Andrew Cleeland
Best Practices: Medical technology innovation must be at the heart of everything we do
March 17, 2017
By Andrew Cleeland
A recent report from the Advanced Medical Technology Association (AdvaMed) sounded the alarm: The future of the American medical technology industry is at considerable risk. For more than two decades, our industry has been suffering from an ongoing, steady decline of entrepreneurship and venture capital funding, which has resulted in nearly a 60 percent drop in new med-tech startups. This statistic is particularly foreboding, when you consider that startups are typically the bedrock of innovation, developing breakthroughs that lead to significant health care cost reductions and more effective and efficient patient care.
Cardiovascular medicine, in particular, is a field that directly benefits from innovation due to its rapidly changing dynamics. Great strides were made in the 20th century in the efforts to manage cardiovascular disease, which directly improved morbidity and reduced mortality. Deaths from stroke have been cut by almost 60 percent and fatalities from heart disease have been cut by more than half.
While these advancements are impressive, more needs to be done. Heart disease remains the leading cause of death and among one of the most expensive conditions to treat. As this field moves toward less invasive therapies and a stronger focus on prevention over treatment, we need to work together to ensure that we strengthen the innovation ecosystem to foster the cost-effective development of new technologies that benefit patients.
Early-stage startups, in particular, are the most fragile as they are burdened with an inordinate number of obstacles, which hinder the development of new ideas. In addition to challenges involving technology, market and fundraising competition, med-tech companies must also endure unpredictable regulatory agencies, nontransparent reimbursement decisions and a significantly more difficult fundraising environment.
To ensure that life-saving devices reach physicians, hospitals and ultimately the patients, we need to create an environment where early-stage startups are given the support to become self-sufficient. Here are four proven ways to do so:
Education and mentorship
Education and mentorship are two of the most valuable resources for entrepreneurs and vital to effectively bring medical devices into the global marketplace. Through the guidance of experienced physicians, young innovators can move faster and avoid many of the common pitfalls that frequently plague startups. Cardiovascular physicians are particularly well suited to provide guidance, given the range of clinical needs they are faced with on a daily basis and the field’s robust history of embracing medical innovation.
Seasoned medical professionals can help entrepreneurs better understand and identify relevant clinical challenges and how they can best be addressed, as well as provide immediate feedback on device concepts. There needs to be a very tight fit between the clinical and medical technology community to develop optimal solutions to advance the field.
A healthy regulatory Environment
Streamlined and expedited processes will go a long way in helping med-tech startups get to market faster. The medical device industry and regulatory entities have not always seen eye to eye on the most effective and efficient ways to bring innovative technology to market. In fact, onerous regulations have frequently been cited as a major obstacle for the industry, driving products to be developed outside of the U.S.
But, in the past few years, we have been heartened by significant, positive developments made by the FDA, as the agency has prioritized protecting and promoting health by ensuring that innovative technology reaches patients. We know about these efforts firsthand, since the Fogarty Institute is one of the organizations with which the FDA has collaborated as it works to support and accelerate medical innovation. In 2015, we launched a first-of-its-kind educational program with the agency with the goal of improving communication, collaboration and understanding between the FDA and early-stage medical device innovators. The program was so successful that it doubled in size in 2016.
This is just one point underscoring that advancements in medicine are made via interdisciplinary collaborations. It is up to all of us to ensure that more of these types of programs are created, not only with startups, but also with physicians and hospitals. The result will be enhanced communication and a clearer understanding of the industry’s needs, challenges, and ultimately, solutions.
Access to hospitals to conduct clinical trials
Innovation is validated in clinical settings. These trials are an essential step for medical technology to satisfy the regulatory process, but also to provide meaningful feedback to startups on the technical feasibility of their device. Many startups have turned to foreign countries to conduct their trials due to accessibility and lower costs. It is time to turn the tide. Having access to hospitals, qualified staff and patients that will help startups test and improve their devices is critical in helping advance innovation. We need to do that here in the U.S. to maintain our innovative edge and provide our citizens with the best available health care solutions.
A stronger and more diversified funding pool
Ultimately, without funding, a startup’s technology will not reach market. A key reason for the consistent decline in launching new startups is the lack of financial backing. The AdvaMed report notes that VC investment in the industry has gone from about 13 percent of total VC dollars in the early 1990s, to about 4 percent in recent years.
Of particular concern, the proportion of those funds devoted to early-stage startups — which often are dependent on these funds to survive — has decreased to a mere 3 percent in recent years from about 10 percent in the early 1990s. Why are VCs fleeing medtech innovation? Often it’s because of the inherent risks and the length of time it takes to achieve a return on investment. That’s why the industry must identify alternate sources of funding, whether through government programs, private grants and investments or partnerships.
It is incumbent upon all of us to assume a role in advancing innovation in medical technology. The ability to better manage and ultimately eradicate cardiovascular disease depends on entrepreneurial minds dedicated to helping discover creative solutions that effectively address the needs of patients today and in the future. At the Fogarty Institute, we abide by Dr. Thomas Fogarty’s philosophy that, “There has to be a better way.” While progress is constantly being made, let’s continue to work together as an industry to find better ways to advance medtech innovation.
About the author: Andrew Cleeland is CEO of the Fogarty Institute for Innovation (www. fogartyinstitute.org), a nonprofit medical technology incubator.
