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Key Challenges Facing Medical Device Startups

An Interview with Mr. Attila Meretei, MedRes CEO

Through our years of working with many startups, we’ve gained a deep understanding of the myriad challenges faced in the medical device development sector. To shed light on these hurdles, we conducted a comprehensive interview with Attila Meretei, CEO of Medres, to get his insights on these issues, based on our experience.

What are the most pressing financial challenges startups encounter today, and how might they navigate them?

The investment world – private and institutional alike – seems to have decided about a year ago that early-stage medical device development is not a great idea. I hope appetite for investment will return soon. This is important for our industry but also for society. This world is starved for positive advances in health, education, environment, global living standards and so on, and investment is necessary to fuel innovation in these areas.

 

In what ways do regulatory and compliance issues pose challenges for startups, and what strategies can be used to address them?

Regulatory guidelines and compliance requirements are opportunities for start ups. A lot of wisdom went into crafting these and start ups learning to work within the guardrails that these requirements establish are more likely to produce safe and effective, and therefore commercially successful, devices. There is plenty of expertise around for start ups to tap into and quickly come up that learning curve, so they should not be intimidated by regulatory requirements.

 

How significant is the impact of market saturation on startups, and what can they do to differentiate themselves?

If by market saturation you mean heavy competition in certain segments of the medical device arena, I guess a start up can do one of two things: leapfrog the current gold standard, or break new ground and fix an unsolved problem. It isn’t of course as easy as it sounds. There is comfort in working on “me too” devices (and value as well, if they contribute to training new engineers and driving hospital cost down, for example). Explaining to investors a new way of doing something is difficult sometimes, and changing clinical pathways is even harder. But, the rewards can be substantial for those who prevail.

What are the common operational challanges startups face during their initial stages, and how can they effectively manage them?

I guess it depends on where they are. In the typical medical device hubs capable founders and entrepreneurs can quickly assemble a crew, set up operations and get rolling in development. Outside the hubs, it is harder. In Eastern Europe for example funding sources are scarce. Sources that are available may not be aligned with what companies need in terms of financing in later stages of their development. They may raise an early funding round that poisons their cap table. On top of that, operations can be burdened with significant administrative load or lack of subject matter experts, etc. That said, innovation still happens almost everywhere, start ups are created. The desire to push the limits, reframe what is considered possible, replace gold standards are, I guess, an essential and vulnerable part of the human spirit.

 

Can you discuss the difficulties startups face in securing venture capital or angel investment in the current economic climate?

Other than it seems there isn’t any funding available right now? It will change in time. It will just have to. This is what the entrepreneur who may cure a form of cancer hears these days, after pitching everybody and their grandmother: “Nah, not now. Come back in a year.” Or, more likely, she is hearing crickets after sending that pitch deck out… I am not trying to beat up on anything or anybody, but complex, long-term projects (e.g. curing cancer) need steady, unrelenting support over time. Our lemming mentality and feast-to-famine cyclicity is not really helping tackle big problems.

 

How do startups combat the challenge of building a customer base in a competitive market?

“Build it and they will come” rarely works, so don’t count on that. Entrepreneurs starting out fall in love with an idea, become attached to the mission, and often overlook the need for a solid commercialization plan as it becomes important much later in the life of a start up. They focus on the clinical need, the technical challenge, which are more immediate needs. The solution I guess is to reverse the process, thinking about commercialization early, digging in, really sorting out commercial strategy even before launching the company. The best investors require this upfront thinking from the start ups they consider investing in.

 

What are the technological challenges for startups?

It depends. Sometimes little, sometimes unsurmountable. One thing is for sure: biology has a way to make every device idea more difficult than we anticipate. Biology always pushes back against our interventions.

 

What challenges do startups face when trying to scale internationally, and how can they prepare for successful expansion?

Regulations are not harmonized across the world, so access to different markets requires the repetition of large chunks of clinical and regulatory work. This is a massive hurdle for most start ups, limiting their business potential and hindering the spread of medical innovation, forcing patients to wait for new therapies longer. I think the typical way forward for the average start up company is to launch in one market, get a foothold there, show success in such a limited market entry, collect real life clinical evidence, and leverage this data into some form of commercial expansion.

 

Despite all the challenges, why start a medical device start up company?

It is exceedingly rewarding to break a new path and work on a product that can improve the human condition and perhaps save lives. I am in it because I want to do my utmost to ensure that by the time my kids are of that age where these conditions become concerns, there are therapies available. I would love for them to not having to worry about the diseases that impact, almost without fail, every family in my generation and the ones before.