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with the MRO™
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2. 2
Thinking Globally During
Medical Device Development:
Accelerating Products to International Markets
Tim Blair
Director Global Business Development
Seth J. Goldenberg, Ph.D.
Senior Principal Scientist
3. 3
Expectations
» Healthcare economy today
» Basics of the product development lifecycle
» Thinking globally when developing your “get to
market strategy”
» Bringing development disciplines together in a
unified, strategic fashion
» Considerations medical device developers should
have in moving devices forward
» Avoiding “unnecessary” failure
5. 5
Healthcare Trends (Innovation)
» MedTech growth ~5% CAGR reaching $500BB in the next 10
years
» Revenue growth in MedTech (5%) will outperform Pharma
(3.8%) 2012-18
» China MedTech growth is ~20% (Consumption and Production)
» LATAM MedTech growth is ~10% (Brazil and Argentina ~20%)
» IVDs expected to lead MedTech growth with global revenues
~$60BB, followed by Cardiology and Diagnostic imaging
» PMA “like” devices available in Europe an avg of 43 months
before being made available in US markets – changing trend?
» First time PMAs decreased 5% in 2012 and a similar decrease
in 2014 (Is this an innovation pattern?)
» Avg. cost > $100MM and 8 years to get a PMA to market
6. 6
Healthcare Trends (Innovation)
» Hospital utilization for devices are trending down
» Device revenue / margins continue to get squeezed
(Utilization, Reimbursements, Taxes, Time to Market)
» MedTech spending in RA, QA, CA growing ~3X market growth
» MedTech R&D spending will grow 3.9% / year to reach
$26.7BB by 2018 – but slowing relative to CAGR
» M&A deal value fell 14% in 2013; deal count dropped 15%
» Recent Mega Deals 2014-5 indicate what?
7. 7
Healthcare Trends (Innovation)
» Investor $ fell 14% in 2012 to $3.8BB; expanded slightly by the
end of 2013
» Nat’l Venture Capital Association estimates 25-30% of venture
backed businesses fail completely
» Wall Street Journal – of 10 VC backed deals 3-4 fail completely;
3-4 return original investment; 1-2 produce substantial returns
» Define failure? “If failure is defined as failing to see the project
return on investment (specific revenue growth rate, date, or
break even) then >95% of start ups fail.” Shikhar Ghosh
8. 8
So what?
» The MedTech Industry will see stable growth, but
struggling to maintain historical profits
» Device Makers have to find growth (M&A, Operational
Efficiencies, Innovation, New Markets – Mega Deals make
sense)
» Device Makers have to control costs more than ever
» Device Makers will be seeking new innovation
models and partners to market their products
» Device Makers have to maintain compliance and
acceptance in current markets which is only getting
more challenging
9. 9
A Medical Device - Defined
» A medical device is defined within the Food, Drug, and Cosmetic
Act as:
"...an instrument, apparatus, implement, machine, contrivance, implant, in
vitro reagent, or other similar or related article, including a component part, or
accessory which is: recognized in the official National Formulary, or the United
States Pharmacopoeia, or any supplement to them, intended for use in the
diagnosis of disease or other conditions, or in the cure, mitigation, treatment,
or prevention of disease, in man or other animals, or intended to affect the
structure or any function of the body of man or other animals, and which does
not achieve any of it's primary intended purposes through chemical action
within or on the body of man or other animals and which is not dependent
upon being metabolized for the achievement of any of its primary intended
purposes"
10. 10
A Medical Device - Defined
» A medical device is defined within the Food, Drug, and Cosmetic
Act as:
"...an instrument, apparatus, implement, machine, contrivance, implant,
in vitro reagent, or other similar or related article, including a component
part, or accessory which is: recognized in the official National Formulary, or
the United States Pharmacopoeia, or any supplement to them, intended for
use in the diagnosis of disease or other conditions, or in the cure,
mitigation, treatment, or prevention of disease, in man or other animals, or
intended to affect the structure or any function of the body of man or other
animals, and which does not achieve any of it's primary intended purposes
through chemical action within or on the body of man or other animals and
which is not dependent upon being metabolized for the achievement of any of
its primary intended purposes." is not a drug.”
11. 11
FDA Classifications
Lowest risk classification. FDA Review is not typically
required. Usually 510(k) exempt.
• Bandages
• Many surgical tools
FDA clearance is typically needed via FDA 510(k) process.
