The clock is ticking

Research and development is key to survive in the fast changing healthcare environment. This is a fact. Big pharma companies are slow at R+D. To address this need, big pharma has been looking for innovative proteins, targets and diagnostics discovered by the small biotech start-ups.

I see the future of big pharma more in marketing rather than in R+D. Big pharma will end up specializing in producing and selling new drugs, and will probably leave more and more R+D to the ones that excel in that. Producing and selling new drugs requires a significant scale, and this is an asset that big pharma companies indeed have.

If they end up living on the buy side of the market for know-how, big pharma companies will need to decide what kinds of R+D should they do in-house, and what kinds should they acquire through M&A, alliances or licenses. As the costs of R+D skyrocket and profits go down very quickly, they will need to act fast. The clock is ticking.

Elasticity matters

Some food for thought, today. Elasticity, an economic concept widely used in economics but usually unknown for wanna-be healthcare entrepreneurs, is a crucial factor to identify future demand in healthcare products.

Elasticity refers to how much the demand for a product would be affected by a change in its price. The demand for pain relief or for a surgery of a ruptured aneurysm would be inelastic, as the patient or his/her family would demand immediate care, regardless of the price. On the other hand, an individual that has a limited disposable income (his salary) might, for example, defer the purchase of needed medications for the "silent" hypertension (after all, it does not hurt today, you don’t see the disaster coming) if its price increased a relatively small amount (a highly elastic demand). Maybe he would prefer to go on vacation instead.

And here’s the thing. It seems that the need of the aneurysm surgery would make it a great product to sell…, but it is not. In healthcare, inelastic products (generally speaking) tend to have zero cost alternatives. Yes, they are so important, that you just can’t charge too much for them. It would be like asking thousands of dollars for the air that we breathe. It just does not make sense. On the other hand, elastic products usually have space to aim for a big market. They are not necessary (or better, not perceived as necessary by the buyer), and therefore, they become a luxury (and you can charge whatever the market elasticity allows you to charge).

Never wondered why breast implants are so expensive?

Social networking coming to healthcare?

Social networking, popularized by teens sharing information with their friends online on Web sites such as Facebook or Myspace, may now come to healthcare sooner than you think.

For a variety of reasons, social networking has been slower to take off in the healthcare world. Physicians typically have less time to devote to socializing online and are willing to do so only if they believe they are getting a unique benefit from the site. And patients have been reluctant to share too much information about their personal lives. But this is changing.

Two new websites are leading the way. One for MDs, Sermo, providing physicians with a platform to ask for advice, discuss cases and share knowledge; and the other one targeted to patients, Patients like me, providing patients with the same disease the opportunity to share their experiences and learn from others.

The need is obvious, but what makes me feel still a bit uncomfortable is their business model. Many of the new services are free to members. Revenue usually comes from advertising or charging third parties the access to data and member discussions. Sermo, for example, wants to charge $100,000 to $150,000 a year to pharma companies and nonmedical businesses like hedge funds, which will use it to research such things as how doctors feel about new drugs. They can monitor online discussions, with the doctors' names omitted, or see topics being discussed on the site -- like a new medical device or a controversial cancer treatment -- to determine what's rising or falling in popularity. It is a bit early to tell, but to me this business model makes sense.

Having said that, I’ve seen a lot of social networking models making sense but failing in the long run. We’ll see.

Electronic identities will be crucial as well for these new portals to fly. Social networking portals in healthcare, especially those who involve physicians, will need to make sure their members are who they say they are. Healthcare, at the end of the day, is a trust related business.

You can watch here a great video that I discovered while reading JJF’s excellent blog, Salud y Gestion, where the CEO’s of both companies discuss their potential.

Healthcare fastforward

"The empires of the future
are the empires of the mind"
Winston Churchill, Speech at Harvard University

Predicting the future is a very difficult task. While trying to anticipate the future and reading a lot about it, I’ve come to think that we tend to overestimate the near future (let’s say the next 5 years), while we usually tend to underestimate the far future (20 years and ahead).

