Those working in the medical technology space know the unique challenge of launching a product (and company) in the medtech domain. For those thinking about this space, or in the midst of working to build a medtech product and company, here are a few of the special challenges you will face compared to creating a consumer, commercial, or industrial product:
- Costs to develop a medtech product are significantly higher than other kinds of products.
While there significant cost savings is possible when creating a Class II device, compared with a Class I device, the costs to realize a truly medically beneficial product is several times (and maybe 10 times) higher than creating a consumer product with “nice to have” health-monitoring features. One obvious example is a wearable device meant to monitor heart rates. Virtually anyone can go out and, inexpensively, get a wearable to monitor heart rates targeted for general fitness/wellness applications. That know-how is virtually commoditized and is predicated on not needing medical-grade accuracy, dependability, and consistency.
As an example, it takes a heck of a lot longer to create an accurate and reliable medical-grade wearable to monitor heart rate—especially if one wants to monitor heart rate profiles. For a casual consumer, the ultimate accuracy may not be particularly important; relative performance is adequate in a device for medical applications, precise performance is critical. As with anything, the harder it is to do, the longer it takes, and the longer it takes, the more it costs.
Additionally, it costs a lot to validate that a product has medical efficacy to satisfy FDA and other global certification organizations. You need a very detail-oriented and rigorous quality system to control and capture the design history, test and validation results, field trials, etc. There are techniques that can be used to help modulate the cost by careful interpretation of the regulations and tailoring of processes, but if you are considering a medical-grade product, one cannot avoid the substantial incremental cost.
- Product certifications for medtech products take longer, even at the lower grades.
While the physics of a problem statement in the medical and non-medical spaces are unchanged, the time required to test and validate that the product performs as expected by following a documented procedure is critical in medtech. This can require multiple rounds of prototyping and testing to build the case proving effectiveness (all fully documented and controlled). The queue and processing time for realizing an FDA certification is also quite long. It is not unexpected for a medical device to take months or even years to go through a process achieving certification all the while running up development and quality assurance expenses.
- Medtech products are much riskier to produce than other products because of the need for high levels of reliability and accuracy.
Because of the need for reliability and accuracy, and because the potential for failure is so high, the profile of medtech product development is extremely high. A product concept based on a “me too” or purely lower cost variant of existing products is not a sound business model. It may be tempting to look at existing products (and pricing models) and then assume you can have a viable product with a simple cost reduction. Never underestimate the intelligence of your competitors! One should never assume that a “new and improved” version of an existing product is not under development by current entrants in the market. Also, without a very substantial rationale, be careful not to assume you can simply price your product at a lower price point and sustain this as a competitive advantage. When threatened with a pricing assault, one would be wise to expect existing competitors to react in kind and they may have the advantage of more mature cost models (and deeper pockets).
Lastly, despite all the challenges, the risk/reward ratio in this space has attracted a lot of intellectual property (IP) activity. While one can research existing, awarded patents looking for the green space between pre-existing IP, the total amount of IP being created in this space is huge and is growing daily. Finding a safe and unique space for your technology that is not already protected or in the process of being protected, is never assured.
- Finding investors for a medtech startup is challenging; a much smaller subset of investors have tolerance for the risk.
Now, it comes down to raising money. Yes, there are investors out there with an interest in this space. The challenge will be finding a party (or parties) with a tolerance for the risk (financial, competitive, intellectual property) and long time horizon to profitability associated with medtech products while also having deep pockets for development expenses. There are precious few of those, and hence there are vastly more startups with great ideas that fail to materialize the capital needed for realization. It is a delicate dance to find the right potential investor… and the process can take months (or years) longer than anyone expects
- Specialized skills are needed to satisfy regulatory processes.
Using the example of the wearable heart rate monitor, virtually any consumer product company can create a product with a claim of measuring heart rate. Such products may be satisfactory for looking at approximate, relative changes between a rest and vigorous exercise state. However, these do not come with the assurances that one can depend upon the data for life-critical monitoring. Without a clear intention and process, such products will not pass the rigor of FDA or other regulatory bodies. There are individuals with deep experience in helping companies create appropriate processes, monitoring the development and test processes, overseeing the data compilation and storage (i.e., design history files), and then, preparing, submitting and shepherding certifications through the various regulatory bodies.
So, does all this mean one should avoid going after medtech product development? Of course not. As a society, everyone is looking for better ways to extend life, improve the quality of life, mitigate pain, and reduce the severity and duration of disease, pain, or chronic health conditions. Likewise, from a purely business perspective, there can be huge rewards associated with alleviating large-scale medical issues.
This comes with a risk, and risk comes with increased uncertainty. This presents a challenge in establishing a realistic budget and schedule, along with recognizing and confronting the technical and IP challenges. The summation of the risks and challenges manifests itself in the difficulty of securing adequate funding to realize the vision.
One should approach this with eyes wide open, realizing the challenges ahead. Developing medtech products is a marathon and not a sprint. Only the most persistent and compelling will survive.