Applicant must show “Substantial Equivalence” to a
previously cleared “Predicate Device”
• Intravascular guide wires
• X-ray machines
Highest risk classification. Approval is usually obtained
through FDA’s Premarket Approval (PMA) process
• Pacemakers
• Heart valves
See NAMSA’s whitepapers for more information.
12. 12
CE Mark Classifications
Lowest risk classification. Non-sterile and /or non-
measuring function; No Notified Body involvement
Class IIa - Manufacturing systems audit
Class IIb - Manufacturing & product design audit
(Technical File)
Highest risk classification. Manufacturing &
Design Dossier audit
See “The Medical Device Regulations” by Kathe Clark for
detailed information.
13. 13
Variability in Medical Device Classification
» Different device classification can significantly impact
path for approval
» For Example:
A device in the US could be a drug in the EU or other
foreign markets
A 510(k) orthopedic device in the US is frequently a Class
III in China and will require local clinical data
Mexico and Chile fast track FDA and Canadian approvals
» Understanding the differences is optimal to planning
appropriately for your launch - ensuring all testing,
regulatory, quality, reimbursement, and clinical
requirements are aligned to the commercial
promises is critical
14. 14
Expectations
» Basics of the product development lifecycle
» Thinking globally when developing your “get to
market strategy”
15. 15
Common Mistakes in
Medical Device Development
» Technology not “disruptive” enough – actual better
put “technology did not make industry take notice”
» Me too product that failed to understand GPO or
Hospital Network objectives
» Poor reimbursement planning – lack of code,
coverage, or payment may prevent funding and
WILL impact adoption in the marketplace
» Failed to address the Health Economics of today
» Failed to employ Human Factors Research
» Undefined regulatory pathway – poor indication
strategy (idea is to focus on starting smart)
» Unclear Global Market Strategy
16. 16
Common Mistakes in
Medical Device Development
» Underdeveloped time and cost analysis – milestone
strategies were poorly established and poorly
communicated
» Ideas, IFUs, owner’s manuals aren’t accepted or
understood in the chosen markets
» Failure to hire the right team, overcoming turnover,
over paying executives, managing conflict, and a
recognition that outsourced specialists are likely
better, faster, and cheaper (FTEs are often the
biggest line item in a budget – why?)
» Engineering and Manufacturing misaligned or
incomplete (GMP)
17. 17
So what?
» Devices fail to reach their objectives for many
reasons; a singular strategy on its own is not enough
in getting to revenue – tomorrow’s innovators will
have to do more with less – we need to innovate
innovation
» Today’s “buyers” of innovation have changed and/or
need to be identified early
» An early, well defined global strategy is critical to
success
Customized for speed
Optimized to reduce risk and take advantage of
market intelligence
Global knowhow and communication
18. 18
Ideas for Development Success
» Unmet needs need a defined “get to market strategy”
that includes regulatory, compliance, testing,
reimbursement, financials, and other disciplines
Speed to market relies on this harmonization
» Have solid and expanding IP – even blocking IP
» Work with FDA (and other notified bodies) early and
often (Pre submission meetings are free)
» Have a platform, an evolution
» Have passion, take beachhead everyday
21. 21
Medical Device Development Process
» A strong team
who understands
the process is
critical to
investors or
project leaders
» Communication
across the team
is critical to
success
22. 22
Note: Product Development is not a single event. Developing a
device is a process that evolves, goes in circles, and rarely has an
endpoint that resembles the draft document. It’s not linear and
there is no definition for the development process. The
development process is messy and there are many tradeoffs along
the way.
Factors:
How are you communicating the process?
Who is the owner of the process?
What are the assumptions / risks?
What downstream disciplines can you introduce early?
Medical Device Development Process
23. 23
Communication: Developing a Path to Market
» Great ideas must have a strong documented vision
amongst all stakeholders
24. 24
Owner of the Development Process
» Managers of Innovation – the owner of the process
Large Industry – Product Manager, a person who
often has one foot in engineering and the other foot in
marketing; owner might be higher to the P&L holder
Start Up – President or Founder / Inventor, a person
with an idea to address a market need
» Responsibility of this owner / manager
Build the “strategic marketing” plan, communicate the
plan, manage the resources, manage the costs, and
manage the risks
25. 25
Market Strategy
Note: Despite doomsday scenarios, the MedTech space is
expected to reach > $500BB in the next 10 years, up
from $270BB in the current decade
Differentiation
Reimbursement
Clinical Evidence
26. 26
Market Strategy – Your Story, Your Value
» Market evaluation
» What else?
