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Medical device firms can boost their chances of success10/10/2007. Source: IVCJ (Israel Venture Capital & Private Equity Journal). Elka Nir
 The fastest growing population among developed nations today is the over 60 age group, which, according to a recent United Nations study, is expected to account for a full one-third of the population by 2050. This ageing
population is characterised by increased healthcare demands and a desire to improve life quality, driving growth in innovative medical developments. An innovative
technology, however, does not guarantee success in the marketplace. Elka Nir, Managing Director-Life Sciences of Giza Venture Capital, and a veteran medical devices industry executive, describes what it takes to turn a promising technology into a successful medical solution and a major business opportunity.
Market size and landscape
The target market should be sufficiently large and attractive, but at the same time not too crowded with competitors. Even where a new solution has the potential to create new markets, it is important to ensure that this market size is adequate. New transformational solutions might have barriers in creating/entering the market, and this should be addressed in company plans.
Identifying unmet customer needs
Understanding customer needs is a critical success factor. It is most important to understand which problem requires a remedy. The unmet need can take different forms - a missing means for diagnosis, a therapy for a disease, a device to improve specificity or efficacy, a tool/application that raises productivity and throughput, a device to reduce a procedure's risk, a solution that allows more patients to be cured by a wider range of physicians - not necessarily experts - or a minimally invasive solution that reduces recovery time and patient suffering.
It is crucial to understand the environment in which the device is to be used. Questions to be asked are: Who will use the product? Is it the physician, nurse, technician, physicist or a combination of them? What are their requirements? What does the lab/operating room look like? Who are the other players in the operating room? What other types of equipment are found in the operating environment? Does the success of the new solution require collaboration with other departments or disciplines?
Defining the right solution
Once the unmet need is identified, it is important to ensure that a complete solution is developed, meeting user requirements, and paying attention to the following:
User friendliness. A common mistake of inexperienced developers is to create a solution that is too sophisticated and not easy to operate. Setup should be simple. The usability flow should be self-explanatory and have a strong correlation with the procedural steps.
Another caveat is to avoid too much flexibility. Users usually prefer not to have too many choices at each stage. They expect the system to be designed based on understanding the various clinical steps and to provide only choices that are relevant. Too much flexibility tends to be confusing and time-consuming.
Automation and guidance. These factors are very important in order to reduce procedure time and user errors as well as increase throughput, while meeting safety requirements.
Fit into the existing operating environment. It is essential that the landscape in the lab/ hospital is well understood. Sometimes the solution requires collaboration with other departments. For example, in many cases, imaging solutions involve a few modalities and require cooperation as well as connectivity solutions among various departments. Developing a solution that is based on importing CT or MR images without planning connectivity to the departments or ensuring that the other modalities understand what's in it for them can have a negative impact on product success.
One has to identify the cases in which the new product disrupts the way things are being done and be ready to address potential resistance.
Another aspect is identifying potential physical environmental disturbance and avoid/resolve it. For example, if the solution is based on an electromagnetic technology, it is important to learn which metals might be found in the operating room and potentially interfere with the solution.
Cost. The solution should make economic sense for the customers and suppliers. The overall healthcare aspects should be analyzed from the purchasing decision-maker's point of view, making sure the new solution is cost-effective.
Reimbursement. At times, new technologies must undergo a lengthy approval process to gain insurance coverage, and even then, only partial reimbursement may be approved. These considerations affect the adoption of new medical devices and therefore their potential markets. Awareness, wise strategy and proactive steps are key to maximizing reimbursement prospects.
Identifying risks, planning mitigations
It is essential to identify the risks - business, technological, regulatory, IP, competitive, people - associated with a new solution as early as possible.
Once the risks are mapped out, a clear mitigation plan, including timelines for execution in case the risk materializes, is essential, particularly for those risks with high severity and impact. Being too optimistic, or implementing the mitigation plan at a late stage can cause delays in time-to-market as well as missed business opportunities.
Early feasibility to mitigate key risks
A good way to reduce technological/clinical risks is to perform early feasibility studies. This allows identification of problems at early development stages, and enables changes when it is still not too painful. There is no need to complete the whole product in order to understand that one of the basic technologies/features does not work. The earlier the core technology is examined, the better the chances of identifying the challenges and still having time to resolve them or to switch to a different solution.
Intellectual property
IP should be filed as early as possible to block competition. It is important to address various application aspects and not only key technology. A thorough search should be made to verify that there is no infringement of other patents.
Regulation
Medical devices, in general, are subject to regulatory requirements in design, manufacture, labeling and advertising. A thorough risk analysis, mitigation plan and detailed validation plan as well as right definition of the submission strategy are key. A professional submission needs to be made as early as possible when the data are ready, allowing enough time for question and answer cycles.
