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Commercializing Med Tech Innovations: When Scaling Sales Makes Sense

Commercializing Med Tech Innovations: When Scaling Sales Makes Sense

Mark Andreessen, the founder of Netscape and regarded investor/entrepreneur, coined the term “Product/Market (P/M) Fit”, which simply means “…being in a good market with a product that can satisfy that market."  According to Andreessen, this state of commercial Nirvana is achieved by iterating on your product, messaging, and targeting until something really clicks.  Then, and only then, do you flip the switch to “Scale”.  In med tech (vs. tech), there are usually two or more markets to satisfy, namely users of the technology (e.g. doctors, nurses, patients) and those paying for it (e.g. hospitals, health insurers, maybe patients again).  There are often two products, too – the gizmo, app or service being sold, and the evidence demonstrating that the product is worth the payers' money or the users' effort. You could say that in med tech a “Product/Evidence/Markets (P/E/M) fit is the gateway to scalable commerce.  

In our industry, we have become very creative in hitting that all-important “on market” milestone as quickly as possible, making good on long-standing promises to investors (often longer than planned) and sparking celebration among long-suffering employees. For PMA devices we go to Europe, we pursue humanitarian device exemptions, and find first applications with the fastest clinical pathway no matter how small the opportunity or insignificant the benefit.  For 510(k) devices, the possibilities for fast-tracking to launch are even more plentiful. But this cleverness and scrambling increases the likelihood P/E/M fit has been bypassed, delayed, or just ignored.  This can lead to the Commercialization Doom Loop:

Here are four steps emerging med tech companies can take to find their P/E/M and avoid market purgatory:

1.     Gain P/E/M insight as early as possible - learn what you can about product performance and evidence requirements for both user and payer market majorities well before submitting that FDA or CE filing. This early feedback could affect everything if you listen carefully: clinical study plans, product designs, regulatory pathways, financing requirements, even what talent you need.  While engaging S2N to help gather all this data is great (shameless plug), most critical is sending all the company leaders into the field to interact with target customers and opinion leaders. This gets everyone on the same page, and helps the company build loyal future customers who will bear with you through early mistakes.  In our experience these first accounts are often your best ones for many years to come.

2.     Clearly set investor expectations that regulatory approvals and clearances don’t translate into immediate hockey stick sales growth.  Initial launch is not the time to hire the seasoned commercial CEO and replace all of your engineers with glossy reps. Use different language to describe your first 6-18 months post approval – deploy terms like “limited launch” and make an overt distinction between that and “full launch”.  While not the ticket to instant riches, the first regulatory approvals do drive value in that they reduce the cost of evidence development and provide irreplaceable real-world use experience. Product and study iterations are challenging in our regulated industry, but a window of relative efficiency can open after regulatory approval and before locking down scaled manufacturing.

3.     Once “on market”, start small. Limit the size of your initial sales and marketing organization so that you can iterate on messaging and targeting, and ultimately find that repeatable, scalable sales process (assuming you have P/E/M fit). Starting small has a number of benefits – you learn from the market while managing not just your commercial spend, but also containing the costs for your clunky, sub-scale first-gen devices, and minimizing the likelihood and scope of any initial safety or performance issues.  If you make the most of the limited launch period, and don't exit it prematurely, you will be much better positioned for success at commercial scale up (look for our next blog on sales metrics and knowing when to hit the gas).

4.     Consider a longer, more meaningful regulatory path. Heresy, right?  Regulatory approvals are so seductive and satisfying, but no matter how much you try to contain investor expectations, or how ready your team may feel to progress to the next chapter, the shortest path to market may not be the wisest.  Consider alternative regulatory strategies that may take longer initially but provide you with more claims or “E” at launch, such as a de Novo 510(k) vs. a traditional 510(k).  The timeframe to meaningful sales could end up being no longer, and even shorter, than Plan A, and the additional market risk reduction could be attractive to commercial stage investors or acquirers.

The road to P/E/M fit is never clear, easy or short in med tech, but the destination can be well worth the trip.

Reimbursement Fundamentals for Disruptive Medical Technologies

Reimbursement Fundamentals for Disruptive Medical Technologies

Many new medical technologies, particularly the low- or mid-tech ones, fit more or less neatly into an existing reimbursement code. For the companies developing such devices, de-risking involves demonstrating 1) it works and won’t kill anyone, 2) the path through FDA is efficient, 3) the company can manufacture it at attractive margins, and 4) enough people will want to buy to imagine profitability.