Alignment with regulatory, testing and clinical plans to
provide the right data with optimal speed
Sound post market clinical data should be used to
differentiate you in the market – Health Economics is
here to stay
“Clinical data is the number one driver of a company /
project’s value”
27. 27
Incremental Products
Market Strategy Decision
Define • V1.0
Refine • V2.0
Extend • V3.0
Disruptive Products
Unmet
Medical Need
Technology Leap
KOL Demand
Product Approval
28. 28
Example Products
» Incremental
Infusion Lines
Catheters
Needle Protection
PICC lines
Syringes
» Disruptive
Venous Stents
Mini Pacemakers
Robotic Surgery
Electronic Medical
Records
Phone Apps
Note: Both types of products face similar challenges,
although a few exceptions where disruptive products
have additional challenges
29. 29
Careful Evaluation of Market Opportunities
» In depth analysis of market opportunities in specific
sectors / therapies is crucial
» Over estimation of market size can lead to not
reaching sales goals or to imperfect business and
legal decisions downstream
30. 30
China
» Rise in GDP driving healthcare growth
» Driven by government initiatives
» Average heath expenditure is very low (~$200), yet higher in
urban centers that have better insurance systems
Source: EvaluateMedtech
0
1000
2000
3000
4000
5000
6000
US$
GDP & Healthcare Spend per Capita (Current US$)
China Health Care Expenditure China GDP
32. 32
So what?
» The device development process is challenging
Iterative
More than just an unmet need or IP
» The global medical device market is complex
Filled with opportunity with the right know how
Minimize mistakes with the same know how
Stay align with those who know
34. 34
Concept / Unmet need: Is my idea any good?
Validation
» Feasibility and Effectiveness (Pre-clinical)
Does the concept do what we thought it would do?
Form, fit, function (Bench, Animal, Anatomical)
» What do I need to change or modify?
Designs
Marketing Strategy
Regulatory Strategy
» Beginnings of Safety (should it align with the clinical study?)
» Beginnings of Indications
» Beginnings of Sterilization
» Beginnings of Packaging
» Beginnings of Manufacturing
36. 36
Global Strategic Considerations
» What are global regulatory / testing requirements for
my product?
Don’t expect to go to China for an orthopedic product
without clinical data
Many markets outside of US/EU prefer testing to risk
assessments
Testing
Labeling/IFU
Clinical
37. 37
Regulatory Strategy
» Early decisions impact all decisions downstream
» Frequent regulatory feedback can speed approval
Regulatory
Preclinical
/ Clinical
Prototype /
Design
Concept
38. 38
Reimbursement: Incremental Product
Considerations
Coverage
Whether a service or
product fits the legal
definition of a
medically necessary
covered benefit
Coding
“Fit” of a new
procedure into an
existing code
description
Payment
Whether the
procedure code
assignment to a DRG
group results in
adequate payment
Market opportunity / reimbursement
processes
» Which markets present the best opportunity
for your specific indication? Regulatory path
and indications for use aligned?
» What are the coverage, coding, and
payment processes and related timelines in
each market?
» Which markets are the easiest and fastest
to receive reimbursement? Revenue, Data?
» How healthcare is delivered in China may
be significantly different than US/EU?
39. 39
Reimbursement +
Disruptive Product Considerations:
» Market opportunities / reimbursement processes
Does the procedure fit into an existing code?
Can KOL publications and clinical evidence support a
new CPT code?
» Clinical usage and economic data
What is the evidence needed to support approval and
premium payment? US & EU are quite different
Does the economic premise of your product hold up in
a foreign context?
40. 40
Quality/Compliance
» Quality system compliance often the most time
consuming and complex component of device registration
» Development must comply with all quality standards
Proper Design Controls / Process Controls
Proper qualification of suppliers with proper documentation
Review of all local and international requirements
» Most quality systems are too large or non-existent
» Think about how your quality manual will integrate with
your manufacturing strategy as you prepare for testing
and clinical activities
42. 42
Concept / Feasibility
Concept/Feasibility
Design Validation /
Preclinical
Clinical Market Approval Post-Market
» Beginning of the Process
Idea / unmet need developed
Early Designs and Validation Process, iterative
R&D Bench and Animal models
Regulatory Strategy, global discussion with regulators
early and often
Reimbursement Strategy, think early and often
Quality / Compliance, be Goldilocks
44. 44
Testing
» Safety models
» Efficacy models – understand your IFU related to
predicates
» Validation of Safety
» Understand regulatory guidance documents
» If entering multiple markets, consider testing gap
analysis
China uses older versions of ISO standards and has “Chinese
National Standards” that could differ from US/EU or MHLW
requirements
Additional test group in parallel could provide significant savings if
alternative is complete repeat of testing to enter global markets
45. 45
Testing Disruptive Product Considerations
» Alignment of preclinical data with regulatory and
clinical experts will greatly expedite time to market
» Strategic consideration should be given to larger
preclinical data harmonized with smaller clinical data
– FDA is open minded, other markets may not be
» Strategic testing decisions – the whole product or
test the components?
