LAB2MARKET 3CI
PHASE 1 C o m m e r c i a l i z i n g i n n o v a t i o n www.lab2mkt.com
AKNOWLEDGMENTS
We want to thank Andrew DiMeo, Manuel Kingsley, and Elias Caro for their contribution to this Flipbook.
ANDREW DIMEO I love authentic and meaningful relationships while living life as a Health Innovator, Biomedical Engineer, Design Philosopher, and Social Entrepreneur. My roots are in New York City's Film Industry and a 20+ year career in medical devices & diagnostics. Today you can find me mentoring the next generation of social innovators at NC State, working on my next venture, riding a bicycle somewhere in the woods, or serving as a Team Lead in NIH Programs including RADx, ITAP, Blueprint MedTech, HIV Point of Care Testing, and C3i. On this journey, I served as Professor of the Practice at UNC & NC State where I was lucky to be surrounded by talented students whose coursework led to multiple startups including 410 Medical, Contour Surgical, Augment Medical, Novocor Medical Systems, and MEDIC. Other notable experiences include co-founding Gilero, starting nonprofit trade association NCMD, helping develop “Coulter College” for the Wallace H. Coulter Foundation, Director for Duke NeuroInnovations, Coach for Industrial Design Firm Trig, starting design history software solution company CanvasGT (acquired by Greenlight Guru), and developing the college course Real Social Change.
MANUEL KINGSLEY
Manuel is an expert in medical technology evaluation, development, and commercialization. He led company and technology acquisitions for Bard Medical and guided strategy development for the business. He has over 20 years of experience in the medical technology space including roles in corporate business development (executing mergers and acquisitions), guiding product development, and developing growth strategies. Manuel is the founder of Questus Healthcare Strategies which helps organizations and physician/academic inventors commercialize novel medical technologies. Since 2020, Manuel has been a team lead in RADx, NIH's COVID testing initiative. Before CR Bard, Manuel worked for McKinsey & Company’s strategy practice, Baxter Healthcare, Edwards Lifesciences, and IDEXX Labs. Manuel continually helps clients increase their understanding of customers, markets, and potential strategic acquirers. He is an industrial engineer by training, with an MBA from the University of North Carolina at Chapel Hill.
ELIAS CARO Elias is president and founder of Lab2Market PBC which is dedicated to training biomedical innovators in commercialization. At the Coulter Foundation as VP of Technology he oversees the Translational Partnership Programs at 16 universities. As Senior Executive VP of Beckman Coulter, he oversaw worldwide commercial operations, and previously was president of the biomedical division. For Coulter Corporation he managed companies in Japan, France, Belgium and Latin America. Caro holds a BA in Industrial Engineering, master’s degrees in polymer science and business, and is an AIMBE fellow.
INTRODUCTION
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We recommend using this online book as a companion to the e-C3i summer course and for phase 1 of the C3i course. The book is a guide to validate the viability of the project you are pursuing. We look at viability from two angles. From the user ’ s perspective and from the business perspective. Researchers and companies in medical technologies including, diagnostics, devices, pharmaceuticals, health IT, life science tools, often have a technology and an idea of how their technology can sole a medical problem that is of interest to them or than a user has made them aware of. When we talk of a problem, first we must validate if the problem is what we call an “ unmet need”. We ask the participant to understand the problem that could be in the medical field in research or in the pharmaceutical space. This is what we call understanding the cycle of care, patient journey or research or pharmaceutical process. This understanding will help elucidate where the touch points are and who are the individuals that will be involved, the stakeholders. With the knowledge of the stakeholders that will be impacted by your solution, we focus on planning and conducting interviews to validate what problems these stakeholders have and if the problem that you are trying to solve is a major pain point, that if solved, will change the way that they solve their problem and will be willing to adopt. In the medical field we talk of changing medical practice. As you progress in the interviews, you will either validate that the problem you were trying to solve rises to that level of importance and that it will be adopted, find another problem that you could solve, or find out that you should dedicate your time and effort in a different endeavor. As you progress with the interview, you will start the iterative process of crafting a need the statement that will be used to guide all your development efforts and that will be used in case of FDA regulated products, as the first input for the FDA required process. During this process you will discover what is the value proposition that your future solution must have for each of the stakeholders involved in the cycle of care or process and what are the most relevant attributes that your product must have for widespread adoption.
