Interested to hear any comments on the new proposesd joint venture:
5/31/02 - Suddeutsche Zeitung: Siemens founds joint venture with Dragerwerk.....

May 31, 2002, (Suddeutsche Zeitung /FT Information via COMTEX) -- Siemens, the German electronics group, is to found an electromedical joint venture with Dragerwerk, the German manufacturer of medical technology, in order to strengthen its position on the market for intensive care and emergency medicine. The joint venture, which will have a workforce of 6,400, starts operating with turnover of 1.2bn euros.

At the same time, Siemens will acquire a 35 per cent stake in Drager Medical AG & Co KgaA, one of Dragerwerk's subsidiaries. Siemens' medical technology division is one of the group's most profitable. The group's electromedical operations, which are part of Siemens' medical technology division, employ 220 members of staff in Germany and a further 1,400 in Sweden and the US. Shares in Dragerwerk were up 3.24 per cent at 19.1 euros yesterday evening, while shares in Siemens lost 3.27 per cent to nearly 66 euros.

Seems to me this decision was driven by issues in the European marketplace. Perhaps it's even better to say driven by outside the US concerns. The press release did not even mention ICU ventilator products. One has to wonder which vents they will continue with and which ones they will obsolete. It doesn't make financial sense to carry vents within the same price point and feature set.

A

Alan, I would have to agree with you. From the press release it is quite apparent that Drager will take full control of ALL R & D. I really don't think Drager would remove their Evitas from the market place. It is their top selling product worldwide. I Don't know..... would you buy a Servo I at this time?

It appears that Siemens has purchased 35% interest in Drager....a family owned, private company. It is my fear that this will eventually lead to another corporate takeover that is so common these days. Is the family business model a thing of the past? So many deals start out this way and end up another. GE, Agilent, HP, Phillips....the list goes on. I can see the value of this deal with the product line integration with the exception of the ventilator segment. Monitoring, anesthesia, IT....yeah, OK that makes sense....but ventilators? Should be interesting.
As for the Servo-i, looks like it is doing very well in Europe and starting very strong here in the US. Have not seen it but hear lots of good things. I do not think Drager will discontinue their Evita series any time soon. Perhaps the next generation ventilator will deliver everthing we have been asking for in one package!

Imagine if, instead of coming out with Windows 95, that Bill Gates/Microsoft had merely purchased Apple and integrated their operating system? Or used the Apple team to design future computer interfaces, yet kept the same MS sales force,....the possibilities are endless.

Although the Servo I seems a very good ventilator, I believe the Drager to be superior. Although the Drager organization is certainly large and impressive I suspect that the worldwide Siemens force is larger. For some time Siemens has contracted out the sales. This just seems a logical extension. Over time how this will affect future innovation will be interesting. If too much arrogant inertia and innovative lethargy become a standard at Drager because of the merger (and any demoralization which may occur), then another company may just arise to run with the ball.

Another reason to just remember that as RT's we shouldn't be too enamored of any one ventilator. Else we too much resemble that former Doctor (played by Gene Wilder) seen disheveled and drinking Woolite after Stravos Mevios took Daisy back to "the hills of Armenia".

Chris,
From strictly an ICU ventilator perspective, I'd be hard pressed to go in this direction for now. Someone on this forum said Siemens bought 35% of Drager. I don't see it that way. I see Drager eliminating their competition. Lubeck will be running the show. The Evita series was released as early as 1994 so Drager might be already conducting R & D work on a new platform. However, the Servo i is brand new. Will the management consider the Servo i their vent of the future and stop R & D work on the Evita series or its replacement? Who knows?

The language of the press release leads me to believe that the new company will stress monitoring, OR vents and IT solutions. It seems they'll be focused for a good deal of time outside the US. It is in Europe where the Anaesthesiologists make the purchasing decisions for monitors as well as OR and ICU ventilators. They run the ICU's and want to buy a "package" deal.

In the US, it'll be interesting to see how they set up their sales force. What will happen with Allegiance? The Siemens Allegiance contract expires at the end of this year. Perhaps we'll see some Siemens and Drager reps selling Respironics, Viasys and PB Ventilators very soon.

Alan

Alan,
I had heard that Drager wasn't developing a new vent, in fact the only new thing introduced is a larger screen for the E4. Perhaps they are looking to the future with a platform that they didn't have to have any R&D expenses on since someone else developed it. It is also my understanding that the E4 and E2 are very expensive to make because of the front panel's excessive cost, giving drager a smaller margin than they would like. I agree with you that the focus is on monitoring/IT/Anesthesia and what will happen with vents may be anyone's guess. But based on the market acceptance in Europe and now in the US, I doubt Siemens would embark on a joint venture that would eliminate a brand new product capable of generating tremendous income for the company. It was my impression from the press releases that there is no "purchase" per se, rather both companies are entering into a seperate entity "at arm's length" of both the parent companies. Of course, we'll see if it gets past all of the regulatory barriers. It would be nice to be able to have access to both products. One question, why would you expect Seimens and Drager reps to be selling other vents?

How do you know Draeger is not developing a new vent?
How do you know Evita is expansive to make because of the front panel's excessive cost?
How do you know the targeted margin for Draeger?
It is considered as company confidential, how can you know? Are you working in Draeger or its competitor?

