Hearing instrument and cochlear implant companies have stayed focused on their respective market niches over the years. Hearing aids have been marketed to people with mild, moderate, and severe hearing loss, and cochlear implant companies have focused on people with profound hearing loss. Now, both are actively seeking investment into the other’s market niches. Sonova, the parent holding company to Phonak of Switzerland, has just completed its acquisition of Advanced Bionics, a Valencia California company. AB makes cochlear implants, medical devices focused on electrical stimulation of the cochlea, allowing people with profound hearing loss the ability to hear and communicate. The cochlear implant, an implantable medical device, is the most sophisticated electrical neurostimulation prosthetic in distribution.

Not to be outdone Cochlear Corp of Australia, is now in the hunt for a hearing aid company. A competitor to Phonak, Cochlear Corp has in excess of 60% share of the cochlear implant market, and is considered the market leader. Siemens wants to divest their hearing aid division, and Cochlear Corp. is in the bidding. Siemens is hoping to conclude the transaction this spring with a valuation of over $2 billion Euros. In an industry plagued by low levels of market penetration, perhaps this consolidation will create value and drive more innovation and lower costs. In the end, people just want to be able to communicate with each other.

The tinnitus percept originates in the brain, a central nervous system (CNS) reaction to a disorder of the peripheral nervous system, specifically the auditory nerve. It starts with hearing loss in the inner ear, (cochlea), and the brain responds to the hearing loss by increasing its ‘gain’. Here is what it sounds like for some…

Chronic tinnitus can be very uncomfortable, even painful. For a few million in this country with chronic tinnitus, it can also be debilitating. People who have chronic tinnitus report sleep deprivation, as well as anxiety and depression. Some are suicidal. It just doesn’t go away, and there is no gold standard treatment today that effectively suppresses the tinnitus percept.

The good news is that there is an active project today that is developing a medical device which, if successful, will help solve this large unmet clinical need, and bring relief to millions. Encouraging data already exists from clinical studies showing suppression of tinnitus using electrical neurostimulation of the auditory nerve. Find out more at www.silere.com

In other words, for someone who currently has an implant from Cochlear Corporation, and is considering the Harmony from Advanced Bionics in going bilateral, a) is this a non-issue (incompatibility of brands) and, b) what has the general outcome been like for such patients who have incompatible brands in terms of speech discrimination and music appreciation?

We discussed many questions this man presented to me, and I felt a sense of total frustration on the part of this family. He wanted to hear that there is a solution, and I had to tell him that currently, there is no solution to suppress chronic tinnitus. In fact, neurotologists who are trained in the treatment of disorders of the auditory processing system report that up to one third of their patients report tinnitus as their number one or number two complaint. Tinnitus is in the vast majority of cases a result of hearing loss. Not everyone with hearing loss has tinnitus, but almost everyone who has tinnitus has a hearing loss. This is a very large unmet clinical need in the United States and globally.

Clinical trials which search for clues to the suppression of tinnitus have targeted the brain and central nervous system, the auditory nerve and peripheral nervous system, even the vagus and trigeminal nerves. Drug therapies have been developed, tried, and failed. Transcranial Magnetic Stimulation (TMS), functional Magnetic Resonance Imaging (fMRI), Deep Brain Stimulation (DBS), Cortical Stimulation using paddle electrodes placed on the brain surface, and electrical stimulation of the cochlea are all possibilities which have trial results. Most are ineffective, however electrical stimulation of the cochlea is showing the most promising results.

I was able to leave this man with some hope, in the form of the promise that our company, Silere Medical Technology, intends to develop a neural prosthetic that will be subject to testing in clinical trials. Its purpose is to stimulate the cochlea with an electrical current, providing a suppression of the tinnitus. The company must first gain access to capital in order to begin the design and fabrication process. We need to build the device to test the therapeutic stimulation parameters which have shown to be effective in human subjects. He asked me if his wife could participate in the trials, and I was able to encourage him that this might be a possibility.

What is the trigger point for the public option in the health care plan as suggested by Sen. Snowe? If a state declares insurance for average families to be unaffordable, that state would have the option of offering a government run insurance plan. Important to remember that the public option currently in front of the Senate for debate would only enroll 4 million citizens, or less.

Senate Majority Leader Harry Reid, D. Nevada., needs 60 votes for this bill to pass. Senator Joe Lieberman, an independent from Connecticut, may not support it. If Senator Reid can convince Senator Snowe to vote in favor of the bill, we may have a government health care plan.

