Medical devices start-ups should be seen in the context of the medical device business cycle: (1) research and development, (2) regulation and clinical testing, (3) manufacturing, (4) marketing, and (5) distribution and sale. It is important to see the whole “cycle” and not to focus only on the first stages, because any problem affecting one of these steps may bring the whole start-up to an end. Venture capitalists, when deciding whether to invest in the technology, always consider where an emerging technology is in these streams of activity, and what its prospects are for overcoming any problem arising at any stage.

The second stage, the regulatory pathway, is very “strict” and well defined, with a similar structure both in the United States and Europe. This pathway depends on the classification of the medical device (class I, IIa, IIb or III). Generally speaking, the story goes like this: the lowest risk devices fall into Class I, while devices which are used to diagnose or monitor medical conditions, are in Class IIa. If this is done in manner which could be hazardous for the patient, then the device falls into Class IIb. Class IIb is also reserved for implantable devices or where absorption takes place. Finally, if a device connects directly with the blood or the Central Nervous System, or contains a medicinal product (a drug), then the device falls into Class III.
(For a more thorough definition check this classification criteria from the Official Journal of the European Communities)

I can’t explain all the milestones of the medical device cycle in a single post, it has so many variants, but just as a reminder of its complexity I will list some steps here. To make it short, at some point in the cycle entrepreneurs may need to:

(1) Establish a “design control” framework to design the medical device.
(2) Obtain permission to use the medical device in a clinical study (Investigational Device Exemptions - IDE)
(3) Perform a clinical evaluation to gather safety and effectiveness data. 
(4) Obtain some sort of permission to enter the market, such as Premarketing Approval (PMA) and pre-market notification (510(k)) in the States, or the CE mark in Europe.
(5) Compromise to use good manufacturing practices (GMPs)
(6) Persuade payers and technology assessment agencies of the worthiness of the technology, using outcomes and health economic research.
(7) Conduct postmarket research and surveillance to gather data about the experience of the device in real life.

Entrepreneurs may find problems at any of those steps. It seems complex, and indeed, it is complex, but with good planification of the issues to address at every stage, and depending on the classification of the medical device (class I, IIa, IIb or III) it can be completed in a relatively short time.

A final comment. One of the things I’ve seen is that most new technologies do not result in obvious gains in mortality or morbidity, so at some point it becomes important to demonstrate as well improvements in quality of life and economic advantages. Those improvements will also help to grant market clearance.