5.4.2010 MODERATOR: Zen Chu, Director of Business Development & Wyss Accelerator Fund, Wyss Institute for Biologically Inspired Engineering, Harvard University PANELISTS: Helen Colquhoun, MD, Founder and CEO, Pleiad Aaron Sandoski, Managing Director, Norwich Ventures David Reed, MD, MPH, MBA, Serial Entrepreneur

Forum Summary

Zen Chu, Director of Business Development & Wyss Accelerator Fund, Wyss Institute for Biologically Inspired Engineering, Harvard University:

Developing an innovative biomedical product requires not only good science but also a good business plan.  If one is seeking to start a new biomedical company, it is vital to plan in reverse and to perform a thorough market analysis before investing significant time and money in the development of a product that consumers might not want to buy.  Entrepreneurs must recognize where they fit in the innovation landscape of capital required versus the market size of their opportunity.  Segmenting a disease into manageable challenges and mapping unmet needs is critical if one is to develop a discrete product of high impact.  In studies designed to measure the effectiveness of a new product, clinical endpoints related to cost must be included in order to attract the interest of purchasers.  In the world of innovation, time is life.  One must always seek to minimize the time it takes to develop a product, testing one variable at a time and never developing technology that already exists.  Creating an innovative biomedical company involves many challenges, so in the end, one must be strongly motivated by a desire to help patients.   

Helen Colquhoun, MD, Founder and CEO, Pleiad:

The major question in the world of biomedical devices is how to produce devices to help patients while simultaneously making money for investors.  Long-term planning should be an essential component of product development because step-by-step development introduces market-related risks that scare away investors.  When thinking about how to win approval for a new product, one must understand the product’s minimum label, or in other words, the most limited claim that the product can make regarding its purpose.  Clinical trials are expensive, and less ambitious claims can sometimes be supported without them.  In the United States, the 510k process can be used to quickly win approval for products claiming to be exactly the same as an existing product, but from a marketing perspective, this process is a double-edged sword.  One possible strategy is to seek regulatory approval through the 510k process and to then conduct a post-market trial to expand the product’s label.  Marketing a device for home use, for example, is one way to expand the label of an approved device.     

Aaron Sandoski, Managing Director, Norwich Ventures:

To attract investment, biomedical innovators must think backwards.  Investors will only back the development of a product if they are convinced that someone will want to buy it when it works.  When planning clinical trials, one must consider not only the clinical data needed to win regulatory approval but also the clinical data needed to drive adoption (e.g., information a salesperson will want to present to physicians and purchasing committees at the average hospital).  Having a solid business plan has become increasingly vital over the last few years because funding has become tighter.  Today’s financing environment is poor at least in part because start-ups from earlier in the decade are tying up a lot of funds invested in the healthcare industry.  In this environment, however, one’s competitors will have the same challenges, presenting opportunities for companies with good ideas and solid business models.   

David Reed, MD, MPH, MBA, Serial Entrepreneur:

Biomedical innovators planning clinical studies should make sure that their studies prove both effectiveness and value.  Physicians are no longer driving the healthcare market.  Large payers such as insurance companies and health maintenance organizations (HMO’s) are the entities that determine which products will be adopted.  Controlling costs is pivotal if these payers are to be interested in a new device.  Biomedical companies will benefit if they can show that their product keeps patients out of the hospital.  Efficiency and cost effectiveness are becoming increasingly valued.

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