From Medical Device Concept to Market: Spin-Out or Commercial Partner?

So, you’ve spotted a patient problem in clinical practice and are one of the rare clinicians brave & ambitious enough to do something about it. You’ve spent months, possibly years refining the idea and designing your solution, developed a working prototype and hopefully with the help of an NHS Trust’s Innovation Team (if you have one) secured patent protection for your medical device invention.

A significant milestone has now been reached, all good but how is this idea going to get to market, what happens next?  A patented prototype is a fantastic achievement for any inventor, but it’s not a commercial medical device, yet.

Turning an invention into a product that can be manufactured at scale, approved by regulators, adopted by healthcare providers, priced correctly and ultimately improve patient care requires an entirely different set of skills. It demands expertise in engineering, design for manufacture, ongoing IP protection, regulatory approval, clinical evaluation, manufacturing, supply chain management, market access, sales and post-market surveillance.  And above all it demands financial resources.

This phase is extremely unfamiliar territory for the vast majority of NHS staff, trained to assess patients, care for them and perform procedures. However, these same staff are not trained for the business end of commercial innovation enterprise.

As a result, this situation leads to one of the most important decisions in the innovation journey so far for the successful inventor. Should you establish your own spin-out company and attempt to commercialise the technology yourself or should you seek a commercial partner who already has the expertise, infrastructure and resources needed to bring your invention to market?

For many NHS clinical inventors, the answer to that question may determine whether an innovation idea remains just that, an idea, or progresses on to become a successful medical device that hits the market, and is either a financial success for all parties involved, or not.

And if partnering is the preferred route, who should that partner be, should you work with a small specialist company, or an established large commercial organisation?

It seems there is no single correct answer for each option has both advantages & challenges. The correct decision may well depend upon any support & advice the clinician inventor may be receiving at that point from innovation colleagues and advisors; the inventor’s own ambitions and the capabilities of the organisations involved.

However, if the commercial partnership is the selected route to follow, there is one fundamental factor which the inventor and those around them must absolutely consider prior to a commercial collaboration being agreed.

Many organisations within the medical device sector specialise in different parts of the product lifecycle. Some focus on manufacturing, while others specialise in distribution and market access.

When selecting a commercial partner regardless of the organisations size, proven experience as a medical device manufacturer should be an vital component in the decision process. Manufacturing requires expertise in design, materials, creativity, regulatory compliance, quality management systems, risk management, costing, production processes and post-market surveillance. All of this can be outsourced, however you’ll want to partner with an organisation who’s travelled this journey many times before, building up relevant manufacturing experience.

More than just a product

For many clinicians, development of their concept is deeply personal.  It’s the prototype that’s been hand crafted on the kitchen worktop, the culmination of years of clinical observation, frustration with existing practice, bravery to try, mocking from colleagues, ambition, untold sacrifice and a determination to improve patient care.

For most NHS innovators these projects are developed secretly to protect IP, often receiving no protected time, investing evenings, weekends, precious family time and personal energy because they genuinely believe the innovation can make a difference, and just may be successful.

That’s why the decision to partner with the correct commercial entity to licence your IP is so vitally important.  It’s not simply about finding someone willing to buy into your vision, it’s about trusting a company to do your idea justice and deliver a commercially sustainable product for the purpose intended within a reasonable time frame.  To address the identified patient problem, whilst becoming a commercial success for all parties involved.

Route One: Creating a spin-out company

For some NHS innovators, establishing a spin-out company can be the ideal route, but for many this option can be totally daunting. On the plus side nobody understands the clinical need better than the inventor, so this route can be attractive as it provides total control over the development of the vision and the products future direction.

A successful spin-out company can be highly rewarding, both professionally and financially. However, from what I’ve observed, inventing a medical device and building a successful medical tech company are two very different challenges.

Running a medical device company requires knowledge of finance, engineering, manufacturing, quality management, regulatory approval, human resource management, intellectual property protection, marketing and many other specialist areas. Few NHS clinicians have little, if any knowledge and certainly limited experience in these fields, making it a difficult task to take an innovation from concept to market without additional support.

Without this additional experience there is the risk of underestimating the time, cost and complexity involved. Developing a regulated medical device will take several years, especially in the current climate and often requires significant investment before it reaches patients. Successful spin-outs go about this challenge through bringing together multidisciplinary teams that include experienced mentors, regulatory specialists, engineers, IP specialists and investors as team members to support the clinical inventor.  As mentioned, time, costs & complexity.

Fortunately, there is now a growing innovation ecosystem to support NHS clinicians. Programmes such as the NHS Clinical Entrepreneur Programme provide education in all aspects of the process, plus mentoring, funding and networking opportunities for aspiring innovators. Funding organisations such as Innovate UK can help support research, development and commercialisation, while regional innovation organisations, including Health Innovation Networks (HINs) and NHS innovation hubs offer advice on intellectual property, market evaluation, regulatory pathways and connecting innovators with commercial partners and investors. These resources can help clinicians better understand their options and potentially reduce some of the barriers to developing their concepts.

