Value-driven healthcare, evolving regulatory requirements, and the emergence of new, nontraditional players are rewriting longstanding rules for medical device development and production. Companies accustomed to traditional R&D strategies are finding those methods ineffective at gaining (or maintaining) market share. Consequently, medtech firms are revamping their research and development models by collaborating with organizations outside the industry; incorporating sensors and software into devices and diagnostics for data generation and transmission; and rebalancing their portfolios.
Device manufacturers also are shifting their focus from core products and line extensions to more transformational innovation—i.e., technologies that create and deliver customer value through novel products, solutions and business models that address unmet market needs.
Such solutions, however, are not easily attainable without outside help. Thus, device companies increasingly are outsourcing R&D work to firms that specialize in value-driven product development. MPO’s January/February feature story “Valued R&D” examines the trends and challenges confronting medtech R&D teams as they strive to adapt to the changing healthcare ecosystem. Raghu Vadlamudi, chief research and technology director at Donatelle, was among the experts interviewed for the feature; his full input is provided in the following Q&A.
Michael Barbella: Please discuss the trends and challenges in medtech R&D.
Raghu Vadlamudi: Medtech R&D has been directed towards miniaturization over the last couple of decades. It has progressed at a slow pace, due to limited technology available to produce micro-sized components that make up the devices. Manufacturing process integrations—such as machine tools with laser capability, and additive manufacturing with polymers as well as metals—will advance medtech R&D to a pace unseen before.
Barbella: An EY report last fall concluded that R&D spending is declining. How could that potentially impact future medical device/technology innovation?
Vadlamudi: Medical device R&D spending will always occur, in one form or another. If R&D budgets of large OEM companies are declining, a shift to startups performing these activities will increase. Or, outsourcing R&D activities to developing countries like India will increase. GE has performed a lot of research in India over the last 20 years.
Barbella: Where are companies spending their research dollars now—is it more on incremental improvements or game-changing innovation? Why is that?
Vadlamudi: Most game-changing innovations are coming from smaller startups. Large OEMs are investing in these startups, often with an option to acquire once the developing product receives FDA approval. This process allows faster development of the product. Large OEMs typically work on incremental improvements to reduce the cost of goods sold.
Barbella: How is digital healthcare, big data, and trends like miniaturization affecting the way companies conduct R&D and their R&D business models?
Vadlamudi: Digital healthcare and big data are bringing more information to the table at a faster pace, which will improve R&D timelines. In turn, this accelerated pace will result in significant cost savings. However, a lot of work still needs to be done in streamlining the data to make it useful.
Barbella: How important is outside collaboration in medtech R&D? Please elaborate. Does your company collaborate with outside partners? If so, how do you go about finding the right partner?
Vadlamudi: The importance and level of outside R&D collaboration required by a startup or OEM depends on the depth of knowledge and skill set of its employees, and the technology available to them. If cutting-edge technology is necessary, it is important to partner with a company that will protect your intellectual property and maintain confidentiality.