Sunday conversation with Lars Rasmussen: Pitching medical devices to consumers

In a business saddled with massive litigation and taboo talking points, Coloplast is charting a path for market-beating revenue growth and job expansion. The company held a market day at its U.S. headquarters in Minneapolis last week to announce its plans. The Danish device-maker plans to grow brand loyalty and expand knowledge of new innovations by directly reaching consumers of its patient-choice products, like colostomy and incontinence products. It also plans to pay out hundreds of millions in legal settlements to resolve liability for vaginal-mesh devices while bolstering the safety record of its products with data provided to the U.S. Food and Drug Administration, among other plans. CEO Lars Rasmussen sat down to talk about the ambitious plans.

Q: Coloplast is embracing consumerism in its patient-directed medical devices like ostomy products and catheters, with direct-to-consumer outreach and a live call center for patients to ask practical questions discreetly. Why start doing that?

A: You very often see people who got surgery 20 years ago, and they still use the same products that they did at that point in time. Where, if they knew what was available to them, they could make a different choice. And we make it transparent, what is going on. We want to do that because we are the innovator. We bring more new products to market than any other company in our business. We miss an opportunity if we don't present this to people who would like to use it if they knew it was there.

Q: How much of it is about giving people the ability to choose a product with a higher profit margin for Coloplast?

A: That would be very nice if that was the case. But the fact is, when you work in medical devices you are not paid for innovation. So when we bring a new product to the market, very often it will have the exact same price as the old product that it replaces, and it will even have the same price as 30-year-old products that are still in the category and people are using because they don't know that other options are available. That is how it is.

Q: In a different Coloplast business line, implantable pelvic mesh devices for women, one of your biggest competitors (Astora Women's Health, in Eden Prairie) recently closed down. Is that a market opportunity for Coloplast?

A: Yes. We think Astora had a market share in the 20s. The fact that they have closed down their franchise means that market share will be distributed among the remaining companies. And of course this is an opportunity for all of us.

Q: Astora closed down after its owner, Endo International, failed to find an acquirer for the business. Why try to grab share in a market where someone else was trying to leave, in fact trying to sell, and couldn't?

A: We are in this business area because we think we can make a positive difference. We have products in the market that have been launched after the safety updates came out of FDA. That means FDA approved them. They have looked into our total portfolio of products and said, "You're good to sell them." So in that sense we feel that the products are safe, otherwise we would never sell them.

Q: With mesh, you continue to roll out new products and get approvals, but Coloplast is also planning to pay out 4.5 billion Danish kroner (or $686 million USD) to people suing the company for alleged mesh-related injuries. Is it hard to pay those settlements for a type of product you still support?

A: Yes, it is. The fact is, people live a life with a terrible quality of life if they don't have access to these kinds of products, and that is why we are ­selling ­them. That is also why doctors do the implants. Everybody in today's world knows there is a risk to any treatment that you receive. And I think for this specific business area or product area, it's much more clear than for any other product area. … Having said that, we also have products that have very good clinical data. Most of them were launched after the FDA came out with the safety warnings, and the FDA said you are good to go. So I think that we have a very safe option for people today.

Q: In the presentation today you mentioned net job growth on the horizon for Coloplast.

A: Yes. 3,000 more people in the coming three to five years in the company.

Q: Will any of that happen in Minnesota?

A: Yes, there will be plenty in Minnesota, and also across the U.S., because we have two specific areas that we are going to invest in. That is wound care, and that is in U.S. sales. And it's actually also wound care in the U.S. So, U.S. is at the top of our investment priorities in coming years. We are market leaders in catheters, but we want to become market leaders in both ostomy care and in wound care. And we will have to invest to become market leaders. So that is what we are investing for. It's a growth strategy that we are presenting. I think it's extremely positive. We are by far the market leader globally, and still we expect that we can grow at 7 to 9 percent in a market growing, at maximum, at 5 percent.