Repeat or Renew?

Repeat or Renew?

Medical device industry professionals share their thoughts on the last12 months and discuss the sector’s prospects for a fresh start in 2012.

Michael Barbella • Managing Editor

Those who cannot remember the past are condemned to repeat it.

—George Santayana, Spanish-American philosopher,essayist, poet and novelist.

In F. Scott Fitzgerald’s classic novel “The Great Gatsby,” protagonist Jay Gatsby is willing to tackle the impossible to delight the love of his life—a beautiful but sardonic and somewhat cynical married socialite. Gatsby is determined to “fix everything” by recreating the era in which they were romantically involved, but is stopped short by the words of a trusted friend.

“You can’t repeat the past,” his friend, Nick Carraway, warns. Taken aback, the billionaire replies, “Can’t repeat the past? Of course you can!”

In the fictional world, of course, anything is possible—even time travel. But such a concept, while fascinating, may not be too popular in the real world these days, given the length and extent of the latest global doldrums. To some extent, the world seems stuck on instant replay, mired in the same economic misfortune that significantly has reduced working class wealth, destroyed America’s housing market and prevented an overall robust recovery from taking place.

Some sectors of the economy are experiencing the sense of déjà vu more than others. Medical device manufacturers, for example, particularly have felt caught in a vicious cycle this year as they face many of the same challenges they encountered in 2010: healthcare reform, the U.S. regulatory process, the device excise tax, sluggish sales, pricing pressures and caps on reimbursement rates.

Over the last few weeks, Orthopedic Design & Technology spoke to various industry professionals to analyze the overall impact of these challenges and determine whether device manufacturers can expect to remain in repeat mode in 2012. The professionals included:

• Mark Bonifacio, president of Bonifacio Consulting Services LLC, a medical device manufacturing consultancy in Natick, Mass.

• Mark B. Leahey, president and CEO the Medical Device Manufacturers Association (MDMA), a Washington, D.C.-based national trade group that represents research-driven medtech companies.

• Eric Major, president, CEO and co-founder of K2M, a Leesburg, Va.-based spinal device firm.

• Daniel R. Matlis, president of Axendia Inc., a Yardley, Pa.-based analyst and strategic advisory firm focused on the life sciences and healthcare sectors.

• Jeffrey C. Wang, M.D., Education Council Director for the North American Spine Society (NASS) and a professor of orthopaedic surgery and neurosurgery at the University of California-Los Angeles (UCLA) Spine Center within the UCLA School of Medicine. NASS is a non-profit group based in Burr Ridge, Ill., that is dedicated to advancing spine care.

• Rick Wise, CFA, managing director/equity research analyst for the Medical Supplies & Devices division of Leerink Swann LLC, an equity research, investment banking and asset management services firm with offices in Boston, Mass., New York, N.Y., and San Francisco, Calif.

Use one word to describe the Year in Medtech. Please explain your answer.

Mark Bonifacio: Change. With healthcare reform pending, in its existing form or in any form, change will be required. Doing business in the medtech world the way it has been done will not keep you at the forefront. Technologies and products that improve patient outcomes and reduce overall healthcare spending will rise to the top.

Mark B. Leahey: Challenging. It has been described by some as a “perfect storm” impacting medical device innovators today. There is an unpredictable regulatory pathway, venture capital funding continues to shrink, and the industry still faces—and is already planning for—a 2.3 percent medical device excise tax. This proud American industry is one of the only net trade exporters, but we are in danger of losing this position. Our elected officials note that we have to out-export, out-innovate and out-manufacture our competition, and the medical technology industry is one that can achieve all of these goals, but there are many challenges.

Daniel R. Matlis: Uncertain. That’s the word I have heard medical device executives use most often when describing the current state of the industry. What are some of the issues that they often bring up? You have the 510(k) review process, the [Institute of Medicine] IOM saying it should be scrapped, while FDA and industry saying, “no, no, no”… it’s like Winston Churchill said: “Democracy is the worst form of government except all the others that have been tried.” The same thing applies to the 510(k) process—it is not perfect, but it may be the best we have. The lack of clarity has caused a lot of uncertainty in 2011. Another issue that often comes up in discussions is healthcare reform and comparative effectiveness—how they are going to impact the industry. Another area of concern is the impact of globalization and outsourcing. There’s a lot of angst by industry executives around that. Axendia did a research study on Life-Science Global Supply Chains and what was very interesting is that 94 percent of the executives surveyed said that they’re going to increase product sales worldwide and 78 percent say that they’re going to increase global sourcing. But when we asked what they see as the greatest source of risks, 94 percent said that raw material supplied outside the U.S. represented the highest risk. The final issue that often comes up in discussions is the impact the excise tax will have on the industry and how it might stifle medical technology innovation Add all these factors, and I believe I have justified my description of 2011 as uncertain.

