Today, less that 12% of Medtech start-ups succeed to launch their product on the market. A few companies exit pre launch, via licensing or acqui-hires, and the remainder simply run out of cash. While unforeseen market conditions may adversely affect even the most experienced Founders, many seed and Series A medtech startups lack a plausible game plan to address the 4 main hurdles to market launch.
- Regulatory – understand and comply with the different regulatory bodies in the different markets regarding safety and efficacy.
- Validation – make sure your product not only meet a specific need but give the right answer to that need and that you carry out qualified trials.
- Adoption – Keep in mind the variety of users who will be handling your product, make sure they will want to and be able to use it, and don’t underestimate the training part.
- Economics – establish pricing models for your innovative Medtech solution
Michael Dillhyon is a serial technology entrepreneur, with experience in both life sciences/healthcare data systems and software platforms, who spent the past 2 years in an executive role with a Silicon Valley-based wearables firm that built a disruptive, FDA-cleared cardiometabolic patch.
According to Dillhyon, regulatory is the place where medtech startups struggle earlier on. Regulation is a very complex ecosystem. There are well known regulatory bodies like FDA in the United states, CE in Europe, NINSHO in Japan, but you also have some other local regulatory bodies to consider, like the FCC (US), if your solution includes radio signal for instance.
As North America, Europe and Asia represent the lion share of the current medtech market, it is imperative that startups plan and execute properly in attaining and keeping regulatory bodies in these regions satisfied with both the safety and efficacy claims of the startup’s product offerings.
There is also a difference between registration and clearance. Maybe you don’t need to clear your product with FDA but just to register it. That’s why it’s important to get in touch with the regulatory bodies; they are not your enemy. They can provide free assessment and guidance through the process. Tell them what you are planning on doing and they will advise you. It is important to get in touch early with the regulatory bodies, especially with the FDA, whose complete process can take up to 3 years.
Important note: unlike patents, demonstrating novelty does NOT impress the FDA for Class II+. Focus instead on showing equivalence to a predicate to gain clearance. By default, any device that has no predicate but presents a risk to patients/consumers is Class III (requires de novo petition to re-classify).
With FDA, you also need to determine if you require a pre-market approval (PMA), which is basically saying to FDA that you are going to market with this product and that it´s safe and effective. If you do need a PMA, be careful how you market your product after doing your FDA submission: If you over market it, you may have to restart the submission all over again.
Once you obtain the FDA clearance, it is only valid for one year, and then you have to reapply every year.
Many entrepreneurs tend to start with the CE mark in order to get a 1st regulatory accreditation. CE is faster to get, and normally valid for 3 years, except if it’s a high risk device, in which case it’s only one year. Nonetheless, Europe has its down sides too and having a CE mark is not always enough. Every country and even region have their own regulation, which means that you need to have a good understanding of every country/region in order to introduce your product and abide by their requirements. That’s why it’s advisable to have someone in house dealing with regulatory.
Important advice on regulation: Make sure you document everything. It will make things easier when you apply or reapply with a regulatory body or integrate with another company. Keep documenting even after CE/FDA submission.
The validation process is a crucial component to ensure a successful product launch. You need to make sure that your solution not only solves a concrete need but that it does it effectively. Too many products are taken to the market and fail because they don’t actually solve the need they were aiming at.
For any medtech startups building product or services that represent a new standard of care or significant revisions to existing clinical pathways, a series of qualified trials must be designed, deployed and documented in the target market verticals.
Partnering is key in the validation process. The earlier you start speaking and collaborating with partners, the better, to ensure a quality market validation.
In order to find partners, you should develop local relationships and find industry leaders. That’s why you should attend appropriate conferences and even local meetups in order to expand your network. If you can find a partner and take him to the next level, even better – big hospital or a well-connected industry leader that can introduce you to other key people.
Partnering will also help you understand the market better, giving you a clear idea of the needs your solution is solving and also finding out new market needs that could turn up in other business opportunities.
Building on the validation thinking, the firm must develop and distribute training/support for a wide variety of users (e.g. clinicians, researchers, development community).
You need to understand very well the person who will be using your solution. Your solution may be solving a market need but you should put yourself in the skin of the final users and understand how they think and work. You may have a CMO in your team who validated your product but all clinicians don’t think and see things like your CMO. Compliance and usability are very important too. Your solution has to be easy and comfortable for the user.
Attending medical and scientific conferences will help you to understand your users, how they think and what they need. Identify the KOL who will be recommending your solution and establish a marketing strategy to reach and convince them.
• Economics is also a very important piece in the equation and requires some preparation.
Pricing models for products that are either entirely disruptive or transplanted into new channels can be an onerous task, particularly when revenues are contingent upon public and private sector reimbursement schemes.
As for the regulation part, every country/region can have its own system. You need to understand who would be paying for the solution you are bringing to the market and how much are they willing to pay. If insurances are involved, how much are they paying. If they are not involved, who is paying for it? You need to design a cost constraints and different price models based on the different healthcare systems and/or payers. Make sure you understand how things are currently working and don’t forget to take into account elements like inflation.
Launching a product on the market is not a trivial process, and requires preparation for each of those 4 hurdles, determination and above all, an amazing team to make it happen.