Why is planning for commercialization important even for early-stage startups? Because the vast majority of startups acquired over the past five years were at revenue-generation stage. “Of the few companies who were acquired pre-revenue, most were in cardiology,” said Marga Ortigas-Wedekind, Fogarty chief commercial strategy officer and head of the company’s educational programming. “So, unless you’re in that hot space, the likelihood is that you are going to have to commercialize.”
With this compelling premise, Fogarty Education launched its final half-day educational workshop of 2024: Commercialization. The presentation was divided into three sections: Glenn Snyder, principal and global medtech practice leader from Deloitte Consulting, laid the groundwork by describing the current medtech commercial environment; Chris Pfaff, VP of commercial strategy, Cytovale, Lynn Deutsch, president and founder of Regulatory Promo, LLC, and Matt Merkert, senior director clinical marketing, Ancora Heart, Inc., covered preparing for launch and strategies to maximize impact; and John McCutcheon, president and CEO of EBR Systems, Inc., Leslie Trigg, CEO of Outset Medical, and Dave Vort, chief commercial officer of Cytovale, closed with the high-stakes topic of planning and executing a product launch.
Following are some of the highlights and top takeaways:
The Medtech Commercial Environment
According to Snyder, the medtech industry is facing several broad shifts that may require companies to reassess and adapt. These include:
- Evolving customers – 88% of patients believe that preventative care and wellness should be the primary focus of healthcare providers.
- Shift in care delivery – The move away from traditional care settings towards hospital-at-home means an increased need for monitoring and clinical support in the home. “The key is trying to design products that are easier to use and more consumer-oriented,” Snyder said.
- Tech advancement – The use of AI, machine learning and digital tools in medical devices continues to increase.
- M&A investment trends – Segments with the highest-growth outlook include robotic-assisted surgery, diabetes management, structural heart, electrophysiology, and digital-enabled solutions.
Snyder also offered some tips for successfully commercializing new medical technologies:
- Collaborate with health systems to refine your commercial model. To emphasize the point, Ortigas-Wedekind noted that Fogarty’s partnership with El Camino Health has enabled multiple companies to co-develop products and fine-tune product-market fit using feedback from clinicians and others at the hospital.
- Appeal to stakeholders beyond clinicians – “Patient impact is increasingly important,” said Snyder. “Are there non-clinical things you can do to make patients’ lives easier?”
- Demonstrate clinical AND economic value – “You can have the best innovation in the world, but unless it is absolutely clinically superior to current technologies, stakeholders will not adopt it if they do not reap an economic benefit,” Snyder said.
Part II – Preparing for Launch
“As you prepare for commercialization, you move from thinking about value drivers and things that make the company interesting to making very specific decisions that relate to going to market,” said Chris Pfaff. “These include deciding what you really have – a product, a product-service combo, or something else; pricing, and how that is linked to either the value being delivered, reimbursement, or competing products; the referral pathway; product positioning; and so on. The key, according to Pfaff, is coherence – all of these elements must be aligned.
Using Cytovale as a reference, Pfaff explained how the company evolved its positioning from an IVD lab product to a broader hospital solutions company that affects the care of the patient throughout their hospital journey. “As we changed our frame of reference, it changed our market size, value proposition, target customer, competitive set, and so on,” he described.
Pfaff emphasized that a commercial strategy is never set in stone. “It needs to evolve as you learn more about the market, competition, and customer needs,” he said. “Being open to optimizing or even significantly changing your strategy is key.”
Making Claims
Next, Next, Lynn Deutsch shared important tips around planning credible and defensive marketing claims that are regulatory compliant – while maintaining the desired impact. This achievement can only be accomplished by clearly understanding the applicable regulatory landscape, proactively defining the scope of promotional claims, and ensuring product claims are factual, not aspirational. One helpful strategy she recommended was to create a claims matrix – a spreadsheet developed and formalized with approvals in collaboration with R&D, regulatory, clinical and marketing where you determine together what your claims are and your supporting documentation for making that claim. “This can save a lot of hand wringing and frustration later on,” she said.
When it comes to social media, Deutsch advised proceeding with caution, even in the early days of product development. “Create a social media policy for the organization and ensure that all levels of employees and consultants are trained,” she suggested. “Remember, anything shared or linked online by your organization becomes your responsibility.”
Even less obvious marketing and promotional events are subject to scrutiny – physician testimonials, speaking and educational events must align with the cleared or approved indications for use of the product as the company who will ultimately be held liable for such content. By adhering to applicable laws, regulations and guidance documents, organizations can ensure that their promotional materials are truthful, non-misleading and supported by adequate evidence. This safeguards not only patients and healthcare professionals, it also protects the company from legal and reputational risks.
Building a Roadmap to Commercialization
Closing out the second section, Matt Merkert observed that a robust clinical study is naturally associated with clinical evidence generation and regulatory approval. “But we really want to consider the broader view – how to craft a path to convert a robust market opportunity into a long-term revenue opportunity,” he said. The first step is thinking through the design of a pivotal study that will not only provide an evidence foundation for regulatory approval, but for reimbursement and adoption too.
“Start by understanding your stakeholders, the decisions they are making, and the information they need to inform those decisions,” Merkert said. “For physicians considering whether to recommend Ancora’s heart failure treatment over others, we needed to provide evidence of safety, improvements in quality of life, and functional capacity as well as classic ‘hard outcomes’ around hospitalizations and survival.” He continued, “For payers, since Ancora is a new treatment category, we recognized the importance of also gathering inputs to inform a cost-effectiveness and healthcare utilization analyses.”
