Returning from The MedTech Conference (AdvaMed) we are enthusiastic for the future of our medtech industry ecosystem. It starts with leadership. Many key medtech industry leaders (Joe Almeida at Baxter, Omar Ishrak at Medtronic, Kevin Lobo at Stryker, Caroll Neubauer at B. Braun) and their respective leadership teams were there to set the example for upcoming industry entrepreneurs.
There was an open environment of sharing lessons learned, discussing industry opportunities and challenges, and networking. The medtech industry has been way behind the holistic ecosystems of innovation in biotech and pharma. Those life science segments have their own lifecycles – idea creation to company formation to technology incubation to capital injections to patient engagement and product/company maturity (on their own – or swallowed into a larger entity).
In medtech, large companies have focused on consolidation (bigger is better, or some would say the rich getting richer) versus innovation. While money is spent at large companies on research and development (R&D), it’s difficult for market leaders to disrupt themselves. That’s where the entrepreneurs and innovators play a key role in our market ecosystems across the world. Unfortunately, in medtech, the early part of this century brought about unique challenges for upcoming start-ups and disruptors. Changes in reimbursement and regulatory policies have led to longer return on investment (ROI) cycles for investors. Seeing these trends, along with the fact that medtech market opportunities are typically smaller than biotech and/or pharma, many venture capitalists (VCs) reduced investments in medtech. Except for digital health (a topic for a separate column), this led to a critical dearth of medtech funding from the early 2000s – until recently.
Fortunately, leaders have recognized this ecosystem, and many initiatives are providing support for the fledgling entrepreneurs our medtech industry so desperately needs (as do patients).
One key initiative is called MedTech Innovator. Led by venture capitalist Paul Grand, MedTech Innovator provides international competition for new companies, products, technologies, and ideas. It’s life support for future disruption by the upcoming innovators in our industry. It’s also encouraging that companies such as J&J, Baxter, and others begin setting up their own incubator programs and their own venture funds. Historically, it’s been tough for large companies to invest in innovative upcoming ideas, as the funds (though plentiful) would come out of someone’s operating budget, negatively impacting short-term fiscal performance. Smart companies have now recognized the value of having separate funding arms to invest in the industry’s future.
Whether you are an established small, medium, or large company, you should appreciate, support, and pay attention to these efforts. Additionally, it may be worthwhile to establish relationships with the upcoming entrepreneurs/innovators, as well as with other industry leaders, and to continuously assess new ideas as one never knows where your next market leading product/technology will originate. We all should value the next idea that creates an even larger medtech ecosystem for our future.