Here’s a list of trends I’ve been collecting from many different sources. This is not to endorse or support any particular technology or event taking place in the future, obviously, we simply don’t know what will happen. This is more to make people think about the wonderful challenges ahead. And yes, it gets very weird at the end.

2008-2010

• Electronic prescriptions reduce fraud and improve speed
• 24/7 blood chemistry monitoring
• Ultrasound or radio activated capsules
• Blood analysis chips
• Supermarkets used as major source of medical alerts
• Synthetic viruses
• Synthetic bacteria

2010-2012

• Instant electronic identification of pathogens
• Expert systems used extensively in GP surgeries
• Multimedia patient records
• Lifestyle monitoring and insurance linked to medical records
• Video tattoos
• Cyber-drugs (electronically activated drugs)
• Automated pain relief for soldiers
• Bacteria in toothpaste to attack plaque
• Antibacterial coatings on domestic appliances, phones etc,
• Flexible displays used for body monitoring and alerts
• Emotion alerts
• Rich world badly infected by third world disease
• Smart pill bottles remotely monitor medication taking and use alarms
• Diabetes cure via stem cell research
• Hotels offer some hospital services

2013-2015

• Devices roaming within blood vessels under own power
• Operations videoed and stored routinely as part of medical record
• Use of human's own tissues to grow replacement organs
• Direct electronic pleasure production
• Artificial senses, sensors directly stimulating nerves
• Smart membranes for remote control of drug injection
• Context sensitive cyber-drugs
• Electronic stimulation of brain sensations as recreational substitute for drugs
• Some implants seen as status symbols
• Gene-gel stimulation of re-growth of natural teeth on demand
• Retina regeneration using foetal retinal cell injection
• Tooth regeneration
• Domestic bacterial detection devices
• Plastic bones
• Emotion logging and recording
• Self certification for prescriptions using electronic diagnostics
• Visitor sanitising in hospitals
• Outpatients at home routinely- remote tele-medical consultations

2015-2020

• Genetic links of all 90% of diseases identified
• Individual's genome part of their medical record
• Synthetic organs by printing layers of cells
• Portable bactericidal devices
• Bactericidal saws incorporated onto materials in hospitals
• Sensory augmentation using sensory implants, nanoparticles etc
• Use of stem cells in brain after strokes or accidents
• Gene therapy generates new hair cells in humans
• Sensory implants allows direct sensing of electronic entities
• Biometrics and medical tests linked to benefits and disability allowance

2020-2040

• Nanotech based organism colonies
• Smart makeup
• Listing of individual's DNA for $1 (10M key base pairs)
• Brief human suspended animation
• Electronic memory enhancement
• Many new forms of plants and animals from genetic engineering
• Nanobots in toothpaste attack plaque
• Fully functioning artificial eyes
• Electronic brain implants
• Genetic, chemical and physiological bases of human behaviour understood
• Intelligence or memory enhancement by external means
• First Bionic Olympics
• DNA compression used to create optimal organisms
• Synthetic immune system

>2040

• Artificial peripheral nerves
• Sims game using real genetics
• Enhanced reality
• Artificial intelligence blends with our brains
• And borrowing one of my favourite quotes, “the empires of the mind”…

For those who really love forecasting the future, I recommend you to visit the BT technology Timeline. You will find some of the entries I am writing today in a more detailed perspective, plus many other trends from other industries as well.

Going upstream

Medicine is becoming more and more preventive, and I see this trend very clearly in some of the projects we are analyzing. Today, healthcare is about healing, but there is a lot of space for entrepreneurs willing to change the focus of healthcare out of the acute-care hospital, back to doctors' offices, and then into schools, workplaces and the home.

The focus is as well shifting away from intervening in the acute phase of the disease toward early screening, detection, and of course, toward preventing the disease in the first place.

There’s plenty of room for innovation going upstream. Healthcare no longer takes place at the hospitals, it takes place everywhere around us.

