Investment in Medical Device Industry R&D has been negatively impacted in the last few years. Although President Obama views the health care sector as an industry primed for substantial job growth, the AMA projects dramatic shortages in both the physician and nurse populations, if the 2010 health reform law is enacted. If 30 million additional people get health insurance under this law, the shortages become catastrophic. The truth is that the government can both hurt and help this industry. If there is as little as a 2% cut to Medicare, the drop in revenue will cost more than a quarter million jobs.

How can start up medical device companies navigate these uncertain waters and receive enough funding to start development of a new product? Venture capital funds are struggling to decide how to allocate their monies in a particular medical space or if at all. Suffice to say that the medical technology sector is in jeopardy for creating new jobs, generating innovative technologies and life saving products.

The traditional model for medical device startups is becoming scarcer. These new companies find it difficult to leverage seed money and angel investments into a bricks and mortar establishment. The limited amount of resources negates an infrastructure that can churn out new products. They just do not have the money to pay for the types of resources that they need (equipment, clean room facilities, engineering and regulatory expertise) to properly design, develop, manufacture and clinically validate a new product

A new model for medical device product development is emerging in the US marketplace. Would it not make sense for a startup company to have the ability to have an abundance of resources under one roof where they could develop, test, build, package, sterilize and ship a finished product? Currently, there are contract manufacturing businesses that are beginning to include Incubator Services into their business model. These services include:

  • Place of residency for the Medical Device Manufacturer. Rent space and use the address of the manufacturing business as “your business address”. These startups can be registered with the FDA as either Medical Device Manufacturers or Specification Providers.
  • Access to shipping / receiving/ inspection / warehouse services.
  • Access to tooling / fixtures/ microscopes, etc.
  • Use of a Class 10,000 clean room for assembly
  • Packaging Development and Medical Package Testing for validation
  • Sterilization Validation Services
  • Fulfillment & Distribution of finished goods

This may prove to be a viable approach to the product development process without consuming all the investment money.