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Critical Success Factors for a Medical Device Company
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Critical Success Factors for a Medical Device Company

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Outline of critieria for success as a medical device company

Outline of critieria for success as a medical device company

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Critical Success Factors for a Medical Device Company Critical Success Factors for a Medical Device Company Presentation Transcript

  • Critical Success Factors
    • For A Medical Device Company
  • Critical Success Factors
    • Product idea
    • Business plan
    • Funding
    • Personal factors
    • People
    • Product development
    • FDA approval
    • Reimbursement
    • Product champions
    • Financial performance
    • Free “stuff”
    • Business protection
    • Stark law
  • Business Plan
    • Explains business vision. How you envision the company in 3-5 years.
    • Need to understand market. Product need, market size, competition, technology application and differentiation.
    • Business plan should address all functional areas and fit them all together. Include financial plan-P/L, cash flow, balance sheet.
    • Understand the risks and how to manage them.
    • Enables review and evaluation of concept.
    • Update strategy to reflect changing conditions. Adapt and be creative.
    • .
  • Funding
    • The best source of funding is $ not spent unnecessarily. Manage the cash.
    • Idea –sweat equity/angel funding
    • Product development and marketing-venture capital/government grants
    • Company growth-venture capital and foreign market IPO
    • Investor exit strategy-IPO or sale of company
    • Mature product-R&D and acquisitions
  • Personal Factors
    • Emotional intelligence
    • Family support
    • Leadership skills/make tough decisions
    • Functional, few negative distractions
    • Value relationships/ maintain network
    • Determination
    • Personal ethics
    • Ability to communicate
    • Ability to execute/project management
  • People
    • Need for domain experience
    • Product champion/scientist
    • Medical advisory board
    • Board of directors
      • Advisors
      • Corporate governance
    • Product development/ engineering
    • Process development/FDA approval/quality
    • Sales and marketing
    • Clinical
    • Funding/financial
    • Legal-patent, regulatory, corporate
  • Product Development
    • Engineering
    • Clinical trials/PMA
    • Subsequent changes
      • 510k process
      • Letters to file
  • FDA Approval
    • Europe vs. USA
    • Product approval-510k process
    • Manufacturing process approval
      • June 15, 2006 update by FDA
    • Quality control process approval
    • Marketing restrictions--off-label use
  • Product Champions
    • Doctors, doctors, doctors
    • Hospital
    • Other medical professionals
    • Nurses
    • Professional papers
    • Speeches
    • Conferences
    • News releases
  • Need for Reimbursement
    • Hospitals need to be paid
    • Doctors need to be paid
    • Medical device company needs to be paid
    • Increasingly tight reimbursement policies
    • Best options from an investors perspective:
      • Product category is already approved for reimbursement
      • Breakthrough must offer such compelling clinical benefits and cost reduction that the reimbursement process will be as smooth as possible.
  • Reimbursement in Business Plan
    • Begin planning for reimbursement strategy at the earliest stages of the company formation; it should be a fundamental part of the business plan.
    • Consider the data requirements for supporting a reimbursement submission when formulating clinical trials. The data to support reimbursement may be significantly different than the clinical data.
    • Work with an expert on reimbursement strategy:
      • Regulations are extremely complex
      • Rules and winning strategies change frequently
      • Must stay abreast of best practices
      • Focus is on economics of a procedure, not just clinical outcome.
  • Reimbursement Cycle
    • Detailed understanding of process is needed.
    • DRG’s/CPT’s established to provide for reimbursement
    • Can device company provide guidance on DRG and CPT to be used?
    Payment For Medical Device CPT for Doctor’s Services DRG For Hospital
  • What Are DRG’s/CPT’s?
    • DRG
      • Diagnosis Related Group
      • Developed by CMS
      • CMS=Centers for Medicare & Medicaid Services
      • Reevaluation/new rules currently underway-October 2006
    • CPT Code
      • Current Procedural Terminology
      • Developed by American Medical Association
      • Requests for changes presented to committee
    • Payments based on what is “normal, customary and reasonable” as determined by CMS or insurance provider.
    • Frequently also used by private insurers for reimbursement.
  • Financial Performance
    • Cash flow. Cash is king!!
    • Market penetration = revenue growth
    • Salespersons – feet on the street to grow revenue
    • Revenue growth vs. income-sometime contradictory!!
    • R&D expense-how much is being invested and in what?
  • “ Free” Stuff
    • Web sites and news releases of competitors
    • Analyst reports on industry and competitors
    • Web sites of regulatory agencies and trade associations
      • FDA=www.fda.gov
      • CMS=www.cms.hhs.gov
      • AMA=www.ama-assn.org
      • AdvaMed=www.advamed.com
  • Business Protection
    • Patents
    • Trade secrets
    • Trademarks
    • Noncompete agreements
    • Nondisclosure agreements
    • Code of ethics
  • Sales, Marketing and Clinical
    • Sales vs. clinical
    • Is marketing necessary?
    • Who does a doctor want to talk to?
    • Relationship building
  • Stark Laws
    • Address consulting and professional relationships between doctors and companies.
    • Example of risk-U.S. Department of Justice subpoenas issued to orthopedic companies.
    Hospital Doctor Device Company
  • Stark Law’s Basic Prohibitions
    • A physician cannot:
    • Make a referral
    • To an entity
    • For the furnishing of “designated health services”
    • The may be payable by Medicare or Medicaid (or insurance companies in some states)
    • If the physician (or the immediate family member of the physician)
    • Has a direct or indirect financial relationship with the entity
    • Unless an exception to the Stark laws applies
  • Ten Perceptions That Can Kill A Company
    • You have a great idea and raising money will not be a problem.
    • You can get it done quickly and at a low cost.
    • Dilution is a bad thing.
    • You have the best talent on the street.
    • You do not need patent protection, the trade secrets are significant.
    • “ Build it and they will come.” Success in the market is totally based upon technology superiority.
    • It is a low risk and expedited regulatory pathway.
    • Scientific founders should continue as CEO forever.
    • Management and boards are strategically aligned.
    • Venture capitalists like risk and have unlimited funding.
  • Success