What's wrong with this picture?

Does higher health care spending lead to longer life expectancy? Well, if you ever asked yourself this question, here’s a very good answer from the UC Atlas of Global Inequality.

At the end of the day, it is obviously not only about the amount of money that you spend in healthcare, but about how you use it. This would be one ratio (among many others) to evaluate efficiency in our healthcare systems. According to this chart, the U.S. is not very efficient in allocating the money where it can impact life expectancy, whereas Europe, for instance, we tend to do better.

When I first saw this graph, it immediately triggered a reaction. It made me think we would get a very similar chart when comparing money invested in innovation and innovation output. Of course, the money is important to foster innovation in healthcare, but the policies associated with the investments are a lot more important.

Money won’t solve the problem. I know this is obvious, but obvious as it is, sometimes we forget about it.

The revolution will be downloaded

It is interesting to see the battle between the two formats of high definition video (Blu-Ray and HD-DVD). It seems like the winner is Blu-ray, but it will indeed be a short-lived victory… Who is the real winner? Electronic delivery of contents. It is amazing to see how they fight, and while they do, how they fail to see the big picture. The revolution will be downloaded.

Likewise, in healthcare we are witnessing a similar conceptual battle. The 21st century healthcare system is still using a 19th century paperwork system. There is no question that the electronic medical record (EMR) is the future of health care. Medical records will allow more efficiency and it will provide excellence and convenience to patients. Pay attention; that patient might be you.

But while we struggle to create a standard electronic medical record, patients are willing to read on their computers everything doctors write about them. They are demanding this, and as we are not satisfying their needs, they are turning to several new online services that make it possible for them to scan, store and manage their personal electronic medical records, safely, securely, and without the headaches associated with paperwork and medical record keeping. Some entrepreneurs identified the need and are providing the solution.

You may shiver at the thought, but in the near future, I'm convinced downloading a medical record at home will become routine and it certainly will transform the practice of medicine. Doctors will "declassify" medical records and develop them jointly with patients.

So, we need to see the big picture. This is not about the different administrations pushing a “one and only” standardized EMR system. Yes, the different administrations have the responsibility to push it forward, and this is good, but they need to acknowledge as well that the EMR of the future will be designed as well “bottom-up”, directly arising from the needs of citizens.

Evidence based innovation

Technological inflation increases healthcare costs. Innovation brings hope to people’s lives, but generates a never-ending debate on how to finance it.

Many healthcare innovations offer the potential for greatly improving the quality of life for patients; but more frequently than we think these innovations offer improvements that are, at best, marginal. Sometimes, innovation leads to higher quality of care at significantly lower costs, while in other cases, innovation is cost increasing. Today we demand new innovations to be effective. We need to focus more and more in efficiency as well.

Sometimes expensive new technologies or treatments can reduce the long-term use of other health care resources. We have seen a great example with AIDS treatment in the last decade. The new, expensive anti-retroviral therapy for treating AIDS patients is both effective and efficient. The increased expenditures for those drugs are much less than the savings in inpatient, outpatient, and emergency room costs.

The challenge is to effectively sort through the increasing array of healthcare innovations to develop objective scientific information so that those who make decisions—policymakers, clinicians…—can make informed choices. We need monitoring systems that foster evidence based innovation.

The ultimate goal is to ensure that we can get real value out of the money that we spend in healthcare.

Understanding biotech struggle

Biotech hopes to transform not only the pharmaceutical industry, but also human health and the lives of millions. Without a healthy biotech sector, the great promise to impact human health will go largely unrealized. So we need the sector to perform well.

In the last 30 years, “aggregated” revenues have grown for biotech companies (as expected in any emergent industry), but profits have been very poor so far (with the exception of some amazing biotech start-ups). Biotech is underperforming, it is definitely not a mature industry yet.

Since the dawn of the sector we have heard predictions of imminent prosperity, but so far, nothing. It needs more time, I used to think. But maybe the problem is structural in nature and time won’t solve the problem. The sector has borrowed business models from other high-technology industries under the premise that if they worked there they would work in biotech. Right?