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This will help in your product design and the level of prototype that is required to be able to test your product to the level that satisfies the user needs and validate it. Once you have settled on a user need, is time to start looking into the business viability. Business viability refers to the ability of your solution to attract sufficient funds to get to the market and help the users to solve their unmet need. We will first cover what is business viability and then focus on what investors value. Is important to make sure that you start understanding the business viability of your solution as soon as you settle in an unmet need to avoid spending time if your solution will not reach the market. Contents INTRODUCTION ............................................................................................................................................. 1 ...................................................................................................................................................................... 1 1. WHAT IS AN UNMET NEED.................................................................................................................... 3 2. CYCLE OF CARE: PATIENT JOURNEY ...................................................................................................... 3 3. STAKEHOLDERS (Based on a lecture by Andrew DiMeo) ..................................................................... 5 4. CONDUCTING CUSTOMER INTERVIEWS ............................................................................................... 6 5. NEED STATEMENT DEVELOPMENT (Based on a lecture by Andrew DiMeo)....................................... 8 ...................................................................................................................................................................... 8 6. CRAFTING UNMET NEED STATEMENT .................................................................................................. 9 6. VALUE PROPOSTION AND KEY PRODUCT ATTRIBUTES (Based on a lecture by Manuel Kingsley) ....11 8. PRODUCT DESIGN PROTOTYPING (Based on a lecture by Andrew DiMeo)....................................... 12 9. BUSINESS VIABILITY ............................................................................................................................ 14 10. WHAT INVESTORS VALUE ............................................................................................................... 15
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1. WHAT IS AN UNMET NEED
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If you have an idea for a product or solution that will solve a problem that users have, the first thing to do is to prove that the problem needs solving. You need to ask target users what problems they have with the existing product or solution, what are their major pain points, and what do they like. This process of discovery and validation is what allows to reveal a real Unmet Need that is worth solving and that if solved will make users adopt your proposed solution. In health care we would say an unmet need is a solution to a problem that would change medical practice. In Health Care, no matter how confident you are in your product idea, you must be able to prove the problem is a real one that needs solving. Validating the problem requires you to answer the following key questions: - How is the problem currently addressed or solved? - Who would be positively or negatively affected if my product were adopted? To answer these questions, you must try to better understand the patient's journey as it relates to the problem.
2. CYCLE OF CARE: PATIENT JOURNEY
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In all industries and for all products, empathizing with the needs of target consumers is an essential step in product design and validation. It is important to gather as much data about the users, their needs, and the problems that underlie the development of that product. In the health care context, disease-based care cycles are a useful tool for properly understanding the status of the care process for a given medical condition, often revealing how to improve cost effectiveness, access, and quality of care. In conjunction with quality improvement studies, they can show the strengths and weaknesses within the health care continuum. These visual maps capture all phases of an episode that correspond to its
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progression from outset to closing. Journey mapping begins with a baselining step intended to capture the current patient experience (irrelevant of your product) from multiple perspectives, as well as interactions within the clinical environment. At each phase, the patient and relevant providers share various touchpoints — action and information flows between people, devices, and systems. The resulting visualization helps to identify inter- and cross-organizational gaps in areas such as data flow, compliance, availability of relevant information, etc. Perhaps most importantly, this exercise also helps to identify relevant stakeholders. A stakeholder is any medical personnel, institution, regulatory agency, investor, medical company, or patient group interested in the effect or outcome of the adoption of a new medical product. Each type of stakeholder can impact the success of a new product. The cycle of care diagram may identify several influencers and potential stakeholders for your product, including: Note that if the patient has an HMO, there could be a restriction on the product, as it may be more expensive than the one, they use, and that the HMO has already been purchased. Most hospitals have a committee that evaluates technologies and decides which ones will be approved. In the committee there may be medical personnel who oppose the patch due to economic or technical reasons. As a part of this exercise, it is important to understand how your new product will integrate in the users ’ practice and workflow — or if your product changes the users altogether. A new product might displace a procedure—and the associated revenue — from one discipline or service to another. For example, a virtual colonoscopy moves revenue from gastroenterology to radiology. The machine learning capabilities of IBM Watson may reduce or eliminate the need for radiologists and pathologists for routine diagnostic work. It is more than likely that the displaced disciplines will oppose the change, so it ’ s important to bear this in mind from the start. Once the optimum level of granularity for your product ’ s cycle of Care has been mapped, you will have a clear understanding of the types of clinical personnel you must talk to validate whether the problem you are planning to tackle is of high importance — in other words, if solved or improved, it would change medical Practice. Keep in mind that you may need to interview different clinical specialties. You may also need to interview several clinicians inside the same specialty who
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recommend different treatment avenues related to your identified problem.
