Not many healthcare product executives have resumes that can boast of having run both drug and device businesses the way Ron Mstricaria did at Eli Lilly. Not content with his success at Lilly, Matricaria took early retirement to embark on the challenge of directing St. Jude Medical's transition from a successful single-product firm to a major, multi-platform device company. At both companies, Matricaria endured tough times and critics questioning his strategies, but was ultimately vindicated through the success of each company. Matricaria is the recipient of this year's Phoenix Lifetime Achievement award and spoke with IN VIVO about his career and the current state of the medical device industry.

In the early 1990s, St. Jude Medical was the market leader in its sole product area: mechanical heart valves, which placed it among the most profitable of device companies. Demographics, however, limited heart valves' future growth opportunities and St. Jude needed to diversify, moving into cardiac rhythm management (CRM), cardiology catheters, and vascular access devices, while also expanding in cardiac surgery. The diversification process went anything but smoothly, the company missed its numbers, and investors were quick to punish St. Jude for its integration missteps. In the past year, however, the company has become one of Wall Street's few device darlings, ranking number one in 2000 for returns among device stocks. The company's growth is largely the result of sticking to a strategy that has St. Jude well-positioned in CRM's traditional markets, while also poised to pursue huge new opportunities in atrial fibrillation and, to a lesser degree, congestive heart failure. And St. Jude has not forgotten its base: cardiac surgery, where the company has introduced new sutureless anastomotic technology for minimally invasive coronary bypass surgery.

M&A was the universal prescription for the medical industry in 1998 as acquisition dollar volumes hit record levels. For some, the dealmaking further separates the haves and have-nots. For others, it's an addictive drug for coping with chronic insufficiency syndrome. But for nearly everyone who's using it, M&A is the easiest, if not always an effective, answer to the increasingly intractable problem of growth.

Are small-cap stocks stuck in a temporary down cycle? Or are they being hurt by structural changes in the investment community? True, investment funds have increased in size to such a degree that it has become financially impossible for most of them to invest in small cap companies. But small companies have things that large companies don't--innovative and differentiable products that are so crucial to the growth of large companies. {IN VIVO} talks with top-ranked health care analyst Dan LeMaitre of Cowen & Co. about the pressures on large and small device companies.