3 Solutions to Common Challenges Academic MedTech Startups Face

February 12, 2014

By Jeff Wallace, Program Manager

Universities and academic centers are known hotbeds for innovative and disruptive technologies across all industries. While several industries are fertile ground for this type of commercialization, the medical technology space and regulated environment has its own unique challenges that further test the university-born entrepreneur. University entrepreneurs are strongly encouraged to pair up with the right partners, whether it is through their institution’s technology commercialization office or an experienced third-party firm, in order to maximize their chance of realizing market success. Throughout my career managing various medtech development programs, three common challenges continuously bubble up when dealing with academic start-up ventures. While these challenges can be a hindrance, keen entrepreneurs can turn the following into opportunities.

Challenge #1: Under-appreciation of the development efforts needed to get to the finish line

Technology developed in the lab is, by its very nature, operating under constraints and assumptions. The ‘eureka’ proof-of-concept moment can be the pinnacle of the innovation process, but the development road to reduce that eureka to a robust embodiment is a long road travelled. Multiple iterations (and failed attempts) lay in waiting before the constraints and assumptions can be unwrapped to allow the invention to stand on its own as a commercialized product. Unfortunately, an under appreciation for the magnitude of effort required to transform an idea into a fully commercialized medical device can undermine a fledgling business plan or show inexperience when at the negotiating table.

Through my own personal experience in both small and large medical device companies, there is a large disconnect between alpha or beta prototypes and the finished product. The development phases of ideation and proof of concept are very apparent to nascent startups, but consideration for all the effort needed for reduction to practice, detailed design, specification derivation, and verification activities are under-appreciated or missed, often hindering the path to one’s exit strategy. Product concepts that are not ready for prime time result in considerable quality issues and/or delays caused by forced redesigns. This may leave the medical device entrepreneur with a considerable funding gap between what they asked for and what it actual takes to get to a formidable milestone.

Solution: The solution is a regimented process of development planning and the realization that multiple iteration cycles are inevitable. Having that industry expertise on your team or in a partner gives those start-ups a considerable advantage to minimize the risk of the company hitting a funding gap roadblock.

Challenge #2: A true appreciation for the rigor required of an industry-accepted quality management system

The disciplined exercise of following design controls and creating a design history file (DHF) is a non-trivial skill that is typically learned on-the-job through industry experience. Unfortunately, the bodies that regulate design control activities do not give leeway to small companies – everyone has to comply with the same set of expectations to compete in this space. Since the foundation of a DHF begins at the very onset of development (i.e. understanding needs, conceptualizing design inputs, etc.) nascent companies without the knowledge and/or discipline for appropriate design controls are more likely to start off on faulty footing.

I’ve had the fortune of being involved in the due diligence process of companies investigating a potential acquisition target to see if it was worth ponying up asking price - it can be an eye-opening experience. Everyone enters the process excited at the target’s initial story and potential. But the level of meticulousness and the gaps in the documentation files can take the shine off that enthusiasm quickly. Even if the deal still goes forward, the target’s value is pushed down in these scenarios as the larger company has to compensate for the effort it will take to ‘plug the holes’ and minimize the liability of an incomplete DHF.

Solution: The structure, detail, and completeness required to meet the expectation of the larger company’s quality requirements in today’s Medtech market demands a level of effort and rigor that many entrepreneurs seem to miss. For startups, it can be unfathomable to contemplate creating their own quality system without significant investment. It is therefore prudent to partner with a development firm with an established QMS in place allowing the startup to ‘rent it’, not ‘buy it’.

Challenge #3: Navigating the complexities of today’s regulatory environment

The goal of many medical device startups is to be able to reach first sale - a milestone that would greatly increase the company’s appraisal and value. However, for the majority of this market space, the first sale requires some form of regulatory approval. Understanding the regulatory landscape and establishing the correct path to market is a driving consideration at the very beginning of business planning. Regulatory requirements may appear straight forward and general to the unaccustomed eye. Take heed, however, as even experienced regulatory advisors will admit that the simplicity can be a siren call and that the devil is in the details.

Solution: Regulations, whether in the US or in the global economy, require a thoughtful strategy to be successful, as small variations in intended use can exponentially increase the level of supporting evidence expected to get clearance. Small changes in claims may seem inconsequential to business planning or technology development, but these changes can open up formidable pitfalls on the regulatory front that may require expensive clinical work to address. Technologists coming out of academia are not likely to have the considerable industry experience required to navigate these challenges. Time and again I have seen novice companies miss their opportunity and/or lose out to more regulatory-savvy competitors as a result. The best-in-class startups bring in regulatory advisors at the very beginning, before marching orders are set and battle lines are drawn. Whether the advisor is part of the company or any external regulatory specialist, the business plan and regulatory strategy can be synched together at the start and risks can be mitigated early through sensible planning.

The medtech market space has abundant opportunities for ventures that are innovative, smart, and savvy to the industry’s expectations. Entering into a medical product development program with one’s eyes opened wide to the above challenges will maximize the chance of realizing entrepreneurial success.

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One of our core values here at Ximedica is on educating and inspiring innovation in healthcare. Come see us at one of our upcoming workshops.

Understanding Medical Device Development

Date: March 6, 2014 6-8pm

Where: Harvard ilab

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Human Factors & Usability

Date: March 26, 2014 11am-1pm

Where: BIOMEDevice Boston Learning Lab

Boston Convention & Exhibition Center

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Medical Devices: User Needs & Design Inputs for Successful Product Development

Date: April 29, 2014 8am-Noon

Where: Life Science Alley SIG Event

Registration details coming soon!