Have you ever wondered why medical technology doesn’t evolve like consumer technology does? The ideas are ripe, many of the components required are inexpensive, and we have the infrastructure. There’s a general feeling that we should be a lot further ahead than we are because we see consumer tech moving so fast.
There’s no way to overstate the impact of technology on healthcare. From artificial hearts to electronic healthcare records, technology changes everything. Here’s a few observations that’ll help clarify why med tech’s a slow moving industry:
The FDA’s guidelines on the medical device development process speak directly to the issue. There’s several steps in the approval process and they depend on the type of device being developed.
Class I devices can be low risk like an at home ovulation test. Class III devices have more risk or are invasive like a hip replacement. Companies may not know what class their device is as figuring that out can be difficult.
Regulatory compliance is a master’s course all by itself. The FDA outlines five steps:
- Device discovery and concept
- Preclinical research prototype
- Pathway to approval
- FDA review
- FDA post-market safety and monitoring
In turn, each of those steps is broken down into an ever more bewildering process. A seasoned regulatory expert and CRO can help startups navigate through this and interface with the FDA.
All innovation is expensive. Medical innovation, even more so. In large part, because it’s an iterative process to get from concept to market and it’s a heavily regulated industry as mentioned above. Traditional sources of VC funding are starting to dry up, making it more difficult, but not impossible to get funded. According to Joseph Walker of the WSJ:
Investment in the medical-device and equipment industry is on pace to fall to $2.14 billion this year, down more than 40% from 2007
He also mentions:
Venture money received by the biotechnology sector declined 28% over the same period, while software startups recorded a 75% increase.
While medical devices tend to reach the market faster than their pharmaceutical counterpart, the monetary reward for a groundbreaking drug is exponentially higher than that of a groundbreaking medical device. Some medical device makers are finding success by going public.
As long as a company has an idea that’s been fully validated by early stage market research, have a strong value proposition, and have done their homework on what investors to seek, getting funded becomes easier.
A startup can invent the latest and greatest technology out there that has the potential to disrupt healthcare but if the product isn’t reimbursable or show value to the insurance companies, least in today’s market, it won’t make it to market.
It takes some real expertise to know the market and how it relates to the insurance companies, the hospitals or clinics purchasing the product, and how it adds value to everyone involved. If this can be demonstrated properly, it can be a win for everyone.
For instance, a molecular diagnostic test is 5x the cost of it’s main competitor but allows for earlier diagnosis that has the potential to save two nights in the hospital so the overall payout to the hospital is less. This is real value.
It’s a difficult road to move medical technology forward but with some expert help, it’s easier. Fortunately, there are medical device development services that exist to help innovators get their ideas to market and understand these nuances of the industry. This is key as it makes for a more efficient and less expensive journey.