Michael Barbella, Managing Editor02.03.23
The timing couldn’t have been worse.
Fear, bordering on panic, had gripped Wall Street. Stocks were plummeting, the VIX Index was surging, and futures were selling like hotcakes.
Brokers stood motionless on the trading floor, dumbfounded by the free-falling numbers looming like storm clouds on overhead monitors. Some were silent; others cursed. No one smiled.
This was not the way it was supposed to be.
It was supposed to be different. Much different.
Jason Feldman was supposed to visit the New York Stock Exchange floor—fulfilling a lifelong dream—and launch his company’s re-branding. During a Cheddar TV interview, Feldman was going to tout the unique concept of his startup: providing healthcare to men through telehealth and at-home clinician visits. He was stoked to discuss the company’s services platform and weekly 150-visit capability.
It was supposed to be a new beginning for Vault Health.
And it was, just not in the way Feldman intended.
“So I’m going down there with our chief medical officer and we get down and we’re waiting to do our first interview and the market crashes. It literally crashes,” Feldman recounted to a Coke Scholars Ignite Podcast (SIP). “So here I am, I’m ready to take my little selfie in front of the bell, just for fun, and the market crashes, and people are actually very, very, very concerned. You can see it. They’re saying things, they are swearing. And this is right before COVID really kills 12,000 or 13,000 people in New York on the first go round. This is not a good day.”
Not good at all—March 12, 2020, was a historically awful day on Wall Street, with the Dow plunging 10% in its worst showing in 33 years. The 30-stock index sustained its largest recorded loss (2,352 points), and the S&P 500 sank 9% to close in bear market territory, thus ending the Street’s 11-year winning streak.
The market’s meltdown that day marked the start of a national crisis characterized by lockdowns, isolation, fear, and uncertainty. For Feldman, though, it became a turning point in his quest to build a durable, scalable healthcare platform.
Not surprisingly, Feldman scrapped his company’s re-branding and quickly expanded its product/service offerings to 34 states. “...we go back to the office and suffice to say, we’re thinking, ‘all right, what are we going to do?’ Immediately I stopped spending all our money,” the Vault Health founder/CEO recalled. “I quickly said to everybody, all right, we’re going to launch every product we have in our roadmap for 2020. We’re going to launch it all now. It doesn’t matter what it is. It doesn’t matter if it’s pretty...just launch it. If this is going to be a sinking ship, let’s not waste any time, bring everything from below deck on deck and let’s do it.”
Despite the drastic undertaking, Feldman remained concerned about his company’s survival. So he decided to pivot.
Fortunately (or fatefully perhaps), Vault Health was working with Rutgers University that spring on a men’s fertility program. But the research institution—through its RUCDR Infinite Biologics lab—also was developing the world’s first COVID-19 saliva test that halved turnaround times for results.
Feldman approached his Rutgers contacts about distributing the test and providing related home-based telehealth services for it —i.e., enabling a healthcare practitioner to virtually advise and/or guide patients through the test administration.
“I went to them, I said, ‘All right, we want to use our new telehealth platform to launch a testing product at home. Everybody in America could do this at home,’” Feldman told SIP. “And they said, ‘That would be a great idea, Jason, except the FDA just shut down all at-home testing. So you can’t do that.’ And I said, ‘You must’ve misunderstood me. What I meant to say was, I want to launch a diagnostic test prescribed by a doctor that could occur maybe at somebody’s home.’ And they thought about it, and they were like, ‘Well, that sounds better. That might get through the FDA.’”
The saliva test did actually get through the FDA (via emergency use authorization, May 2020), and with Vault Health’s help, was distributed to millions of U.S. households. Since the start of the pandemic, the company has disseminated more than 12 million at-home saliva assays and now sells turnkey COVID-19 testing management systems for employers. Vault Health also has extended its reach, branching out into clinical research, heart disease, and pre-diabetes.
The company partnered with health IT firm Datavant and venture capital-backed Medable last winter to improve clinical study efficiency. Datavant is using Vault’s telehealth prowess to connect decentralized trial subjects to more than 500 real-world data partners and—with patient authorization—retrieve medical records from its more than 15,000 clinics and 2,200 hospitals.