A recent report from the Advanced Medical Technology Association (AdvaMed) sounded the alarm: The future of the American medical technology industry is at considerable risk. For more than two decades, our industry has been suffering from an ongoing, steady decline of entrepreneurship and venture capital funding, which has resulted in nearly a 60 percent drop in new med-tech startups. This statistic is particularly foreboding, when you consider that startups are typically the bedrock of innovation, developing breakthroughs that lead to significant health care cost reductions and more effective and efficient patient care.
Cardiovascular medicine, in particular, is a field that directly benefits from innovation due to its rapidly changing dynamics. Great strides were made in the 20th century in the efforts to manage cardiovascular disease, which directly improved morbidity and reduced mortality. Deaths from stroke have been cut by almost 60 percent and fatalities from heart disease have been cut by more than half.
While these advancements are impressive, more needs to be done. Heart disease remains the leading cause of death and among one of the most expensive conditions to treat. As this field moves toward less invasive therapies and a stronger focus on prevention over treatment, we need to work together to ensure that we strengthen the innovation ecosystem to foster the cost-effective development of new technologies that benefit patients.
Early-stage startups, in particular, are the most fragile as they are burdened with an inordinate number of obstacles, which hinder the development of new ideas. In addition to challenges involving technology, market and fundraising competition, med-tech companies must also endure unpredictable regulatory agencies, nontransparent reimbursement decisions and a significantly more difficult fundraising environment.
To ensure that life-saving devices reach physicians, hospitals and ultimately the patients, we need to create an environment where early-stage startups are given the support to become self-sufficient. Here are four proven ways to do so:
Education and mentorship
Education and mentorship are two of the most valuable resources for entrepreneurs and vital to effectively bring medical devices into the global marketplace. Through the guidance of experienced physicians, young innovators can move faster and avoid many of the common pitfalls that frequently plague startups. Cardiovascular physicians are particularly well suited to provide guidance, given the range of clinical needs they are faced with on a daily basis and the field’s robust history of embracing medical innovation.
Seasoned medical professionals can help entrepreneurs better understand and identify relevant clinical challenges and how they can best be addressed, as well as provide immediate feedback on device concepts. There needs to be a very tight fit between the clinical and medical technology community to develop optimal solutions to advance the field.
A healthy regulatory Environment
Streamlined and expedited processes will go a long way in helping med-tech startups get to market faster. The medical device industry and regulatory entities have not always seen eye to eye on the most effective and efficient ways to bring innovative technology to market. In fact, onerous regulations have frequently been cited as a major obstacle for the industry, driving products to be developed outside of the U.S.
But, in the past few years, we have been heartened by significant, positive developments made by the FDA, as the agency has prioritized protecting and promoting health by ensuring that innovative technology reaches patients. We know about these efforts firsthand, since the Fogarty Institute is one of the organizations with which the FDA has collaborated as it works to support and accelerate medical innovation. In 2015, we launched a first-of-its-kind educational program with the agency with the goal of improving communication, collaboration and understanding between the FDA and early-stage medical device innovators. The program was so successful that it doubled in size in 2016.
This is just one point underscoring that advancements in medicine are made via interdisciplinary collaborations. It is up to all of us to ensure that more of these types of programs are created, not only with startups, but also with physicians and hospitals. The result will be enhanced communication and a clearer understanding of the industry’s needs, challenges, and ultimately, solutions.
Access to hospitals to conduct clinical trials
Innovation is validated in clinical settings. These trials are an essential step for medical technology to satisfy the regulatory process, but also to provide meaningful feedback to startups on the technical feasibility of their device. Many startups have turned to foreign countries to conduct their trials due to accessibility and lower costs. It is time to turn the tide. Having access to hospitals, qualified staff and patients that will help startups test and improve their devices is critical in helping advance innovation. We need to do that here in the U.S. to maintain our innovative edge and provide our citizens with the best available health care solutions.
A stronger and more diversified funding pool
Ultimately, without funding, a startup’s technology will not reach market. A key reason for the consistent decline in launching new startups is the lack of financial backing. The AdvaMed report notes that VC investment in the industry has gone from about 13 percent of total VC dollars in the early 1990s, to about 4 percent in recent years.
Of particular concern, the proportion of those funds devoted to early-stage startups — which often are dependent on these funds to survive — has decreased to a mere 3 percent in recent years from about 10 percent in the early 1990s. Why are VCs fleeing medtech innovation? Often it’s because of the inherent risks and the length of time it takes to achieve a return on investment. That’s why the industry must identify alternate sources of funding, whether through government programs, private grants and investments or partnerships.
It is incumbent upon all of us to assume a role in advancing innovation in medical technology. The ability to better manage and ultimately eradicate cardiovascular disease depends on entrepreneurial minds dedicated to helping discover creative solutions that effectively address the needs of patients today and in the future. At the Fogarty Institute, we abide by Dr. Thomas Fogarty’s philosophy that, “There has to be a better way.” While progress is constantly being made, let’s continue to work together as an industry to find better ways to advance medtech innovation.
About the author: Andrew Cleeland is CEO of the Fogarty Institute for Innovation (www. fogartyinstitute.org), a nonprofit medical technology incubator.