Do specialist medtech SMEs have more trouble gaining market access than major healthcare corporations? Terry Young of the MATCH project discusses the challenges and rewards of going it alone as a small company.

For a small medtech company, developing a product that is technically and clinically effective may well be relatively straightforward: that level of expertise and innovation is why the company exists. But from there, the SME may find its route to market obstructed by complex regulatory and procurement barriers. The streamlined company structure and technical focus that helped the SME develop its products may prove handicaps in the struggle for market access. Is there a way through?

Professor Terry Young is Chair of Healthcare Systems at the School of Information Systems, Computing and Mathematics, Brunel University, and Coordinating Director of the MATCH project, which provides guidance on innovation and commissioning for medtech SMEs and start-ups. He explains how SMEs can get through the crosstown traffic between them and their customers: with the road map of value-based assessment.

How can smaller companies overcome regulatory and procurement hurdles?

From discussion with companies (and especially those which subscribe to MATCH as network partners), I am aware of three areas where small companies may struggle.

The first area is the regulation associated with obtaining a CE Mark. The second involves setting an acceptable price for the product – which links to the third, more general question of how to demonstrate value for money (VFM) through a NICE-type appraisal method. While many products do not yet undergo such an appraisal process, it is becoming clearer that firms will need to furnish evidence of VFM. Clearly, value is easier to demonstrate at lower prices, and companies are starting to look at pricing strategies that maximise the chance of reimbursement or endorsement following a NICE-type appraisal without needlessly throwing away profits.

At first sight this looks likely to complicate matters for smaller companies, since alongside securing finance, protecting their positions on intellectual property and garnering evidence of safety and performance, they will face the challenge of managing a position on evidence of VFM. However, using effective tools to perform cost-benefit analysis at a very early stage means that time often wasted in remedial activity can be used early on to set a better design agenda. Also, since cost-effectiveness analysis relies heavily on evidence that is increasingly needed in any case, it is possible that the whole process, properly integrated and streamlined, will not increase the overall workload.

This insight needs to be factored into the business planning. Since investors often specialise in a specific phase of a product’s development, having a clear position on the development and articulation of value is a big advantage in securing funding and then selling on to the next stage of investor.

Is it better to become part of a larger corporation or to go it alone?

That is for each company to decide! By being able to furnish evidence and to demonstrate a robust process of acquiring and analysing evidence, companies put themselves in a much stronger position strategically with agencies such as NICE – and tactically when negotiating with local procurement groups.

In the first phase of the MATCH project (2003–2008), some smaller companies expressed reservations about working closely with larger companies; but in practice we were not aware of tension. Some companies even ended up undertaking projects for some of the larger companies, though that was more serendipitous than planned. It seems to me that there are lots of ways in which smaller companies might coexist with bigger companies.

Since many small companies have a trade sale as a possible exit strategy, the ability to be in control of one’s destiny, articulating value to customers, suppliers and investors alike, has to be of great benefit.

What does ‘innovation’ really mean in market terms?

‘Innovation’ is a buzzword just now, and as such it tends to mean different things to different people. Clearly, it carries the idea of doing new things. I like to think of innovation at two levels.

In terms of services, we tend to think of improvement methods – which date back to the end of the last century, when the Modernisation Agency and others were pressing hard for a new emphasis on process. Learning and, indeed, learning how to learn have become popular pursuits, and are making their mark in the delivery of care. Of course, not all socalled ‘improvement’ really works out. Call centres, for instance, may have brought great benefit to banks and insurance companies, but they are not always popular with customers.

In terms of technology, innovation tends to focus on invention. However, the new does not always outperform the old – and indeed, the best technical solution does not always enjoy the commercial success it merits.

The critical element, when we change the way we do things or the technology with which we do them, is to have a way to measure whether the new is better, worse, easier or genuinely cheaper than what it replaces – and for whom. This is why HTA, economic evaluation and a formal means of addressing the needs of users are critical. If we have a scale by which we can know when an innovation has resulted in better outcomes or experiences, or has lowered the cost of care or the time taken to deliver it, then we can move forward.

Unless there is a very free and mature market, the industry (and particularly small companies) will struggle to realise the benefits of innovation. Good news stories and simple narratives of impact are not enough when tens of thousands of people may be using a device over decades. It is interesting, for instance, to follow the debate over the value of implantable cardio-defibrillators, where some recent HTA analysis suggests that lowering the cost would still have a much better impact on cost-effectiveness than improving the performance. On the other hand, it might be argued that industry has had to innovate without solid guidelines, because the evidence has taken so long to accrue.

We have a chance to put many aspects of healthcare innovation onto a common footing and, for the first time, apply real value assessment every time we believe we have achieved an innovation.

“We have a chance to put many aspects of healthcare innovation onto a common footing and, for the first time, apply real value assessment every time we believe we have achieved an innovation.”

How can you make being a smaller company work for you?

It is easy for us to offer suggestions, but much harder for those who have taken the risks to make it work. In the spirit of the question, however, here are some ideas that might help.

1. Take at least a little time to consider what a move to evidence-based supply and purchasing might mean to your company. This might include:
a) Updating your skills audit to make sure that the requisite skills are in house or that you have access to them through trusted partners.
b) Ensuring that you have a clear costbenefit analysis (however rudimentary) that connects to clinical outcomes in the context of a known or planned-for delivery paradigm.
c) Thinking about the role that users have played in your design, and how their views will influence the final product.

2. Make provision in next year’s budget for at least some of the following:
a) Skills development to understand value-based decision-making in design.
b) An audit with an external specialist of your design process and your methods for articulating value.
c) Attending a conference where academics and industry will meet to discuss what is happening now, and to spot trends for the future.
d) Purchasing or commissioning supporting materials (guides, workbooks etc) for your entire workforce.
e) A day away with other members of your supply chain.

3. Do some basic scenario planning around your business plan to include the following types of questions:
a) What could I do better to free up resources for evidence collection and analysis of value?
b) Is it possible to re-plan my route to market so that I spend a little more up front and reduce the cost of market and after-sales services?
c) What have the big bought-in items been up to now, and what do I expect them to be in five years’ time?

MATCH (Multidisciplinary Assessment of Technology Centre for Healthcare) is a research collaboration between four UK universities involved in healthcare technology assessment and a cohort of industrial partners. MATCH aims to transform the medical devices sector by researching, testing and making methods available to cut the time and cost from concept to continuous improvement in the market, in support of medical device users, the industry, regulators, reimbursement agencies and healthcare providers. For more details, visit www.match.ac.uk