Mitigating risk with market research

Common pitfalls and how to avoid them

Many innovators have amazing ideas for novel medtech products but in reality, very few ideas make it to market.

There are high barriers to entry to the medtech sector. Developing a medical device is an expensive process with regulatory burdens and significant development costs which have escalated in the last 10 years.

Understanding the market is key to mitigating some of the risk attached to developing a medtech product or service. It is imperative that medtech innovators correctly identify and understand their customers and markets; and regularly review market attitudes and conditions to identify trends, challenges and opportunities.

Component costs, material costs and labour costs have all increased considerably since the Covid pandemic which is impacting decisions on how to develop and manufacture new medtech innovations.

Whether a new entrant into the market or an established vendor, the medtech sector precariously balances developing products that will benefit society against delivering a commercially viable product and navigating harsh market conditions.

Here we discuss how market insight can help to mitigate some of the risk associated with developing or commercialising a medical technology.

1. Know your customer

This may sound obvious, but many innovators new to the medtech sector do not realise that there is rarely – if ever – a single customer in healthcare.  Medical technologies have to be sold to several stakeholders that can be broadly categorised as users, those who benefit from the product and those who will actually purchase the technology. Often it is not a clear-cut case of clinicians (users), beneficiaries (patients) and payers (healthcare provider) as transformational technologies may deliver organisational benefits for example.

By exploring and understanding the stakeholders relevant to a technology, medtech developers are better equipped to gather and build the evidence required to meet the needs of each stakeholder group, For example, to fine tune messaging and evidence to enable clinicians and patients to make an informed decision about adopting your technology, and to devise pricing strategies that will be acceptable to payers.

2. Understand market dynamics

It is important to understand the current status of the market in terms of what is driving demand, what are the barriers, who are your competitors and what is likely to change in the near future.

Complex medical technologies can take years to come to market and trends and drivers change over time. New markets may emerge that did not previously exist, and new barriers can emerge such as changes to medtech regulations.

It is important to be realistic about market size and to be mindful of your competitors – both direct and indirect and to look at the broader issues affecting the medtech sector such as regulatory change and environmental concerns. For example, we are currently seeing a surge in interest in sustainable materials in the medtech sector.

3. Understand the clinical ecosystem

Medical innovations are not used in isolation and so it is important to understand current care pathways and facilities. It is important to understand how an innovation may be placed in that pathway – or reshape a pathway. Market intelligence can help to inform thinking around key stakeholders and ensure you are developing the right product, for the right market.

Market research will also identify the products, processes and procedures that your technology will compete against, helping innovators to map out training and infrastructure needs etc.

4. Understand the healthcare financial landscape

Healthcare is funded in various ways around the world. For example, in the UK, the NHS is publicly fund through taxation. However, the actual model is extremely complex.

In England, Integrated Care Boards (ICBs) administrate over £100bn funding across community services, mental health, hospital and ambulance services. Capital spending, public health and other specialised services fall outside of this funding so it is important to understand the finance structure of the market in which you will operate.

When selling to the NHS and other publicly funded health systems, a strong health economics case will help the path to adoption.

Many overseas healthcare markets utilise private insurance and statutory insurance-based systems which present their own opportunities and draw backs.

5. Choose the right market for your innovation

Over the years, we have assessed the market for a number of early-stage technologies where the most attractive market opportunity did not match the initial aspirations of the innovator. A good example would be an algorithm developed to help train clinicians to take blood pressure (BP) readings correctly; it would let the user know if the BP reading had been taken correctly or not. However, the far larger market identified was for at home BP monitors where people are monitoring their blood pressure.

The innovator began their journey intending to develop a niche BP training tool and ended up licensing technology that is in use in many at-home devices today around the world.

Similarly, selecting the right indication for a novel therapy needs to be the one where you have the best chance of commercial success. Some products are useful for several indications. In these instances, we have conducted research studies to identify the best market entry point in order to bring focus to research and development activities in order to improve the chances of commercial success with the anticipation that the technology will then be applied to other diseases/indications further down the line.

6. Route to market

Determining the route to market strategy for a new medical technology is critical to the success of your product. You need to engage your customers in the way they want and in the right place. Working with Accelerate, we provide tailored market research to help you make informed decisions about the route to market model that is right for your product and your business.

Commercialising your medtech idea does not mean that you have to set up a manufacturing facility or sell the product yourself as there are opportunities for selling and licensing intellectual property within the medtech sector.

Similarly, with the UK’s vibrant medtech contract research, development and manufacturing sectors, there is a wealth of expertise and options on hand to pave the way to market.