Wrong. Not all the high-technology industries are alike, and science based businesses have unique challenges and need unique approaches. Those challenges stress traditional business models such as the ones used in services, IT or medical devices, for instance. In other sectors, science is a tool for creating new products and services. In biotech, science is the business.

And why science conflicts with business?

• Science focuses on methodology, business focuses on results
• Science values openness and sharing, business values secrecy and intellectual protection
• Science demands validity (is the idea valid?), business demands utility (is it useful, will they buy it?)
• Science measures itself on how it contributes to a body of knowledge, business on financial performance.

No wonder why they don’t get along very well. Once science becomes a business there is tension between one set of principles and the other. This may be at the core of the poor results that biotech has as a whole, university and business are two worlds that talk a very different language.

When I compare the different innovation sectors of healthcare entrepreneurship, I use a very simple 2x2 matrix to illustrate the differences among them. Services, Information technologies (IT) and medical devices are performing really well today. Complexity in biotech is huge, as it is based on intellectual property (secrecy limits the "learning" of the sector as a whole) and it needs a longer time to market. We need to help life sciences sector a bit more, understand their struggle and maybe compensate the initial market failure addressing the risk uncertainty and allocating more government capital into it. If biotech delivers, the impact on healthcare will be amazing.

Cash is real, profit is just an opinion

Sometimes I hear very convincing pitches from healthcare entrepreneurs about their projections of future profits. These projections are usually followed by an “and let me tell you something, this is a conservative estimate, we have been very prudent in estimating our future profits”… Smile.

I had a nice chat today with some very energetic entrepreneurs, and while discussing with them the meaning of a “conservative estimate”, I remembered a very powerful lesson I received some years ago. A company’s profit after taxes (also called net income) is an arbitrary figure, obtained after assuming several accounting hypotheses regarding expenses and revenues.

Without getting too technical, the classic definition of net income is revenues for a period less the expenses that enabled those revenues. In spite of its conceptual simplicity, net income is based on a series of premises that could easily alter the result. The treatment of depreciation, the scheduling of expense accruals, or the allowances for bad debts, for example, can significantly alter the final net income.

Cash flow, is an objective measure, a “powerful” figure that is not subject to any personal criterium. It is not a matter of opinion, is the real output of our start-up. As one friend of mine once taught me: “Cash???... In my pocket”.

The needs of the one vs. the needs of the many

Some basic economics today. This is one of my favourite topics to generate discussion in a meeting; it generates so much energy from both sides of the discussion. Which one is more important, the needs of the one or the needs of the many? Should we invest heavily in a drug that costs an amazing quantity of money to save an individual (protecting the needs of the one), or should we allocate that money into, let’s say, prevention if we know that at the end of the day we will save many more people (protecting the needs of the many)? How do we decide where we allocate our finite resources?

The truth is our healthcare systems are based on scarcity. Scarcity has two sides, the infinite nature of human wants and the limited nature of resources available to produce goods and services.

It is clear that the demand for healthcare has expanded dramatically in the first world in the last decades. Why? Changes in the age structure of the population meaning elderly people needs more healthcare, increases in real incomes (more on that later) and improvements in medical technology have done the trick.

When real incomes go up, people’s expectations of healthcare go up as well. We are not longer prepared to put up with pain or discomfort. In some countries, people suffering from mild ostheoarthritis of the knee often have an operation rather than give up playing golf! Yes, that happens.

Improvements in medical technology have increased the range of treatments available. Many new treatments have transformed now serious illnesses into chronic medical conditions requiring a lot of resources.

And that’s the problem, the other side of this equation relates to the finite nature of resources (land, labour, capital…) that the society has available to invest in this. There is a trade-off between healthcare and other goods (education, police….), and of course, devoting all resources to education or devoting all the resources to healthcare would be irrational. The problem is how the society decides how much should we spend on each one.