Merkert also offered suggestions for how to use early learnings from the clinical study to set the company up for commercial success. “Selecting hospitals for the trial involved identifying key criteria at the sites that are correlated with enrollment success and refining the criteria over the course of the study. These criteria can inform early commercialization efforts as well,” he said. “Additionally, as investigators consider this new treatment for heart failure patients in a clinical study setting, their understanding of the unique, differentiated value proposition begins to take shape. In a commercial environment, this is the core of helping to drive initial adoption with physicians.”
Early Lauch – Thinking about a Commercialization Strategy
The final panel gathered three commercialization veterans; Dave Vort, Leslie Trigg, and John McCutcheon, for a provocative discussion on the fundamentals of planning for commercialization, and the challenges of responding effectively to a reality that is often very different than planned.
“The first thing I want to share with you is that there is no singular template for commercializing a product,” said Vort. “It depends on what type of product or service you’re offering, what stage you’re at, what markets you are pursuing, and what the reimbursement landscape looks like.” He continued, “Accordingly, our goal is to give you are some things to think about to help you develop a process and framework to think about commercialization.”
He started by posing a series of questions to help teams think about their goals, including the company’s purpose or reason for being, its vision for the next 2-10 years, strategic objectives around where the company wants to play and what its must-win battles are, and what initiatives, people, and resources are needed to achieve those wins.
Being certain about the answers to these questions, however, is aspirational. “What this should reinforce for you is the importance of discovery,” said Trigg. “What’s most important early on is asking the right questions—and a lot of them—vs. knowing the answers. And then keep asking, stay curious, and avoid “becoming an expert” as it will stunt creativity. Answers will change and evolve so discovery is a continuous process no matter how much you already know,” she said.
Vort also listed five essential questions to help a company shape its commercial execution strategy:
- Does your solution fit a critical focus area or revenue driver for hospitals?
- Is the pathway to reimbursement clear and understandable?
- How much physician/nurse/patient behavior change is required for adoption?
- Is your product revenue-generating or it a cost-reduction solution? This is important because these require different pathways and procedures. “At Outset Medical, we are not a top line revenue generation story,” said Trigg. “We’re a cost reduction story – and that affects our strategy around our call point, who our influencers are, and who our decision-makers are.” She explained that rather than relying solely on the physician to advocate for adoption, which is common in a revenue-generating space like cardiology, her company also needed a powerful financial tool that demonstrated ROI for administrators.
- Does the product or service limit or replace other physician revenue streams? “For example, if your technology replaces four or five tests with a single, better test, you are asking physicians to do something that is better for their patients but also that cuts into their income,” said Vort. “If you know this up front, you can create a mechanism to tell that story without running away from the facts.”
Hiring
The panel also discussed key roles and hiring for a company getting ready to commercialize, with top priorities being a sales operations leader, a commercial leader, and a reimbursement specialist. While Vort advocated for a sales operations person as the first of these key hires, Trigg and McCutcheon felt differently. “I would go for the commercial leader because I think their number one job is to help the business answer all of those questions,” said Trigg. She added that a good commercial person who’s done the discovery and is in the field day-to-day can also save the company money on R&D by limiting device feature development to those that matter most.
McCutcheon agreed, “I think you want a commercial experience in early. This may not be intuitive if you are a physician or engineer founder, but you really need that kind of DNA in the thought process.” He recommended finding an experienced “Swiss Army knife” person who can be hands on across multiple business functions like customer targeting, strategy and reimbursement.
Beware the Adoption Curve
Trigg shared that one of her biggest learnings at Outset was around the sales process and the adoption curve. “In the beginning, our sales process was simple – demonstrate the device, explain the ROI, and move to a purchase order. And it kind of worked,” she recalled. “But while that process worked with early adopters, it did not work at all with the next tier. As we were growing, our pipeline and deal size were getting bigger, and we realized late that we needed to create a much more sophisticated and rigorous sales process for mainstream adopters.” According to Trigg, because these later adopters behaved very differently, their decision-making process was totally different. And along with that realization came the recognition that the company needed different tools, leadership and sales people who could scale at an enterprise level.
Another pro tip from the panel was to bite the cost bullet and use sophisticated tools like Salesforce from the beginning to collect and analyze data, maximize productivity, and avoid making the same mistakes in multiple regions of the country.
All three panelists consider commercialization to be a journey rather than an event and advised that company leaders stay open to learning and listening. “Everybody brings a viewpoint to the table and you’ll evolve your strategy as you go,” said Vort.
“Consider the design of a commercialization strategy as an experiment,” advised McCutcheon. “When you’re launching, you have a hypothesis. So go out, do things that are measurable, come back and evaluate, and then adapt methodically until you find the optimal approach.” He continued, “For me, 100 percent of the time, the most effective commercialization strategy turned out to be different in some material way from what we thought before we went out and started testing it.”To help with these many challenges, McCutcheon recommended reading The Hard Thing about Hard Things – Building a Business When There are No Easy Answers by Ben Horowitz. Vort’s suggestion was to tap the network. “The medtech community is a really special, small community that truly believes in passing it on. Don’t hesitate to reach out to experienced leaders for advice and guidance.”