Are We in the Golden Age of Medical Devices?

I recently had a chance to take part in a “Friday 5” interview with Medical Design Technology. One of the questions I was asked was “What’s the most exciting aspect of the medical device industry?”

My response was that right now, the medical device industry is in a “golden age”.

Yes, it’s true that the high water mark for investment funding for this industry was in 2007.

VC deal flow for healthcare sector (source: PitchBook)

VC deal flow for healthcare device sector from 2005 – Q1 2014 (source: PitchBook)

2014 was the best year for med device investment funding since 2007.

Despite an improved funding environment, many medical device startups, inventors, and entrepreneurs feel like there is not enough funding available.

Some might even say that my “golden age” comment is ludicrous.

Yes, money is still (and probably always will be) one of the most significant gating items for medical device success.

Medical Device Investment Influences

There have been quite a few influences on the med device sector. Some have been positive. Several not so positive.

Medical Device Tax

Things such as the Affordable Care Act, also known as the “medical device tax”, in the U.S. Many would argue that this tax has pushed investment dollars (and jobs) away from medical device companies. However, by some accounts, the med device tax has had little impact on investors.

Regulatory Environment

U.S. FDA continues to be the model of medical device regulations throughout the world. Many emerging markets emulate product classification and regulatory approach. Some regulatory agencies even accept FDA clearance as de facto clearance for their markets.

Despite this, we seem to be in an era where FDA regulatory scrutiny is at an all-time high.

Before being too critical of FDA, realize the role of the agency is to protect healthcare consumers and ensure medical devices are safe. And with all of the advances in technology in recent years, I can imagine the job of a FDA reviewer is quite challenging.

Couple this with other regulatory markets tightening and also becoming more stringent. EU and Canada are, by and large, similar in nature to FDA.

But places where regulations used to be fairly lax 10 years ago, such as China and Brazil, are now some of the more difficult regulatory markets to enter for med device.

Emergence of Digital

I also mentioned in my Friday 5 interview that the emergence of technology, specifically smartphones and apps, is creating the most significant impact on the medical device industry.

In fact, Rock Health reports that digital health accounted for 8 percent of all venture capital funding for the 12-month period between Q3 2013 and Q3 2014.

This is significant.

Why a golden age?

Frankly, my comment about the medical device industry being in a golden age is corroborated more by personal experiences rather than hard facts.

In the past few years, I have been exposed to more medical device startups than any other few year period in my 17+ year career.

Startups developing a device to help patients with COPD.

Startups developing technology to help males with fertility issues.

Startups developing prostate cancer products.

Startups developing custom-designed, patient-specific orthopedic implants.

Startups developing a wound healing patch for dental applications.

I can go on and on about the volume and variety of medical device startups I’ve worked with and aware of. Yes, there are plenty in the digital space.

And all of these medical device startups I’ve had the pleasure of being exposed to have one thing in common: They all believe their products and technologies will change the world for the better.

Yes, there is a golden age in the medical device industry happening right now. With passionate inventors and entrepreneurs figuring out a way to make things happen despite difficulties finding funding they need.

 

 

Jon Speer has been in the medical device industry for over 16 years. In 2007, Jon started Creo Quality to help medical device companies with project management, quality systems, and regulatory submissions. As a result of his experience in the medical device industry, Jon had an idea to develop a software solution to improve how companies handle Design Controls. Because of this greenlight.guru was born. You can find him on Google+Twitter, and LinkedIn.  

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