We need a clear understanding as to how this bill will be financed. Taxing companies who commercialize the best in medical technology and drug development will only discourage innovation and delay marketing of better health care. US Corporate taxes are already the second highest in the world, next to Japan. Insurance premiums for companies and individuals will likely increase. Providing health care insurance will be a growing cost burden placed on the small to medium sized companies in this country that are already struggling with a disproportional, and growing tax liability. It will only be a matter of time before these companies will go out of business, or move to a more tax lenient country, like Ireland.

In my opinion, we have the best health care in the world, provided by the best medical practitioners in the world. We have an imbalance and unfair distribution of resources within a system of patients, providers, and payers. That system simply needs a realignment, not a complete overhaul.

Private equity firms showing interest in the Siemens division include KKR & Co. L.P. and BC Partners Ltd. Options for Siemens include a sale, or potentially an initial public offering (IPO). The company will pursue a dual track, presumably to maximize exit valuation. According to the Bloomberg article, “Siemens is reportedly considering withdrawing from the hearing aid business in order to intensify its focus on energy, transport and infrastructure, and on medical diagnostics tools.”

Siemens has a history of designing and manufacturing excellent hearing instruments, and it is not clear to me why they plan to divest this business. Their company has competent people, effective distribution channels, and is poised for growth. Looking forward to following this story.

Announced earlier in November, Sonnova Holdings has agreed to purchase the assets of Advanced Bionics for $489 million USD. Advanced Bionics principal shareholder is Mr. Al Mann. Closing date for the transaction is scheduled for sometime in February. This acquisition signals the entrance of Phonak into the cochlear implant market, a large and growing segment of the hearing industry. This market has been long dominated by Cochlear Corporation, an australian company that commercialized the invention of Graham Clarke, MD.

The cochlear implant has been described by many as a miracle medical device. It’s purpose is to stimulate the auditory nerve by placing an electrode array into the cochlea, and tonotopically aligning electrodes with neural elements located within the cochlea. The device is implanted in the mastoid cavity behind the ear, and receives its power, and electronic signals, via an R/F link to an external component that looks much like a BTE hearing aid. The Advanced Bionics Hi Res 90K has been described as the most sophisticated neural prosthetic device in commercial distribution. Cochlear Corporation has just released its Nucleus 5, which may take that claim away from AB. Only time will tell.

In the United States there are about 750,000 people with a profound sensorineural hearing loss who would be candidates to be recipients of the cochlear implant. To date, there are approximately 200,000 cochlear implant surgeries performed worldwide. Cochlear Corporation predicts that in ten years, over 1 million people will have this marvelous device.

Through this acquisition Phonak is expanding into implantable hearing devices, and is the first hearing instrument company to do so. With a 24% share of the HI market, Phonak is demonstrating its commitment to future growth and strong returns by making an impressive investment in the growing implantable device market during a time of economic uncertainty and downturn.

The mission of Heart of the Village is to ‘raise awareness in the United States about diseases of poverty and provide direct assistance to survivors with emphasis on programs that sustain wellness, education and job opportunities.’ This foundation has three areas of focus which include wellness, education and jobs, and sustainability.

The Nyumbani Children’s Home was the Kenya’s first facility for HIV-positive children. The story about Dr. Browne, and her foundation, includes pictures of Andrew Dickson Mungai, one of Nyumbani ‘s children with a profound hearing loss. Mungai lost his parents at age three. Now 13, he has suffered numerous diseases, including tuberculosis and pneumonia. A bout with spinal meningitis in 2005 left him with a profound hearing loss, and no way to communicate with his friends.

Dr. Browne brought young Mungai back to the US for a cochlear implant, which is a neural prosthetic device that will allow him to ‘hear’, and improve his communication skills and overall chances in life. She will continue to travel to Kenya to help Mungai, and others with hearing loss, as she serves them through her foundation.

Dr. Browne’s actions are inspirational, and she is to be commended for her vision, courage, sacrifice, determination, and heart to help children in the developing world who cannot help themselves. It is through the efforts of people like Dr. Browne that others in the world will be given a better chance at life.

Blogging allows us to not only share our views on a subject of interest, but also receive the views of others on the same topic. Seth Godin talks about tribes this way, that we have something in common with our customers, and we should listen to each other. What a novel approach!

My good friend Blaine Millet at Customer Experiences Inc. http://customerexperiencesinc.com/blog/ has also been talking a lot lately about this, and in his observations describes how important it is to listen to customers, and get their feedback.

I couldn’t agree more.