Tiger Buford and a colleague explain why Stryker, Zimmer, and Smith & Nephew stopped licensing early-stage orthopedic devices. Big companies' BD teams lost the muscle memory for these deals and now demand multi-million-dollar sales first. Career risk for executives has made them vet everything obsessively instead of taking speculative bets like they did twenty years ago.
What's the rationale not doing it?
I can give one reason, which is the— this is personal experience, at least— the business development company, the business development functions at bigger companies have like almost lost that muscle memory on like how to do licensing arrangements, at least on a grand scale. There's always these one-off deals that you'll hear about or something like that. This would be an interesting topic, Tiger, if you could ever get like like a retired BD person on is like, what the hell happened to licensing arrangements in orthopedics? Because there are too far too few that exist and there is so much wasted money that goes on because these big companies insist on something that is a really good product and they know it's a really good product from inception. They insist on the smaller companies going out and wasting so much money to get it to $10 or $15 or $20 million in sales for them to just go buy it. Um, afterwards when they could have just licensed it from the, the, the, the beginning. So that's, that's one, you know, nothing specific to CMF, and they might be more adept at something like this than bread and butter orthopedics, but, but I, I think the BD functions at the big companies that are losing muscle memory when it comes to like how to effectively put licensing arrangements together.
I— the, the BD people are— have become more and more risk-averse, and I I think that it's driven by career risk. So if you're high up at Stryker or Zimmer or Smith Nephew or something, and you're looking at 30 deals at the same time, you're just, all you're doing is processing deal flow, you know? And you've got to check, if you make a mistake, your career's over there, you know? If you buy a dog. So you have to check every box— IP, regulatory, sales adoption, pricing, reimbursement. Oh, can they— they got $10 million, can they get to $20 million? I mean, but it's— they have to check every box nowadays to pull the trigger. And 20 years ago, they would just try things, license it, you know, buy products before they were even commercialized. And It's driven by career risk. The companies have gotten so big that they can't take chances anymore.