» Discussion/Education with global testing groups and
foreign regulatory experts are key to success if going
abroad
46. 46
Design Validation / Preclinical
Concept/Feasibility
Design Validation /
Preclinical
Clinical Market Approval Post-Market
» Having a global preclinical / testing plan that is
harmonized with your regulatory, reimbursement,
and clinical plans will:
Reduce your risk
Optimize your products for the right pre market or
post market studies
Optimize your products for the right markets (more
than just one market with incremental costs)
Reduce unnecessary testing or research
48. 48
Clinical
» Validation of Safety and Efficacy work
» Typically required by regulators for disruptive
products, but not always for incremental products
» Global site selection and patient selection criteria are
critical
» During clinical trial design, reimbursement strategy
and “motivation” of KOLs / Sites must be considered
» Understand foreign requirements that best treatment
after the study to be provided at $0 for chronic
indications / or sponsor requirements for treatment
costs beyond the standard of care
49. 49
Clinical
» Keep costs down on clinical trials and consider
publication planning in supporting commercial goals
but be careful – don’t sacrifice time or approval
» Is additional data worthwhile to differentiate, or should
this be a post market strategy?
» Health Outcomes & Health Economics are here to
stay
Note: Clinical data is the number one drive of a company’s value.
Valid data in today’s healthcare market is critical in getting to market
and thriving in the market even if not required for regulatory approval.
50. 50
Clinical
Concept/Feasibility
Design Validation /
Preclinical
Clinical Market Approval Post-Market
» Clinical data is #1
Watch the stock tickers
Watch the big exit start ups
» Maximize the clinical phase – but don’t create
unnecessary red flags by trying to do more than is
required (marketing and clinical are different things)
» Seek strategies (global sites, community hospitals)
that impact enrollment and study execution over big
name KOLs and Institutes
52. 52
Regulatory Submission
» Submitting the dossier is just the
beginning
» Several rounds of discussion may
be required before acceptance
» Regulations on response times are
constantly changing (Brazil and EU
are changing)
» Understand the global agency
timetables to reduce risk / optimize
your get to market strategy
» Is distribution tied to your foreign
registration?
54. 54
Manufacturing Strategy
» Begin scaling your manufacturing strategy
Contract manufacturer OR Equipment in house (decision
likely made during the feasibility stages)
Scale in step with Distribution Strategies
» Optimization of the manufacturing process (still
understanding GMP guidelines)
Stability
Process improvements
Compliant
Reproducibility
Document Controls
Product Accountability
55. 55
Distribution Strategy
» What is your strategy for commercial adoption?
» Significant physician training & KOL development
maybe required in international markets, particularly
for disruptive products
» Conference and Tradeshow adoption strategies
56. 56
Post-Market
» Ongoing clinical evaluation to further
validate patient safety, product efficacy
» Collect data to differentiate your
technology and pursue product
improvement
» Collect marketing data to publish and
promote product to KOLs
» Sales Force Training (direct or indirect)
» Physician Training, particularly for first
to market & disruptive products
57. 57
Product Development in Summary
» Failure to explore global market opportunities will lead to less
than optimal results
Investors / Sr. Management want global strategy
» Collaboration across product development life cycle is key to
success, it’s not linear, seek partners who know
» Alignment of regulatory, reimbursement, testing, quality, clinical,
manufacturing, and distribution across the global market
strategy is essential (too few companies have this mapped)
Time, cost, burn rates – don’t let the project die! Develop the right
milestones for you and your investors
» Convincing preclinical and clinical data, ideally linked to positive
health outcomes is key to product adoption
» No product is alike; regulatory bodies, reimbursement, testing
guidelines and market conditions are constantly changing
Customized development strategies must be employed
58. 58
Thank you
NAMSA
Headquarters
6750 Wales Road
Northwood, OH 43619 USA
Telephone:
866.666.9455 (toll free)
+1 419.666.9455 (direct)
+1 419.662.4386 (fax)
info@namsa.com
Tim Blair
Director Global Business
Development
tblair@namsa.com
Seth J. Goldenberg, Ph.D.
Senior Principal Scientist
sgoldenberg@namsa.com
