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R&D White Spots & Competitive Advantage

In collaboration with an equity research firm, we conducted research into future technology developments for stents in 2003. Our interest was primarily heart stents, a promising (at that point) method to avoid more invasive methods such as angioplasty. In 2003, Johnson and Johnson was the only company with a heart stent on the market, but it was rumored that J&J’s monopoly would soon be broken. We used Technology Mapping to determine whether Boston Scientific was capable of becoming a powerful competitor and to determine the potential future positions of Guidant, Medtronic and other legacy players.

The team that conducted the study was broadly skilled. Three members were financial analysts with decades of experience following healthcare companies. One member was a Ph.D. technologist. The group held regular meetings to assess results and determine the implications of the findings.

A comprehensive search found 7730 US patents or applications that mentioned "stent" anywhere in the patent. At the time of the study, we had only titles and abstracts for the study, enough to understand the intent of the patent. Then, the team divided the problem into enough categories and segments to isolate materials, manufacturing and applications issues for stents

Fig. 1 is an early strategic technology evolution map showing how stent technology was evolving in 2003. The view is a historical view that it emphasizes the flow of ideas leading from one technology development step to another. As the project started, bare metal stents were the dominant theme in the area, coated metal stents were just emerging. The dotted lines in Fig. 1 indicate themes the team discovered in the patent literature, but that were not yet products.

stent evolution

Figure 1

Fig. 2 shows a temporal patenting activity view of drug delivery by stents in 2003.The map was formed from a word/phrase search for drug delivery and stents. In this figure, each diamond is a patent and it is plotted vs. the filing date. Each line is a parent company. The company at the top has the most patents in the search/category. In this figure, BSX is Boston Scientific, GDT is Guidant. MDT is Medtronic. J&J is Johnson and Johnson. The visualization reveals a number of points relevant to the key question about J&J dominating the stent market space.

Notice that the top four in this category are Boston Scientific, Guidant, Medtronic and J&J and that Boston Scientific had more patents than J&J. This pattern was repeated in nearly all the Visual Indexes we ran.

Notice that Guidant’s activity occurred early and then tapered off recently.

Medtronic’s activity was slow and steady.

J&J, the field "leader", was number four.

stent evolution

Figure 2

An annual report from Boston Scientific showed a picture of a stent manufacturing setting that allowed the group to determine which of the several paths that had been explored in Boston Scientific’s extensive patent base was actually being used. From the technology development patterns, the group became sure that Boston Scientific would shortly emerge as a major competitor and that it was set for success.

In August 2003, an equity research report detailing the landscape for heart stents was published. The research team recommended Boston Scientific as a stock to buy. Those who followed their advice profited handsomely since the price of the stock did nothing but rise for almost a full year after the recommendation.

In the process of forming categories and segments, the group found several surprises that foretold product that might emerge in the future.

One surprise was the connection to genetics and the idea of using a stent as a means to deliver genetic material for gene therapy. The group felt that the idea was a patent placeholder and might emerge much later.

A second surprise was to find significant amount of work on biodegradable and biocompatible stents. In 2003, there was almost no "buzz" about biodegradability or biocompatibility. Almost all attention was focused on coated metal stents. In fact, what the group had found was an early warning signal for stent products that would emerge in late 2007 and 2008.

The study illustrates how technology mapping can lead to a successful prediction of the near-term competitive situation. The study also successfully anticipated the next step product in stents, the development of the biodegradable, biocompatible stent 4-5 years before the product was introduced.

ADDED NOTE:

The heart of this story is that with MEASUREMENTS of technology trends, you can see well into the future. Isn't a warning of 4-5 years enough time for you or your company to see a disruptive signal and make plans for the change that is coming?

Analysis of technology trends can do the same for you in your industry.

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