3. STAKEHOLDERS (Based on a lecture by Andrew DiMeo)
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Stakeholders include patients, payers, and providers, but also business mentors, investors, and consultants such as quality, regulatory, intellectual property attorneys, business attorneys, accountants, reimbursement specialists, design, and manufacturing firms. The purpose of identifying stakeholders is to be able to understand individual stakeholder group ’ s needs and the value the solution might bring to address those needs. Therefore, it's much more beneficial to segment markets by a stakeholder group. When conducting stakeholder interviewing to learn about needs, stakeholders will express their needs based on their environment. You will want to record as many needs as you can from your stakeholder interviews. After you have conducted several interviews and recorded multiple needs, you will want to zero in on what are your user needs. Look for patterns. If you get conflicting needs from many stakeholders in the same group, you will need to interview more people in that group to see if you can ascertain specific needs common to all. In industry, stakeholder interviewing and validation on an ongoing exercise. The market and needs of stakeholders can change and so it is vital to conduct stakeholder interviewing on a regular basis. It is conducted even for products that are advanced. Defining user needs and revisiting them is critical for good product development. When conducting interviews, different stakeholders will respond differently to the importance of a given problem and their satisfaction level if it is solved. To segment your markets, you must understand what the different stakeholders find valuable. This will allow you to develop a pitch or a value proposition targeted to that stakeholder group later. Also recognize that people don't know what they want. At the turn of the century if you asked a person about transportation needs that might say they needed a faster horse as they could not conceive of an automobile. Henry Ford and Steve Jobs are examples of creative geniuses that developed products that consumers could not imagine but directly
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fulfilled their needs. Stakeholders might not be reliable about solutions, but they are reliable sources about the jobs they do and the specific tasks they conduct. Since stakeholders are less reliable about solutions, let them talk about the solution they envision, i.e., a faster horse, and you can start to understand what they might want in a vehicle. To be an effective entrepreneur you need to be a good listener, understand what people need, and then take their needs and translate them into products. In summary Stakeholders include a comprehensive list of patients, payers, and providers. It is an entire ecosystem of people that will use, buy, benefit from, block, support, invest or interact with technology in ways you won ’ t be aware of yet. Therefore, there is a need to segment the market accurately. It is important to segment by importance and satisfaction to prioritize the identified needs. Conducting stakeholder interviewing and identifying needs is an iterative process and allows one to identify the value proposition to the specific stakeholder group(s).
4. CONDUCTING CUSTOMER INTERVIEWS
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Preparing and conducting an interview involves several steps to ensure that the interview is informative, professional, and effective. Here are some steps to follow: Step 1: Determine the Purpose of the Interview Before you start preparing for an interview, it's important to know why you're conducting it. Determine the goal of the interview and what you hope to achieve from it. This can help you tailor your questions and make the most of the time you have with the interviewee.
