Medical Device Manufacturers Must Engage with Start-Ups

February 13, 2012 – 9:16 pm

Guest blog from Paul Wilkins, Senior Consultant, Sagentia (Cambridge, UK)

Bringing a radical technology to market is very difficult but the rewards—to inventors and the industry as a whole—can be phenomenal. Many large companies have put significant or risky R&D programmes on hold until economic conditions improve, and so start-ups are increasingly seen as the lifeblood of innovation in the medical device sector. Without the procedural rigour and constraints that can be forced upon an organisation, start-ups have the creative environment and people who can generate game-changing ideas. Typically, start-ups must focus on one idea at a time; however, if that first idea is not as disruptive as first hoped, the end of that idea could also be the end of the company. Those that do survive often form the backbone of larger corporations’ next-generation offerings, through acquisition or licensing.

Despite the crucial role that start-ups play in the medical technology industry, the current economic climate cannot be overlooked. Continuing the trend of previous years, in 2011 we have seen a decline in early stage investment in medical technology start-ups. The investment that has been made has focused on start-ups whose technologies are perceived to have a simpler regulatory pathway to market. The most complex regulatory pathways are often associated with complex technology areas (for example, in vivo imaging and surgical implants) and one could argue that it is these areas that most need disruptive technologies.

For their part, the more progressive medical corporations continue to recognise the importance of these smaller companies (approximately 73% of the United States’ 5300 medical device companies had a head-count of less than 20 in 2007) and many are taking a more collaborative approach to fostering new technologies. Rather than buying an idea outright before significant development has occurred, they are working with start-ups to bring products closer to market through equity or resource investment. There is no doubt that the larger firms would not continue to lead the market without access to these SMEs. Here we focus on three market areas where there is significant disruptive activity driven by start-ups: m-health, DNA sequencing and surgical robotics.

A strong source of innovation is the transfer of technology from one industry to another and the inevitable convergence that ensues. As mobile telecoms and consumer electronics have continued to develop at a staggering rate in the last decade, there has been a natural progression through e-health (the use of information and communications technology to support healthcare practice) to m-health (specifically using mobile technology such as PDAs and mobile phones). For example, AliveCor’s iCard ECG (currently going through FDA 510(k) submission) allows any iPhone or iPad to provide the functionality of an ECG. A battery-powered card attaches to the back face of an iPhone using Velcro allowing doctors, paramedics and other medical professionals to quickly and easily analyse a patient’s cardiac activity. A natural extension of this product is to transmit the ECG display from the point of use to central hospitals or doctors’ offices.

A huge amount of research continues in the field of DNA sequencing with obvious applications in pathogen detection, personalised medicine, biodefense and forensics. Various techniques are used to enable sequencing systems–optical methods (Illumina and PathoGenetiX, for example), nanopores (Oxford Nanopore) and electrochemical techniques (Ion Torrent). DNA Electronics, based in London, UK, are a young, agile company whose Genalysis platform has been licensed by Ion Torrent and Roche 454 Life Sciences. DNA Electronics are developing their own Point of Care instrument allowing real-time, disposable tests for any target nucleic acid sequence. The use of sequencing appears set to become commonplace in conventional medicine in the not-too-distant future and as our knowledge of genomics grows this is sure to have a huge impact on the way conditions are assessed and therapeutics are administered. If there was any doubt as to the significance of sequencing within personalised medicine, Roche’s attempted hostile takeover of Illumina for a price of US$5.7bn was announced at the time of writing.

Intuitive Surgical launched the da Vinci system for robotic-assisted minimally invasive surgery in 1999 and are the global leader in this rapidly emerging field. The precision of movement in confined spaces offers the potential for better clinical outcomes and less pain for patients. Miniaturisation techniques and advancements within robotics continue at pace and robotic surgical systems are being developed by global medical device companies as well as start-ups such as Titan Medical Inc., based in Toronto, ON, Canada. Titan Medical’s Amadeus system will include telecommunication capabilities, allowing world-leading experts to operate remotely, as well as force feedback, informing surgeons how hard they are pulling on tissues for the first time.

The medical device industry needs start-ups to keep innovating over the next few years in advance of a likely flood of acquisitions. To best prepare themselves for this, established firms need to continue engaging with start-ups regularly as technologies evolve. It is clear that the medical device industry moves fast; ignoring these young firms until their ideas are developed further could be a costly mistake!

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