Outsourcing MedTech Devices: Considerations from the Outset

All too often, a company devises its plan to produce a med-tech device without considering what the end result—a successful marketing launch—realistically involves. And that is because, says Chris Rapp, VP of global marketing and commercial operations, North American Science Associates, LLC, the stakeholders charged in reaching that end do not have the same vision as to how to reach that goal.

Rapp, speaking to an audience of med-tech experts at the 2022 Medtech MVP Conference, says the typical scenario for med-tech design and production goes as follows:

• The device’s engineering takes a backseat to another department’s desired features and benefits
• Engineering and manufacturing receive the specifications
• The safety and regulatory teams say it is impossible to make the desired claims without specific data
• Once the device is made, it isn’t clear what improvements the new device has over existing devices on the market, thereby jeopardizing reimbursement opportunities
• The investors aren’t happy because their goals for the product were different from the outset.

As a collective business approach, notes Rapp, those steps are “pretty choppy.” Adding to the chop are poor lines of communication among the stakeholders, which help delay the time to market. Another delay maker is the lack of time-sucking bumps in the product’s time frame; such bumps include natural disasters like pandemics or personnel issues, such as finding someone to fill the slot of a critical team member who left for another job.

But the most serious problem he attributed to failed med-tech device projects is lack of stakeholder alignment. Collectively, everyone is striving for the same goal, but each group has its own interests.

New realities

Any company whose aim is to commercialize a medical device product realizes that it has to overcome numerous challenges, such as getting on formularies and having their devices accepted by clinical leaders.

But the last couple of years have produced new challenges, some attributable to the pandemic, like supply chain problems, but others as well, including access to capital and changing regulatory dynamics. These all can add to extending the amount of time, from concept to commercialization, of a new product. So, improving flexibility to reduce the company’s fixed costs “is something that we've really started to see as a result of the pandemic.”

Flexibility is key, Rapp says, because the goal is to control risks. One controllable factor is selection of team members. “It takes a fantastic team to make this happen.” And team members should be considered movable with each new product.

Not every cardiovascular device is going to need the same individuals to get the product to market, he points out. An academic institution might have the right accelerator component, or another group just the right artificial intelligence and machine learning software. What are the target markets? With every decision, should come another decision—whether to build or buy.

“I want to build the most cost-effective plan with the right team. I'm focused on speed to market, I want to have predictability and some … milestones to ensure success,” Rapp says.

All these decisions, he notes, should be based on where the company wants to end up.

In answering a question from an audience member, the issue of who owns the intellectual property should be made on its strategic worth. “Is it really strategic for me to either own the data that's being generated from the device development program, or from the devices that are being created themselves?”

What success looks like

Over the last six years or so, more companies have been spending part of their R&D budget on outside talent. Emergo, says Rapp, conducted a recent medical device and design survey that asked respondents about outsourcing practices —60% of the respondents said they were outsourcing 50% more of their R%D budget than they were five years prior.

Other figures

Rapp says that over the last five years, there has been significant revenue growth in the device manufacturer market. Between 2020 and 2021, there was double digit growth, attributing some of that achievement to the rise in demand for digital tech, health tech, even artificial intelligence.

And, the med-tech community has increased its acceleration of acquisitions. While the deal value has dropped recently due to inflationary concerns and capital deployment challenges, strategics, he said, are still looking to “acquire smaller organizations to complement their product development cycle.”