Jeffrey C. Wang: Flat. I chose the word “flat” because I finally see the recent explosion in new spinal devices and new spinal companies becoming more manageable. With the recent difficulties with [U.S. Food and Drug Administration] FDA approvals of truly new technologies, I believe we are seeing a slowing of newer technologies and a refinement of existing technologies that are already approved and do not require an [investigational device exemption] IDE trial or new approval.

Rick Wise: Challenging because more than at any time in the several decades of observing the industry, it seems like every aspect of the industry is being challenged in multiple ways. Between the economy, an exceptionally complex and difficult regulatory environment, budgetary concerns at the state local and hospital level, the pushback on innovation, the [medical device] world feels totally turned upside down. A lot of the innovative medical products are being sold in Europe first. There’s been a change in the mindset, a profound lack of understanding of how medical device innovation occurs. Medical devices occur in an iterative fashion. In addition, the FDA has a critical job to uphold the highest quality and safety standards possible. And as those standards and new regulatory processes evolve, it’s challenging for regulators and companies alike. Still, mechanical products are subjected to a great deal of abuse and wear and tear (products implanted inside the body) and you can’t expect these pieces of metal and plastic to be 100 percent forever. It’s sad to me that because of some real product performance issues—which happen—it feels like the pendulum has swung too far. We turn to doctors and medical technology for help with very challenging, complex disease states. No doctor is perfect, no device is perfect, no company is perfect, but this is a period where the pendulum has swung too far. It’s become all about products having to be 100 percent forever but that’s not realistic.

Please discuss the medical device design trends in 2011 and why those trends have come to the forefront this past year.

Eric Major: Minimally invasive spine surgery has seen rapid advances in 2011. Due to advances in technology, surgeons have been able to expand patient selection and treat an evolving array of spinal disorders. 2011 was a year of innovation for K2M, as the company introduced a total of ten new products in the span of one month. These new products are important advances for the company, as K2M remains committed to offering solutions for the full spectrum of spinal pathologies that build upon its proven track record as a leader in the complex and minimally invasive approaches to the spine. As we look to 2012, it can be expected that the increase in minimally invasive surgeries will continue. As part of our commitment to meeting surgeon and patient needs, K2M has created a new Minimally Invasive Spine Unit (MISU) of experts in the field, which will continue to expand in 2012.

Wise: There’s been a continued push to manufacture offshore. Much like the rest of the American industry, for a whole host of reasons, cost among them, the medical device industry is moving offshore and that has an effect on innovation. Is it a trend that the regulatory bar and quality bar continues to be raised—as it should be—regarding record-keeping, comparative effectiveness and supplier management? Maybe. I expect the need for ever-better process controls, information-gathering and [data] transmission to the FDA to get tougher over time.

Bonifacio: MIS (minimally invasive surgery) and all the surrounding technologies have led to the miniaturization of many things. These trends will continue as in most cases they lead to better patient outcomes, shorter hospital stays/recoveries and better overall quality of life, which are all part of the healthcare paradigm shift that is occurring as we speak.

Wang: The trends I have personally seen are the improvements and refinements in existing technologies and making what is already approved and accepted devices/technologies even better. I see medical devices being improved, refined, and easier for the surgeon to use, primarily in surgeries and technologies that are already approved and well-accepted. I believe the difficulties with bringing new technologies to the market have inhibited the process and I see a focus on new products that are easy to approve. I do expect this to continue through 2012.