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Step 2: Choose the Interview Format Decide on the format of the interview. Will it be in-person, over the phone, or virtual? Each format has its advantages and disadvantages, and your decision should depend on the nature of the interview and your resources. Step 3: Develop Interview Questions Create a list of open-ended questions that will help you achieve your interview goal. You can also prepare some follow-up questions to ask depending on the interviewee's responses. Ensure that your questions are clear and concise and avoid leading questions. Step 4: Research the Interviewee It's important to know the background of the interviewee, including their experience and qualifications, so you can ask informed questions. Research their work history, education, and accomplishments to help you understand their perspective better. Step 5: Schedule the Interview Contact the interviewee and schedule the interview at a time that's convenient for both of you. If you're conducting the interview virtually, ensure that you have a reliable platform and a strong internet connection. Step 6: Conduct the Interview Start by introducing yourself and explaining the purpose of the interview. Ask your prepared questions, and actively listen to the interviewee's responses. Take notes as necessary and be respectful of their time. If you have follow-up questions, ask them. Your goal is to have the interviewee to tell you what the most important problems or issues that she has in her profession. Ask her to mention from 3 to 5. Go deep to understand the problems he mentioned. If the problem you are trying to solve is not one of the 5 problems mentioned, ask her about your problem, why is not important. Remember you are trying to validate if the problem that you are considering solving with your technology is worth solving. Step 7: End of the Interview and Follow up Once you have finished with your questions, ask him if there is something else that she wants to discuss and has not been covered. Also ask if she could introduce a colleague. At the end of the interview, thank the interviewee, and ask If you need to clarify any information or get additional details, could you have a follow up call. Overall, preparation is key to a successful interview. By following these steps, you'll be able to conduct an informative and productive interview.
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5. NEED STATEMENT DEVELOPMENT (Based on a lecture by Andrew DiMeo)
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In 1997, the FDA published Design Control Guidance for Medical Device Manufacturers, advising businesses to control design. It was meant to convey that product success depends on design. As of 2010, academic and hospital-based organizations started to focus in translating their innovation and today we're seeing more ideas from universities and hospitals. This is a substantial change from the 1997 guidance document that was to guide medical device manufacturers. Academic innovators lack design control guidelines, so many don't know about it or don't execute it because it's hard. Leaving design history in the rearview mirror can haunt us, so take care of it today to make the journey ahead smoother. Our industry misrepresents the FDA's waterfall diagram as a stage-gate process. However, user needs may not occur in a stage-gate-like process. • We must establish unmet requirements iteratively since products evolve. This evolutionary real-life medical device design method can help us define user needs in a way that saves time and improves our product. A Harvard Business School lecturer remarked, "Fall in love with the problem, not the solution”. The problem with outcome-driven innovation is forcing in the outcome before we understand the problem that really needs solving. We encourage you to read Lance Bettencour, Clayton Christensen, Tony Ulwick, or Don Norman. They all recognize that we need to understand the problem before discussing solutions. Needs and solutions are relative to each other and relative to individual perspectives. "Users don't need a quarter-inch drill, what they need is a quarter-inch hole." The hypothetical mind experiment says we need the hole to access the brain, to remove a tumor, to improve the quality of life. However, since drilling produces the hole, we claim we need the hole to enter the brain, remove a tumor, and improve life.
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• Often teams miscommunicate when one member thinks abstractly and another concretely. This causes the need for a trace matrix for the FDA to be defined as a need, instead of a solution. We need to comprehend the problem-solution space on all these levels to find solutions that improve quality of life, make a hole in the brain, remove a tumor, or shrink it and eliminate it with chemotherapy.
