Armen Bakirtzian, CEO and co-founder of Intellijoint Surgical Inc., Canada's fastest growing tech company in 2020, in the company's Kitchener, Ont. headquarters on March 21. With millions in international sales, Intellijoint just landed its first Canadian customer, Humber Hospital.J.P. MOCZULSKI/The Globe and Mail
Intellijoint Surgical Inc. is one of Canada’s leading medical device startups. The Kitchener company’s navigational tools are used by surgeons in 15,000 procedures annually to help improve outcomes of hip and knee replacements, mainly in the U.S., Australia, New Zealand and Japan. And the company was named Canada’s fastest-growing technology startup by Deloitte in 2020.
Yet despite developing its technology with the help of 12 Ontario orthopedic surgeons and receiving Health Canada approval in 2015, Intellijoint has never made a sale to a public hospital at home – until now.
On Tuesday, the company will reveal it has sold its flagship product, Intellijoint HIP – which includes a mini-camera, laptop and instruments to aid with the accurate positioning of implants – to Toronto’s Humber River Hospital at a news conference Ontario Premier Doug Ford is set to attend.
But circumstances behind the sale speak to a chronic problem facing domestic medical technology innovators that one deal won’t solve: a lack of demand for new medical technologies from publicly funded hospitals and health authorities in Canada.
Funding for the six-figure purchase of Intellijoint equipment and enough disposable items used during surgery (screws, discs, reflective markers and sterile drapes) for 1,200 procedures – two to three years’ worth – is not coming from Humber’s operating budget. Rather the funds were raised by its foundation at the behest of Humber surgeon Dr. Sebastian Rodriguez-Elizalde.
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A deal like this “is a one-off; this is not a scalable model” to grow in Canada, said Intellijoint CEO Armen Bakirtzian. He gave up years ago trying to sell at home after hospitals turned him down despite support from their surgeons. “A lot of people would not even bother. They would pick up and move the whole company to where the customers are.”
Dr. Rodriguez-Elizalde agrees. “It’s sad this is a Canadian company struggling to succeed in Canada that is best in class for what it does. It’s incumbent upon us as physicians and lobbyists and patients and users to demand it,” he said in an interview.
It’s a familiar problem that has come up in many government reports: Canadian innovators, particularly in medical technology, often have a harder time selling at home than abroad, despite the country’s reputation for leading medical research.
Provincial health systems have a reputation for stinginess and risk aversion when it comes to buying new technologies, making narrowly-focused budgetary decisions that don’t take into account benefits such as better health care outcomes and lower subsequent costs to the system. Many startups leave, taking jobs, intellectual property and tax-generating economic activity elsewhere.
“From a budget perspective, we’re always constrained in terms of just being able to maintain the equipment we have today,” said Mark Taylor, director of commercialization with Toronto’s University Health Network. “Hospitals have relied on donor money to purchase those big-ticket items. That’s a function of our system.”
Karimah Es Sabar, chair of the federal health and biosciences economic strategy table, said when it comes to medical technology, “We are late adopters, even of Canadian technology, because we’re risk-averse and siloed in our procurement in health care. ...We have some great capabilities and science which Canadians don’t have access to.”
Former Ryerson University president Sheldon Levy, who recommended in a 2019 report to federal Small Business Minister Mary Ng that Ottawa lead a “team Canada” approach to help procure more from local innovators, said “the idea of Canada buying from Canada is a serious problem – it’s acute in the medical space.”
Asked why governments haven’t fixed the problem, he said, “That’s the million-dollar question. I guess you have to realize it’s a problem first.”
There is a recognition at the political level things need to change. “I would absolutely acknowledge that any procurement of medical technology has proven to be challenging for Canadian companies,” said Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation and Trade. He said several recent initiatives by his government should lead to more purchasing from domestic manufacturers.
Mr. Levy’s report led to the establishment of CAN Health Network, which has brought together several hospitals to build an integrated marketplace for domestic health technologies. The group has procured $55-million worth of contracts and is asking Ottawa for $100-million to expand its strategy. UHN’s Mr. Taylor, meanwhile, said Canadian hospitals have started to foster growth of medical technology and biotechnology innovations by working to incubate startups.
As for Mr. Bakirtzian, he’s more encouraged than he’s ever been. At a news conference at Intellijoint headquarters in July, 2020, Mr. Ford stated, “we need to fix” the fact so few of Intellijoint sales come from Canadian hospitals. The company’s technology has been used in 1,000 Canadian procedures, half at private surgery centres and the rest thanks to a federal innovation funding program at two Ontario hospitals.
That was followed by meetings between Mr. Bakirtzian and provincial government officials at Queen’s Park. “This is not anything new for us. We’ve been trying to describe the challenges we face for a long time and have done so with multiple governments,” said Mr. Bakirtzian, whose company generates $10-million a year in sales.
Mr. Bakirtzian sees two possible outcomes that could help him and other medtech suppliers. First, hospitals need to be allocated innovation dollars over and above their tight operating budgets so they can spend on new technologies, he said.
He’s also encouraged by a recent request for proposals from Kitchener’s Grand River Hospital to do a research study on the clinical and economic benefits of using hip replacement surgery navigation tools. Such a study would address a lack of data on the cost effectiveness of such technology, according to the Canadian Agency for Drugs and Technologies in Health. Intellijoint has bid on the contract.
If that study concludes such technology is beneficial, it could lead the Ontario Health Insurance Plan to reimburse for its use, which would pave the way for uptake by hospitals, Mr. Bakirtzian hopes. The contract is set to be awarded in the coming weeks. “Ultimately that is what will lead to widespread adoption” in Ontario, he said.
“We’ve got a pathway here to actually achieve reimbursement, which is the holy grail for medical technologies.”
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