For most “disruptive” medical technologies, however, it is the market adoption risk that often generates the most worry starting around Series B and escalating to a fever pitch in the quarters leading up to launch. Providers generally want to get paid more for using expensive new technology, and additional reimbursement typically lags years behind product approval if it ever happens at all. Compared to the payers of the world, the medical device regulatory bodies are virtual pussycats. You did one study for FDA? We need three. You studied patients out 6 months? We want two years. And we still might not pay extra for your devices, no guarantees.

The high hurdle to new reimbursement will, and is meant to, discourage all but the most confident in the value of their novel therapy or diagnostic. Those brave companies that do forge ahead to slay the reimbursement beast need to be armed appropriately. To learn more about how emerging medtech companies can pave the way toward reimbursement for disruptive new devices, I spoke with Kelly Shriner, Director of Health Economics and Reimbursement for Boston Scientific (by way of Asthmatx). In 2010, BSC acquired Athmatx, with its novel Alair Bronchial Thermoplasty treatment for severe asthma, for $193.5M up front and up to $250M more on the back end. Bronchial Thermoplasty was awarded a rare new Category 1 CPT reimbursement code in 2012, a major milestone long in the making.

For the edification of our emerging medtech clientele, I asked Kelly what she was glad she did early on at Asthmatx to position the technology for reimbursement down the road. “I can’t overemphasize the importance of a strong clinical strategy,” said Kelly. “We followed a scientifically sound path that helped us gain ground along the way, which was crucial for a technology as novel as ours.” What made Asthmatx’s clinical program so rigorous? Three randomized, controlled trials, including a robust sham control arm and tracking of healthcare utilization data in both arms to facilitate economic comparisons. “If we didn’t have that data, we’d be dead in the water with payers,” said Kelly.

Building relationships with the relevant clinical societies, and building them early, is also important groundwork for future reimbursement. “Payers seek the input of these societies on all their decisions,” said Kelly. Asthmatx started reaching out to societies in 2005, a full seven years before receiving their Category 1 code. “The societies are the ones that push for appropriate coding with the American Medical Association (AMA), and as a company you can’t own that process,” said Kelly. “The persistence of the societies helped us go from a temporary Category III code to a Category 1 code in one year.” Trust me, this is lightening speed.

Once on the market with a new CPT code, the reimbursement effort is far from over. Individual payers still have to agree to actually cover the assigned code (a.k.a. send money) when the procedure is performed. Payers can do this on a case-by-case basis, necessitating much paperwork and fortitude on the part of providers, or they can issue a coverage policy so the reimbursement flows with appropriate use. “The Catch 22 is that payers’ coverage policies don’t flip until payers see demand from market, but demand is driven by reimbursement,” says Kelly. In the meantime, companies need to be prepared to offer users “an intense level of support” through the one-off reimbursement appeals.

Companies also need to intensively educate the payers, for example about the rigors of the PMA regulatory process. “I found myself having to explain the difference between a 510(k) and a PMA, and the level of evidence required for a PMA device like Alair,” said Kelly. Feeding into this misperception is the fact that the FDA has access to all of the company’s data, whereas payers tend to only look at published, peer reviewed articles – a naturally self-limited dataset. Given the opportunity to explain how similar a PMA is to an NDA, though, payers got it. “As an industry, we need to do a better job of bringing payers up to speed on the FDAprocess, particularly for PMA-approved medical devices”, suggested Kelly.

Kelly continues to negotiate with payers around the world as part of the BSC team. Reflecting on the acquisition, Kelly proudly recalls, “Our early payer strategy helped BSC get comfortable with Asthmatx; the reimbursement strategy, as well as the strong clinical strategy and compelling data, helped get BSC over the hurdle of taking on an earlier stage technology.”

Should I Fund My Medical Device Company on Kickstarter?

Should I Fund My Medical Device Company on Kickstarter?

If you don’t prowl the crowdfunding site Kickstarter as often as I do (I admit I’ve funded ten projects to date), you might not know that a medical device company recently reached its stretch goal of raising more than one million dollars. The Kickstarter donors to Scanadu, a Star Trek inspired “medical tricorder”, essentially bought their own participation in a quasi clinical trial, sweetening their cash with a little crowd-sourced data. Kickstarter and similar sites provide a platform for startups to raise money in exchange for early-bird perks such as first access to products, dinner with the founders, or even a bit part in a movie (a speaking role in the Veronica Mars movie went for $10,000). The relevance of Kickstarter-type crowdfunding for medical devices has yet to shake out, and a hot debate on the topic is emerging.

