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Rob Packard
Ship & Print Your FDA eCopy
October 2016
Is the Lean Start-up principle applicable to medical devices?
3 min reading time

This morning I was listening to my favorite daily podcast. The podcast guest made an extremely controversial statement. He said that he no longer agrees with one of the most popular entrepreneurship books called “Lean Start-up.” The book encourages start-up companies to launch a “minimum viable product” (MVP), perform a pilot launch in order to test market the product and then design a new MVP based upon the feedback. This learn start-up process is repeated multiple times until you find a product that generates traction with customers quickly and sells.

The podcast guest believes that entrepreneurs need a solid business plan and financing BEFORE they start a company. I disagree with his statement. Re-iterative design of MVPs is a successful technique for new product development by start-ups. In fact, I think re-iterative design is essential to successful start-ups. However, I also believe strongly that entrepreneurs need a solid business plan and financing in order to be successful. I believe the reason for the contradiction is that the sales cycle and the barriers to entry are different for new product.

In the medical device industry, you must understand: 1) how will your product be sold and distributed, and 2) what is the regulatory approval process for your product. Some devices can be sold by demonstrating performance in a simulated use setting, while other devices require clinical study data comparing safety and efficacy with a competitor product. Regardless of which type of data you need to convince users to purchase a device, you also need testing data in order to obtain regulatory approval. Some devices require tens of thousands of dollars to complete the necessary verification and validation testing, while other devices require hundreds of thousands of dollars or more. It makes no sense to mortgage your home and spend your life savings in order to develop a new device if you run out of money before you can complete your 510(k) submission.

The podcast guest’s point in his controversial statement is that you need a business plan that answers these two critical questions before you mortgage your home and place yourself at risk for bankruptcy. Inventor/founders that start device companies need to know what kind of data they will need to achieve regulatory approval, customer approval and investment in their company. This must be explained clearly in a business plan, and the entrepreneur needs enough funding to always get to the next stage of investment.

If your device concept is a stand-alone software application for a smartphone that reminds people when to take medication, this is a Class 1 device that doesn’t require a 510(k) and testing consists of only software validation. For this device, outside investment is probably not required to generate sales. If your device concept requires simulated use testing with 100s or thousands of disposable devices (e.g., disposable needles), and clinical data is needed in order to convince hospitals to pay a premium for your new device, then you need hundreds of thousands of dollars before you can achieve 510(k) clearance and successfully sell your device.

I believe device entrepreneurs should be developing MVPs in both of the above examples. However, you can test market a standalone software product and sell each software download of that MVP. In the case of a new disposable needle design, you should be creating a disposable needle of the most common needle gauge first and perform simulated use testing and a small clinical study with a few hundred prototype parts before you invest in production tooling for thousands of parts in each size needed by hospitals. The simulated use and clinical study data you gain from a few hundred parts will be necessary to convince other investors to fund your start-up, and the feedback from few potential users is critical to secure that investment.

source: https://www.linkedin.com/groups/2070960/2070960-6193926051228319745

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Posted by Rob Packard
Asked on October 17, 2016 12:00 am
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Thank you very useful. We actual have a needle in design phase and starting with the most common size would make sense. Great advise thank you for sharing.
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I agree whole heartedly
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Ron Ellsworth Great topic. A focus on pros and cons with conclusions? Positive for us all. (Think-think!)
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I think that lean startup principles are definitely applicable to medical devices. However, some adaptations are necessary based on the constraints of a highly regulated industry. An MVP is fundamentally a tool for learning—a means for a company to gain key knowledge about customer needs and market fit for a new product. Eric Ries’ book The Lean Startup uses examples from his own experience in a (non-medical) software startup, where the cost of change and the cost of getting a product to market is very low. These costs are very different for a regulated medical device. Medical startups need to make rational calculations of the cost of getting a product to market versus the value of earlier learning from the market. I think a more practical approach for medical device development is to incorporate “learning cycles” (design iterations) at the front end of product development which play the same role as an MVP without the cost of going to market.
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I agree. The MVP is the right way to go when you have a simple use of data. When that proves successful, a company can then expand the depth of the data to a "device". Using the MVP to prove the idea may get the funding required. Startups today (at least in Silicon Valley) rarely "mortgage their home" to get funding - there is a lot of money around to fund good ideas. The use of good business principles - business plan, decisions based on data - serve well in all industries. Understanding the impact of regulations takes time which is typically something startups don't have.
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Andrew Kyle The FDA regulations make this type of approach implausible in the medical device industry. You need a salable product without using patients and physicians as the test market after the product is launched.
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