Another challenge is balancing entrepreneurship with clinical practice. Many NHS clinicians continue working while trying to develop a company, but dividing time between patient care and running a business can become increasingly difficult as the concept develops and the company grows.

Route Two: Partnering with a small commercial medical device company

Many NHS innovators are naturally attracted to specialist companies who work with products related to their invention.  These organisations can often be small commercial enterprises, often entrepreneurial, innovative and enthusiastic about developing new technologies.

In this relationship inventors frequently have regular access to senior decision makers and can be closely involved throughout development. However, enthusiasm alone should be considered alongside demonstrable capability and experience, as one of the most important aspects of due diligence is understanding exactly what type of company you are partnering with.  Are they an experienced medical device manufacturer or primarily a distributor?  The distinction can be crucial.

A distributor may possess established customer relationships and comprehensive sales capability, they may also know the marketplace exceptionally well and have established routes into hospitals and healthcare systems.

However, distribution experience does not automatically provide expertise in manufacturing regulated medical devices as manufacturing requires a different skillset, it requires experience of manufacturing medical devices.

The size of the organisation is far less important than its proven experience in manufacturing. Questions every inventor should ask include:

• Have they previously designed and manufactured medical devices, what are these devices, were they financially successful?

• Are they an ISO 13485-certified manufacturer? (internationally recognised quality management system (QMS) standard for medical device manufacturers)

• Do they manufacture products themselves or outsource production?

• What regulatory approvals have they successfully obtained?

• Who manages quality assurance?

• Do they have sufficient financial resources to support product development and growth?

  
  

The objective is to identify a partner whose capabilities align with the needs of the project and who can demonstrate the experience and expertise required to successfully develop and commercialise the product.

Route Three: Partnering with a large commercial medical device company

For many NHS innovators, partnering with an established multi-national medical device entity may offer advantages in terms of manufacturing experience, regulatory expertise, quality systems, financial resources and commercial infrastructure. This isn’t simply because large organisations have greater financial resources, it’s because they possess mature systems developed through years of designing, manufacturing and commercialising regulated medical devices, resulting in a wealth of manufacturing experience.

The correct partner will understand the entire product lifecycle for your device.  From concept evaluation and engineering through regulatory approval, manufacturing, supply chain management, international market access and post-market surveillance. These organisations have already built the infrastructure required to deliver products safely and consistently.

Large manufacturers also bring dedicated teams covering:

• Product development

• Manufacturing engineering

• Regulatory governance

• Clinical evaluation

• Supply chain management

• Legal services

• Intellectual property

• Market access

• Marketing

• International sales

• Customer support

• Post-market surveillance

  
  

Perhaps most importantly, large manufacturers have experience on how to produce medical devices consistently, safely, for the right price and at scale.

A medical device must also be a sustainable business

Clinicians naturally judge innovative medical devices by their clinical impact.  However commercial organisations judge them by both clinical and commercial success.

Developing a medical device requires substantial investment, and a product that fails commercially cannot continue benefiting patients indefinitely. When an NHS Trust licenses its intellectual property to a commercial partner, there's no guarantee of commercial success. However, the primary objective of a licensing agreement is to create a mutually beneficial partnership in which successful commercialisation delivers improved patient care through market adoption, a sustainable business for the commercial partner, and royalty income for the NHS Trust over the lifetime of the patent.

Due diligence: Choosing the right partner

On a daily basis NHS clinicians evaluate evidence before making decisions affecting patient care, so why should the commercialisation of the clinician's innovation concept be any different?  Before entering into any commercial licensing agreement of Intellectual Property, difficult questions need to raised. 

• Is this organisation an established medical device manufacturer or primarily a distributor?

• What medical devices have they previously designed and manufactured?

• Do they understand the product, the market, pricing strategy?

• What manufacturing capability exists internally/outsourced?

• How much regulatory expertise do they possess?

• Who will lead the project, what manufacturing experience do they have?

• How much investment can realistically be committed?

• Can they manufacture at scale if demand increases?

• Can they support international expansion?

  
  

The answers to these questions are likely to be far more important than the size of the company itself.  As with any relationship, it’s vitally important to pick the right partner.

Final thoughts

Reaching the stage of having a patented prototype is an extraordinary achievement as few innovation concepts ever progress that far.  However, the ultimate goal is to deliver that concept in the form of a product which addresses that identified clinical patient need.

Building a spin-out may be the right decision for some, whereas partnering with a smaller company may provide close collaboration and work better for others.

For many NHS innovators, an larger well-established medical device manufacturer may offer advantages through proven manufacturing experience, regulatory expertise, quality systems, financial resources and commercial infrastructure.

Ultimately, there is no single correct route. Some innovations will thrive within a spin-out, while others may benefit from partnering with a smaller company or a larger established manufacturer. Experience in distribution is valuable, while proven experience in regulated medical device manufacturing is an vital consideration when deciding upon entering a commercial partnership and the subsequent development of a successful commercialisation strategy for your medical device concept.