First things first.
There are way more then 14 things to consider. This is a good start to generate a well thought out business plan to reflect your medical device idea. This is extremely hard. There are so many factors to take into consideration. Let alone the cost. A 2010 Stanford study identified average cost of bringing a 510k product to market is $31 million. This is no pocket change.
I have listened to over 30 medical device pitches in the past couple of months. I have heard some fantastic ideas that could potentially change the way things are done in the medical field. On the flip side, I have listen to many ideas that frankly have not been well thought through. In the spirit of helping out my medical colleagues, I thought I would share with you 14 considerations for your brilliant UNICORN medical device idea! Let's get into it!
Does the medical product solve a problem? Well of course this would be a logical first step haha. But there is more to it than just solving a problem. Is the process easier for the patient, doctor, nurses, staff, hospital, etc? Would you be breaking standard of care protocols? If so, is there a clear advantage to using this device? Devices can utilize amazing technology but to break standard of care protocols where the misdiagnosis would lead to death is to great of a risk.
2) 510k Pathway
What does the regulatory pathway look like? This reminds me of a couple of pitches I heard where the product is extremely complicated, to the point that regulatory pathway would take years to complete. Regulatory partners are extremely important to understand risks, timelines, and compliant certifications.
3) Target Consumer
Who will be purchasing the medical device? Are there qcodes, cpt codes, drg codes associated with your medical device idea procedure? Who will ultimately be the decision maker? Great device for the patient but too expensive for the hospital?
4) Cost Of Goods Sold (COGS)
Have you talked to a couple of manufacturers to determine estimate of COGS? Factors to consider: R/D team, inventory, IP attorney, regulatory, prototyping, usability studies, testing, design iterations, manufacturing partners, supply chain management, risk, sales team, etc.
5) Predicate Devices
Are there any predicate devices on the market? What are the pros and cons of the current predicate device? Interview medical professionals. What are their thoughts? If there was a perfect device ,what would it look like? How would it work? What if it did X ok, but did Y really well? ASP?
6) Average Selling Price (ASP)
How much does it cost to purchase a predicate device? What will your ASP be? Are the COGS at least 50% of ASP? To have a sustainable business model, you need to get ahead of COGS inventory. Life cycle of a product over time, what does the ASP look like? What is the market volume? Is it over 500,000 units a year?
7) R/D Groups
Have you talked to a couple of medical device engineering firms to get an estimated development scope of work, timeline, and costs? How should you choose your R&D firm? This is a topic in itself. Each one offers something different. Some firms are really good at engineering. Some are really good at working with their manufacturing partners. Others do a great work with catheters, etc. Definitely do your research and pick a R&D firm that fits your medical device idea.
8) Must Haves vs Nice to Haves
What are a couple of key features and benefits that the product must have vs nice to have? Another way of saying this is what needs to be in the first version vs second version. Vita Group has realized over and over again that we could engineer a product for YEARS! At some point the features and benefits have to be version 2, 3 or 4. Product pipeline?
9) IP Attorney
Have you spoken to an IP attorney? There is so much that goes into this. I think I will leave this for another time. This is extremely important. There is a major difference between IP filing attorneys vs IP attorneys that file and litigate. Do your research.
A good rule of thumb is 1/4 cost for development, 1/4 cost for regulatory, 1/4 cost for inventory, and 1/4 cost for execution. Meaning your inventory will be a significant amount of money. Projecting inventory for 12 months, 24 months, and 36 months is very important. This will help determine your ordering cycles, fundraising efforts, debt management, and regulatory pathway considerations.
Who will buy the first 10 units? Who will buy the first 1,000 units? 5,000? 10,000? 400,000? This topic has a myriad of options. Do you want to hire a sales team? Independents? What does that growth look like? Do you have a marketing department? What are the go-to-market costs? How will you manage distribution? Who will manage it? Sales is one of the most important factors in any medical device. Teams are very specialized. There are a lot of great motivated individuals out there. Worth their weight in gold. There are a lot of individuals that will not have a sale for years. I have seen a number of great medical devices get all the way to market and fail.
12) What is the goal?
Do you want to sell pre 510k, pre market, at market, etc? Do you want to create a company? Do you want to go IPO? What is your goal? This can always change but having a goal to shoot for is important. This will determine go-to-market strategy.
I'm saving the best for last. Now that you have 1-12 answered. Now you need funding! Haha Prepare yourself for being told NO a lot. Be prepared to fund-raise multiple times. Typically to get your medical device idea off the ground. You can look to friends and family. There are numerous medical VC groups out there. This section you could have a couple of blogs on. There are a number of ways to fundraise but there are multiple ways to FAIL at fundraising.
Creating a team to bring your device to market is extremely important. There are so many different groups that help bring a medical device idea to market. I would have to say a number of the medical device pitches we hear, come to Vita Group because of our multi team approach. Vita Group provides all the support to bring a napkin idea all the way to market with a plug and play sales team.
That concludes 14 considerations to bringing your brilliant UNICORN medical device to market. Like my grandpa always said, "The first step to succeeding at anything; tie your shoes."
Have a fantastic weekend!
Chief Operating Officer
"It is expensive to bring a medical device to market. A 2010 Stanford study 1 identified the average cost to bring a 510(k) product from concept to market at $31 million."
Maria Shepherd, Medi-Vantage 09.01.17. https://www.mpo-mag.com/issues/2017-09-01/view_columns/medtech-price-strategies-who-is-going-to-pay-for-it/