When demand seems to be infinite (everybody wants improvements to the quality of their lives), some rationing needs to be in place. But rationing means sometimes not investing an amazing quantity of money to save an individual… So we face the problem of deciding how much healthcare should we have. We need to decide how much of which kinds of healthcare should be provided. And we have three systems to provide this healthcare (and here is where the real discussion begins), the free market, the command system and the mixed system.

The free market allocates healthcare resources according to consumer’s purchase behaviour (let the market decide for us). In a free market, there is no interference from the government. Free markets have proven very effective in maximising satisfaction, but need as a sine qua non condition that both buyers and sellers have access to enough information to allow them to make rational decisions. The command system would use planning by experts (politicians at the end of the day) to allocate healthcare according to “needs”.

It’s hard to choose between those who rely on the “invisible hand” of the market and those who exercise power by spending other people’s money, isn’t it? More on this in a future post.

Convenience!

If we look at healthcare in the classic two by two matrix: low/high for complexity of care, low/high for out-of-pocket expenses, there is an amazing large gap for the low complexity/low out-of-pocket expenses.

Retail healthcare, in the form of “low cost” convenient-simple-quality healthcare may have enough consumer value to have a significant place in the spectrum of healthcare delivery. It just needs to add convenience.

However, as healthcare is a relationship business, it will be important that this retail healthcare aims at complementing and never at substituting the status quo. At the end of the day confrontation should not be an option, as it is in everybody’s best interest to allow retail healthcare to enter the marketplace, it will solve so many problems of our present healthcare systems.

For example, does anyone doubt that emergency departments (which by their very nature have to be prepared for the most critical patients) are the least cost effective method of dealing with minor health problems? The market is begging for alternatives.

Convenience, convenience, convenience (three new words for XXIst century healthcare).

I could have done that

Just some quick thoughts today. I meet every day with colleagues and healthcare managers to discuss new opportunities. You all know I always say that when a healthcare professional is mad at something, there is usually an opportunity behind. Problems encapsulate opportunities.

Today, in a meeting, it came to my mind that when you face a problem, asking “why questions” may lead to understanding, but the “why not questions” are the ones that can lead to breakthroughs.

I heard a great idea today (congratulations JG). The best ideas are usually simple. I call it the “duh…” reaction… When you first hear the idea you may be tempted to dismiss it as obvious (that’s the nature of really good ideas)… But please, no matter how you react, never say “I could have done that”, because you didn’t!

Fishing ideas

Most of healthcare ideas start when physicians identify a process they can do better. It happens every day, believe me. When one has identified a process, the most straightforward way of turning it into revenues is by converting the process into a service. For example, a microbiologist may identify a process that enables to diagnose faster a microorganism. He could offer from that moment on a service to diagnose this microorganism. Send me the samples, and I’ll give you the diagnose. But this is a mistake. No good.

As we have been discussing in some of the last posts, a service is not precisely what investors are looking for. A service grows by adding more “manpower” into it, that is, by hiring more people (as the service usually involves “people” that we need to pay). It usually cannot grow exponentially as fast as a product can, and its costs always increase largely when we increase production.

To build value, the physician could try to turn the process into a product (see my diagram). Following the previous example, the microbiologist may design a “diagnostic kit” to facilitate the process he created, and then sell the kit to allow different hospitals to perform the diagnostic faster. Or maybe he can design a medical device, a machine meant for executing the very same process he identified, and then sell this machine. By doing this he has generated a new business model that now sells a product, a tangible thing, that can be produced in large quantities and grow much, much faster. No need to say venture capital loves this.

To build value he can try either to get strong intellectual protection by patenting the process (whenever possible). When he does this, he is creating barriers of entry that other potential competitors will need to break before entering the same market. Venture capital loves this as well.

But of course, doing both things at the same time creates the most value. The value is in the upper right quadrant. Next time you have an idea, try using this framework to add value.

Committed vs. involved

I am asked very often about whether a doctor needs to quit his job to lead a start-up. Well, there is no straightforward answer; I can’t give a yes or a no. It depends.