Some skeptics of Kickstarter for medtech believe that this pre-selling / fundraising route is only for “toy” medical projects, not for serious FDA-regulated devices. A review of the numbers, though, may cause these naysayers to take a second look. Projects on Kickstarter have raised $670M over the last three years; according to PWC MoneyTree, start-up and seed investment in medical devices totaled $492M during that same period. Kickstarter will never replace the role for traditional angel, venture and strategic investors, especially for medical technologies requiring tens of millions of dollars in investment (a.k.a. most of them), but it could provide yet another hopeful bridge over the valley of death for earlier stage medical technology companies. And Scanadu is proving it can work for some devices.

To help emerging medtech companies decide whether to defy the skeptics and launch a Kickstarter campaign, I have created a simple three-point checklist. Answer yes to all three of the below questions and crowdfunding might be just the thing to get your gizmo out of the garage.

1. Will people care about my device?

The typical Kickstarter “donation” is in the $100-$200 range, so you will need a lot of crowdfunders to achieve a meaningful sum of money. For people to engage and open their wallets, they must:

  • a) Think your product is super cool; and/or,

  • b) Want to help you solve a problem (a plus b is best)

Scanadu, with its relatable value proposition and Trekkie cache, attracted more than 5,000 donors averaging ~$195 per donation. I can’t imagine that a hemorrhoid therapy would have the same broad appeal, but then again typical Kickstarter trollers may spend a disproportionate amount of time sitting in front of their computers.

2. Can I offer appropriate perks?

This is where many medical device companies will struggle. Early access to a life-saving medical technology is not exactly something a company can offer for unapproved technologies, and a company can’t guarantee participation in a clinical trial given the normal litany of inclusion criteria (not to mention you may end up in the control arm). Being an OTC device certainly made Scanadu’s life easier, but even so, Kickstarter donors will get a research version of the device to help develop algorithms for later testing in clinical trials. In general, the more consumer-oriented the medical device, the more likely it will be appropriate for Kickstarter-type crowdfunding, but creative entrepreneurs may be able to come up with some compelling perk (product naming rights?). Definitely have legal counsel review any offer before you put it out there.

3. Can I get enough to make it strategically worthwhile?

Most medical device companies need double digit millions to reach cash flow positive. $5.5 million is the largest raise on Kickstarter to date (though Ubuntu Edge is looking to smash that record and raise $32M), so Kickstarter alone won’t get you there. If $1 million or less can propel you to an important milestone, such as functional prototype or proof of concept, and if the Kickstarter platform gives you something else of value in addition to cash, such as user feedback and consumer awareness, then Kickstarter could be a good move.

Currently, only a small subset of medical technologies might make worthy Kickstarter projects, but crowdfunding for medtech is here to stay. Equity-based healthcare crowdfunding is next to emerge, though the rules are just starting to take shape and currently only accredited investors are able to invest through these platforms (see HealthFundrReturn on Change, and VentureHealth). For those of us in the emerging medtech space (and every other space for that matter), a little revolution on the funding side seems in order.

Medtech heads to Africa and so does S2N

Medtech heads to Africa and so does S2N

The large medtech companies seem to talk endlessly about emerging markets delivering their top-line growth targets, and they are not just talking about BRICcountries anymore. During his recent visit to Africa, President Obama stumped for increased trade with “the world’s youngest continent”, and companies like Covidien are seeing the promise of Africa, too. Selling in Africa seems like a natural step for some of the industry giants, but what about the little guys? Can emerging med tech companies turn the large African populations, improving healthcare infrastructure, and growing middle class into valuable markets?

Not to be outdone by Obama, last month I traveled to sub-Saharan Africa for an S2N client seeking to understand regional customer requirements for a novel medical technology. This medical technology is funded in part by a foundation grant, hence the African twist. While there, I visited several health centers and was able to get a sense of how care is delivered and by whom in this part of the world. These observations, admittedly from one country (Ethiopia), underscore both the potential and challenges of African markets for healthcare technologies.

The key customers are governments.

Government sponsored clinics and hospitals serve the majority of people in Africa, often providing care at no charge or for a nominal fee. However, private health clinics do exist for those who can afford a fairly modest fee for services. While in Africa, I visited a brand new private health center with 40 inpatient beds and 2 ORs. This center was well supplied, exceptionally clean and had its own IT department. This private center was actually funded in part by the local government because the public one was struggling to keep up with patient demand. Indeed, the public clinics were busy and waiting areas were full. In many African countries, the government may be your first call point, and official buy-in will be important when introducing any new technology more broadly. The government not only influences purchasing but also practice, care delivery and technology use.

