Defining the Foot and Ankle Segment
Paragon 28, Inc., named for both a model of excellence and the 28 bones in the human foot, is committed to developing innovative solutions for foot and ankle surgeons. Driven by an unmatched passion for the foot and ankle segment, Paragon 28 is defining the market with leading edge research and innovations. The company is based in Englewood, Colorado, with a facility in Dublin, Ireland.
Paragon 28 was founded in 2010 in Birmingham, Alabama, and subsequently relocated to Colorado. “We started the company in a basement in Birmingham. When we first came out to Colorado, we had a small office space, where we had one person answering the phone and had all of our product stored there as well,” says Albert DaCosta, Co-Founder, President, and CEO of Paragon 28. DaCosta partnered with VP of National Accounts Lee Rosenthal, Chief Financial officer Jim Riegler, and later with Chief Technology Officer Frank Bono to launch the company. “We were executives from other companies, and we had an idea to build this company on all the different variables that we thought made for a solid company, so we got together and started Paragon 28,” DaCosta says.
The four founders launched and grew the young company through a unique business strategy. “We did it in reverse,” DaCosta says. “Instead of developing a technology and then finding a sales force to sell that one product, we found existing technology that we could distribute and built a sales force around that product line. Then, as we developed next generation technology, we integrated it into an existing sales force. That was unique to us.” This approach proved tremendously successful. “It has been a whirlwind of growth ever since we started this company,” DaCosta says.
Of course, this unique strategy presented challenges. Paragon 28 partnered with a manufacturer that was subsequently acquired by a larger company. “That was something we did not anticipate, so there were a few years of challenge,” DaCosta says. Yet even that challenge worked in the company’s favor, spurring it to pursue the development of new products. “We had to carefully develop our own technology to backfill what would have been a void from the partnership with that company. Today, we have 90 percent (there are a few private labeled biologic products) proprietary products. We are in control of our destiny, our pipeline, and our sales force.”
As one of very few companies dedicated exclusively to the foot and ankle, Paragon 28 is poised to define the segment. Foot and ankle is the youngest segment within orthopedics, so the needs of foot and ankle surgeons are currently underserved.
“I think the best comparison is the spine segment. Looking back 20 to 25 years ago, it was an emerging market; there were not companies committed to creating technology specific to the spine. Today, the spine segment has over 200 companies participating in that space,” DaCosta explains. “That is essentially where foot and ankle is now, as an emerging market. Right now we have four or five truly committed companies participating in foot and ankle.”
Consequently, foot and ankle surgeons have limited options for surgical implants. Until recently, surgeons had no choice but to repurpose implants made mostly for trauma and for other parts of the body. “They would borrow plates, for example a hip fracture plate, and they would cut and manipulate them to fit the foot. Given the specifics for each one of those segments, the considerations for [hip surgery] are very different from considerations for the foot, but that was really the only way to service these surgical procedures up to this point,” DaCosta says.
This underserved segment offers enormous potential for innovations that impact foot and ankle surgeons and the patients they serve. “What we are doing now is creating specific products for each indication and each area of the foot, with consideration of blood supply, soft tissue coverage, and weight-bearing requirements for that area; that is how we are creating technologies specific to the foot,” DaCosta said.
These new technologies are driven by groundbreaking research. “There are still many indications that are not fully described, researched, and proven yet, so there are not opportunities for us to really impact the segment and help define the way doctors perform these surgeries. Long after Paragon 28 is around, our principles, theories, research projects, and ultimately the implant products that we create will be defining the future of this segment,” DaCosta says. The vast potential for new discoveries and innovations makes foot and ankle the fastest growing orthopedic segment.
“The reason foot and ankle is the fastest growing segment is because there is still so much research to do. Whereas with the knee, there are fewer procedures to consider, with the foot we have hundreds of techniques for addressing just a bunion deformity. There are several large segments like bunion deformities, fracture fixation, and flat foot reconstruction; within each of those categories there are hundreds of procedures for us to consider and improve.”
Paragon 28’s unique passion for the foot and ankle segment sets it apart from the competition. “There are companies that come from other orthopedic segments, for example a large hip and knee company, and they see that foot and ankle is growing so quickly and they want to be part of that growth. Those companies don’t have a passion for foot and ankle, and so they do a lot of replications and slight variations of the same technology. Those companies want to take part in the growth, but are not part of defining the segment,” DaCosta explains.
“That is where we differentiate ourselves. We are excited about our research that will help surgeons acquire a better understanding of how we should be addressing these indications, which will lead to significantly reducing the recurrence rates and complications that plague a younger segment.”
To this end, Paragon 28 is investing in industry-leading research. The company has partnered with several universities and institutions to perform research designed to better understand the anatomy and the surgical environment of the foot and ankle. “Our research happens long before we have a design concept, so we are not trying to prove our [product],” DaCosta says. “We are conducting research to better understand the pieces of the anatomy, of the procedure, of the soft tissue contribution, all the things that we do not yet fully understand. We are trying to identify those things through research, and when we do, we publish the information to benefit surgeons.”
Paragon 28 has partnered with researchers at the University of Michigan and the University of Arizona, as well as several research institutions in Ireland. “One of the reasons that we opened a facility in Ireland is because the country has many universities, with different research specialties, and a strong bias toward orthopedics,” DaCosta says.
Paragon 28’s investments in research drive its product development. “Every product we develop is designed to solve a problem that exists with the current technology, or to meet a need that is not met,” DaCosta says. The young foot and ankle segment offers countless unmet needs to be addressed. Paragon 28 launched 19 product design projects in 2017, and anticipates launching 17 to 19 new projects this year. “I believe that Paragon 28’s pipeline is the deepest in the foot and ankle space. As far as ideas for next generation technologies, there’s no shortage within Paragon 28. We work very hard to identify and solve the next indication.”
Paragon 28’s leadership in the segment is evident in its rapid growth. The company grew 63 percent in 2017, and DaCosta anticipates continued high growth in 2018 and beyond, as the company continues to bring products in its pipeline to market.
Paragon 28 continues to see strong growth in the international markets it serves, which include Europe, South America, Australia, and the Asia-Pacific region, as well as South Africa. “The very first country we expanded into was South Africa, and we did well over one million dollars in sales in our first year there,” DaCosta says.
Expansion into the global market was another factor in the company’s decision to open its facility in Ireland. “We are an American company, but we are participating in the international market. Ireland represents an environment where we can bring in thought leaders from around the world to develop next generation technology,” DaCosta says.
“We are growing carefully but quickly, and that is a reflection of the confidence of the surgeons who are excited about our passion for the segment,” DaCosta says. Paragon 28 anticipates 55 percent growth in 2018 and continued growth in the years to come. “Right now, we are making sure we have a strong foundation to support this year’s opportunity, and to put the right team in place for 2019 and 2020 and beyond. We are building a solid foundation to support us as we grow.”
As the company continues to grow, Paragon 28 remains fiscally conservative. “We are a private company, but we treat it as a family business. We spend every dollar as if it is coming right out of our personal pockets, because of the aunts, uncles, moms, brothers, and sisters who have invested in our company. We take that very seriously, and we do not spend money unless it will truly impact the company in a beneficial way. Although we are fiscally conservative, we are not afraid to invest in growing the company. We’ll put our money into the right opportunities to make sure we are maximizing every dollar,” DaCosta says.