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Venture capital investments in the spine segment are as arid as the Mojave.
“We are currently facing a funding desert, an environment that feels almost like an extinction event for early-stage technology investment,” said Marc Viscogliosi, Principal of Viscogliosi Brothers, a full life cycle investor, and Chairman & CEO at Spine BioPharma. “It’s possible to invest heavily in technology and innovation, but success is far from guaranteed. The adoption model and long-term efficacy of outcomes are unpredictable, which makes it difficult to ensure a return on investment.”
The challenge facing the spine industry today lies at the intersection of multifactorial complexities and product commoditization, according to Viscogliosi.
“Significant pricing pressures and margin erosion make it incredibly costly for companies to develop technological advancements and compete effectively,” he said. “At the same time, surgeons are continually seeking ways to differentiate themselves and mitigate the financial strain that the healthcare system places on their daily fees.”
Viscogliosi believes industry executives must recognize and grasp the current funding landscape to create a competitive advantage.
“Companies that survive, adapt and evolve in this environment are not always the biggest or strongest players,” he said. “Success now hinges on being nimble, fast and ready to pivot in response to industry changes.”
Comprehensive Care
Viscogliosi said venture capitalists are increasingly gravitating toward lower-risk, later-stage investments where revenue growth is already apparent or positive cash flow has become crucial.
They’re also looking earlier in the patient care continuum and focusing on interventional technologies to treat medical conditions. Viscogliosi highlighted a few significant acquisitions in this space over the past several months: Boston Scientific’s acquisition of Relievant Medsystems for $1.2 billion and Stryker’s addition of Vertos Medical for an estimated $600 million.
“Both deals were in the interventional spine space, which tells us something important,” Viscogliosi said. “Investors now analyze how interactions occur within entire patient care sectors rather than individual innovations. This shift reflects the growing need to mitigate risk in an uncertain market.”
Viscogliosi highlighted the level of innovation that has occurred over the past 30 years to improve surgical success and said the industry’s focus has changed. “We’ve now entered a phase of incremental innovation aimed at reducing surgical variability,” he explained.
He pointed out that it’s not uncommon for patients to undergo what’s deemed a successful spinal fusion yet still be dissatisfied with their overall outcome. According to the literature, this mismatch occurs in roughly 40% of cases.
Viscogliosi said 500,000 and 1 million spine surgeries are performed each year and noted that about 10 million patients are currently under the care of interventional pain physicians, receiving injections, undergoing ablation procedures or being prescribed opioids to treat back pain.
“Let that sink in for a moment,” he said. “That means 10 to 20 times the number of surgical patients seek alternative treatments before surgery. Why is this important? If you consider the future I’ve described, where innovation is converging, you’ll see that care pathways and patient treatment algorithms are going to change.”
Viscogliosi believes the industry will see a more holistic approach to patient care involving the integration of drug therapies, biologics, surgical interventions and health technologies. The various modalities will be used during collaborative care models instead of remaining isolated as individual treatment events.
“Orthopedic companies that truly want to move the needle on clinical outcomes and innovation must intervene earlier in the disease progression,” he said.
Selective Focus
Jeffrey C. Wang, M.D., a spine surgeon at Keck Medicine of USC, believes the orthopedic industry needs to think globally and rely on data to justify new solutions that improve patient outcomes.
“One of the challenges is the overwhelming number of products on the market,” Dr. Wang said. “Many products, especially in categories like allografts or bone graft extenders, lack substantial clinical information to support their use. We need to demand the data that proves efficacy.”
Dr. Wang pointed to important developments in biologics as a significant market opportunity in spine. He also acknowledged the numerous clinical benefits of performing surgery with robotic assistance and navigation platforms and shared important advice for companies that develop new enabling technology.
“They need to focus on making these tools user-friendly and accessible, especially for surgeons who are accustomed to traditional surgical techniques,” he said.
He also addressed the important concern of developing cost-effective solutions. “Companies want to introduce new enabling technologies and many surgeons want to work with the latest and greatest platforms, but we have to think about the cost of developing them,” Dr. Wang said.
He referred to the surge in technologies that entered the spine market in the early aughts and said he could reference numerous implants that were touted as the next big thing and that are no longer in use.
“These exciting new products were backed by companies, consultants, investors, studies and reimbursement codes and were implanted in patients,” Dr. Wang said. “Many of them failed or simply didn’t stand the test of time. Those of us who have been around long enough have seen this dynamic before. We need to be careful not to introduce too many new technologies at once. True innovation can get lost in the noise.”
The introduction of new procedures also tends to devalue existing treatment options, according to Dr. Wang, who referenced the buzz surrounding cervical disc replacement coming at the expense of cervical fusion surgery. As a result, surgeons end up being paid less for the procedures they perform most frequently.
“I’m very excited about new technologies, but we need to be cautious about adopting everything at once,” Dr. Wang said. “It’s essential to be selective and focus on the ones that truly offer something better.”
