DaVita and medical device company Medtronic launched their new venture, Mozarc Medical, to develop new kidney care technologies with a specific focus on at-home treatments.
Announced nearly a year ago, the company is co-owned by Medtronic and DaVita, each with equal equity stakes. Both companies provided initial investments of $200 million in cash to get the company off the ground, DaVita and Medtronic executives confirmed. The companies will contribute future operating capital to keep the company going.
Mozarc will be overseen by a six-person board of directors, comprising two selected from each company and two independent directors.
More than 1 in 7, that is 15% of U.S. adults or 37 million people, are estimated to have chronic kidney disease, according to data from the Centers for Disease Control and Prevention. Data from the American Kidney Fund indicates that nearly 810,000 patients in the U.S. are living with kidney failure, and approximately 570,000 are on dialysis.
Kidney disease is a global health challenge as well. Nearly 10% of adults around the world have chronic kidney disease, representing around 700 million people. At least 2.6 million of them are currently being treated for kidney failure—a number that’s expected to double by 2030, according to researchers’ estimates.
Mozarc Medical will draw on DaVita's experience as a provider of dialysis services and Medtronic’s medical device know-how to scale up dialysis delivery systems and other technologies to treat the latest stages of kidney disease, according to the companies.
"From Medtronic's point of view, we are purely a technology, innovation and medical device company. We know what our strengths are, one of which is technology. But this is one area where technology alone may not be the answer," Ven Manda, CEO of Mozarc Medical, said in an exclusive interview about the launch of the new medical device company.
"We need to have technology and expertise, advice and guidance from experts in clinical services and providers of care, and that's where we feel that this sort of structure and arrangement gives us, through the board, the requisite guidance for us to continue to advance what were believe are exciting new pipeline technologies that we're working on," said Manda.
A 28-year veteran of Medtronic, Manda, formerly the president of the company's renal care solutions segment, was tapped to serve as Mozarc Medical’s chief executive.
To form the new venture, Medtronic spun out its existing renal care solutions (RCS) business into the new company, as well as its product pipeline, global manufacturing and R&D teams and facilities in the renal care solutions sector. Through the first three quarters of Medtronic’s fiscal year 2023, the RCS business had revenue of $64 million, $63 million and $70 million, respectively, according to the company.
Mozarc Medical will have a global workforce of about 1,700 team members, Manda said. The former RCS leadership team has also transitioned to serve as Mozarc Medical’s leadership team.
When asked about potential layoffs or workforce reactions from moving the RCS business over, Manda said Mozarc is a "growth-oriented business."
"I don't see us necessarily focused on those kinds of reductions," he said, but then added that the new medical device company may drop out of smaller markets. "There will be certain changes we're making as we transition from our fairly wide, somewhat dispersed footprint in terms of customer service to a more focused country footprint. That will be a change but not necessarily in terms of wide-scale employee reductions,” he said.
Medtronic, based in Dublin, develops medical devices and therapies to address 70 health conditions including cardiac devices, surgical robotics and insulin pumps. The company also plans to spin off its patient monitoring and hospital ventilator businesses, allowing it to focus more on its cardiovascular, diabetes and surgery business units, Fierce Medtech reported.
Med device company Baxter also has laid out plans to spin off its global kidney care operations into a new, publicly traded enterprise.
Combining forces to make in-home therapy more accessible
When asked why the new kidney care company was christened Mozarc, Manda said the name encompasses the concept of being a pioneer and music innovation, as in Wolfgang Amadeus Mozart, and contributions to the world that are "everlasting."
"Even today, music is creating new frontiers. 'Arc' encompasses what we believe and it's what we want to do, which is to be inclusive, to be comprehensive and to represent growth and advancement," he said.
One of the largest providers of kidney care services, DaVita served 200,000 U.S. patients at 2,776 outpatient dialysis centers, at home and in hospitals in 2022, according to the company's website. DaVita also operates 352 outpatient dialysis centers in 11 countries worldwide.
"There's a lot we can do in care delivery and new clinical programs and new data and personalizing care for patients. But there is an important role for technology,” said Scott Doniger, DaVita’s group vice president of corporate strategy, who will also serve on Mozarc’s board.
“We wanted to be able to be more directly involved in that innovation to really help make sure that our patients can get what they need," Doniger said during a joint interview with Manda. "It made sense to launch this company that's going to be entirely focused on kidney care, not part of a much bigger organization and potentially distracted and fighting other ideas. Now we've got an amazing team that's just laser-focused on the innovation we need in kidney care."
The new venture's focus will be on "meaningful and innovative" patient-centric kidney health solutions, according to executives.
A big focus for Mozarc will be developing products for at-home treatments to make dialysis more easily accessible, offering an alternative to the typical schedule of in-clinic sessions three times a week, executives said.
Research suggests that dialysis sessions at home, under the right settings, can have clinical outcome benefits, provide better quality of life and more independence for patients, and decrease burden and time spent traveling to and from facilities.
Without giving too many details about upcoming products, Manda said Mozarc will focus on ways to use technology to keep patients on home therapy longer while also improving the patient experience and "demystifying" kidney therapy for a cohort of patients who are older and often more vulnerable.
There are unmet needs in kidney care where innovation and new technology can play a vital role to help improve patient outcomes, he said.
"Dialysis is a rather harsh treatment, it involves accessing the blood supply. Dialysis patients have to utilize fairly large size needles for each treatment. There is an opportunity and an unmet need to make that more convenient and comfortable for patients," he said.
Another opportunity is to holistically connect the patient's dialysis needs with their overall health and enable patients on dialysis to live longer, he noted.
Home dialysis has been a priority for DaVita for 20 years, Doniger said. “There's a lot that we can do by thinking about how we better integrate the technology and the service," he noted.
DaVita will remain product-agnostic to ensure patients have access to the best technologies, he added.
There is a need to make kidney care more personalized to get to the root causes that lead some patients to have worse outcomes. Social determinants such as poverty and food insecurity can worsen the quality of life for patients with kidney disease and kidney failure.
"We are getting deeper and deeper into understanding those root causes," Doniger said. "We can feed those insights to the innovation team to think about how could you solve this challenge that a patient is having. That level of expertise, data and access to the patient journey and understanding really what's going on in their homes, in our clinics and in their lives outside of dialysis, that information I think is going to be really helpful for the innovation cycle."
Kidney care is a rapidly growing market. Data on the size of the market vary, but one research firm, Next Move Strategy Consulting, pegs the value of the dialysis global market in 2019 at $96 billion and forecasts it will grow to $146 billion by 2030.
The market opportunity is attracting new players like Outset Medical, a medical technology company that developed a portable dialysis machine for at-home use.
Last year, Fresenius Health Partners, Cricket Health and InterWell Health formed a new value-based care company focused on services for the earlier stages of kidney disease.
A growing list of startups is chasing the lucrative kidney care market with a focus on modernizing chronic kidney disease and end-stage renal disease management. These companies include Monogram Health and Strive Health, led by former DaVita executives Bob Badal and Chris Riopelle, along with Healthmap Solutions and Somatus, which raised $465 million and has a valuation exceeding $2.5 billion.