The Medable pairing combines that firm’s software-as-a-service platform with Vault’s telehealth capabilities to provide a unified experience for clinical trial patients, sites, and sponsors. The alliance enables sponsors to seamlessly offer Vault home testing and diagnostics, home healthcare visits and televisits, virtual site capabilities and related logistics, scheduling, and status tracking through Medable’s patient and site apps.
Vault Health’s meteoric three-year journey from 49-employee startup to large, multi-million-dollar diagnostic/telehealth powerhouse can be attributed in part to exceptional leadership, foresight, open-mindedness, and a risk-taking disposition.
Resilience was important too, especially during the company’s formative years. Such flexibility is essential now in the wake of a global pandemic that forced businesses in all industries to adopt new operational strategies. Specifically, the abrupt shift to remote work has provided enterprises with a once-in-a-generation opportunity to reimagine the ways in which jobs are performed and companies are run.
Moving past decades of orthodoxy about 9-to-5, office-centric work required a corporate ethos mindset shift. One of the areas most affected by this paradigm change was the research and development (R&D) process.
“Research has become more challenging in the wake of the pandemic,” noted Eric Guire, Ph.D., principal investigator/R&D manager at Innovative Surface Technologies Inc. (ISurTec), a Saint Paul, Minn.-based medical device coatings manufacturer. “Things we used to take for granted (supply chain) now require our diligence. Research programs need more flexibility to deal with supply constraints, personnel constraints, and complicated timelines.”
Granted, flexibility has always been a part of the medtech R&D process as companies pursued innovation excellence amid rapid changes in the healthcare ecosystem and macroenvironment. The pandemic, however, forced organizations to take that resiliency to the extreme.
That extreme prompted some companies to rapidly scale parts of their business to meet COVID-19-related healthcare needs—i.e., ventilators and personal protective equipment. Medtronic, for example, increased ventilator production by more than 40% during the pandemic’s early days, recruiting engineering and quality help from its Cardiac and Vascular Group. The medtech behemoth also sought assistance from outside partners like SpaceX and Intel in producing critical components and remote management features for the machines.
Resiliency also was necessary to contend with mandatory lockdowns and the ensuing shift to telehealth services and remote work. Cyber communications inspired a wealth of new connectivity solutions like Royal Philips’ medical tablet for remote patient monitoring, and GE Healthcare’s RPM software for both improving ventilated patient surveillance in hospitals and identifying patients’ deterioration risk. Digital-only interactions also beget more online programming: Boston Scientific Corp. enhanced its remote case/technical support and digital training/education offerings via augmented reality platforms. Its “train the trainer” sessions combined virtual group meetings with hands-on learning to expose physicians in one-on-one settings to the company’s newest devices and therapies. Boston Scientific also produced webinars to help customers navigate new and changing pandemic-related challenges and legislation.
Besides spawning an onslaught of telehealth and teleconferencing options, the pandemic also changed work habits, forcing businesses to abandon the traditional office-centric culture for a more flexible arrangement. Zoom, Microsoft Teams, Trello, Dropbox, Slack, and other workplace software were key to helping companies maintain operations without compromising productivity.
For medtech firms, those tools were a lifeline—in many cases, all- owing them to continue producing essential healthcare products. But the sudden switch to remote work was challenging at first for research teams—Medtronic R&D engineers, for instance, took lab equipment home and set up makeshift shops in their kitchens.
“In the early days of the global pandemic, innovation in medtech R&D initially suffered, since many engineers were accustomed to innovating in person with their colleagues,” said Hajo Wetzel, director of Global Advanced Technology & Simulation, Medical Business Unit, at global medical connectivity solutions provider TE Connectivity. “With progressive development over time, the issues related to proximity diminished; we, like many industries, have accepted and embraced virtual collaboration.”
The industry has no other choice, really. Remote work—borne of necessity during a public health emergency—is now a job market fixture and will likely remain entrenched long after SARS-CoV-2’s official end. Economists expect about 20% of full workdays to be spent at home in the post-pandemic period—roughly four times pre-coronavirus levels.