6. CRAFTING UNMET NEED STATEMENT
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Writing a need statement that is void of solutions involves focusing on describing the problem or need that a product, service, or solution is meant to address, without proposing a specific solution. Here are some steps to follow: 1. Start by clearly defining the user or customer group that is experiencing the problem. This could be a specific demographic, industry, or group of people. 2. Describe the problem in detail, using data and research to support your claims. Focus on the impact the problem has on the user or customer, including any pain points, challenges, or obstacles they face because of the problem. 3. Avoid proposing any solutions or features that might address the problem. Instead, focus on describing the need in neutral, objective terms. 4. Use clear and concise language to ensure that the statement is easily understood by others. Avoid using technical jargon or buzzwords that might be confusing or unclear. 5. Conclude the statement by summarizing the problem and its impact, emphasizing the need for a solution without suggesting what that solution might be. An example of an Unmet Need Statement: "Adults aged 65 and older who live alone face a high risk of social isolation, which can have negative impacts on their mental and physical health. According to research, social isolation is associated with increased risk of depression, anxiety, and cognitive decline, as well as higher rates of chronic disease and mortality. Despite the availability of some social services and programs for seniors, there is still a significant need for more personalized
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and accessible social engagement opportunities that can help seniors maintain a sense of community and connectedness, improve their quality of life, and promote healthy aging." In this example, the need statement clearly defines the user group (seniors who live alone), describes the problem (social isolation and its negative impacts), and emphasizes the need for a solution that can address this problem in a personalized, accessible, and effective way. By avoiding specific solutions, the statement leaves room for more creativity and flexibility in developing potential solutions. "Patients with neurological disorders, such as Parkinson's disease, Alzheimer's disease, and epilepsy, require accurate and non-invasive methods of accessing the brain to monitor and treat their condition. The current methods of accessing the brain are often invasive, require surgery, and can cause discomfort and complications. Furthermore, these methods may not provide enough information for accurate diagnosis and treatment. There is a significant need for non-invasive and accurate technology that can provide real-time access to the brain and allow for precise diagnosis and treatment of neurological disorders. Such a product would improve patient outcomes and quality of life, while also reducing healthcare costs and increasing the efficiency of treatment." In this example, the need statement defines the user group (patients with neurological disorders), highlights the problem (the current methods of accessing the brain are invasive and insufficient), and emphasizes the need for a non-invasive and accurate technology that can provide real-time access to the brain. By avoiding specific solutions, the statement allows for more flexibility in developing potential products that can address this need. The Unmet need is the input for the Waterfall Model used by FDA, Here below is a description of the model.
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6. VALUE PROPOSTION AND KEY PRODUCT ATTRIBUTES (Based on a lecture by Manuel Kingsley)
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A value proposition is a statement that summarizes the unique benefits a product or service offers to its customers. It defines what sets a product or service apart from competitors and why a customer should choose it over other options. The value proposition is a critical component of any business strategy, as it helps to differentiate the product or service and communicate its benefits effectively to potential customers. A well-crafted value proposition should be clear, concise, and compelling. It should clearly identify the customer's problem, describe how the product or service solves that problem, and articulate the unique benefits that the product or service provides. The value proposition should also be tailored to the specific needs and preferences of the target customer, considering their pain points and what they value most. Interviewing stakeholders will help you understand customer needs and understand how to achieve product market fit. Achieving product-market fit is a critical goal for any business, as it ensures that the product or service is meeting the needs and preferences of the target customer. To achieve product-market fit, businesses need to focus on customer research, feedback, and testing. They should start by understanding the customer's pain points, needs, and preferences, and use this information to develop a product or service that addresses those needs. Then, they should test and iterate on the product, gathering feedback from customers and adjusting as needed. By doing so, businesses can refine their offering and ensure that it aligns with the customer's expectations, leading to increased adoption, satisfaction, and loyalty. One of the most important aspects of a value proposition is its uniqueness. It should clearly communicate what makes the product or service stand out from the competition and why customers should choose it. This could be through a unique feature, a specific benefit, or a different approach to solving a common problem. By highlighting these unique aspects, the value proposition can help to differentiate the product or service in a crowded marketplace and increase its appeal to potential customers.
