New product turn over

MedCity News has an article on J&J exiting the coronary drug eluding stent business:  End of J&J stent business carries lessons for medical device innovators.  It is very surprising to me that they are just leaving the market, surely with $400 million revenue this year they could make something happen.  I know they were getting their clock cleaned, but what kind of signal does this send to their R&D organization as a whole?  We're not afraid to throw in the towel?  Obviously J&J has a lot of smart people and I've never run a Fortune 500 company.

The take away message from the article is you need to keep innovating...  I have no idea why you wouldn't, you need to turn over your devices regularly to stay competitive, plus each time you do it you can raise prices and increase margin.  Plus you're paying those engineers anyway (hopefully)- don't let them get distracted on non value added side projects.  How often you turn over your devices with new models depends on the devices, guide wires and catheters, every 1-2 years you should have a new model or at least a respectable line extension.  Other devices can take longer depending on their complexity and regulatory approval time, obviously for drug eluding stents you need a more significant investment. 

That being said, don't do it just for the sake of having something new, if the device isn't actually improved a reasonable amount they customer will notice.  I was part of one launch with really good immediate sales, then a huge fall off because the customer realized this new product didn't meet any need the old one didn't, in fact it was worse (from their point of view, from the company point of view it was cheaper.)  After the initial buys, the customers didn't reorder, they saw right through it despite the best efforts of marketing.  If you're investing in a medical device company this is one thing you want to look for, are they launching new products at a reasonable rate, or are they just sitting back and letting things happen?

Anyway, congratulations to Abbot, Boston Scientific, and Medtronic enjoy your extra sales.