While not universally accepted at first, work-from-home policies eventually gained favor with companies once they discovered their numerous benefits: lower overhead costs, wider talent pools, reduced absenteeism, better employee retention and engagement, and—perhaps most importantly—higher productivity.
Ironically, remote work improved the relationships and collaborations among medtech research teams.
“The collaboration within our global R&D team became closer and thus improved,” stated Lars Gerding, vice president of Technology at Freudenberg Medical, a global partner in the design, development and manufacturing of medical devices, components, and product solutions. “Since face-to-face meetings were no longer an option, we quickly adopted digital tools for collaboration. Reaching out to a colleague on Microsoft Teams —even if you haven’t met in person—has become much more natural even across countries and time zones. This is a huge benefit for multinational companies like Freudenberg Medical.”
And TE Connectivity. Wetzel credits the virtual work environment with improving the overall efficiency of his firm’s R&D teams.
“The virtual environment has brought the medtech R&D global community closer together than it ever was before,” he said. “For example, while the processes for prototyping have not changed much, virtual collaboration has helped us prioritize parts of the process and tap the well-educated workforce in India for R&D engineering services such as simulation, for overall efficiency gains.”
In addition to improving research collaborations, the telework trend also has boosted product design creativity and helped accelerate both the acceptance and adoption of connected healthcare solutions, industry experts claim.
Design creativity manifested itself in novelties like clear face masks (to facilitate lip reading) and 3D printed adaptors for manual hand-pumped ventilators, while such connected solutions as robotic telemedicine carts and eICUs became literal lifelines to front-line healthcare workers in early 2020. The latter tool allowed clinicians to monitor between 60 and 100 critically ill patients in multiple facilities using two-way cameras, video monitors, microphones, and smart alarms connected by high-speed data lines. More than 300 U.S. hospitals in 34 states took advantage of eICU services during the pandemic’s initial rampage, Indian Heart Journal data determined.
“Throughout the pandemic medtech manufacturers were able to showcase their creativity by blending remote and on-site collaboration. This has led to the development of many innovative designs and processes,” explained John Cooney, vice president of Research and Development, Cardio & Vascular, at Integer Holdings Corporation, a Plano, Texas-based medical device outsource manufacturer serving the cardiac, neuromodulation, vascular, and portable medical markets. “At the customer level, remote proctoring of some clinical cases created more acceptance for connected technologies in the industry and accelerated their adoption. The many new technologies and products that were developed successfully and launched during the pandemic, in my mind, underscores that having the right winning teams in place—regardless of remote challenges—will drive the best results for everyone.”
Many organizations, like Integer, have returned to on-site working and collaboration, but also now leverage the accepted practices from the pandemic with flexible working arrangements, enabling a better work-life balance for employees,” Cooney continued. “The supply challenges experienced by the industry also changed how companies think about development, with a greater focus on insourcing to minimize supply chain risks and by also developing solutions that reduce supply chain costs.”
The masters, though, are difficult to identify because companies’ R&D approaches are about as varied as the entities themselves.
Startups are naturally more flexible with their research programs than larger firms due to their size and receptivity to new ideas and working methods. “Startups hone in on one idea and then sell it to large companies. OEMs try to create small startups within their company,” ISurTec’s Guire observed. “Small companies are much more innovative and risk-taking than larger firms. The startup excitement creates a unique bond and strong work ethic among employees. More yes, less blocking. Startup firms are less risk-averse; they try new ideas and see if they work. Bottoms-up approaches are more likely to become reality. Larger organizations just try to profit off what they already know. You see a lot of people moving around and people not excited about what they’re doing. A smaller company takes a bottoms-up approach. People in the lab are experimenting and seeing what they can do.”
That experimentation and bottoms-up approach is what sires the revolutionary innovation sought by OEMs, which tend to have a higher burden of quality and compliance to ensure they can adequately scale-up core technologies. Large multinationals also have more lengthy commercialization paths, due to the bureaucratic makeup of their organizations.
