Medical Device Company
A medical device company is a commercial organisation that develops medical devices, medical software, medical accessories and surgical instruments to diagnose, treat, or prevent medical conditions. Examples of medical devices include artificial joints, health-monitoring watches/wristbands, ventilators, insulin-dose applicators, pacemakers, stents, ICU life-sign monitors, etc.
Many medical device companies start their life as startups, and most evolve from their founders’ idea of a novel medical solution. Their mission in life is often to develop devices that provide a novel solution in a medical-market niche or an innovation for it that surpasses current methods, services or products.
Medical devices are notoriously one of the types of products that are the hardest to get to market. They are not easy to develop, manufacture and to launch and are surrounded by layers of regulations. You also have to know very well in advance who your customers are and how they shall pay for your product.
What you as the founder of a medical device company have to know from the onset: your company’s products are subject to clinical trials and approval processes with regulatory bodies in, potentially, Europe, Asia, USA and the rest of the world.
Medical devices are strongly regulated products and must be approved by medical regulators such as the EU Commission agencies under the Medical Device Regulation (MDR), or by the FDA in the USA – before you can place them on the market.
The regulatory demands on medical devices fundamentally influence the business model and planning of MDC and their setup of development and quality processes. Some claim that it is not so much a finished device that is the final product of MDC development as it is the complete documentation demanded by regulatory agencies. The latter also includes Quality Management Systems (QMS) documentation and valid design history files (DHF).
As a founder, you have to plan well in advance how you will enforce documental-process compliance with quality-associated regulations.
Start your path by imagining the three steps for your medical-device case:
- Most innovating companies in MedTech are startups and SMEs;
- To develop and bring a medical device to market can take 3 to 10 years;
- You will have to prove the clinical benefit of your novel product or device to top-tier clinics and reimbursement-approvers;
- Think about how to best exploit broader market demand and plan scaling up for the general hospital market;
- The market for medical devices is quite different from most other domains.
Ask yourself about the market.
- Is there really a market for the device and its use-case?
- What should the product look like? How to will I make it easy and safe to use? What should be the product specifications?
- How can I get market acceptance? From who can I receive clinical peer recognition? Does my product require endorsement by medical doctors?
- How do I attain reimbursement-approval in my country – and possibly in China, Japan, Canada, USA, EU countries or elsewhere?
- How do I show clinical benefits to the health-insuring companies?
- What is my business model? Should I sell to consumers and patients directly or to private and public hospitals?
- Who is the buyer of my product, who makes buying decisions, who pays for the device?
- Who are the stakeholders, and who are the final customers – patients?
- How to move from device-adoption in top-tier clinics to acceptance by the general hospital market, in all regions?
Founders have to also think of development issues:
- What is the planned timeline form product conception to prototype and certified final product?
- How much funding do I need?
- Where will I find funding?
- To whom will I outsource product design and development?
- Who will be provide prototyping services?
- How do I put in place a process-documenting and quality-assurance system to facilitate FDA, CE Mark or similar regulatory approval?
- How do I create a reimbursement strategy for the capital providers and founders (me)?
- How will I protect my IP (Intellectual Property)?
An innovative idea for a product is far from enough for an MDC to gain financial backing. Only those with an excellent business plan and a detailed product-development plan have a realistic chance of funding. No one will give you their money because they love you or your device. Healthcare innovation is quite costly, which is why most MDCs are small young companies, funded by one – or several types – of risk-seeking capital.
Among the latter are:
- Venture Capital (VC);
- Private placement (sale of securities to select investors);
- Angel investors (Wealthy individuals with deep pockets and personal interest);
- Technology competitions (Contests to attract technology partners with monetary and in-kind rewards);
- Incubators (Providers of subsidised services, support, networking and accommodation);
- Crowdfunding (Mass micro-financing for Phase 2 activities, i.g. prototyping or validation);
- Local Government (indirect financing by City or Government through incentives and tax deductions);
The more planning you can show in your medical device company to possible investors, the greater your chance of receiving funding!