After years of steady growth, the dialysis market is predicted to increase dramatically, and this growth will severely strain the current system of dialysis clinics where most of these procedures are performed. Home hemodialysis could help relieve this bottleneck but has not been a viable alternative to date because of the lack of effective device innovation. NxStage Medical has developed a system that makes home hemodialysis a therapeutic option, which could dramatically improve both the health and lifestyle of patients, along with the economic future of the dialysis market.

Though one key ingredient is luck, exit-by-M&A can be planned, as the Esperion-Pfizer transaction shows. Focusing on a single underappreciated pathway and eschewing discovery, Esperion put together, very inexpensively and very quickly, an in-licensed portfolio of related compounds. By doing so, Esperion minimized the chances it would find itself competing against an improved follow-on should it prove the value of its mechanism of action. Likewise, once it had reached some clinical proof of principle, its strategy positioned it either for a major multi-product deal or, even more likely, an acquisition-with Pfizer's $1.3 billion takeover the eventual outcome.

Dialysis prolongs the lives of patients with end-stage renal disease, but outcomes are still poor, with a 17% mortality rate in the US. Nephrologists and technology developers want to improve outcomes, but the economics of dialysis have stymied innovation. Medicare tightly controls pricing, and developers are hard-pressed to find therapies that increase clinical benefits but not cost. Recently, two major clinical trials in dialysis hint that the benefits of dialysis, as it's currently performed, are approaching their limits. Start-ups now have the ammunition with which to approach a technologically stagnant market. Small companies, however, face daunting competition: three giant players dominate the market, two of which own 40% of the service centers that provide dialysis therapies.

While in-home dialysis offers quality of life benefits for patients with kidney failure and even clinical benefits over in-center hemodialysis sessions, most conventional hemodialysis systems aren't suitable for the home environment. Renal Solutions has developed a self-contained hemodialysis system that is cost-effective and easy to use, to address the $1.6 billion potential market for home dialysis.