Nevertheless, large companies are not at a total disadvantage to startups: their size and resources makes it easier for them to market new products and fund new research.
“Startups are extremely focused on solving their immediate problems while hitting their funding milestones. This can sometimes lead to punting technical challenges into the future with the mindset of ‘that’s the acquirer’s problem to solve,”’ Millar Inc. CEO Tim Daugherty said. Headquartered in Houston, Texas, Millar develops catheter-based solid-state pressure sensors.
“Established companies and OEMs don’t generally have this luxury (if you can call it that) because they have to ultimately launch and commercialize the device, including any tradeoffs accepted during development,” he added. “This naturally leads to a difference in speed of development, with established companies being more accepting of longer development timelines. Each approach has its pros and cons, but when an established company can isolate its R&D team and create an internal group with a startup mentality, they can recreate that speed to market mentality and then iterate and improve the device in future generations.”
Established companies obviously have the bandwidth to attempt such mimicry. Startups’ exploits, by contrast, are largely dictated by funding, which can be difficult to obtain. Case in point: A report last year from AdvaMed Accel and the Deloitte Center for Health Solutions found that just 5% of the global deal value in 2020 went to medtech startups, as opposed to 13% for biopharmaceutical firms.
There are various reasons for the oversight: the longer exit times associated with startups and early-stage companies, as well as medtech’s inconsisstent regulatory process and variability in coding and reimbursement pathways. Conservativism among investors doesn’t help, either.
Yet startups survived remarkably well during the pandemic—better, actually, than many of their larger cohorts. Millar’s Daugherty noticed a fascinating dichotomy forming between companies, based soley on their size.
“As a contract development and manufacturing organization, we saw an interesting difference in how our startup customers handled the pandemic compared to strategics and companies operating commercially,” Daugherty told MPO. “The startups were battling their burn rates and kept moving forward, with many seeing it as a chance to get ahead of their competition by not shutting down. The strategics were more likely to pause or cancel projects to manage the hit to their P&L (profit and loss). Post pandemic, we are seeing paused projects come back online as procedural volumes recover and investment in R&D becomes feasible again.”
“Since startups are not selling a product yet, the impact of COIVD was not reduced sales revenue, but a risk to running out of cash before they can make enough progress to raise additional capital. Every startup knows their monthly burn rate, so they had to find ways to keep working,” he said. “As places shut down because of the pandemic, employees took equipment to home labs or garages so they could keep moving forward. They made sure the projects didn’t stop because they couldn’t afford for them to stop. They only have so much money. They’re working on a fixed amount and during COVID-19, it was even harder to raise new money. They had to keep going.”
Outsourcing R&D can provide a company with much-needed fresh ideas or a global perspective. It also gives companies access to a wider talent pool—an advantage that has become particularly valuable amid the pandemic-induced skilled labor shortage.
“Outsourcing lately seems to be a bandwidth issue. With affiliated changes from the pandemic, many [companies] do not have adequate staffing,” stated Justin Bushko, principal at medical device design firm Concise Engineering Inc., based in Clearwater, Fla. “This is partly due to workers leaving the market and partly due to additional projects being undertaken to accelerate growth. These two factors in tandem create a significant deficit in some organizations. Those that have been successful with outsourcing efforts have excelled. Those that are still playing it safe internally are now attempting to outsource their first project in years.”
In addition to its staffing perks, outsourcing R&D can be more cost-effective and expedite time to market.
“In my opinion, [companies] do not outsource R&D, but [rather] are looking for additional resources for their product development. More specifically, they are looking for supplementary resources to add to their own development teams or complementary resources to get access to skills and technology they don’t have in-house,” Freudenberg’s Gerdin noted. “That way, OEMs can focus on their core competencies, like treating a specific lesion. When you outsource parts of the product development, you can get the product to market faster because you don’t have to start from scratch. You just have to ask the right people the right questions...”
Indeed, asking the right questions and finding the right people are key to successfully outsourcing research projects. But the latter is more challenging to achieve than the former.
The “right” outsourcing partners are trustworthy, honest, flexible, and reliable. Most importantly, they should be knowledgeable about both the product and company for which they are providing service.
