Carlson School of Management News

The Medical Industry Valuation Lab

Friday, March 11, 2011

 

Medical technology inventors typically aren't business people. To help them realize the market potential of their inventions, Carlson MBA students and students from seven other University colleges are providing evaluations of new medical innovations through an experiential class at the Carlson School called the Medical Industry Valuation Lab.

Sponsored by the Carlson School's Medical Industry Leadership Institute (MILI), the Valuation Lab, "helps inventors accelerate the innovation pipeline, prepares students for leadership roles in the medical device industry, and benefits Minnesota's economic development," says Steve Parente, MILI director and a professor of finance.

The ultimate end-result is for the students to provide the inventor(s) a final report on the marketability of the invention as well as a financial figure as to what the cost and revenue will be in the future.

"Inventors are looking for an analysis to see whether a technology or idea that they've been working with has a good market value," says co-Instructor Randy Nelson, who is president of Evergreen Medical Technologies, a medical device developer and manufacturer. "Is it something that has good commercial value as it is now? Does it need additional work, or is it just good research and never would make a good product? Is there intellectual property issues? Is there regulatory strategy problems? Is there no market?

There's a whole number of things the students look at. They analyze it the way an investor would to see if it's a valuable investment or not."

Ge Yan, Full-Time MBA '11, a recent Valuation Lab student says the class is, "essentially a training ground for us to apply the knowledge we've accumulated to real-world experience. So, basically, it's a transformation from a classroom to the real world."

To grasp the fundamentals they'll need to know while doing a evaluation, Carlson MBA students and their University peers start each semester with a day-long "boot camp" where they listen to presentations by industry experts on such topics as marketing, intellectual property, valuation, regulatory rules, reimbursement, and licensing.

Once an assignment (invention) is identified, the students form teams and work together or five weeks to evaluate the invention.

"We first meet with the inventor to better understand their invention. In the beginning a lot of us are learning the terminology and kind of getting an idea of what space [the invention] is playing in the healthcare industry," says Archana Balasubramanyam, Full-Time MBA '11. "What teams usually do is decide which parts they want to concentrate on and then they go at it - we start to look at [the invention] from the different parts."

The teams and instructors spend weeks of class time discussing assumptions, validations, and verifications in order to form final recommendations. In the fourth week, students conduct a mock presentation that is critiqued by Finch and Nelson. In the fifth week, students give a final presentation to the inventor(s).

"After that's over," says Finch, "we hand out another set of assignments and they'll do the process again. They'll do this three times in a semester."

Not only do Carlson students get experience evaluating medical inventions, but the class environment lends itself to invaluable interaction with fellow MBA students and students from other University programs.

"One of the key things I really like about the class is that it helps me meet a lot of part-time students and students from the [University's] East Bank as well; MDs, law students," says Balasubramanyam. "It's beneficial to get their perspectives on the healthcare industry. I can see where law students are concentrating their efforts, and the MDs where they're concentrating their efforts."

Since taking the class, Yan has created his own consulting business that utilizes the evaluation model he learned in the class. Balasubramanyam, who will start a job at Medtronic after graduation, credits the Valuation Lab as the main reason for her securing the position.

"In the interview process this class came up a lot and they were very impressed that I was actually working with these different inventions and knew how they come about and are marketed, and also how I've already developed that network in the Minnesota healthcare space. The class really helped me," she says.

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