Some health care firms have managed to work around the industry's well-documented growth constraints by pursuing a strategy of convergence--finding new combinations of formerly distinct market segments for pharmaceuticals, devices, and diagnostics. The authors, at Bain & Company, outline the considerations that drive the evaluation of and set the stage for convergence opportunities. Companies can use them to capitalize on an array of opportunities throughout the commercialization continuum and develop a response to potential threats from the outside.

In Vivo presents another installment of our quarterly review of dealmaking--in this case April through June 2002. Our data come from Windhover's Strategic Transactions Database. We include medical device financings by deal type; diagnostic financings by industry segment; pharma and biotech alliances by therapeutic category and industry segment; pharma and biotech financings by market segment, and pharma and biotech M&A.

The market success of Zevalin, Idec Pharmaceutical's second product will largely depend on how well the company has built the requisite commercial infrastructure prior to launch. Idec benefited from having watched how Genentech handled the launch of Idec's first drug, Rituxan. But Zevalin raises unique issues including the need to establish a logistical framework for this first-of-its-kind regimen, in which radiation oncologists play a significant role in the therapy. A disappointment would heighten the uncertainty around the launch of other kinds of innovative products--Idec's certainly, and also those of other companies. The industry will be watching this as a barometer of potential for whether other highly complex therapies whose delivery entails the use of several types of specialists can succeed.

As scientific innovation in molecular imaging explodes, experts believe the big payoff will be in clinical, rather than research, applications. But absent validating clinical data, businesses remain hesitant to jump into the field.