“Outsourcing a project and finding strategic partners is not that different than in the past. The credentials of the firm are critical,” Bushko said. “Do they focus on medical, or are they just breaking in to medical? Have they been successful releasing products, or are they just a prototype shop? The initial sales cycle offers some indication of the working relationship, but the team often changes once the official project starts. Avoid putting too much effort on who and focus more on the approach that will be utilized. Do they know the lingo? Have they done this before? Are they trying to apply experience from a different realm into medical? Are they assuming common sense prevails?”
All good questions.
With only one right answer.
Fear, bordering on panic, had gripped Wall Street. Stocks were plummeting, the VIX Index was surging, and futures were selling like hotcakes.
Brokers stood motionless on the trading floor, dumbfounded by the free-falling numbers looming like storm clouds on overhead monitors. Some were silent; others cursed. No one smiled.
This was not the way it was supposed to be.
It was supposed to be different. Much different.
Jason Feldman was supposed to visit the New York Stock Exchange floor—fulfilling a lifelong dream—and launch his company’s re-branding. During a Cheddar TV interview, Feldman was going to tout the unique concept of his startup: providing healthcare to men through telehealth and at-home clinician visits. He was stoked to discuss the company’s services platform and weekly 150-visit capability.
It was supposed to be a new beginning for Vault Health.
And it was, just not in the way Feldman intended.
“So I’m going down there with our chief medical officer and we get down and we’re waiting to do our first interview and the market crashes. It literally crashes,” Feldman recounted to a Coke Scholars Ignite Podcast (SIP). “So here I am, I’m ready to take my little selfie in front of the bell, just for fun, and the market crashes, and people are actually very, very, very concerned. You can see it. They’re saying things, they are swearing. And this is right before COVID really kills 12,000 or 13,000 people in New York on the first go round. This is not a good day.”
Not good at all—March 12, 2020, was a historically awful day on Wall Street, with the Dow plunging 10% in its worst showing in 33 years. The 30-stock index sustained its largest recorded loss (2,352 points), and the S&P 500 sank 9% to close in bear market territory, thus ending the Street’s 11-year winning streak.
The market’s meltdown that day marked the start of a national crisis characterized by lockdowns, isolation, fear, and uncertainty. For Feldman, though, it became a turning point in his quest to build a durable, scalable healthcare platform.
Not surprisingly, Feldman scrapped his company’s re-branding and quickly expanded its product/service offerings to 34 states. “...we go back to the office and suffice to say, we’re thinking, ‘all right, what are we going to do?’ Immediately I stopped spending all our money,” the Vault Health founder/CEO recalled. “I quickly said to everybody, all right, we’re going to launch every product we have in our roadmap for 2020. We’re going to launch it all now. It doesn’t matter what it is. It doesn’t matter if it’s pretty...just launch it. If this is going to be a sinking ship, let’s not waste any time, bring everything from below deck on deck and let’s do it.”
Despite the drastic undertaking, Feldman remained concerned about his company’s survival. So he decided to pivot.
Fortunately (or fatefully perhaps), Vault Health was working with Rutgers University that spring on a men’s fertility program. But the research institution—through its RUCDR Infinite Biologics lab—also was developing the world’s first COVID-19 saliva test that halved turnaround times for results.
Feldman approached his Rutgers contacts about distributing the test and providing related home-based telehealth services for it —i.e., enabling a healthcare practitioner to virtually advise and/or guide patients through the test administration.
“I went to them, I said, ‘All right, we want to use our new telehealth platform to launch a testing product at home. Everybody in America could do this at home,’” Feldman told SIP. “And they said, ‘That would be a great idea, Jason, except the FDA just shut down all at-home testing. So you can’t do that.’ And I said, ‘You must’ve misunderstood me. What I meant to say was, I want to launch a diagnostic test prescribed by a doctor that could occur maybe at somebody’s home.’ And they thought about it, and they were like, ‘Well, that sounds better. That might get through the FDA.’”