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12 | P a g e 8. PRODUCT DESIGN PROTOTYPING (Based on a lecture by Andrew DiMeo) Iterative design is a process that involves creating a prototype of a product or service, testing it with users, and using feedback to refine and improve the design. Customer 5 Min. 30 Min. Another key element of a value proposition is its relevance to the customer. It should speak directly to the needs and concerns of the target customer and provide a clear and compelling solution to their problem. The value proposition should be written from the customer's perspective and use language that resonates with them. By doing so, it can help to build trust and credibility with the customer and increase their likelihood of making a purchase. The value proposition can also help to establish a sense of urgency and create a call to action. By highlighting the unique benefits of the product or service and the problem it solves, it can create a sense of excitement and urgency around the offer. This can encourage potential customers to act and make a purchase, increasing the conversion rate and driving business growth. Build excitement attending and presenting in industry events. In summary, a value proposition is a statement that communicates the unique benefits of a product or service and why customers should choose it over the competition. It should be clear, concise, and tailored to the specific needs and preferences of the target customer. By highlighting the unique aspects of the product or service and its relevance to the customer, the value proposition can help to differentiate the offering, build trust and credibility, and increase conversion rates. The Key Attributes of a medical product must demonstrate highly improved performance compared to the standard of care in one or various of the measures that are important to the Accountable care Organization (ACOs). ACOs measure key health outcomes such as reduced hospital admissions, decreased emergency department visits, improved management of chronic conditions, and overall improvement in patient health. They also measure population health indicators, care coordination and transitions, and financial performance. The success of an ACO is determined by its ability to provide high-quality, patient-centered care, achieve cost savings, improve health outcomes, and enhance the overall patient experience.
interviews are a critical component of the iterative design process, as they allow designers to gain a deeper understanding of the needs and pain points of their users. To conduct customer interviews, it is important to make the interviewee feel comfortable and ask open-ended questions. Analyzing customer interview data is also important to identify key themes and patterns. Incorporating customer feedback into design iterations is also important to create products that are more intuitive and user-friendly. Testing design iterations with customers is also important to ensure that changes made based on customer feedback have improved the product. Refining design based on customer feedback is also important to create products that truly meet the needs of their users. Iterative design is a process of continually refining and improving a design based on feedback from users. It involves creating a prototype of a product or service, testing it with users, and then using feedback to refine and improve the design. The goal of customer interviews should be tied to the overall objectives of the design project and focus on the areas where feedback from users is most needed. The iterative design process involves testing design iterations with customers, refining the design based on customer feedback, and applying iterative design principles to design projects. Customer interviews are a critical component of the process, and designers can create products that are intuitive, user-friendly, and truly meet the needs of their users. CTA can help designers apply iterative design principles to their next project. Rapid prototyping is a process of quickly creating a physical or digital prototype of a product or service to test and validate design ideas, identify potential issues, and make necessary changes before the final product is developed. It offers several benefits when it comes to validating customer needs, such as testing ideas quickly and cost-effectively, gathering feedback from customers early in the product development process, and minimizing the risk of failure. This guide will explore the benefits of using rapid prototyping for customer needs validation, the process of rapid prototyping, advanced techniques, tools and resources, and next steps to ensure successful customer needs validation. The process of rapid prototyping for customer needs validation involves several steps. The first step is to define the problem and identify the customer ’ s requirements. The second step is to create a prototype that accurately reflects the customer ’ s needs. The third step is to conduct user testing on the prototype. The fourth step is to analyze the user feedback and make necessary changes to the prototype. The fifth step is to use rapid prototyping to iterate and improve the product. Creating a prototype that accurately reflects customer needs involves involving customers in the design process and using the appropriate prototyping method.
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Conducting user testing on the prototype is a critical step in the process. User testing involves testing a prototype with a group of target customers and gathering feedback about their experience with the product. Businesses can use various methods such as surveys, focus groups, or individual interviews to analyze user feedback and make necessary changes. Rapid prototyping is essential for successful customer needs validation, as it involves repeating the process of creating a prototype, testing it with customers, analyzing their feedback, and making necessary changes until the final product meets the needs of the customers. Advanced rapid prototyping techniques can be used to validate customer needs more effectively, such as virtual prototyping and additive manufacturing. Additive manufacturing allows businesses to create complex designs quickly and cost- effectively and test them with customers before investing in the final product. Rapid prototyping is an effective method for validating customer needs and ensuring that the final product meets those needs. Businesses should use advanced rapid prototyping techniques and tools and resources to identify potential issues early in the product development process, save time and money, and ensure that the final product meets the needs of the customers.
