A rising star
Jang Yue-teh graduated with a degree in materials science from National Tsing-Hua University, Taiwan in 1976. At that time, while most of his classmates were interested in semiconductors or metallurgy, Jang became fascinated by the fundamental chemistry of materials. In 1984, he gained a PhD in materials science from the University of Utah, a major center of research into artificial heart technology, and then entered the business world of hi-tech medical devices.
Fortune has smiled on Jang. In the last 20 years, his chosen field has grown enormously in both importance and repute. Because he entered the industry in its infancy, he is today an important adviser for the Biomedical Engineering Center (BMEC) of Taiwan's Industrial Technology Research Institute (ITRI), especially when they need guidance on the business side of operations.
Says Jang, who visits ITRI regularly to share his experience, "If Taiwan wants to take on the role of contract manufacturer in this area, it's unlikely to be a financial success." He notes that a Taiwanese company was once planning to produce electronic blood-sugar monitors. Although they were going to manufacture several million a year, the profit was only a few US cents per unit. In any case, if American companies need contract manufacturers, they're going to choose China because of the lower costs.
Jang notes that medical devices are different in a number of important ways from run-of-the-mill electronic products. Whereas computers with small capacities running at slower speeds, for example, are still popular at the lower end of the market, medical equipment needs to be state-of-the-art. A blood-sugar monitor that malfunctions may result in bad decisions, delays in treatment or worse. Because of the more critical environment, there is no value in last year's products; hospitals and patients need the latest technology and best quality available.
"Taiwan should be developing 'smart' industries: doing research and creating new ideas rather than building things for other, smarter people," says Jang. Taiwan's future lies in pursuing the R&D side of the business, which requires a smaller investment but produces greater returns. This is how many of the medical technology enterprises in Silicon Valley have succeeded.
Jack of all trades
In mid-July, Johnson and Johnson, one of the leading pharmaceutical and biotechnology companies in the US, announced the acquisition of Ensure Medical in Silicon Valley, a company which The Vertical Group had set up with Jang as CEO.
Johnson and Johnson saw enormous potential in one key piece of R&D: a "vessel closure device" (VCD) which uses a synthetic bioabsorbable polymer to close the site of an arterial puncture made during surgery. They predict that soon after clinical testing next year, the instruments will be available for use worldwide in around 8 million heart operations every year.
Jang explains that a standard procedure in cardiac surgery to correct a blocked artery involves using a catheter (tube) inserted into an artery in the groin to carry a balloon or stent to the obstructed vessel in the heart, and inflate it to clear the blockage. After the operation, to stop bleeding as quickly as possible, pressure needs to be applied to the incision in the groin for 30-40 minutes, and the patient must lie still for a further six hours. "Our invention expedites wound closure and can stop bleeding in as little as 30 seconds after the catheter is removed. Almost magically, by two months after the operation, the wound heals and the bioabsorbable VCD has dissolved. If the patient ever needs a second operation, the same incision site can be used again," says Jang. Saving 30 minutes of surgery time is critical for cardiac teams who might have been on their feet for over two hours during the operation, and the technique also reduces the patient's discomfort and shortens bedstay time.
In 1989, Jang came to Silicon Valley from Utah and was appointed to the research department of a new firm, CVIS, as vice-chairman. He was involved in research into vascular ultrasonic imaging techniques, his team winning 25 new patents. One of the new techniques pioneered was an intravascular ultrasound device, which works from within a blood vessel to provide detailed, high-resolution images for identifying blockages and other defects. This is now an essential procedure in cardiac surgery.
Jang has gained a wealth of experience in R&D, observing the needs of medical practitioners for sophisticated technology, and developing an understanding of the market. In 1999, he obtained a US$7 million investment from The Vertical Group to found a new company, IVS, which does R&D on medical products to help cardiac patients recover more quickly. This new company helped Jang to realize his dream of establishing his own business. In 2003, Abbott bought IVS for US$110 million, a prime example of a venture capital enterprise which needed only a small investment, but which yielded an excellent return.
The patent comes first
Jang had "hit the bulls-eye" with this venture. And with an eye on his obvious talents, in 2000 The Vertical Group had invited him to become a partner. At age 46, he was beginning another stage of his already multi-faceted career.
From starting his own enterprise to the venture capital business, Jang emphasizes six essential conditions for success. First, the problem that needs to be solved must be isolated and understood. For example, a stroke patient must have an injection of blood decoagulant within the first three hours after the stroke. If the patient has the injection too late, it will be ineffective and may even cause harm. So the problem to be solved is how to make the decoagulant injection safer for the patient. What, then, are the possible solutions?
After the product is developed, what is involved in getting approval from the US Food and Drug Administration (FDA)? In addition, it is critical to consider the area of patents: does the new technique infringe upon others' intellectual property rights? Will it be easy for other companies to copy the product once it hits the market, and are any safeguards necessary to prevent this from happening?
Jang points out that there is not a lot of money in either new drugs or medical technology for manufacturers; the big profits go to the patent owners and the company that markets the product.
"The most important thing is the instruction leaflet that is included with the product. This should describe what the product is, how to use it, who should use it (the symptoms), the time required for effective treatment, and any possible side effects. This is examined closely by the FDA, and the ultimate aim is to comply strictly with FDA regulations.
The main difference between researching and developing new medical instruments as opposed to new drugs is the time and investment dollars needed. R&D of a new medicine can take an average of ten years and US$1 billion, but a new medical device can be on the market in only three to five years at a cost of perhaps a couple of million dollars. "In fact," says Jang, "many new companies in Silicon Valley develop good ideas and then sell them--just like buying and selling options. Ideas are often bought and sold while they are still in the development stage. Then the product is put through clinical testing and commercialized by a manufacturer who can bear the risk. This is one way that Taiwan could do it." Jang suggests that if every year three or four people were selected by the Biomedical Engineering Center of ITRI and sent to Silicon Valley to work with him for six months or so, this apprenticeship scheme would build experience and provide the basis for development of the industry within Taiwan.
Lonely at the top
There are more than 400 medical technology companies in Silicon Valley, but no more than five chairpersons are ethnic Chinese. Jang doesn't deny that it is difficult for Chinese to get promotion--it depends entirely on whether they have the ambition to blend into the mainstream. While the person at the top holds an envied and powerful position, when there is a problem or a difficult decision to be made, they are virtually alone. It's cold and lonely at the top.
Jang is a committed Christian, a man with a gentle and cultivated appearance, a clear logical mind, a sensitive heart and an enormous respect for life. For many years he has been involved with hospitals and has witnessed the sadness of sickness and death, everyday events in the world of medicine. He has even thought about becoming a doctor himself because it is the best way to help save peoples' lives. Today, when he sees medical instruments developed by his own company saving lives and relieving pain, he finds a great sense of achievement. It is this sense of responsibility to humanity which provides the ongoing inspiration for Jang's work.