The saliva test did actually get through the FDA (via emergency use authorization, May 2020), and with Vault Health’s help, was distributed to millions of U.S. households. Since the start of the pandemic, the company has disseminated more than 12 million at-home saliva assays and now sells turnkey COVID-19 testing management systems for employers. Vault Health also has extended its reach, branching out into clinical research, heart disease, and pre-diabetes.
The company partnered with health IT firm Datavant and venture capital-backed Medable last winter to improve clinical study efficiency. Datavant is using Vault’s telehealth prowess to connect decentralized trial subjects to more than 500 real-world data partners and—with patient authorization—retrieve medical records from its more than 15,000 clinics and 2,200 hospitals.
The Medable pairing combines that firm’s software-as-a-service platform with Vault’s telehealth capabilities to provide a unified experience for clinical trial patients, sites, and sponsors. The alliance enables sponsors to seamlessly offer Vault home testing and diagnostics, home healthcare visits and televisits, virtual site capabilities and related logistics, scheduling, and status tracking through Medable’s patient and site apps.
Vault Health’s meteoric three-year journey from 49-employee startup to large, multi-million-dollar diagnostic/telehealth powerhouse can be attributed in part to exceptional leadership, foresight, open-mindedness, and a risk-taking disposition.
Resilience was important too, especially during the company’s formative years. Such flexibility is essential now in the wake of a global pandemic that forced businesses in all industries to adopt new operational strategies. Specifically, the abrupt shift to remote work has provided enterprises with a once-in-a-generation opportunity to reimagine the ways in which jobs are performed and companies are run.
Moving past decades of orthodoxy about 9-to-5, office-centric work required a corporate ethos mindset shift. One of the areas most affected by this paradigm change was the research and development (R&D) process.
“Research has become more challenging in the wake of the pandemic,” noted Eric Guire, Ph.D., principal investigator/R&D manager at Innovative Surface Technologies Inc. (ISurTec), a Saint Paul, Minn.-based medical device coatings manufacturer. “Things we used to take for granted (supply chain) now require our diligence. Research programs need more flexibility to deal with supply constraints, personnel constraints, and complicated timelines.”
Granted, flexibility has always been a part of the medtech R&D process as companies pursued innovation excellence amid rapid changes in the healthcare ecosystem and macroenvironment. The pandemic, however, forced organizations to take that resiliency to the extreme.
That extreme prompted some companies to rapidly scale parts of their business to meet COVID-19-related healthcare needs—i.e., ventilators and personal protective equipment. Medtronic, for example, increased ventilator production by more than 40% during the pandemic’s early days, recruiting engineering and quality help from its Cardiac and Vascular Group. The medtech behemoth also sought assistance from outside partners like SpaceX and Intel in producing critical components and remote management features for the machines.
Resiliency also was necessary to contend with mandatory lockdowns and the ensuing shift to telehealth services and remote work. Cyber communications inspired a wealth of new connectivity solutions like Royal Philips’ medical tablet for remote patient monitoring, and GE Healthcare’s RPM software for both improving ventilated patient surveillance in hospitals and identifying patients’ deterioration risk. Digital-only interactions also beget more online programming: Boston Scientific Corp. enhanced its remote case/technical support and digital training/education offerings via augmented reality platforms. Its “train the trainer” sessions combined virtual group meetings with hands-on learning to expose physicians in one-on-one settings to the company’s newest devices and therapies. Boston Scientific also produced webinars to help customers navigate new and changing pandemic-related challenges and legislation.
Besides spawning an onslaught of telehealth and teleconferencing options, the pandemic also changed work habits, forcing businesses to abandon the traditional office-centric culture for a more flexible arrangement. Zoom, Microsoft Teams, Trello, Dropbox, Slack, and other workplace software were key to helping companies maintain operations without compromising productivity.
For medtech firms, those tools were a lifeline—in many cases, all- owing them to continue producing essential healthcare products. But the sudden switch to remote work was challenging at first for research teams—Medtronic R&D engineers, for instance, took lab equipment home and set up makeshift shops in their kitchens.