Unlikely healthcare workers perform procedures.

Because of a shortage of trained MDs, it is healthcare workers, with widely varying skill levels, who are the primary providers of patient care. One of the public clinics I visited had throughput of ~300 patients per day, managed by a staff of 14 healthcare workers; the one MD on staff had been on medical leave for several weeks. In both the public and private clinics I visited, the workers were clinically knowledgeable, keenly interested in learning about new technologies, and articulate in describing their needs and capabilities as care providers. Many healthcare workers with 2 – 4 year degrees could deliver babies and perform small surgical procedures (e.g. wound closure and episiotomies). Most of the healthcare workers I encountered in the urban and peri-urban clinics spoke English, although I was grateful for our counterpart who spoke the local language.

Preventative care is challenging, and cell phones may help.

In Africa, patients often go years without seeing a doctor or other healthcare worker. The concept of a general check-up, especially if you are healthy, is almost non-existent. For patients who do make it to the clinic, healthcare workers commented that follow-up appointment cards may be given for 3-5 years out, but there aren’t really appointments – long lines are the norm. Many patients also travel great distances to the nearest health clinic, so governments and NGOs are focused on ways to bring care closer to the patient. Ethiopia is a pioneer in training health extension workers to provide basic care, for example vaccinations and family planning counseling, in the more rural areas. With mobile phones nearly ubiquitous, even in remote villages, m-health solutions are also receiving attention and funding for preventative care and treatment in Africa.

While a single experience in one African country does not tell the whole story, I hope and expect to be traveling to the emerging markets more frequently for my emerging medtech clients, particularly for those medical device cost-disrupters who can meet the low price points demanded in Africa. Certainly getting into the field to visualize the environment and talk to the people who may someday be using your technology is an invaluable first step in the right direction.

Defining Disruption in Emerging Medtech

Defining Disruption in Emerging Medtech

In our line of work, we come across many innovative medical technologies appended with the adjective “disruptive”. Some uses of the term require more squinting to imagine than others. The disruptive label is enticing because big ideas are associated with big funding and big exits in the emerging medtech landscape. Alas, there is no objective measure of a device’s potential disruptiveness; like pornography, to paraphrase a former Supreme Court justice, “you know it when you see it.”  Renal nerve denervation for refractory hypertension – now that’s disruptive.  Fully implantable artificial heart – disruptive.  Transcranial magnetic stimulation for depression – disruptive.  RF ablation for severe asthma – disruptive. Of course, to really disrupt the market, these technologies need to be widely adopted, and it so happens none of these have quite reached that stage yet, but at least the potential is there to fundamentally change treatment paradigms.

High “disruptivity” is not essential for new medical technologies to attain success. There are perfectly clever, fundable innovations out there that don’t rock the healthcare world or get published in NEJM. What is important, though, is ensuring a proper balance between the two fundamental dimensions of disruption, namely Care Disruption and Cost Disruption.

Care Disruption can be created by:

  • A new device-based treatment where only drugs (or nothing) existed before

  • Enabling a much broader group of patients to be treated

  • A completely new setting of care, e.g. new home treatment or monitoring

Cost Disruption can be created by:

  • Being significantly cheaper than existing solutions (e.g. 5-10X cheaper)

  • Adding significant costs to the healthcare system

  • Massively shifting costs associated with a certain condition from one category or payer to another

To lay this out visually, if your technology is both a Care and a Cost disrupter, then it is in the “Maximally Disruptive” box on the above classic 2×2 chart. For technologies that significantly change care and also increase or shift costs substantially, the key to market creation is the development of compelling clinical data. The reward for successfully demonstrating value may be keen interest by the big medical device companies looking for entirely new verticals (consider the $800M purchase of Ardian by Medtronic).  Medical technologies that are able to disrupt care at a significantly lower cost, for example by leveraging advances in processing power (Moore’s law), are equally exciting but are just starting to emerge.

On the other end of the spectrum is the “Market Share Battle” quadrant, where incrementally better new products with a comparable or slightly lower price tag fight entrenched competitors for a piece of an existing market. The battlefront here is often in purchasing departments of health systems, and the sales channels are likely through distribution. Exits for products in this category tend to be later stage and based on multiples of revenue; prove you can gain share on the market and there will be interest.