9. BUSINESS VIABILITY
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Once you have uncovered an unmet need, you then need to determine if you have a viable business. Can you raise the necessary funds to get your solution to the market? Raising the necessary funds means understanding what is important for investors and what is the state of the healthcare industry. For example, will your product be reimbursed, or do you need to establish a reimbursement? First is business viable. You need to understand the vision of your business and what is the market size for your solution. This is also a point where you need to do a gut check. Are you an entrepreneur willing to work tirelessly to get your solution to market? Or are you employed at a university and not able/willing to give up your job to start a company? Being an entrepreneur requires a lot of sacrifice and is not a part-time endeavor. If you don ’ t wish to give up your current role, your best route to get your solution to the market might be to license your technology.
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If you decide you want to create a business and pursue financing, the next question you must ask is: is this business investable or not? Determining if a business is investable requires you to understand the market size that the solution addresses. Based on market size the right funding may be non-dilutive funding, such as grants or foundation funding. Dilutive funding which will require you to give up a portion of your ownership could be from angel or VC funding. What is non-dilutive funding? A company that receives non-dilutive funding, such as government grants or foundation funds, keeps 100% of the equity, in other words, you don't have to share the equity (profits or losses) with someone else. Dilutive funding requires you to give up some equity in your business. Early dilutive funding might come from Angels. Angels tend to invest smaller sums of money, usually invest locally and might be driven by specific interests of their members. Venture capital usually invests in larger amounts. Very few VC firms invest in early-stage companies. There are some private equity groups that might invest, and you can consider alternative sources like crowdfunding. Also consider the investing arm of large corporations. Companies like Johnson and Johnson and Intuitive Surgical have their own separate investment arms that make investments in companies. Sometimes these investments come with a partnership to help the start-up company advance their technology.
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WHAT INVESTORS VALUE
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Investors value a company's intellectual properties less than inventors do, because they know that there is a lot of work to be done before a product can get to market, and they also know how costly it is to penetrate the market. The management team is very important, and several interested parties that would be interested in acquiring it would be better. Also, you must consider how much gain your technology is going to do for the users, and how bad is the pain of the users? Most companies that acquire a product need to protect their intellectual property. The cost of patent protection worldwide is very expensive, so investors must cover those costs if they want to sell the company later. Market size, competition, alternative products in clinical trials, all these things are always in the mind of investors.
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The stage of the technology, which in a way refers also to risk, determines how long it takes to get to product freeze and be ready to start clinical trials. Medical devices are bought by hospitals, healthcare systems, and the new way that healthcare is implemented and will continue to be implemented is that procedures have a DRG code and the DRG codes are fixed amounts. So, the reimbursement these days has more to do with cost reductions and improved outcomes. There are different ways to price a product, Products should be priced in relation to the value it produces and not the cost. This requires sufficient proof. Obviously, capital is required, in the case of drugs is close to two billion dollars to get approved. Medical devices depend on the regulatory and reimbursement status between tens and hundred million. The other thing to understand is where will your product fit with the strategies for companies that are acquiring. Medical devices companies prefer to wait until a smaller company gets through the regulatory process, has a good product, and has reimbursement, and then they would pay 500 million or more to avoid risk of failure. For medical devices, the trends are different. There is more remote medicine, COVID- 19 opened the door, and there are companies investing a lot of money in trying to provide remote medicine. There is renewed interest in brain technologies, including treatments for pain and depression, diagnoses and treatment of a stroke, and brain interfaces. Technology has improved enough that is making it more possible, and there is also more space these days for wearables and their capabilities. Investors will always look at the management team and advisory board of a small company, and they need a management team that can be flexible and adapt. A CEO is fundamental to raising funds. If you want to find a CEO, you should spend time networking and try to find somebody that has demonstrated before that they can do it. You always must be a learner to get investment from VCs. I think humility is very important to maintain, so people will really say, "Okay, this person really is interested in learning, is flexible, accepts suggestions."
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