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An Unusual Business Model

RK008/ An Unusual Business Model
Naglreiter Medical Device Development Organization uses a novel approach to shorten the timeline between medical device concept and device submission.

In the wide field of incubators, accelerators, co-working and wet lab spaces, and venture capital, Naglreiter Medical Device Development Organization (NMDDO) occupies a unique niche.

The company, based in Miramar, FL, was started with the goal of reducing the time and resources that go into building a new medical device company or developing an innovative medical technology.

Weeks or months, as well as millions of dollars can go into finding or building a facility, crafting a quality system, and hiring talent. NMDDO offers entrepreneurs a chance to skip to the fun stuff—developing the technology or product. The company’s business model differs from outsourced development and consulting arrangements by keeping management of the project under one roof with aligned timelines.

“We provide a full business manual, we provide all the quality systems, and we’re the people, the equipment, and the quality system backbone that then goes into that company,” said NMDDO President Brett Naglreiter.

NMDDO uses customized service agreements to start a client relationship. This includes an estimate encapsulating the entire cost for what the entrepreneur wants to achieve. However, a customer does not need to work with NMDDO for every part of that plan—“We’ll be as much or as little of that budget,” Naglreiter said. The customer can determine what resources he or she wants access to, including facility space, equipment, sterilization service, a machine shop, human resources and accounting systems, NMDDO associates, and a quality system. Because this contract covers the customer from their starting point to their end goal, it eliminates the need for additional transactions.

Naglreiter explained, “We’re not doing a project for you, we’re not manufacturing it for you, we’re manufacturing it, getting regulatory clearance, with you.”

NMDDO can work with up to five mid-sized or 10 small early-phase companies and projects at one time, and is currently at two-thirds capacity, Naglreiter noted. So far, NMDDO has found new customers by word of mouth and has developed expertise in the vascular, GI, ophthalmic, and spine fields, among others. Many of the company’s past and current clients are well known, including Surpass Medical/Stryker Neurovascular, Edwards Lifesciences, Syntheon LLC, and Surefire Medical Inc.

Clients select the services and systems that work best for their needs. For instance, one client may use NMDDO’s people and facility space, but continue to use its own quality system. Another may bring their own employees but use NMDDO’s facility space and quality system. A serial entrepreneur who comes in the door with a novel technology may want the entire package, because he or she doesn’t want to have to hire anyone or build a facility. This flexibility appeals to potential clients, Naglreiter said. “It’s such a new model . . . it takes a little bit of time for them to understand that that’s what is being offered.”

This flexibility and mixture of client needs means NMDDO must maintain a detailed plan for its own staffing and service needs. The company applies its plans for its customers to a proprietary staffing model that can help determine when to hire new associates. There are just over 50 associates at NMDDO right now.

“The model itself wouldn’t just inherently cause success. It actually is the people,” Naglreiter explained. “I’m very proud of the people that work here and how lucky I am [in] how talented they are. It’s the energy and the people with the right environment and the right model that make it all work.”

Eventually, NMDDO clients leave the firm. Potential events that might trigger this include an acquisition or a commercial milestone. Naglreiter emphasizes that leaving the organization is not a hassle for the departing company, because everything they created while at NMDDO remains their own. “That’s really where the magic comes in from the model, because it is being developed in your own system and we’re working in your system,” Naglreiter said. “The IP is all yours . . . The word transfer is not even needed . . .” The intellectual property, the quality management system, the physical assets, and much more remains with the company as it moves on to the next phase.

Naglreiter sees plenty of future potential for his company’s business model. “I think that it’s a good model that we could replicate at key locations like in the Bay Area or Boston or Minnesota,” he said. “I could see this as more of a franchise idea that we could model in different locations and people will start to appreciate how much time and money they’re saving if they start with this in the beginning to de-risk their programs."

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