I think it is safe to say that the Evita, Servo i and PB840 are most likely all relatively expensive in terms of "cost of goods." You might even add Hamilton (Switzerland) into the mix. However, manufacturing costs are likely higher for ventilators assembled and tested in Germany or Sweden. Although one may have it, one doesn't require inside information to make these assumptions. It is well known that labor and benefits costs are higher in Northern Europe. PB may fair better considering that they manufacture their vents in Ireland. German citizens are by law allowed 6 weeks vacation even in their first year of employment. They also by law only work 32 hour weeks. I'm not sure about Sweden but I do know the social "safety net" is elaborate compared to the US in both Germany and Sweden. It is my opinion that, for the most part, Europeans like the fact that they have a highly socialistic style of government - but they pay for it one way or another. Government sponsored transportation, education, retirement, and health care differentiate Europe from the US. We in the US won't countenance +50% taxation on our income. Anyway, that's another topic but it is pertinent in the sense that Siemens and Drager build their products in the north of the European continent and Viasys, Respironics, Pulmonetics and others build their vents elsewhere. Those additional costs will be passed on to the buyer. We all know that American companies are better positioned to be competitive - not just in health care - why else would the US dominate but for the system in place? We all should admit that we're not smarter, we just have a better system.

Roger 2: Many of us RT's have backgrounds that lend to a high level of communication with manufacturers. Some of us have close friends with knowledge regarding cost to build a vent. I have asked questions such as -why should I pay so much more for this vent vs. that vent? Company engineers and sales reps respond by pointing out that their inspiratory and expiratory valves are more sophisticated and that a touch screen user interface involves higher cost for circuit boards, etc. The high end vents are selling for 30k. Would you think that a company selling a ventilator for 20k is doing so because they are philanthropic? Would you believe a T-Bird or Esprit or Bear 1000 is being sold by those companies for lower prices simply because the company is willing to make less money? I don't think so - I think they use lower cost components. Roger may work for a hospital or a manufacturer, but his information and assumptions are not off the mark. Also, it's OK if Roger works for Drager or Siemens or PB or Viasys or Pulmonetics or Respironics. But, it is your right to ask him and your right to question his motives. I love this forum.

Roger, you asked why I think Drager and Siemens reps might find themselves selling vents for other companies. Well, history tells me that whenever there is a merger, a partnership, an acquisition or a takeover, it is always followed with an effort to reduce the cost of selling and increase efficiencies in manufacturing, R & D and SG&A (that's my stock market investing habit coming through - I like to read annual reports). If two sales teams have the same products to sell, it stands to reason that it isn't necessary to carry all the personnel to do the selling.

Alan

Regarding the..

"We all know that American companies are better positioned to be competitive - not just in health care - why else would the US dominate but for the system in place? We all should admit that we're not smarter, we just have a better system."

The overall reason American companies are better positioned to be competitive is basically because we stood intact after WWII, while the rest of the world was in shambles. Had Germany won, or had Russia won a bit more early such that they took over all of Europe, or had England and France both beaten Germany early on (and then both kept their colonial empires intact and transitioned them from colonialism to imperialism to the new IMF mandated free market "thou shalt never take off" system)---with any one of these scenarios we would not have nearly the material basis for such arrogance.

And Japan is very competitive yet has a socialist medical system.

The comment that we have a better system.. I would love to see those words above various pictures pointing out some what that means for the uninsured and other (ever growing) disadvantaged persons.

The new IMF regulations are basically forcing countries to stay mirred in a very unequal poverty. Anyone whom thinks this can go on for long is in for a rude awakening. If capital can flow seamlessly through national boundaries, then why not labor? This is a question being asked among many so adversely affected.
For a current discussion of this, go see....

http://www.thenation.com/doc.mhtml?i=20020610&s=press

From the article (Stiglitz is a somewhat renegade IMF member)...

"In March of 1997, barely a month into his job, Stiglitz flew to Addis Ababa to meet with a group of Ethiopian officials who had become embroiled in a bitter dispute with the IMF. Several months earlier the IMF had suspended Ethiopia's lending program after growing dissatisfied with the way its economy was being run. Stiglitz found the suspension baffling, for the Ethiopian economy appeared to be in good shape: Inflation was low, output was rising and, after decades of famine, the government had launched a rural development program focusing on the needs of the poor. The IMF, however, claimed that Ethiopia was too dependent on foreign aid, which could dry up and then cause a budget crisis, and had failed to meet certain conditions on its loans, such as deregulating its financial market.

Upon returning to Washington, Stiglitz pointed out that the Ethiopian government had resisted financial deregulation for good reason: In neighboring Kenya, the policy had led to higher interest rates, which devastated poor farmers. For several weeks, he waged an intense--and, in the end, successful--internal campaign to get the IMF program restored. But the experience left him deeply embittered. "I found the whole thing astonishing," he says. "Not just the policies but the way the IMF interacted with this country, basically just telling Ethiopia what to do regardless of what its leaders thought."

From the Nation, June 10, 2002

Back to ventilators...

I find it interesting that many of the better designed ventilators are coming out of Europe. This is partly because they are being designed by MD's very interested in mechanical ventilation. I believe PB has excellent engineers, but their marketing is, well directed to the market from inception. Substitute innovation with jamming everything into the ++ menu. Then, true, they may be more expensive because they aren't assembled in Malaysia by Kathy Lee's special troops.

I suppose we shouldn't talk politics here, that's another type of ventilation.