Matlis: One trend that has picked up steam in 2011 is the [Center for Devices and Radiological Health] CDRH’s emphasis on the total product lifecycle (TPLC) approach. The FDA has been implementing TPLC for some time but we saw it really gain a lot of steam in 2011 with the CDRH putting it as its top priority for 2011 and then following shortly thereafter by including it as its top priority in its 5-year plan. In addition we are starting to see requirements for more medical devices to follow that TPLC approach.
The second one is somewhat related – the increasing difficulty for industry to collaborate with surgeons, doctors and healthcare practitioners in the development or improvement of medical devices.
Having worked in the medical device industry, I know that many of the ideas for product improvements and enhancements come from healthcare practitioners—the surgeons, doctors, nurses and technicians who are using the tools every day. The perception from industry executives is that the flow is being curtailed right now, and when that flow is restricted it could impact innovation. The [U.S.] Department of Justice settlement with orthopedic manufacturers started the process. As a result industry has promoted the adherence to a voluntarily Code of Ethics. AdvaMed’s Code of Ethics on Interactions with Health Care Professionals is certainly a good framework, but these actions may be having a chilling effect on innovation. When a CEO tells you that before he can take a healthcare professional to dinner he needs to jump through a series of hoops or get approval from this that and the other, this may have an impact on innovation.

­Please discuss the medical device manufacturing trends that have occurred in 2011. Will those trends continue next year?

Matlis: From a manufacturing standpoint, I think what we’re seeing is a lot more outsourcing going on in the industry and we’re also seeing more emphasis on gaining visibility from those

outsource manufacturers and the entire manufacturing process. One of the drivers for this in addition to TPLC is the FDA’s imminent release of the UDI (universal device identifier) rule. Even though UDI is primarily intended for tracking product once it leaves the manufacturing facility, many medical devices manufacturers are taking the opportunity to leverage UDI to gain visibility throughout their supply chain and extending that level of traceability throughout the supply chain. This year, we welcomed IBM, Microsoft and Cisco into the medical device manufacturer category as a result of FDA’s Medical Device Data System rule, which now classifies certain healthcare IT as a Class 1 medical device. So if you’re making certain healthcare IT products, you’re now considered a medical device manufacturer, and you must register and list with the FDA as a medicaldevice manufacturer.

Bonifacio: Commodity medical devices are moving the way of any other commodity market, with (good) quality assumed, and price being the driver. Outsourcing continues both domestically and abroad. These trends will continue, though the locations may change as China continues to grapple with rising wages, currency valuation and freight/logistics issues. South America, the Dominican Republic, Costa Rica and Mexico should all benefit from this. In NorthAmerica, automation, lean manufacturing and working on higher value-added products will help keep jobs and manufacturing in the U.S.

Wise: There’s been a continued push to manufacture offshore. Much like the rest of the American industry, for a whole host of reasons, cost among them, the medical device industry is moving offshore and that has an effect on innovation. Is it a trend that the regulatory bar and quality bar continues to be raised—as it should be—regarding record-keeping, comparative effectiveness and supplier management. Maybe. I expect the need for ever-better process controls, information-gathering and [data] transmission to the FDA to get tougher over time.

What major issues and/or challenges have impacted the medical device/medtech industry in 2011?

Wang: I believe there are several issues that have impacted the medical device/medtech industry. The difficulties with FDA approvals and requirements for IDE trials for new products have made many companies reluctant to bring new technologies into the market in the United States. I believe they are looking to Europe and other countries to gather clinical data and I expect this trend to continue. Even when these products can get through the FDA approval process, insurance companies are often not approving the use of these products and refuse to pay for the surgeries that utilize them. I do expect this continue in 2012. I also see that surgeons and policy-makers are demanding more stringent evidence of the efficacy and positive outcomes with the use of new technologies. Therefore, I do expect that newer technologies will require definitive evidence of efficacy in order to be adopted for wide usage amongst surgeons. This is perhaps especially important for the biologics products. The same issues will exist in 2012 and the market/industry may continue to contract.

Bonifacio: [U.S. Food and Drug Administration] FDA reform/healthcare reform lead the way. While the impact in 2011 has been muted as many of the new directives are phased in over the next two years, you can see companies beginning to prepare for the “new normal” as it pertains to healthcare and to medical devices. The days of layering technologies and unnecessary tests and procedures may be seeing their last days. While this change will happen, it may occur over the next several years and will not happen overnight.

Major: From our vantage point, a lot of companies are experiencing challenges—both internally and externally. There has been a decline in innovation and a slowdown of new product introduction by companies that had been viewed as industry leaders. The global economy is suffering and the spinal medtech market has experienced many challenges. It’s been important for K2M, as a company, to continue to embrace the solid ethics established at our founding.