If your technology involves a significant change in care but not necessarily in cost, for example a shift in the site of care or a less invasive, easier procedure, then the focus of the company should be on Market Education. Products in this category, even if money-saving, can encounter referral pattern problems where clinicians who “own” the patients may be disincentivized to offer a less expensive solution, especially if it is provided elsewhere. In this case, direct-to-consumer marketing and advocacy may be required to gain traction and prove demand for the new technology. Companies offering endometrial ablation solutions, as an alternative to hysterectomy, could tell you first hand about the referral pattern problem. Proving cost-neutrality or savings with post-market economic studies may also be required to realize a shift in care patterns.

Where you don’t want to land is in the upper left box, unless your technology is on the cheap end of cost disruption. No entrepreneur will admit that the innovation they’ve nurtured is an incremental improvement at a higher cost. Unfortunately, until the clinical benefits and/or economic savings of more expensive innovations are credibly demonstrated in studies or even better with real-life use, skeptical clinicians, payors, hospitals and patients will likely place it in this box. The trick is moving as quickly and efficiently as you can to a better zip code.

S2N Whitepaper - Marketing for Emerging Medtech: A Stage by Stage Guide

S2N Whitepaper - Marketing for Emerging Medtech: A Stage by Stage Guide

Early stage medtech companies have a need for marketing well before having a first product on market. This S2N Whitepaper identifies the critical marketing needs at each stage of progress to lay the groundwork for a successful product launch:

  • Concept Stage – Defining the product, the market and the business case

  • Development Stage – Understanding your customer and building relationships

  • Pre-Commercial – Preparing for launch and gaining early adopter feedback

Fill out my online form.

The Rise of Robotics in Med Tech

The Rise of Robotics in Med Tech

Robots represent a vision of the future, a vision that inspires two parts amazement and one part fear of being replaced by superior machines. In manufacturing, robots have been deployed since the 1960’s to exceed human precision and productivity. This same potential exists in the provision of healthcare, but to date robots have barely made a dent. Despite the $20B market cap of Intuitive Surgical, less than 2% of worldwide surgeries are performed robotically today, and penetration of this pioneering surgical robotic platform may be peaking.

A robotic invasion could be on the way, though, with a number of forces converging to give robots a boost in the healthcare sector.

Robotic technology is advancing

The current surgical robots essentially take a highly skilled surgeon and “super-humanize” them, with the help of 3-D visualization and enhanced precision through minimally invasive incisions. Intuitive is selling these benefits primarily in urology and gynecology cases, Mako Surgical for knees and hips (implantable hardware included), and Mazor Robotics in spine and ultimately brain procedures. Moving from the OR to the interventional suite, robots promise not just precision but also distancing the clinician from the radiation-emitting fluoroscopy in the procedure room. Hansen MedicalStereotaxis and new entrant Corindus are targeting the vascular and electrophysiology labs with this value proposition.

The really game-changing robots, though, may be cooking in academic labs, taking advantage of ever increasing processing power and communication technologies to truly extend beyond human and even geographic boundaries. The Raven surgical robotic platform, was initially funded by the US Army in pursuit of telerobotic surgery, the concept of a highly trained surgeon in one location performing surgery on a truly remote patient (e.g. in space). Back on earth, the Harvard Biorobotics Lab is leveraging the Raven’s open source software and powerful computing capabilities to enable beating heart cardiac surgery using real-time 3-D ultrasound imaging to guide surgical instruments in tandem with moving heart structures. IBM’s Watson is now training its supercomputing smarts on complex diagnoses and treatment pathways, showing how logarithmic increases in processing power might one day drive not just clinical decisions but the interventions themselves.

Robots will get less expensive

In general, prices fall when production efficiency and competition increase; the robotics field is no exception. Over the next few years, Intuitive will be joined by new robotic surgery entrants starting a few Moore’s Law cycles ahead of da Vinci (see this S2N Blog on price disruption in med tech). Emerging robotic competitors include Titan Medical, audaciously naming its robot after another classical dead genius (Amadeus), and Medrobotics, with a flexible robotic system able to reach places the straight-armed da Vinci can’t access.

As robots fall in price, they will not only gain traction in high-value surgical and interventional procedures but also start performing more mundane healthcare functions. Several efforts are underway to develop “personal robotic assistants” or NurseBots, with Asia, motivated by a rapidly aging population in need of care and companionship, leading the charge. Panasonic has been piloting a hairwashing robot for hospitals and nursing homes, complete with 16-finger massage and hairspray application. A robot conceived at the Korea Institute of Robot and Convergence can sniff out soiled diapers and other problem situations is now being deployed in trials at nursing homes.

