Over the past few months, I’ve been privileged to meet many talented scientists and physicians who have created wonderful technologies for improving patient care, but who have little experience determining whether their technology could be the foundation for a successful new business. One recurring challenge is quantifying the addressable market – not a skill that is typically taught in science, engineering or medical school. Here’s my approach, using a hypothetical example.
Category: market
Medical Device VC Funding: Slide Deck – Part 1
You need a great slide deck to raise funds for a start-up medical device company. If your presentation would be right at home in a scientific or medical meeting, it’s not the right deck. A great deck tells the story of how investors in your company will do well (financially) by doing good (improving medical care). It’s all about the business, and only briefly touches on the technology.
VentureHacks totally nails the deck template for tech companies. If you haven’t already read http://venturehacks.com/articles/deck, do it now. Read the comments too. Even better, read the whole VentureHacks archive, and buy their book at http://venturehacks.com/pitching. Pay attention to their sage advice: “Put pictures in the slides and text in the notes,” so that your deck can be used as both a presentation and a handout.
Medical device companies are different, so the VentureHacks template isn’t quite right. Today’s post provides a slide deck template for a company developing a single medical device product to address a single unmet need. Later posts will describe a slightly different template for “platform” companies, where the company envisions several new products addressing multiple market needs based on a core technology platform.
I’m posting this template and asking for your feedback. Convince me that you have an improvement, and I’ll update the template. Let’s get started.
Continue reading “Medical Device VC Funding: Slide Deck – Part 1”
Medical device companies are different
Medical device companies are different.
Most people in the medical device industry believe that regulation by the FDA (and similar entities around the world) sets the industry apart. While medical device companies are indeed overseen by the FDA, this is not really the primary cause of differentiation. Many industries, such as wireless communications, are highly regulated. Quality and reliability requirements in many industries are controlled by tight industry standards (Telecordia), ISO standards, military requirements, and customer demands.
So, what really sets medical device companies apart from other high-tech companies?
The four-part customer: patient, physician, provider and payor.
Medical device companies sell products and services to an incredibly complex four-part customer – the patient, the caregiver (usually a physician), the care provider (typically a hospital, outpatient center, or physician office), and the payor (aka the insurance company). Successful medical device businesses address the needs of all four constituencies.
It’s common that the needs of these four constituencies are not aligned. A powered contrast injector saves the interventional cardiologist time and x-ray exposure, but adds expense to the hospital. So hospitals push back on use. A better-but-slightly-more-expensive pap smear (ThinPrep) took years to gain market adoption, as insurers needed to be convinced that the improved performance was worth the extra cost. Robotic tools for prostate cancer have been adopted with relatively little clinical evidence, as hospitals found the device to be useful in their marketing to patients. Drug-eluting coronary stents achieved rapid adoption because Medicare decided to pay for these devices even before FDA approval.
This four-part customer sets the bar for business success at a much higher level than just FDA clearance or approval. While some pre-clinical and clinical data are often needed to obtain regulatory clearance, rarely will this provide sufficient evidence to drive significant product adoption. Economic data is not required for regulatory approval, but physicians, providers and payors all want to save costs or increase income. As a population, we get sicker as we get older. So the US Center for Medicare Services (CMS) must be convinced that new medical devices and new procedures will benefit their patients, at a reasonable cost.
The four-part medical device customer impacts every aspect of a medical device business plan, including technology/product, clinical/regulatory, market, and financing strategies. Failure to master the four-part customer may be the most common cause of medical device business failure. How does your business address each of these constituencies?
Jay Caplan on Medical Devices 