Leahey: FDA’s regulatory pathway has been the biggest challenge for the medical technology industry in 2011. Whether submitting Class 2 or Class 3 devices, there has been a chorus of complaints that the process has been unpredictable and unreasonable. This is leading to high paying manufacturing jobs moving overseas as American innovation is landing in Europe and elsewhere first. Ninety-eight percent of medical technology companies have less than 500 employees, and most cannot afford the delays and unreasonable requests that are leading to these decisions. Unfortunately, we also know of examples of companies developing promising technologies and devices that ran out of funding navigating the process and closed.

Components of the Affordable Care Act continue to be turned into regulations that could have negative impacts for medical device innovators. For example, final regulations for Accountable Care Organizations were issued recently which could lead to a lack of access to cutting edge devices and technologies for patients and providers.

Wise: I think innovation, selling, marketing and the whole business model that has been in place is changing. The way new technology gets to market, the requirements for impeccable clinical data, the fact-based world we live in, the ever more transparent world we live in, are all serious challenges. But one of the major challenges is this: If you are a CEO running a medical device company, given the rapidly changing and ever more complex healthcare world, you have to think about how your company is going to adapt and change. The prescription going forward is pretty clear—you have to be more innovative than ever and I suspect you have to rethink the way that you invest in marketing and selling your product. The orthopedic industry has had a somewhat mixed record on quality. It feels like this past year or two in particular has been all about the controversy over metal-on-metal hips. It feels like this debate has been going on for several decades, even though it’s only really heated up in the last 12-18 months. I think that this year has also surprised analysts and doctors alike—it turns out that this was the year we all suddenly learned that the [orthopedic] reconstructive industry is also a consumer industry. With rising copays for COBRA benefits and the loss of [health] insurance due to high unemployment, I’ve heard from patients and doctors alike how people are reluctant to take time off work to have a hip or knee replaced. It’s really taken a toll on procedures. And it’s not looking like 2012 is going to be much better. We expect further declines in 2012.

Matlis: Product diversion, thefts and counterfeiting – there’s been a significant increase in the number of medical device products that have been either stolen out of warehouses or trucks that have been stolen containing pharmaceutical products and medical devices. Boston Scientific reported that a shipment of medical devices was stolen on its way to the company’s sterilization facility. We’re seeing an increase in the number of product thefts and also the counterfeiting of some medical devices. Many companies have taken notice of that this year. I think this [increase] is a combination of things. You have a situation where you’re dealing with a high-value item that can be easily reinserted into the supply chain and by the same token the penalties associated with the theft of medical products are relatively low. Earlier this year, there was a proposed bill that would make the theft of medical products prosecutable under the RICO (Racketeer Influenced and Corrupt Organizations Act) statute—the statute that is often used for organized crime. This is something UDI would help with. Right now you have no way of knowing whether the product is legitimate or not. There is no centralized database, which is what UDI would support.

How will these issues and/or challenges shape the industry next year?

Leahey: If the regulatory environment does not improve, we will continue to see devices and technologies being available to patients outside the United States first. Many practitioners we talk to refer to the “toolbox” they use to provide patient care. The more tools they have, the better. When safe and effective medical devices are available, we know these lead to a reduction in hospital stays and increased life expectancies. These are goals everyone agrees with, and as our economy continues to struggle, it is urgent that we address these problems so that 2012 can be a year with improved patient care, innovation and job creation.

Bonifacio: Think Lean, think patient outcomes, think lowered overall system costs, shorter hospital stays. While some of these things have always been talked about in recent years, escalating healthcare costs, especially in the U.S., are unsustainable in the long term.

What predictions do you have for growth in 2012 based on the industry’s performance in 2011?

Wang: I think the issues we faced in 2011 will continue into 2012. The growth I see are from companies making existing products and technologies better and more refined. I see potential expansion into areas that are already being explored, but perhaps have not reached their full potential. An example is minimally invasive surgery. There are other areas that have not reached their full potential and may be areas where the industry could expand.

Wise: I continue to be very cautious in thinking about growth predictions for the medical device industry’s major markets in 2012—hips, knees, spine, stents, CRM [cardiac rhythm management]. If people are unemployed, they don’t have insurance, they’re not going to visit the doctor as often and they’re not going to undergo [medical] procedures. On the other hand, if you have a job and you need your knee replaced, you may find it hard to be away from work. Until we get a more convincing recovery and until unemployment falls, industry growth rates are going to be challenged. Hospital budgets remain under pressure and insurers are pushing back hard on utilization. These challenges are not going to change simply because we flip a calendar page.

