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Commercialisation & Distribution

Commercialisation & Distribution

The commercialisation conundrum: medical device sales and the journey to market



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John Power and Dr Elin Haf Davies are the CEOs of two of today’s standout medtech companies, which are at very different stages in the commercialisation process. Here they share, with Lauretta Ihonor, the lessons they’ve learnt about medical device sales on the road to market

medical device sales

Recent Eucomed figures confirm that Europe is the world’s second largest medical technology market after the US. And in Ireland, as we know, medtech business is booming. According to MedTech Europe’s 2015 European Medical Technology Industry report, Ireland has the second highest medtech employment rate in Europe (behind Switzerland) and is a leading producer of global medical devices. Aerogen is a case in point. Founded in 1997 by design engineer John Power, the Irish medtech company makes aerosol systems that deliver drugs to patients via a respirator. Its devices are now used in hospitals in more than 75 countries worldwide with 1.3 million sold this year alone.

Aerogen has grown exponentially following its reacquisition from US pharmaceutical company Nektar Therapeutics in 2007. The Galway-based operation has experienced 30 per cent year-on-year growth over the last seven years, something that CEO John Power attributes, at least in part, to having a solid distribution network in place.

‘Our medical device sales are mainly through large multinationals, like GE Healthcare, Philips Healthcare and Dräger,’ he explains. ‘Our drug-delivery devices work synergistically with the ventilator systems they make, so partnering with us to integrate our technology into theirs works well for both parties.’

Mixing with the multinationals

Aerogen’s connections with big multinationals began while the company was in its infancy. ‘We started as a design company, offering our services to the multinationals,’ Power explains. ‘We funded a lot of our development through that.’

Based on this experience, he advises that ‘bootstrapping’ services in this manner has the double benefit of putting a company on the radar of key players who can assist with growth plans, while also overcoming one of the greatest barriers to commercialisation: lack of funding. However, he warns: ‘The problem with taking the bootstrapping route is that while it provides much-needed funds, it does so at a slow and steady pace, taking longer to get your product on the market.’

Difficulty in securing all-important funding for product development or launch is a growing problem in the medtech sector. And as Power highlights, it’s a one that’s further compounded by an industry-wide tightening of regulatory requirements. ‘It now takes double the amount of time and money to get a product to market compared with 10 years ago, simply because of today’s big regulatory demands.’

And with further tightening of regulations expected when the revised EU Medical Device Directive is implemented later this year, the size of this regulatory obstacle appears set to grow. Power concedes there’s little that medtech companies can do about EU and global regulatory challenges, but he says they can ease the process by ensuring they have sufficient funds for the whole process.

John Power

John Power

‘Bootstrapping is one way to go, but the other big one is to work within a medical incubator at a university. Let them know you’ve got a great product idea and ask about partnering up with one of their engineering technology groups to develop it,’ he advises.

It can take a lot of time and many rejections until you get the funding and partnerships needed for commercial success but, according to Power, it is all worthwhile, despite the often turbulent ride. He explains: ‘Once you get your product to market and start creating revenue, medtech is one of the best markets in the world to be in. It’s pretty stable in terms of global economics, and once you’re in, it’s hard to displace you.’

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Persistence pays off

Partnering up with big players is highly effective for growth and development, but getting those all-important ‘yeses’ can be incredibly difficult. This is something Dr Elin Davies, founder of UK-based medtech company Aparito knows all too well. The digital health company, founded by the former children’s nurse, produces wearable technology and smartphone apps that passively collect patients’ physical function and outcomes data outside of a hospital setting.

As pharmaceutical companies conducting clinical trials are Aparito’s end users, Davies and her team have been faced with a challenge: getting a risk-adverse pharmaceutical industry to use a next-generation digital product in the much-neglected field of orphan diseases. But her company’s persistence, coupled with the decision to focus on a field that’s currently being incentivised across the world, is paying off.

‘We’re working globally. The first study our product was used in was in India, and it’s now being used in studies in the UK. We’re also about to launch in the US and we’re in discussions in the Netherlands too,’ she explains.

Aparito’s steady success reflects her team’s thorough research into the drug development landscape. The field of orphan diseases, defined by the European Union as ‘conditions with a prevalence of 5 in 10,000’, is rapidly growing in pharmaceuticals. EvaluatePharma’s 2015 Orphan Drug Report estimates that worldwide orphan drug sales will reach $178 billion by 2020, primarily due to the attractive financial incentives, such as reduced regulatory activity fees and market exclusivity, currently being offered to pharmaceutical companies developing orphan disease drugs.

Dr Elin Davies

Dr Elin Haf Davies

‘Our goal is to show these companies how our technology can offer additional support in terms of patient data capture as they carry out necessary drug trials,’ says Davies. Like John Power, she recognises the current EU and global regulatory climate as a big commercialisation challenge. While she is lucky enough to thoroughly understand the regulatory requirements for Aparito, owing to her former role as a drug development regulator for pharmaceutical companies, Davies acknowledges that those without this knowledge may struggle.

For them, she says the key to successfully overcoming regulatory challenges is dedicating time to fully understand the requirements and assembling the right team to handle them.

Presenting to the right people

An additional hurdle to navigate on the journey to market is getting your product in front of your target customer, be that through a distributor or otherwise. Having worked with patients in clinical trials, completed a PhD in this arena, and worked with pharmaceutical companies, Davies has contacts in the industry and asserts that such relationships are crucial to commercial success. But for those who embark on medtech commercialisation without such connections, ‘it’s all about networking, getting out there and making contacts’, she says. ‘It takes a long time to get to the decision-maker, so you have to be patient but persistent. You have to knock on many doors and keep knocking until you find the right one.’

Forewarned: the key challenges on the road to commercialisation

  1. Funding – partner up with established companies, where possible, and don’t overlook university incubators.
  2. Regulation – stay abreast of changing regulatory requirements for your product. Assemble a knowledgeable team to oversee this.
  3. Rejection – persevere but remember to ask for feedback from those who say ‘no’. If there’s a fundamental flaw in your business, the reason behind the ‘no’s’ will quickly reveal it.
  4. Network, network, network – and then network some more.

About the author

Lauretta Ihonor is London-based doctor, journalist and nutritional medicine practitioner who has worked as a broadcast journalist for CNN international, BBC and Sky News. She has had a lifelong interest in optimising health/preventing disease through diet and exercise.

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