Throwing Good Money after Bad?

ThrowingGood Money after Bad?

SevenPeaks technology, a young company established in the recent yearsunder the leadership of Jack Brandon had developed a new product intothe market in the medical field. The product was an electronicdevice used to cauterize blood vessels instead of the common forceps,which are used by the doctors. One clear thing from researchers andwhat the surgeons own up is the use of tissue in the surgery process,the last thing about their work that they would look forward to.Scharfstein Weekes an investment company focused on initial-stagemedical technologies firms had invested six hundred thousand dollarsin the new equipment, and this was out of its recently raised onehundred million dollars.

Thegreat challenge to Brandon’s team regards the sales part, beingable to convince the surgeons who are used to the usual forceps andtissues in handling blood vessels. Although the investment made byScharfstein Weekes had positive feedback from their surgeons who hadtried the new equipment, the company and its directors who includedChristian Harbinson and the firm’s investment committee becamereluctant to order the equipment for the second time.

Brandonwas so positive of the device and its future and perceived the salespart as a normal challenge of any new product in the market.Convincing the surgeons was the only part remaining to sell theequipment and introduce them all over the surgery centers in thecountry. The senior partners were the main obstruction towards a newsecond deal with Harbinson’s firm the partners were reluctant tomake this move.” Throwing good money after bad” was a phrase usedby the team of senior partners in the investment firm.

Accordingto Harbinson’s report, the devices could be used hundreds of timesin as many subsequent surgeries as possible without the surgeonsgetting worried that they would break down. This would mean thatthere is a probability that an institution that once acquired itwould not order for another one the second or third time this is badfor business. The founder of the investment firm Joe Scharfsteinnoted this from the report, posing a challenge to Christian Harbinsonto convince the investment team of why they would go back topurchasing the devices/equipment.

Oneof the distributors in the medical technology field had returned mostof the initial inventories that had been made commenting that theyneeded a product that could sell itself. The Cauterizing devicesneeded to reach out to the surgeons and specialists through frequentcalls and the hospital buying groups, which the distributor claimedwas not such a priority in sales.


Theeducation hill is an uphill road, commented Brandon in one of thereviews concerning the sales figures. The surgeons have neverimagined of such a tool in their work and thus convincing them topick up this new idea would take some time. He explained how SevenPeaks being a new company in the market was one of the challenges toreach the targeted market more so because it was dealing with medicalequipment innovated on their own. The biggest challenge that thecompany faces according to Brandon is that the distributors do nothave much enticement to show the new device to the surgeons as wellas hospital purchasing groups in general this is because it is sucha small product line.


Brandon,however, had a new idea that he related to one of his clients, aplastic surgeon. Brandon`s aim was to embark on production ofelectrosurgical forceps having similar nonstick properties used inthe previous innovations. Forceps are a must use in every surgery asurgeon uses from six to eight forceps in one surgical procedure.Brandon goes on to estimate the demand that they will have for theforceps assuming that one surgeon undertakes three procedures in aday. This product line is easier from Seven Peaks according toBrandon because it would not involve convincing the doctors andhaving to explain how it works it is not a new tool in the market.Forceps are not reusable, once a procedure is ongoing, there isalready a need for replacement of the tools used and, therefore, thisimplies high demand and good business for Seven Peaks.

Thechallenge might be on the target market considering most of theplastic surgeons run their private clinics and medical centers.Plastic surgery would require the sticking tissue in their proceduresbut Brandon is positive of using the result aspect to convince themotherwise. Brandon’s team plans to develop the tools in a year’stime and introduce them to the market. A distinctive hospital hashalf a dozen or six operating rooms and performs two to threeprocedures a day, which can directly be linked to a high demand offorceps.

ScharfsteinWeek was not convinced of Jack Brandon`s new idea wondering how thiscould even work termed as a twisted tool, they preferred thecauterizing device that seemed like something new in the market.Christian Harbinson was again mandated to provide substantial proofand reasons why Weeks should continue non to buy Brandson’s ideawhich Harbinson quite believed to be a good deal.