Leahey: The medical technology industry is a passionate and resilient group of innovators, but our concerns are that we will lose our edge with the headwinds facing this vibrant field. While there are always ebbs and flows facing industries, medical technology innovators tell us they have never seen such a challenging regulatory environment for developing new and innovative devices. Our hope is that we can see the return of a predictable and reasonable regulatory pathway, and with numerous stakeholders engaging in this process and bipartisan support in Congress, we continue to work towards this goal. With the emergence of new markets in Asia, Europe and other overseas populations, there continues to be opportunities for medical technology companies to expand and improve the quality of life for patients.

Bonifacio: Sheer demand for product and services and our aging (global) population growth will continue, albeit it may be at a slightly slower pace than prior years. 2012 will be a year to watch the unfolding reform of our healthcare systems (U.S. and globally) and how we position ourselves to meet these new demands. Global demand growth is inevitable as we continue to see middle class growth in the BRIC countries (Brazil, Russia, India,China), whose residents want the same quality of care and products as other developed nations.

Major: 2011 was a year of amazing growth for K2M. While other companies in the industry saw decreased market share, K2M has grown its market position by double-digits year over year. K2M is experiencing unprecedented growth through innovation and new approaches to operations as it delivers on its commitment to become the global leader in the spine market. Its acquisition last year by Welsh, Carson, Anderson and Stowe provided the company the additional capital, which allowed K2M to continue its robust product development. In addition, K2M is doing things differently by pioneering a local office distribution strategy in select markets, which allows for stronger customer relationships and responsive service. In addition to its organic product development, K2M is also expected to announce M&A activities by year’s end representing innovations that continue to strengthen the company’s portfolio. In addition to U.S. growth, K2M is expanding dramatically internationally. The company has now set up direct offices in the United Kingdom and Germany and has continued to enter new international markets at a rate of one to two countries per quarter. To help fuel international growth, K2M has made three new senior international hires. As we look back at the growth in 2011 and towards what the future holds in 2012, we believe that successful companies will continue to be able to adjust to a challenged environment, continuously delivering on their promises to physicians, patients and colleagues.

Please assess the general health of the medical device/medtech industry this year.

Matlis: I think overall the industry is in a good position, financially. The biggest concern we hear from executives regarding the health of the industry is the amount of taxation—if the industry is taxed at a higher level will those jobs remain here? And the uncertainty around reimbursement and comparative effectiveness analysis is a concern for industry executives. The health of the industry especially compared to some other industries in the economy today is good. The patient is in a stable condition.

Bonifacio: I think medtech in general and the device industry will continue to be strong. This may vary from sector to sector on exact amounts but overall the general health and marketplace should continue to grow and be strong. Companies in the market need to focus on international growth and markets and really understand the needs of those emerging markets and work from there. Healthcare, medicine and devices in general may not be the same in all markets and it will be important for companies to establish themselves with a local presence in these markets to understand the needs and fill the demand. I also believe consolidation will continue among OEMs, contract manufacturers, and other service providers.

Leahey: While many established companies are pushing forward in these difficult times, recent data suggests that there has been a significant downturn in venture capital investment in early stage companies over the past few years. Reports have shown that this downturn is directly related to the unpredictability with the regulatory process at FDA. Early company formation is the leading indicator for innovation and job growth. If new companies are not being funded, this is bad for healthcare and our economy. It also is concerning to larger companies who rely on these innovators to bolster product pipelines.

Wang: I have not really seen any truly new technology in 2011 because of the concerns I already mentioned. All of the technologies that we have seen are “left over” from prior years. We may see more advances outside the United States where newer technologies may have an easier pathway.

Wise: As far as the industry’s financial health is concerned, companies are in very robust shape. All the major companies have embarked on cost reduction and efficiency programs, everyone is rethinking how to conduct business to get more in line with the changing times. And it’s pretty clear the VC [venture capital] community has backed off the medical device industry based on the regulatory environment. But until we get greater clarity and certainty on the regulatory front, it’s tough to say the industry is in great shape. Take a big step back and look at the big picture. The work the FDA is doing to ensure quality and safety is positive. But until we get greater certainty about the process and how it works and the timelines involved in making it work, it’s hard to view the companies as being in robust shape. Every large company I cover is excited about the opportunities in emerging countries—China, Russia, India, Brazil, etc. That’s a major new opportunity. Offsetting that though, are concerns about Europe. The companies in this sector are outstanding companies by and large, and they will manage through these challenges, but 2012 has to remain another complex, challenging year for the industry as it works hard to adapt to a rapidly changing world.

