1. Critical Success Factors
For A Medical Device Company
12/2/2018
Dickson Consulting

2. Critical Success Factors
Product idea
Business plan
Funding
Personal factors
People
Product development
FDA approval
Reimbursement
Product champions
Financial performance
Free “stuff”
Business protection
Stark law
12/2/2018
Dickson Consulting

3. Business Plan
Explains business vision. How you envision the company in 3-5 years.
Need to understand market. Product need, market size, competition, technology application and differentiation.
Business plan should address all functional areas and fit them all together. Include financial plan-P/L, cash flow, balance sheet.
Understand the risks and how to manage them.
Enables review and evaluation of concept.
Update strategy to reflect changing conditions. Adapt and be creative. .
12/2/2018
Dickson Consulting

4. Funding
The best source of funding is $ not spent unnecessarily. Manage the cash.
Idea –sweat equity/angel funding
Product development and marketing-venture capital/government grants
Company growth-venture capital and foreign market IPO
Investor exit strategy-IPO or sale of company
Mature product-R&D and acquisitions
12/2/2018
Dickson Consulting

5. Personal Factors Emotional intelligence Family support
Leadership skills/make tough decisions
Functional, few negative distractions
Value relationships/ maintain network
Determination
Personal ethics
Ability to communicate
Ability to execute/project management
12/2/2018
Dickson Consulting

6. People Need for domain experience Product champion/scientist
Medical advisory board
Board of directors
Advisors
Corporate governance
Product development/ engineering
Process development/FDA approval/quality
Sales and marketing
Clinical
Funding/financial
Legal-patent, regulatory, corporate
12/2/2018
Dickson Consulting

7. Product Development Engineering Clinical trials/PMA Subsequent changes
510k process
Letters to file
12/2/2018
Dickson Consulting

8. FDA Approval Europe vs. USA Product approval-510k process
Manufacturing process approval
June 15, 2006 update by FDA
Quality control process approval
Marketing restrictions--off-label use
12/2/2018
Dickson Consulting

9. Product Champions Doctors, doctors, doctors Hospital
Other medical professionals
Nurses
Professional papers
Speeches
Conferences
News releases
12/2/2018
Dickson Consulting

10. Need for Reimbursement
Hospitals need to be paid
Doctors need to be paid
Medical device company needs to be paid
Increasingly tight reimbursement policies
Best options from an investors perspective:
Product category is already approved for reimbursement
Breakthrough must offer such compelling clinical benefits and cost reduction that the reimbursement process will be as smooth as possible.
12/2/2018
Dickson Consulting

11. Reimbursement in Business Plan
Begin planning for reimbursement strategy at the earliest stages of the company formation; it should be a fundamental part of the business plan.
Consider the data requirements for supporting a reimbursement submission when formulating clinical trials. The data to support reimbursement may be significantly different than the clinical data.
Work with an expert on reimbursement strategy:
Regulations are extremely complex
Rules and winning strategies change frequently
Must stay abreast of best practices
Focus is on economics of a procedure, not just clinical outcome.
12/2/2018
Dickson Consulting

12. Reimbursement Cycle Detailed understanding of process is needed.
DRG’s/CPT’s established to provide for reimbursement
Can device company provide guidance on DRG and CPT to be used?
12/2/2018
Dickson Consulting

13. What Are DRG’s/CPT’s? DRG CPT Code
Diagnosis Related Group
Developed by CMS
CMS=Centers for Medicare & Medicaid Services
Reevaluation/new rules currently underway-October 2006
CPT Code
Current Procedural Terminology
Developed by American Medical Association
Requests for changes presented to committee
Payments based on what is “normal, customary and reasonable” as determined by CMS or insurance provider.
Frequently also used by private insurers for reimbursement.
12/2/2018
Dickson Consulting

14. Financial Performance
Cash flow. Cash is king!!
Market penetration = revenue growth
Salespersons – feet on the street to grow revenue
Revenue growth vs. income-sometime contradictory!!
R&D expense-how much is being invested and in what?
12/2/2018
Dickson Consulting

15. “Free” Stuff Web sites and news releases of competitors
Analyst reports on industry and competitors
Web sites of regulatory agencies and trade associations
FDA=
CMS=
AMA=
AdvaMed=
12/2/2018
Dickson Consulting

16. Business Protection Patents Trade secrets Trademarks
Noncompete agreements
Nondisclosure agreements
Code of ethics
12/2/2018
Dickson Consulting

17. Sales, Marketing and Clinical
Sales vs. clinical
Is marketing necessary?
Who does a doctor want to talk to?
Relationship building
12/2/2018
Dickson Consulting

18. Stark Laws
Address consulting and professional relationships between doctors and companies.
Example of risk-U.S. Department of Justice subpoenas issued to orthopedic companies.
Hospital
Doctor
Device Company
12/2/2018
Dickson Consulting

19. Stark Law’s Basic Prohibitions
A physician cannot:
Make a referral
To an entity
For the furnishing of “designated health services”
The may be payable by Medicare or Medicaid (or insurance companies in some states)
If the physician (or the immediate family member of the physician)
Has a direct or indirect financial relationship with the entity
Unless an exception to the Stark laws applies
12/2/2018
Dickson Consulting

20. Ten Perceptions That Can Kill A Company
You have a great idea and raising money will not be a problem.
You can get it done quickly and at a low cost.
Dilution is a bad thing.
You have the best talent on the street.
You do not need patent protection, the trade secrets are significant.
“Build it and they will come.” Success in the market is totally based upon technology superiority.
It is a low risk and expedited regulatory pathway.
Scientific founders should continue as CEO forever.
Management and boards are strategically aligned.
Venture capitalists like risk and have unlimited funding.
12/2/2018
Dickson Consulting

21. Success
12/2/2018
Dickson Consulting