The data will catch up

Beyond whiz-bang engineering and reasonable price points, what the robotic revolution needs most is a compelling rationale for cash-strapped hospitals and health systems to get on board. So far Intuitive has sold the da Vinci more on sizzle than statistics, ultimately generating robot fatigue, skepticism and counter-data such as the recent JAMA article showing no advantage for robotic hysterectomies. Emerging competitors and Intuitive itself appear to be getting the message, investing more in controlled clinical and pharmaco-economic trials to support capital acquisition and utilization.

For the right technologies and applications, backed by sound data, the robotic future in healthcare should be a bright one.

Special thanks to Amanda Bronner our Intern for her super work in researching the next generation of robotic medical technology

Is The Medical Device Industry Ready for Big Data?

Is The Medical Device Industry Ready for Big Data?

Many medical devices generate a ton of data, but until recently this data has largely been left to go into the ether instead of the ethernet. Complexities around HIPAA and liability concerns, among other worries, seem to have frightened device companies out of utilizing this potentially valuable asset, if they even know what to do with it in the first place. But times are a-changin’ and some big device companies are beginning to make noises about putting the power of data to work. In Boston Scientific’s recent presentation at the JP Morgan Healthcare Conferencecompany execs called out the “convergence of devices and informatics” as a market tailwind for its future success (what BSC offering will be riding this tailwind exactly is unspecified).

A glimpse at the emerging “big data” strategies of medical device companies shows their approaches to be falling under five major, though not mutually exclusive, categories:

  • New Revenue Streams: The business models enabling companies to “monetize” their data might include charging hospitals or payers for access to and/or management of the data, or providing services such as post-discharge patient monitoring.

  • Product Improvements: Companies could use data streaming off their devices to guide product enhancements and next gen platforms that deliver better performance, and therefore are more competitive in the marketplace.

  • Outcomes Benefits: Processed data from a medical device might direct physicians, patients or caregivers to take steps that, in turn, increase the “efficacy” of the underlying device. An example is St. Jude’s effort to use data from an implanted cardiac assist device to indicate the need for heart failure medication, now being studied in the LAPTOP-HF trial.

  • Liability Protection: Careful review of data from medical devices for purposes of post-market vigilance can detect device problems quickly before too many devices get out there, limiting the magnitude of any unfortunate recall situation.

  • Operational Efficiency: Medical devices of the future will be able to tell you where they are, or are not, which can greatly streamline inventory management, sales targeting, and compliance with device traceability requirements. Think of Walmart as the role model here!

So why is now the time for medical device companies to start cranking up their data wonks and make something of their repositories?

Companies need something new. Medical device companies are in dire need of some “tailwinds” to combat the many headwinds blowing against the industry. The traditional medical device business model of charging for capital, disposables and maintenance is under increasing scrutiny, particularly as the aging fee-for-service reimbursement framework shifts towards capitated, episode-of-care payment. While all the doom and gloom of late may be a bit exaggerated (every sector goes through cycles), a new reality of growing price pressure and clinical data requirements is emerging. If the established medical device companies can’t figure out how to augment their value propositions and revenues with device data & analytics, some scrappy new competitor will get the job done!

Providers could use some help. With hospitals and health systems increasingly on the hook for patients between acute care visits, care providers will be desperately looking for ways to keep patients healthy and out of the hospital. Implanted devices could get drafted into overtime duty, reporting back to clinicians on device performance and patient status, potentially over the entire lifecycle of a disease. Electronic health records, which thanks to a variety government carrots and sticks, are finally becoming entrenched in the US, will enable this vision to be realized. There is speculation that the EHR Stage 3 Meaningful Use criteria, slated for implementation in 2016, will include the incorporation of the Unique Device Identifier data into the EHR, opening the door to creative combining of patient and device data for improved outcomes (and comparative effectiveness research, by the way).

Consumers are taking interest. The old days of patients relying solely on their doctors for assessments of their medical conditions and selection of treatment options are over. We now live in a land where just about every patient “Googles” her disease and comes armed with opinions to her doctors appointments. Smartphone “health apps” are cropping up everywhere, with more ways to measure one’s own health status than frankly any of us might want (though I admit to having a scale that connects to the cloud). Some consumers are demanding access to the data coming off of their implanted devices, stirring up controversy on the application of HIPAA to a patient’s own data.

With the combined force of industry push, and provider and patient pull, a path to beneficial use of the mounting heaps of data from medical devices will be carved. The hurdles of safety, privacy and liability will get figured out much as they do in every other economic sector that stands to gain from data analytics, which is just about all of them.