What issues and/or challenges will shape the industry in 2012?

Leahey: I believe the challenges that the industry faced in 2011 will continue to face it in 2012. We continue to hear about challenges with FDA, and this simply is not a problem that can be fixed overnight. In addition, the medical device tax is scheduled for implementation in 2013, so companies will continue to address the negative impact of this tax on innovation. We have heard that most companies will either cut R&D, lay off workers or other negative outcomes to address this tax. In addition, reimbursement challenges will continue to shape the industry as Congress and other policy makers address the national debt and rising costs of healthcare.

Wise: It’s hard to answer that question. Metal-on-metal used to comprise a third of all hip implants, now it’s more in the 10 percent range. Specific issues may not be in the headlines as much, although we’ve seen in last week or so something about J&J’s metal hip implant. One thing to watch will be the changes coming to Washington, politically. Washington is about politics. A new Congress or a new balance of power might view the regulatory issues in a different light and that would be profound. A different light might mean “Yes we want all this regulation from the FDA but we’ve been underpaying for it.” Or, “No it’s too much, we’re exporting the medical device industry.” As in any election, there will be a lot up for grabs.

Major: At K2M, we expect the challenges that faced the industry in 2011—economic distractions such as mergers and layoff and the uncertain healthcare environment—will continue into 2012. As in 2011, we expect the companies that will weather these challenges the best will be companies that offer leading technology and help surgeons provide solutions to spinal pathologies in the operating room.

Matlis: We’re seeing the trend for companies to begin implementing systems, technology and processes that go outside of their four walls. When these companies were vertically integrated and when everything was being done in-house, you had very good visibility into every step of the process and you could make decisions accordingly. When companies began outsourcing, they really lost a lot of that ability and control into what happens to those subassemblies or components, or even in some cases, the finished product because they outsourced the whole manufacturing process. We’re seeing the trend for these brand owners to look for ways to gain more visibility and control into what happens in their supply chain. Looking for ways to look at what their suppliers are doing in a real-time basis just like what they could do in many cases when they were doing it internally. You could walk down to the shop floor and see what was going on or take measurements from your own shop floor. When you outsource, many companies will tell you that they can’t give you that level of visibility because the processes are proprietary or because there are competitive issues and they’re working with your competitor. As the brand owner, the FDA ultimately holds you accountable. The challenge is that often you don’t have the data to find out when a problem is arising until you get that product in the door. That’s a big challenge.

What changes will take place in the medical device/medtech sector over the next 12 months?

Leahey: It is difficult to identify what will happen over next year, but MDMA and our members are hopeful that efforts to improve FDA’s regulatory framework are successful. There are many stakeholders involved in these efforts, including patient groups and providers, and we all agree that we need safe and effective medical devices into the marketplace to improve care. Members of Congress have recently introduced legislation to address some of the challenges medtech innovators are facing, and FDA is currently examining some initiatives as well. It will be very interesting to see what comes of them.

Bonifacio: From a manufacturing standpoint, cost and quality will continue to be king. Of course, cost for commoditized products and mature markets will be even more crucial. In some cases, I believe we may see a slight slowing in moving medical device manufacturing solely to China or the Far East as increased freight, currency fluctuations, and increased wages will all weigh on this part of the supply chain. With that said, manufacturing in the Far East for the local market demand remains a great opportunity for companies with the right mix of products and the appropriate cost structures. Automation of surgical procedures and more robotics will continue to be deployed, telemedicine and remote patient monitoring, using wireless and internet connectivity will also continue to grow and at a nice pace. The trend for MIS will continue to outgrow other medical markets and this, of course, will push more technology gains in micro and nanotechnologies. As healthcare reform in the U.S. and around the globe continues over the next 12 months and beyond, we will be able to get a better handle on how it will effect what we make, where we make it and how we make it.

Wise: The only change I’m interested in is the economy and regulation. My hope for next year is signs of stabilization for the economy—I don’t expect much on the regulatory front in terms of positive change for the industry. We’ll see. Like everything in life, the pendulum swings and the extremes are not the norm on a long-term basis. But we’ve been on an unhealthy extreme for too long and it doesn’t show any signs of easing.