Industry CEOs don’t take J&J for granted, even if they can’t understand the

Monday, March 31, 2003

On the same day J&J issued a press release about its new iGlide wheelchair - a story that the Wall Street Journal would cover in detail that same week - Invacare issued a press release inviting calls from the media for comment on the wheelchair industry and new wheelchair technology.

The gesture, no doubt, was an exercise in frustration. When the industry’s leading manufacturers roll out new wheelchair technology, the news is covered by the trade press. When J&J rolls out technology - even when it’s not new - the Wall Street Journal comes calling.

So what would Invacare and Sunrise Medical tell the media in the wake of J&J’s announcement? For starters, that power-assist wheelchair technology is not new. Sunrise Medical rolled out its Quickie Xtender at Medtrade last fall. And Invacare sells about 50 power assist systems per month to wheelchair users in Europe.

“We continue to evaluate whether we want to offer the technology in the United States,” said Mixon. “But so far, our people don’t feel we’d sell enough of them (to warrant) the fixed costs of trying to market” power assist.

While Mixon and Hammes each view the power assist market soberly, neither is sanguine about the precedent that J&J is setting by launching direct sales efforts. And for good reason. J&J’s market capitalization is presently $155 billion. That’s about 150-times larger than Invacare’s.

Nevertheless, Hammes can’t quite understand J&J’s strategy in the home medical equipment marketplace. Nor does he buy into the notion that all things are possible because you’ve got a “zillion” dollars behind your efforts.

“Take the car industry. How many times have people said, ‘We’re big. Why do we need dealers? Why don’t we set up our own dealers around the country?” said Hammes. “And the answer is, a big giant company, no matter how much money they want to throw at it, and how many people they want to try to hire away from the rest of the industry, is not oriented philosophically to provide that kind of service, both in terms of pre-sales service and after sales service.”

Hoveround and Electric Mobility are two manufacturers of wheelchairs that have also found success as suppliers. The difference between their formula for success in power, however, and Johnson & Johnson’s fledgling efforts is in the nature of the funding source. Where Hoveround is working a tried and true reimbursement channel in the K0011 power wheelchair market, J&J with its iGlide and its stair-climbing iBot wheelchair are blazing new territory in funding. That, say critics, will make all the difference.

Nevertheless, says Mixon, the “integrated model,” as he refers to direct-to-consumer sales by manufacturers, has been proven to work in the wheelchair industry. While he doesn’t believe that either the iBot or the iGlide are breakthrough products, he won’t readily wave away the potential impact that J&J could have in the home medical equipment industry.

“Here you finally have a company that’s got incredible capital, and they are committed to building a new model,” said Mixon. “So far, we don’t think either of these products is going to have anything but a niche impact But J&J has the power to open provider locations around the country. They may find out that since I am now doing wheelchairs, I may as well do the other stuff to help cover the overhead in my store.” HME