Professional execution
After defining the right solution and having the risk mitigation plan in place, it all boils down to professional execution - on time and on budget, while meeting quality goals.
While planning the right roadmap and pipeline for future products is very important, it is essential to focus on timely execution of the most promising product first, making sure the design will not be continuously modified, but will be frozen as planned.
Meeting planned milestones is crucial. Delays might cause loss of market opportunities, and budget overruns might lead to insufficient funding. Moreover, overall slippage in plans might damage investor confidence in the leadership team, and have a negative impact on the company's image.
Although time-to-market is one of the most critical factors, the existence of quality issues can be very harmful to a medical company. Customers will hesitate to use the product and leading companies will be reluctant to collaborate or acquire the company. From that point on, improving the company's image might prove to be challenging.
Validation and verification should start as early as possible, allowing cycles of improvement, ensuring that the product reaches customers only when quality requirements are met.
External evaluation
Effective external evaluation is a major success factor. It is important to carefully choose the evaluation sites, making sure those evaluating the product will be sufficiently patient to deal with system immaturity issues and at the same time sufficiently critical to provide timely, constructive feedback.
It is important to select sites in terms of staff, volume and experience, ensuring they represent the diversity of environments, users and applications. The sites should have the right resources to support the evaluation, and those making the evaluation should be able to write papers, present at shows and provide marketing support material. The right mix between opinion leaders and "bread and butter" sites is important in being able to provide a balanced picture.
Specifically, an early clinical evaluation round (when the product meets safety requirements) is of major importance. It should take place at a small number of sites, closely escorted by the development team. This early evaluation provides beneficial feedback, allowing for timely improvements. Customer expectations should be set to fit the immature stage of the system, avoiding incorrect product perception.
A few rounds of external evaluation are quite valuable in the fine-tuning of the product to meet customer expectations and quality goals.
Collaboration with key opinion leaders
Key opinion leaders should have a significant role in the definition and development stages. Their deep understanding of the proposed solution, while having the excellent knowledge of the clinical and market aspects, can provide ongoing valuable inputs.
Advisory board meetings, raising real product related concerns, will ensure reception of timely feedback. Moreover, as partners in the development process, they will be strong supporters of the solution, helping in the marketing and launch activities such as publications, presentations, and training sessions. Successful collaborations tend to last for long periods and support future product generations.
Collaboration with market-leading companies
While collaborating with market leaders needs to be carefully examined, based on the company's strategy, it can be helpful in terms of better product definition, shortening development time, better integration in the operating room and accelerating distribution and market penetration.
Training and clinical support
You may have the perfect product, but without the right plan to train the trainers - and then the users - as well as provide ongoing clinical support, product introduction could be stymied.
In most cases, new solutions have a slow learning curve. Users tend to like their old, familiar solution and are slow adopters of new cutting edge products. Providing the appropriate training and ongoing clinical support will speed up the process and avoid resistance or even bad perceptions.
Another channel of introduction and training is the academic one. Early familiarity by physicians and nurses will help make a product the preferred choice in future clinical settings.
Production and distribution ramp-up
The product should be designed for manufacturability and serviceability. The production team should build the external evaluation products, ensuring that "infancy" issues are fixed, while preparing for the larger quantities required at launch time. Inventory should be well-planned to make certain that an adequate product quantity is on the shelf before launch.
Having a stand-alone distribution force, versus working with an established sales organization (or a hybrid model), is a central issue that needs to be addressed early-on to allow time for establishing the designated distribution channel.
People, leadership
Last, but certainly the most important success factor is people! Selecting the right team of talented, innovative, qualified, experienced, and energized people is the most crucial factor for success. Compromises can be painful.
Experience in the medical field and in product development is important for employees and especially the leadership team. The leaders should have experience and a good understanding of the business, markets, customers, operational challenges and product life cycle (research, development, evaluation, production, marketing, distribution and service). They should be able to anticipate potential risks and be decisive enough to initiate the mitigation plan at the right time.
The team must be customer focused, deeply familiar with customer needs and the routine in the lab/clinic. Customers should come first in the way employees think and act. Quality has a crucial meaning when it comes to patients' lives, therefore a focus on quality must be part of an employee's DNA. A strong clinical team is needed to provide clinical knowledge and training as well as to provide support to the customers.
Summary
While there is no magic recipe that can ensure success, strong leadership and recognition of what it takes to succeed, along with a detailed plan and commitment to rigorous execution in a professional manner, can increase the chances for success in the medical devices field.
This article appeared in the Israel Venture Capital & Private Equity Journal (IVCJ). IVC Research Center publishes the Israel Venture Capital & Private Equity Journal, a quarterly review of trends and developments in the Israeli-related venture capital industry. IVCJ, distributed worldwide, is dedicated to providing wide-range coverage of Israel's venture capital industry. For more information please visit www.ivc-online.com
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