The Next Big Niche? Emerging Med-Tech in Transplant

The Next Big Niche? Emerging Med-Tech in Transplant

As an advisor to emerging med tech companies, I am always on the lookout for attractive niche markets where new technologies might get a foothold and demonstrate their value before taking on the (often mythical) billion-dollar opportunity. To this end, for years I have instinctively gravitated toward the transplant market (the solid organ kind, e.g. kidneys, livers, hearts, pancreases, etc…) as a nifty space for novel medical devices and diagnostics. It’s not a very big market, with only 28,000 solid organ transplants per year in the US (as compared to 600,000 hernia repairs) and 100,000 worldwide. The national system for managing transplants is complex and political (a proposed rule to allocate the best kidneys to the patients with the highest life expectancy made headlines this month). And I’ve heard tales of woe about the challenges of studying interventions in this small, unpredictable and highly regulated specialty.

So why do I like organ transplantation as a target for innovation?

Though I don’t usually let data get in the way of a good hypothesis, I confess that lately I’ve longed for a little validation of my fondness for the transplant market. The recent acquisition by Thermo Fisher of One Lambda, which has a diagnostic for tissue compatibility in transplant, for $925M in cash was somewhat confirming, but being a marketing professional I needed the scoop from the front lines. So on a recent visit to my hometown of Cleveland, I visited with renown Cleveland Clinic hepatobilliary transplants surgeons Dr. John Fung and Dr. Bijan Eghtesad (from here on out “the surgeons”). Over a cup of coffee at the Au Bon Pain, the surgeons administered a dose of reality about the challenges in transplantation, and some inspiration for med-tech innovators with transplant-relevant technologies.

According to the surgeons, organ availability is “the bottleneck” in transplant; there are currently 73,660 people in the US on the active waiting list for solid organ transplantation (compare this number to the 28K who got one last year). The lack of organ supply means that patient who might benefit greatly from a solid organ transplant, for example cancer patients, are not considered candidates. The surgeons listed a number of initiatives, many involving policy vs. technology, to improve the supply of organs, including greater use of living donors. Once just for kidneys (since people conveniently have two), a more recent innovation is the use of partial livers from live donors (4% of liver transplants in 2011). “Although the number of living donor transplants is increasing, this has its own limits,” said the surgeons.

Improving the function of organs available for donation would also help supply. “8-9000 people in the US consent to donate livers each year, and only get 6000 get transplanted; that means we are throwing more than 2000 livers away,” lamented the surgeons. New technologies for maintaining organ function after harvesting, such as Transmedics’ Organ Care System (beginning to replace the “ice bucket” in Europe for hearts and lungs), have the potential to increase organ availability by enabling donor organs to withstand longer transport. Further off, “maybe in 10-15 years,” according to the surgeons, we might see the repair of currently rejected organs using functioning cells (check out this New York Times article about growing organs in the lab).

Keeping patients awaiting transplant alive longer is another area for innovation. Dialysis can keep patients in kidney failure alive for years, but for liver failure and newly transplanted livers needing time to settle in and function, “there is not much we can do,” explained the surgeons. One company, Vital Therapies, is developing a “bio-artificial liver” to temporarily support liver function; the system is still in clinical trials. For heart transplant patients, Heartware’s miniaturized ventricular assist device for bridge-to-transplant is expected to gain FDA approval any day now.

Monitoring and maintaining the health of patients running around with transplanted organs is also a hot target for innovation. Molecular diagnostics companies such as XDx are developing tests for non-invasively detecting early signs of transplant rejection, and predictive biomarkers for rejection predisposition are being pursued for personalized immunosuppressive therapy. On the bio-behavioral end of the spectrum, companies such as iReminder are developing novel medication adherence programs targeted to transplant patients and showing reduction in rejection episodes.

After my little journalistic exploration, I still like the transplant opportunity for emerging med-tech. And I checked the back of my driver’s license (yes, I’m an organ donor, and I hope you are, too). Drs. Fung and Eghtesad certainly confirmed my high-value theory; my attempt to get one “miracle story” out of them drew puzzled looks. They are all miracle stories.

For More data on Solid Organ Transplants (and there is a ton of it), visit:

  • The Scientific Registry of Transplant Patients

  • The United Network for Organ sharing

  • American Society of Transplantation

  • American Society of Transplant Surgeons

Driving Early Market Adoption for your New Medical Device

Driving Early Market Adoption for your New Medical Device

CEO speech! High fives! Champagne! Somehow you got your new medical device through the FDA. Time to get this product on the market and start selling. You won’t have long with the last round of cash you raised to get to break-even, or to an exit, or at least to a revenue milestone that shows you are a serious contender. But no pressure!