I understand this is highly controversial, many of you will think a doctor should quit his/her job to start something entrepreneurial, and others will think the opposite, arguing that the healthcare professional adds more value precisely by leading scientifically, hiring a good full-time general manager and staying at his work. As usually in life, this is not a black or white issue, it has many shades of grey.

A start-up needs leadership and management. A start-up needs tremendous commitment. In the start-up world we usually use the catchphrase “to have skin in the game”. Certainly leaving his/her job is one way to have skin in the game, but this is an oversimplification. When I see an MD willing to be an entrepreneur I usually ask myself the question: if the start-up died tomorrow, what would be the impact on this particular doctor? The point here is that just because someone quits their physicians job, just because they write a large check, just because they take the founder title – none of these necessarily means that they’re committed. It’s possible that in all of these cases, the actual impact on the physician is relatively minor.

Committed means to me something much more complex than staying or quitting a job. It means an emotional implication, a deep desire to make things happen. And every case is different.

The healthcare professional may well end up leading but not managing the start-up. That’s his choice and his prerogative if he originated the idea. He can lead, inspire, bring the science into the company, push forward the project, without managing the day by day, or he can choose to manage. This decision will be important to find an answer to the previous question.

By the way, for those of you willing to understand the difference between being committed and involved: When you prepare bacon and eggs for breakfast, the chicken is involved, but the pig is definitely committed.

Electronic signature everywhere?

(disclosure: I serve in the board of Firmaprofesional, a start-up providing digital identity and electronic signature solutions. I hope, however, that I will be able to keep an unbiased point of view to share with you)

Healthcare professionals need secure communications and transactions when they offer their services through electronic means. They need to “sign” documents on the electronic marketplace in the same way they have been doing for years in the “real” marketplace.

To solve this need, a “digital identity” or “digital certificate” may be stored in a smartcard, a pendrive, or any other vehicle suitable for “transporting” it. This digital identity enables its users to authenticate both sides of a “conversation” (or a transaction) taking place on the internet.

Electronic signature will be a pervasive element of everything done in healthcare in the next ten years. Electronic prescription, medical electronic records, telemedicine, all initiatives "take place" within a digital conversation among interested parties (hospitals, physicians, patients, companies…), and this conversation will require strong and compliant systems to authenticate both sides of it.

I see electronic signature as an enabling technology. Once in place, it will allow many other initiatives that would be nonsense without it.

People do respond to incentives

I had a fantastic discussion today regarding who should be the owner of an idea originated inside a hospital. The physician, the institution, both?

It is clear to me that when a physician is hired to do research, the output of this research should belong to the hospital, and the hospital should acknowledge his/her contribution by giving away part of the benefits obtained from it. In this case, the new idea would probably have been unthinkable outside the premises of the hospital, without its infrastructure and assets, so it makes sense.

But what happens if a physician has an idea, let’s say, related to his/her field of experience but not necessarily linked to research? Let’s see an example, if a surgeon perceives a need and thinks about a solution to this need while operating a patient, let’s say a new medical device, should the idea belong to the hospital in one way or another? Well, yes, the idea came to him because he was working at the hospital, but can the hospital claim any ownership over it?

When arguing the relevant role the hospital had in generating the idea, the hospital director may well get from the physician the question “when did I had the idea, from 0800 AM to 1700 PM, or from 1700 PM to 2100 PM? (meaning at their private practices, for example). On the other hand, if the hospital invests in promoting physicians and improving their talents, shouldn't it capture part of the value as well?

Who is the owner of the idea, then? It may seem a futile discussion, but to me it represents the most important barrier to innovation in our healthcare systems, so it is far from trivial. Sometimes physicians don’t engage in innovation because they perceive the ownership issue as unfair. If we want to foster innovation in healthcare, this question needs to have a clear answer. At the end of the day, it all goes down to how the hospital sees healthcare professionals: Do MDs work for the hospital, or do they work at the hospital?

