Large MedTech organizations and university founded startups alike often fall into the same trap. A promising innovation prototype fails to make the transition from a “working” blockbuster idea into a commercially successful product. It is frustrating. Shouldn’t demonstrating its critical clinical or technical capabilities represent the ultimate key to unlocking a product’s success? Unfortunately, this is often just the tip of the iceberg.
For a startup, there is an argument to be made for this being the right strategy. Many have no intention of commercializing their product themselves, instead pursuing acquisition by a large MedTech organization that already has the commercial infrastructure to launch the product. This might be the best approach when the therapy is so unique and impactful that a potential acquirer is willing to ignore any commercial shortcomings, but it is risky regardless.
What are the common reasons that a prototype fails to make the transition? There are several, but they all boil down to early-stage programs ignoring the business problem in favor of the technology problem.
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- Cost – How much will the device cost to manufacture and operate? It is likely a little early to get too precise on margin, but if current reimbursement is $1 and the device is likely to cost $10 that represents a problem to be solved. Too often the prevailing, untested assumption is, it will be less expensive with volume.
- Adoption – If the inventors can successfully operate the device in a controlled lab setting, how difficult will it be to train a population of clinicians or patients? Healthcare is a very risk averse profession and clinician education requires significant effort and investment to prevent a rollout from stalling.
- Service – All devices fail in the field eventually and yours will, too. There must be an easy way to know when it fails and to quickly diagnose the problem. Furthermore, when the device fails, does it fail to a safe state? This is not to suggest that the prototype should support a field ready service infrastructure but understanding what could go wrong may influence the design and how it is tested.
- Manufacturing – Can the device be built at scale, or does it require a sophisticated engineer to build it in a lab? I often hear “let’s focus on the design, we can figure out how to manufacture it later”, a very risky position to take.
These issues are not more important than the critical clinical capabilities, but they cannot be ignored either. Starting with a comprehensive view of what the product needs to be successful commercially, at least, provides a framework to make decisions.
One approach that borrows a method from medical device development, is performing a Failure Mode and Effects Analysis (FMEA) for the product’s commercial success. This can be a low-cost paper exercise that informs where to focus your attention. If the new product is intended to integrate into an existing care pathway, maybe training is an irrelevant concern. Working through this exercise and identifying all the ways the product might fail to be commercially successful forces the thinking and may inspire extra research into the market. For example, what is the reimbursement structure for the target care pathway? A very small amount of research not only reveals the limits of reimbursement, but likewise any potential reasons for reimbursement to be denied. Clinicians often will avoid a therapy when they see a high risk of reimbursement denial.
Not every commercial failure mode identified in this exercise will impact the prototype. However, this failure analysis will arm your initiative with powerful constraints. In my experience, cost is the most ignored constraint and the most likely to kill the product commercially. Whether the constraints are driven by concerns over cost, adoption, service, or manufacturing, respecting them early in development calibrates the focus of a prototype and increasing the likelihood that it will translate into a successful commercial product.
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Adam Hesse is CEO at Full Spectrum. A seasoned leader and entrepreneur, he brings more than 15 years of medical device and healthcare information systems experience to Full Spectrum. Most recently, Adam was in a leadership role in BD’s Diabetes division, and prior to that leading a major modernization program of Medtronic’s remote monitoring ecosystem. Additionally, Adam has deep development experience in both robotics and automation systems, working within the medical device, semiconductor and the product development service industries. Adam leverages these experiences to provide leadership required to deliver technical solutions into highly competitive markets.
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