To excite investors and motivate the team, emerging med tech companies must weave a compelling commercial tale. Achieving those hypothetical 50% CAGRs modeled at Series B is just not as easy as it seemed back then. You could leverage the farm (probably literally) to supercharge a sales force and just sell, sell, sell – a reasonable approach if you have all your data, reimbursement, etc… all buttoned up at launch, e.g. your product is a drug-eluting stent and the year is 2002. Otherwise, it’s probably a good idea to get a toe-hold somewhere and make sure you have a scalable sales model before hiring the former college varsity athletes and booking the 30’x30’ booth.

We recently came across an innovative service provider (in the spirit of S2N) that helps med tech and diagnostics companies with their product debuts. SalesForce4Hire has built a nice business around developing specialized outsourced sales teams to pilot market introductions for new medical technologies, emphasizing the importance of testing the market waters before diving in – regardless of company size or technology type. We asked Julia Mills, Director of Client Engagement at SalesForce4Hire, a few questions about selling new medical technologies in the current US healthcare environment, and to do perhaps a bit of start-up fantasy myth-busting along the way.

First we asked Julia what’s different about launching new medical technologies today as compared to 5 or 10 years ago. No surprises there: “Now it’s all about delivering a product that will produce a better outcome at a lower price,” says Julia, noting that “better outcome” doesn’t mean the same thing to all the people involved in deciding to purchase your technology. Julia added that the recent trend of physicians becoming direct hospital employees is shrinking the physicians’ sphere of influence in purchase decisions. “Gone are the days when doctors could demand a particular technology and threaten to take their patients elsewhere,” noted Julia.

Then Julia offered up some words of wisdom on what’s most important to “get right” when commercializing a new medical product.

1. Focus your Market Entry

“Think big, but start focused and smart,” advises Julia. Pick your first customers carefully, and make sure those first reps have a deep understanding of the complex purchase decision process and all the people they need to touch, from the physicians, nurses and administrators all the way up to the C-Suite. The reps also need the right pitch for each touch point, e.g. economic messaging for the business folks around how the product will improve patient outcomes while containing costs, the reimbursement, story, etc…. For the caregivers, the reps must be clinically savvy and understand the product’s use context. “Driving adoption requires relationships at all these levels, and being able to identify quickly who has the buying power within the hospital, office or lab is critical to success,” says Julia.

2. Understand Your “True Market Viability”

The first couple of years on market are a terrific opportunity to assess and refine your product’s value proposition and target customers, as long as you listen closely to the market. Riffing on the term “forecasting,” SalesForce4Hire is coining the concept of “Fact-casting,” i.e. gaining real world market and sales cycle intelligence as efficiently as you can while in early selling mode. Clinical advocates can be particularly helpful with your “fact”casting. “This group is genuinely engaged and utilizing the product in relevant clinical situations, generally willing to give very candid feedback, which allows you to test your market viability and tweak to your positioning (or kill it) early on,” says Julia.

3. Track Meaningful Metrics

Engaging the pioneering sales force in customer and market reconnaissance is critical, but also puts added burden on the organization, so you want to be smart about directing this effort. Most crucial are sales and market metrics that will truly shed light on what’s working, what’s not, and whether success is on the horizon. “You need ways to measure ROI and sales channel alignment on a small scale first, and use those early Metrics that Matter™ to decide if you are ready to scale up, have to modify your strategy, or quickly shut down and rethink,” advises Julia. Meaningful metrics support effective sales force management and optimized sales cycles, thereby reducing launch risks and accelerating revenue. “The best indicator of success is repeat purchases, meaning real purchases customers are stepping up to pay for,” says Julia.

Now for the Myth-Busting

Myth: If you have a great product, it will sell itself. Reality: a lot of elements have to be in place for a successful product launch. The product needs to be easy to use. It needs to have a strong clinical AND economic value proposition. The sales team needs to have clear goals, effective management, and on-going support. “If the product doesn’t have all of these things, it will struggle,” warns Julia. In the end, the most important goal of the first year or two on market is to learn how to sell (and not to sell) your product – to which customers, for which situations, with what message, and so on – before you inadvertently launch an expensive, unguided commercial missile. Also critical is establishing a few on-market wins you can talk about with your Board, your team and other potential customers. If you play it really smart, and have some luck to boot, your next gig might be selling fine wine from your own little vineyard.