Blog Series Part 5: Selling a Medical Device — Thinking Ahead
By: Alex Despotovic
Tags: Medical Devices, Business Development, Product Development, Digital Health, Business Strategy

Let’s say the product you are building is a hospital bed, made specifically for patients treated in intensive care units — Yes, a hospital bed is a medical device, with very strict guidelines on manufacturing and control of risk associated with its use. Believe it or not, 531 individuals died as a result of being “caught, trapped, entangled, or strangled in hospital beds” from 1985–2013.

Let’s say your company is in the US. You have clinicians that help you do extensive user research and find out what are the needs your product has to meet for your end-users (both patients and healthcare professionals in ICUs), and having clinicians gives you a better chance of nailing that down. After compiling all the data, the company and the investors jointly decide the US to be your first market.

No other countries or markets are considered due to cost and focus, and your regulatory consultant is taking the company through the FDA’s regulatory process related to manufacturing and market approval.

Let’s also say that you have found the first customer, a global hospital and social care chain that is based in the US, but have facilities all over the world. They focus on long-term care and rehabilitation of elderly patients but are expanding their services to intensive care for severe and life-threatening diseases such as COVID.

Things couldn’t be better, right? You have found the only client you may ever need for the company’s long-term prosperity, and they seem satisfied with the quality of your product (which went through hard 18 months of product development and manufacturing). After providing evidence that the product went through the FDA’s process of market approval, you sell 100 beds for their US hospitals and bring significant revenue. Congratulations!

Two months after hospital beds have been shipped to the client, they come back to you and say “we want your company to become our supplier for other markets and for other uses.” An order of 5,000 beds is on the table and they want to use it in Europe, China, and Australia in both intensive care units and in long-term care facilities, with a few tweaks to be made to accommodate the latter. They have a deadline of 6 months and you have to deliver in that period. Based on your previous experience, you are sure you can deliver and are keen to move ahead with the deal.

Every person in the company is ecstatic — you have hit the jackpot, and the company’s long-term future is set. No other clients are needed, and the entire focus is now on delivering the biggest order you will ever have.

You are at the first meeting about this offer, and no one sees any issues with changing a few things on some of the beds for long-term care and starting the manufacturing process as soon as possible.

Just when everyone agreed to move forward, one person, who is hearing about this for the first time, stands up and says: “This deadline cannot be met under any circumstances.” Everyone is in shock.

The regulatory consultant, the person that was responsible for your compliance with FDA’s regulations on medical devices in the US, brings up two painful facts:

Fact #1

“Our product is not certified for use in Europe, China, or Australia. Therefore, the product cannot be sold in those markets until it receives approval from relevant authorities in respective regions. We could’ve prevented this by modifying our documentation along the way to fit other markets which would shorten the process, but it wasn’t considered a priority.”

Fact #2

“Our entire FDA documentation and approval is based on our product being used in intensive care units — expanding its use for long-term care facilities would result in a significant revision of existing documents, possibly resulting in the need for new tests for safety and risk mitigation. This could take well beyond 6 months, and if we wanted to sell our product in other settings than intensive care units, we could’ve adapted our documentation at the beginning to allow it, but the strategy was to focus on intensive care units only.”

Suddenly, everyone is in disbelief, and the biggest opportunity is missed — “How did we not think about this before?”