may charge if the company is more established, or if they demand the report quickly.

Not all who come for review always agree with the verdict, however. In one instance, a large company had come to the lab to have two if its disease management services reviewed. The students gave both a thumbs down. Parente wouldn’t name the Minnesota firm, but said that a company vice president remarked that the students hadn’t been able to capture what the company had hoped.

Vindication for the students and the lab came a few months later when the company pulled the plug on those service lines, Parente said.

“When big firms come to us, it’s usually on a service issue and actually those cases can be very weak because they don’t have IP well defined,” he said. “There’s a sense that they have enough capital to do this and that they don’t have to worry about certain things and they’ll handle their sales and marketing and distribution.”

Parente added that the course is getting noticed by local corporations.

Article continues after advertisement

“Historically, Medtronic hired maybe one or two of our students for those advanced management tracks, but they would go to Harvard, Wharton, Northwestern,” he said. “They have now put us on the list and that was our goal.”