Are hospitals really willing to encourage innovation and intrapreneurship inside their premises? Are hospitals willing to create a culture of reward for those entrepreneurs? There is a lot to be gained here: if the hospital succeeds in fostering innovation, it can create a great environment to attract talent, lead, and generate economic value and social impact.

People do respond to incentives. That’s something I learned very early when dealing with innovators and entrepreneurs. Innovation should not trigger a war between the hospital and the physician. It should always be a win-win scenario where both parties can create a lot of value if they cooperate. So, in my opinion this is not about claiming ownership, but about both parties acknowledging how far can they go and how better will they be if they work together, and share the ownership. That’s the answer that makes sense to me.

Once or twice

A friend of mine told me some months ago a great piece of advice (thanks RG!).

Very early stage start-ups are like boyfriends or girlfriends when we were young… If things go wrong, you can fix them maybe once or twice.. but that’s all. Once or twice.

I don’t want to imply that perseverance is wrong… on the contrary, it is great to have “blind faith” and draw energy from it to overcome difficulties and achieve our goals. But there is a fine line between perseverance and failing to see the obvious, i.e. that your model does not work at all. Some entrepreneurs cross that line every day. Believe me, I’ve seen it quite a lot of times.

There are a lot of interesting things to do in healthcare to be stuck permanently with one underperforming project. The opportunity cost is too high.

The alternative investment markets in healthcare

The winds of change are coming to Europe. I am thrilled about the growth of the Alternative Investment Market (AIM) and the widespread expansion of its concept from London throughout Europe.

The AIM market was established by the London Stock Exchange in 1995, as a less costly route which could be used by smaller companies to raise capital on their introduction to the market. It is a friendly market for smaller IPOs, and this makes it really interesting to entrepreneurs leading relatively small companies. Many European countries are willing to launch similar platforms (some of them in the coming months), and this is good news for healthcare entrepreneurs.

The London AIM and the future similar european markets are becoming a real alternative for healthcare young companies to go public. AIM offers smaller growing companies all the benefits of being traded on a world-class public market, within a regulatory environment that has been designed specifically to meet their needs.

I do not want to get too technical here, but the AIM allows small companies to float shares with a more flexible regulatory system than the one in the classical stock exchange market. The AIM is very appealing to small companies because of its enhanced accessibility. AIM is very flexible and it does not stipulate minimum requirements for company size, track record, the number of shares in public hands or market capitalization.


More and more healthcare companies are choosing to go public on the the AIM, and many others will go public on similar markets across Europe in the coming years. A new tool for financing young companies is born.

Drivers of competition among medical devices

We can classify medical devices in two broad categories, advanced “technological” devices (like surgical instruments, prosthesis…) and commodity-type medical and surgical supplies (like a suture, or a glove).

I am going to focus today on the first ones, the advanced technological devices. To envision, design, produce and sell a new medical device, the new start-up will need to compete on three different levels.

First one, product innovation: to be competitive, the new medical device must confer one (or more) of the following advantages. If you are bringing a new medical device to the marketplace, ask yourself the next questions, and see in how many you get a positive answer:
(1) Does my medical device reduce procedure time, and therefore procedure costs?
(2) Does it enable less invasive procedures?
(3) Does it improve clinical outcomes and extend life expectancy?
(4) Does it reduce patient hospitalization time?
(5) Does it shorten recovery time?
(6) Does it facilitate patient care in less expensive settings?

Second one, product performance: to be competitive, the medical device must be superior to other medical devices used for the same purposes, in product reliability, clinical outcomes, and MDs perception of the quality of the product. The product needs to deliver. Good marketing to physicians is therefore essential.

Third one, product price: to be competitive, the new medical device needs to understand that healthcare will be more and more price sensitive in the future, as costs skyrocket. Pitching the introduction of a new medical device in a clinical environment as a cost reducer (either because it costs less, or because its use avoids complications or some other different costs) is always a good idea.

Understanding these levels may mean the difference between success and failure.