Austin Business Journal
May 30, 2008
Spinal implant maker taps Austin
A joint effort between venture capital firms, local entrepreneurs and a French company has spawned a new medical device company in Austin.
LDR Spine USA Inc. intends to break into the lucrative U.S. market for spinal implants early next year. The firm is the U.S. headquarters of LDR Medical, a French company already selling its artificial discs in Europe.
To prepare for its U.S. launch, LDR Spine USA says it has raised more than $10 million from Austin Ventures, the Rothschild Group in Paris, PTV Sciences in Houston and Path4 LLC in Austin.
The firm is currently seeking fast-track approval from the U.S. Food and Drug Administration so it can market its products in the United States by March, says president and CEO Steven Whitlock.
Anticipating quick regulatory approval, LDR Spine is in the process of lining up American distributors. Whitlock says LDR Spine would like to have 15 distributors by the end of 2005.
Ideally, each distributor will rack up annual sales between $500,000 and $1 million, he adds.
LDR's Austin headquarters, which will add 25 employees during the next year, will focus solely on selling and distributing spinal implants in the United States. Research and development units will remain in Europe.
Whitlock and LDR Spine's other founders are former executives of Centerpulse Orthopedics Ltd., the former Austin medical device company purchased by Swiss company Zimmer Inc.
Whitlock says LDR's American founders all had the opportunity to stay with Centerpulse.
"But there are just so many opportunities for orthopedics in Austin, so we wanted to do something on our own," he says.
LDR hopes to capitalize on a large market.
About 70 percent of U.S. adults -- or 153 million people -- have lower back pain, according to Millennium Research Group. Of those, about 15 million require medical treatment, and most eventually get spinal implants.
Last year alone, U.S. surgeons performed hundreds of thousands of procedures that could have potentially used LDR implants.
The market is huge -- and growing as more baby boomers complain of bad backs -- but so are the competitors.
"The biggest challenge we have is communicating differentiation to surgeons -- how our [implants] are better than what's currently available," Whitlock says.
The Greater Austin Chamber of Commerce says it is keenly interested in attracting more medical device companies.
The chamber has identified the sector as a "must-have" for Austin.
David Smith, vice president at Austin research firm Technology Futures Inc., says the executive talent to grow these companies is not here yet, but could come as the industry grows.
"Life sciences today in Austin is like the software industry in the late 1980s," Smith says. "There's good science here, but all the pieces to be successful and grow a larger company are not here yet. But Austin has the buzz."
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