1. Can you identify the most important takeaway for someone reading The Medical Device R&D Handbook?
It’s the focus on the patient. No matter what we are working on, whether it’s design, material selection, development, or sales, the welfare of patients and solving their clinical need has to be our overriding consideration.
2. What do you consider the most difficult hurdle in medical device R&D, and why?
Right now it has to be funding of early-stage medical device startups. The fundraising environment in medtech for early-stage opportunities has gone from difficult to bleak. There are a lot of reasons for this, but the biggest driver is that it takes longer and costs more to get an opportunity to exit. There are regulatory reasons, business reasons, and added costs such as the medical device tax that make growing to profitability more challenging. The other major driver is that selling a device company to a strategic acquirer is really the only viable exit for smaller companies.
3. Why has selling to a strategic acquirer become the only viable exit for smaller companies?
We don’t have a functioning small-cap IPO market anymore since Sarbanes-Oxley (legislation passed in 2002 involving reforms to prevent accounting fraud following the Enron, Tyco, and WorldCom scandals). This leaves the acquisition route, which is unpredictable. When it is difficult to determine when and if there will be a return on investment, investors stop investing. This makes it all the more important to have a compelling solution to an important problem, an understanding of the acquirer’s strategic needs, and the know-how to run a company with available funds and the ability generate revenues if the acquisition doesn’t happen.
4. So how do entrepreneurs overcome this obstacle?
The good news is that the bigger companies need the smaller companies to fill their pipeline of new products. However, smaller companies must be further along with more proof than ever before. There is more good news in that it is probably easier than ever for small companies to sell into overseas and emerging markets, with the growing middle class in Mexico, Brazil, China, and others looking for the kind of medical technology that the readers of MedicalDesign.com can provide.
5. You focus a great deal on the entrepreneurial nature of the medical device industry. What is the significance of highlighting this as a factor in medical device R&D?
Technology alone will not make you successful. We are very fortunate in this industry that some of the most successful entrepreneurs will also share their knowledge most generously. I interviewed many such leaders for the book and one interview in particular shows how generous these leaders are with their time and insights. The leader I’m speaking of is Dane Miller [formerly president, CEO, and director] of Biomet. We spent an hour but my digital recorder didn’t capture what I think was a great interview. I had nothing and Dane had a meeting to go to, but he offered to redo the interview if I would wait for him. This is the kind of generosity I am talking about.