A Guide to Sustainable Growth in Medtech
Medtech innovation holds immense potential but is inherently risky. Success is often hampered by limited resources, bureaucratic hurdles, and misalignment between the new and core business. Five leading industry pioneers share their essential strategies for navigating these common obstacles.
Show scalability from the start: Don’t rush into commercialization. First, ensure your product meets clinical, economic, and user experience needs. Then, demonstrate the potential for your product to perform well, not just in initial markets but also globally. Aim to meet global standards and market demands to attract a wider audience from the start.
See regulatory processes not as barriers but as an integral part of medtech: Build a business-minded regulatory team that collaborates with other departments. Encourage back-and-forth communication between your regulatory and engineering teams. Make sure your regulatory team facilitates, not just gatekeeps, so that you innovate with compliance.
Align the 4 Ps (patient, physician, provider, and payer): Reassess and pivot your strategy based on stakeholder feedback and market dynamics, especially when original business models or partnerships don't align with your goals. Align your product development not only with real customer needs, but also with physicians and providers.
Have minimum requirements for partnering up: Select your partners carefully, focusing on those with a proven track record and the necessary stability to support long-term projects. Set a minimum investment threshold to manage the administrative burden and attract more sophisticated and less demanding investors.
Tackle a big Issue, aim for a vast market: Identify and address a significant, recognized problem in healthcare to ensure your solution resonates with both customers and investors. Aim for large markets where the potential for return on investments is clear. Challenge your product against potential market failures early to establish its viability and resilience.
Build Towards a Strong Finish
Will Martin has spent decades in the medtech arena in various strategic roles at multiple companies, including Boston Scientific, Access Closure, and Hotspur Technologies. Today, he’s the CEO of IRRAS, where they are developing IRRAflow, a fluid management system that allows the neurosurgeon to actively manage intracranial pressure and cerebrospinal fluid drainage.
Will cherishes his time at Boston Scientific, where he gained valuable experience before moving on to startups. “That was a phenomenal launching point for everything that's come from that point forward,” he looks back. After that, he came across an early-stage startup and became one of the first four members of the commercial team. "I experienced firsthand what it's like to join a pre-commercial company and build a new technology and franchise from the ground up. I was involved in every aspect of the business," Will shares.
Will’s experience with both industry giants and startups was humbling. “Don't rush yourself and think that you have everything figured out,” he advises. “No product is going to launch the way you think it's going to launch. No revenue model that you build pre-commercialization is actually going to come to fruition,” he adds.
To cushion the bumps along the way, it’s crucial to nail product-market fit. For Will, a product needs to meet and exceed customer needs from multiple perspectives, including clinical, economic, and user experience. To follow his advice, make sure you don’t rush your product to commercialization and engage with critics to cover all bases. As Will says, “If you are working with the right physician thought leaders, not only through your product development, but also understanding the three to five accounts and three to five territories that you want to invest in first, it makes everything you want to scale from that point forward a million times easier.”
Think about scalability early on in your journey. Proving that it’s scalable and has potential for global market penetration bumps up your valuation. For Will, success in initial markets should act as a springboard, projecting how the product could soar nationally or globally with a beefed-up sales force.
On that note, having regulatory certifications and a presence in key international markets like Europe, Canada, Brazil, Japan, Korea, and Australia – showcasing readiness for global distribution – boosts your company's appeal to bigger fish. Essentially, broad and well-documented market readiness could substantially elevate a company's valuation.
In a nutshell, Will's advice to early-stage medtech startups is to look beyond immediate milestones and strategize on scaling their success to meet global standards and market demands to appeal to a broader market from the get-go.
Gather a Regulatory Team with a Business Mindset
Ohad Arazi’s career began in the Israeli military as a product manager in the intelligence corps. Then he led Zebra Medical Vision, an AI imaging company, and served as the Chief Strategy Officer at TELUS Health, where he oversaw the organization's expansion to provide Electronic Medical Record systems to 28,000 primary care physicians across Canada. Today, he leads Clarius in commercializing portable, hand-held, AI-backed ultrasound systems designed to make medical imaging accessible and convenient across various healthcare settings. The company has achieved regulatory clearance in 90 countries worldwide, and the number is growing.
Clarius has achieved remarkable regulatory milestones, securing clearance globally for its handheld ultrasound device within just a year of its launch. This includes not-so-easy-to-get approvals from FDA in the U.S., EU MDR in Europe, ANVISA in Brazil, and TGA in Australia.
Securing approval in a single country is challenging enough – succeeding across multiple geographies is a major win. Considering this, one might think Clarius has a crowded, busy regulatory team dealing with paperwork all across the sphere. But in truth, there are only three people.
So, how can only three people undertake such a monumental task? First and foremost, you have to remind yourself that regulatory processes are not obstacles but an integral part of the business. That’s why it’s essential that your regulatory team collaborates with other departments. Instead of vetoing new ideas, a constructive regulatory team bridges the gap between engineering innovations and safety requirements. Ohad explains, “Our regulatory and engineering teams were able to go back and forth, think about how to respond to the regulator's questions, and how to make sure that our validation data set met the requirements. And they actually convinced the FDA on a few positions that we initially didn't agree with. That's a good recipe for how to break through with quality and regulatory.”
“In the life of a medical device company, the regulatory team is so important, and it's so important that they're also business-minded,” says Ohad. Rather than acting as gatekeepers for innovation, restricting the potential, Clarius’ regulatory team functions more like facilitators, or business partners, who carry out the negotiations between the agency and the engineering team.
