What drives medical device entrepreneurs?
Medtech founders need perseverance
Medtech founders operate in an innovative market. Every third product here is less than three years old. In addition to innovation, regulation determines business. Official product approval and certified quality management of the companies are a must. That drives up the capital requirement. Nevertheless, more and more medtech teams are taking part in business plan competitions.
A cyclist lies motionless by the roadside. An accident? Did he collapse while exercising? He does not respond to speech. Breathing and pulse can hardly be determined. Or is that just how it feels in the mounting panic?
Marc Jäger has developed a small device that immediately provides clarity in such cases. "Sensors measure pulse waves and breathing movements just below the larynx," explains the founder of Neocor GmbH from Gondelsheim in Baden. The coin-sized device determines without a doubt whether blood is still flowing towards the brain and the person is breathing, or whether first aiders need to take resuscitation measures.
The device actually belongs in every first-aid box. But only a few want to spend 199 € purchase price for it. For the time being, it is mainly companies and semi-professional rescuers who order it. "We need higher quantities in order to realize a double-digit price," said Jäger, who set up his own business three years ago with the idea he developed at the Karlsruhe Institute of Technology.
Medtech founders have to wait an average of 11 months for approval
Since then, he has pushed ahead with further developments and the approval for his product required by the Medical Devices Act. “Although the sensor is placed on the outside of the neck, it took us six months to get approval for the animal study. Only then were we allowed to carry out the clinical test with 60 test subjects, ”he reports. The prescribed test subject insurance and approval for the study from the competent higher federal authority alone would have cost over € 20,000. Overall, the approval process took a year.
In addition to the usual development costs, medtech founders have to plan budgets for approval, patenting and the quality certification according to the standards DIN EN ISO 13485 and DIN EN ISO 9001, which is mandatory in the industry. Admittedly, approval in this country is much faster with an average of eleven months than in the USA, where it takes an average of 54 months. But when founders in the industry compare themselves to “normal” technology founders, they sometimes get envious.
In addition to regulation, market access is also more difficult than elsewhere. The actual customers of their products - the patients - do not pay for them or order them. The route leads through doctors and clinics, which in turn are paid for by the health insurance companies. A complicated situation for the founders, which makes volatile health policy framework conditions and internationally inconsistent regulations even more difficult.
Medtech founders react to difficult market access with partnerships
Many of the medtech start-ups respond to this with collaborations. Jäger or the founders of Scopis GmbH in Berlin (see portrait below) also work with established medical technology companies, have components produced by them and use their sales networks. Jäger has aligned his Neocor GmbH in such a way that it concentrates on development, marketing and sales to end customers. The production is done by an established company that has all the necessary certificates and an international sales network. With its navigation technology for endoscopes, Scopis also docks with a renowned endoscope manufacturer and its sales structures.
As lean, highly innovative companies, Neocor and Scopis are typical representatives of their species. When asked why, despite the looming shortage of skilled workers in the industry, they go to the trouble of founding a company with all the difficulties described, both answer: the chance to help sick people with intelligent products drives them. They are happy to accept the fact that they are entering a rapidly growing global market.
According to Gary Gelsing, spokesman for the start-up competition for the medical industry of Startbahn MedEcon Ruhr GmbH, the start-up activity in medical technology is currently reviving. “A clear upward trend can be seen in the number of founders and the quality of the business plans submitted.” Around 70 teams took part in the first five competitions, in 2010 over 100 and in the first stage of the current competition over 90 teams. Last year, all the plans submitted withstood the jury's assessment and received a corresponding certificate. This year the scores in the first round have risen again. "The teams approach their plans with great seriousness and professionalism," reports Gelsing.
More and more medtech founders are taking part in business plan competitions
He is not alone with his description of the location. The business plan competitions in Munich, Berlin, the Swabian Cyber.One, Start2grow from Dortmund and the Northern Bavarian network also confirm the trends observed by Gelsing when asked. Recently, more and more medtech founders have also taken part in their competitions. And although they usually only make up 10% to 15% of all teams, in the end they are often at the forefront.
Your chances of financing are comparatively good: over 12% of the companies in the portfolio of the high-tech start-up fund come from the medtech sector. And the industry's attractiveness is growing steadily among private venture financiers - according to the Business Angels Panel, 81% of informal donors now consider the industry to be attractive.
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