All start-up companies need to have enough capital to establish and scale the business, set market share and revenue goals, create an infrastructure to promote and deliver products or services, get sales, and finally, deliver consistent value. However, medical device companies face a number of additional challenges including, but not limited to,the need to often more regularly raise capital, deal with high levels of compliance and regulations requirements, and to deal with a greater demand for published research and development data. As if this weren’t enough, they also need to take account of each of the major challenges described in more detail below.
Making Patient Data Available
Many companies put to market a smart or innovative medical device but these days it is often the data it provides on the patient that is most valuable. Although this may or may not be collected, stored and analyzed well within the device, the real challenge is to ensure data gathering is secure and compliant and that it can integrate well with other systems that might already be in place. Most providers, even if they are large, are unlikely to have or reluctant to spend the necessary money on building the connections to the data they might want. This limits the utility for smart devices. The more medical device manufacturer can therefore think about this challenge, thebetter and faster adoption is likely to occur.
Appropriate Fundraising to Grow/Scale
Raising funds (debt or equity) is never easy for startups or early stage companies, but is often even harder to medical device companies. This is because while seed funding may have created an alpha prototype device and even started the patent process, the product may still be far from fully functioning. In addition, a beta prototype requires a lot more money-anywhere from $250,00 to $1 million typically, which may see a product get theregulatory approvals it needs but may still not have much in the way of customer revenues flowing for the angel or venture capital investor or bank, if it is debt financing. The key challenge then is not only to get as much finance as necessary but at the right stageand before the company runs out of cash.
Maintaining Product differentiation.
Most medical device companies spend a long time and a lot of money before they can bring their products successfully to customers (certainly at scale).This process quickly runs down cash reserves, but means that they also often expose their invention or technology to possible competitors before it has reached the market and got real traction. A potential solution to this difficulty is for medical device companies to develop the next product upgrade, even though the first generation of the product has yet to be launched.
Dealing Effectively with Regulatory Compliance
Every medical device company is likely to face regulatory challenges from the FDA, HIPAA, CLIA and in some cases individual state regulatory authorities and other standards bodies. Rather than to ignore this or give it too little attention, the best approach is to know what regulatory compliance will be needed and operate in a conforming way at the earliest possible stage. Naturally, maintaining a compliant system requires rigorous supervision and commitment to thorough record-keeping.
Successfully “Negotiating” the medical industry.
Medical device companies need to think very carefully about which part of the medical industry their device is likely to have most appeal and how long it is likely to take before they can get the trial use of it or a sale of any kind. In most cases this may take months or even years of prospecting effort, multiple pilots and reporting of results before the practice, clinic or hospital is ready to move forward (or not). In practice this means that device companies need to not only be patient (and have the cash on hand to survive this) but have good marketing plans and follow up systems that do not introduce any more delays into the process than are absolutely necessary. It may also means doing all that they can to get quality time with physicians and other staff that need to see and use the device on their terms.
Medical device companies often have much competition and need a steady supply of cash over a lengthy period of time to survive long enough to get traction with customers (whether these are B2B or B2C ones).However, they must also carefully navigate all of the additional challenges described above if they want to differentiate themselves from others in the market and be sustainably successful. RX4 has experienced all of these medical device company challenges (in early stage and mature forms) in many different healthcare environments and can provide considerable insight and options where the knowledge is limited or does not exist internally.
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CEO-RX4 Group-Taking Care of the Business of Healthcare