Align with the Interests of Your Stakeholders
Leveraging his background in medical research at the National Institutes of Health and experience in surgical residency, David Kuraguntla, CEO of Alio, steered the development of the Alio SmartPatch. This wearable device collects vital health data such as heart rate, temperature, and more advanced metrics like hemoglobin and potassium levels for remote patient monitoring to prevent hospitalization among kidney patients.
Initially, the Alio team was interested in developing a vascular access monitor. However, customer feedback made them realize that while their device was helpful, it addressed only a part of the reasons that patients were hospitalized – monitoring other parameters was also crucial in preventing hospitalization. Thus, the team was set to expand and improve its product features.
"We navigated from the alpha to the beta phase by moving swiftly,” Dave explains. Their transition from an implantable to a wearable device took only about two months – partly due to the fact that they already had a cloud infrastructure and underlying technology. “Despite limited funds and financial constraints at the time, we were able to quickly demonstrate equal value to customers, partners, and investors,” David shares. This efficiency also allowed the Alio team to secure more funding successfully.
This was not the only pivot for Alio. Dave initially aimed to innovate within the medical stent market by developing a smart stent. However, as the company progressed, Dave realized that their business model and the ecosystem of large strategic partners had misaligned incentives. The way these large companies operated, sold, and managed customer relationships was fundamentally different from what Dave's startup was set up to do. Reconsidering their strategy, Dave’s team proposed to their investors a pivot from the initial implantable stent idea to a more feasible wearable alternative that didn’t rely on integration into existing large-scale products. With their new direction, the team retained control over the product and its economic benefits, focusing solely on patient care without the complications of integrating with big companies' sales structures.
To follow Dave’s footsteps, make sure you understand and align the interests of the 4 P’s – patient, physician, provider and payer. It’s important to prevent any party from feeling undervalued. “Not just the patient, but think about their family as well, their loved ones,” adds Dave. “If your stakeholder alignment is seamless, that carries all the way through your product development.” And to Dave, this is key to killing risk in a startup.
Secure Supportive Partners
Tim Blair began his career in sales and marketing before taking on a leadership role at NAMSA, a global leader in medtech. Building on his family legacy, today he leads ICHOR Vascular on its quest to treat thrombus in the peripheral vascular system using a less invasive endovascular technique.
Tim stresses the importance of consistency and professionalism in partnerships. As a startup, you must carefully select your partners, whether it's CMOs to work with or investors to have on board.
Tim is cautious of younger firms that might lack the necessary longevity. Instead, he advises "partnering with people who are trusted, people who have been around the block." If you have to change CMOs or engineering firms frequently, you’ll disrupt progress and delay critical milestones, potentially derailing a project. “Make sure that you really go through a due diligence process of choosing your partners wisely, even at those early stages, because it boils down to this: continuity is so very critical," Tim shares.
When it comes to investors, Tim points out that fundraising isn’t a phase; it’s an ongoing process from the start and requires considerable time and energy to secure commitments and actual funds. That’s why it’s tempting to accept anything that would fill the coffers. However, Tim’s advice is to maintain a minimum investment threshold when making deals with investors.
Setting a minimum investment threshold of $100,000 proved to be a smart strategy for ICHOR. “Our goal was to avoid smaller investments of $5,000 and $10,000, which generate a lot of administrative work. In my experience, investors who contribute $10,000 to $15,000 are often the most demanding, frequently asking about the status of their investment,” Tim shares. In contrast, those who invest above the threshold are usually more seasoned and less demanding, allowing the team to focus on the business rather than on investor relations. This strategy not only minimized the administrative burden but also attracted more sophisticated investors who are familiar with the stakes of such ventures and require less hands-on communication.
Go for the Achilles Heel of the Market
After founding multiple medtech startups, Steve Dimmer set his sight on improving the way we treat pelvic fractures with CurvaFix. Pelvic fractures are particularly challenging due to the curved nature of the bones, which often lead to complications, lengthy recoveries, and significant pain. Their offering is a minimally invasive device that conforms to the natural, unique curves of the pelvis, facilitating faster, less painful recoveries.
Steve is a big proponent of trying to bridge gaps in healthcare that no one can ignore. Convincing someone that you have a solution for a problem that they don't acknowledge is incredibly challenging. It's often better to shift focus to a problem that is recognized.
“Make sure you're solving a big problem; that your customer understands there is a problem before you go ahead and get to the fundraising stage,” Steve advises. “Go out and validate with whomever your customer is early. Ask them a lot of questions. Make sure you're on track.”
For Steve, the name of the game is to solve a fundamental problem that affects a large enough market – so that you can attract investment. Investors need to see a clear path for returns, which is only possible if the market potential is substantial.
When looking for a target market, it’s important to maintain a balance between optimism and critical self-assessment. Listen to your stakeholders and be willing to pivot based on feedback – whether from potential users or market studies. “I started this journey with a consulting role for a local VC. At first, the focus was on high impact trauma. I didn't really get excited about it because treating high impact trauma on the pelvis is great, but it's not a huge market. However, fragility fracture is a bigger, growing market. The mission is very easy to explain. And it was ripe for our technology.” When your mission is to fill a gap that’s impossible to ignore, it gets easier to convince VCs – which is a monumental task on its own.
“Go for the Achilles heel early. I like to challenge the thing that's most likely to make it fail. And if it survives all those challenges, you should do it,” Steve says.