“In the early days of the global pandemic, innovation in medtech R&D initially suffered, since many engineers were accustomed to innovating in person with their colleagues,” said Hajo Wetzel, director of Global Advanced Technology & Simulation, Medical Business Unit, at global medical connectivity solutions provider TE Connectivity. “With progressive development over time, the issues related to proximity diminished; we, like many industries, have accepted and embraced virtual collaboration.”
The industry has no other choice, really. Remote work—borne of necessity during a public health emergency—is now a job market fixture and will likely remain entrenched long after SARS-CoV-2’s official end. Economists expect about 20% of full workdays to be spent at home in the post-pandemic period—roughly four times pre-coronavirus levels.
While not universally accepted at first, work-from-home policies eventually gained favor with companies once they discovered their numerous benefits: lower overhead costs, wider talent pools, reduced absenteeism, better employee retention and engagement, and—perhaps most importantly—higher productivity.
Ironically, remote work improved the relationships and collaborations among medtech research teams.
“The collaboration within our global R&D team became closer and thus improved,” stated Lars Gerding, vice president of Technology at Freudenberg Medical, a global partner in the design, development and manufacturing of medical devices, components, and product solutions. “Since face-to-face meetings were no longer an option, we quickly adopted digital tools for collaboration. Reaching out to a colleague on Microsoft Teams —even if you haven’t met in person—has become much more natural even across countries and time zones. This is a huge benefit for multinational companies like Freudenberg Medical.”
And TE Connectivity. Wetzel credits the virtual work environment with improving the overall efficiency of his firm’s R&D teams.
“The virtual environment has brought the medtech R&D global community closer together than it ever was before,” he said. “For example, while the processes for prototyping have not changed much, virtual collaboration has helped us prioritize parts of the process and tap the well-educated workforce in India for R&D engineering services such as simulation, for overall efficiency gains.”
In addition to improving research collaborations, the telework trend also has boosted product design creativity and helped accelerate both the acceptance and adoption of connected healthcare solutions, industry experts claim.
Design creativity manifested itself in novelties like clear face masks (to facilitate lip reading) and 3D printed adaptors for manual hand-pumped ventilators, while such connected solutions as robotic telemedicine carts and eICUs became literal lifelines to front-line healthcare workers in early 2020. The latter tool allowed clinicians to monitor between 60 and 100 critically ill patients in multiple facilities using two-way cameras, video monitors, microphones, and smart alarms connected by high-speed data lines. More than 300 U.S. hospitals in 34 states took advantage of eICU services during the pandemic’s initial rampage, Indian Heart Journal data determined.
“Throughout the pandemic medtech manufacturers were able to showcase their creativity by blending remote and on-site collaboration. This has led to the development of many innovative designs and processes,” explained John Cooney, vice president of Research and Development, Cardio & Vascular, at Integer Holdings Corporation, a Plano, Texas-based medical device outsource manufacturer serving the cardiac, neuromodulation, vascular, and portable medical markets. “At the customer level, remote proctoring of some clinical cases created more acceptance for connected technologies in the industry and accelerated their adoption. The many new technologies and products that were developed successfully and launched during the pandemic, in my mind, underscores that having the right winning teams in place—regardless of remote challenges—will drive the best results for everyone.”
Many organizations, like Integer, have returned to on-site working and collaboration, but also now leverage the accepted practices from the pandemic with flexible working arrangements, enabling a better work-life balance for employees,” Cooney continued. “The supply challenges experienced by the industry also changed how companies think about development, with a greater focus on insourcing to minimize supply chain risks and by also developing solutions that reduce supply chain costs.”
Does Size Really Matter?
The ever-evolving nature of healthcare requires enterprises and their R&D teams to be adaptable, flexible, and future-oriented. While that dogma is baked into most medtech corporate credos, some firms are better than others at executing it.The masters, though, are difficult to identify because companies’ R&D approaches are about as varied as the entities themselves.
Startups are naturally more flexible with their research programs than larger firms due to their size and receptivity to new ideas and working methods. “Startups hone in on one idea and then sell it to large companies. OEMs try to create small startups within their company,” ISurTec’s Guire observed. “Small companies are much more innovative and risk-taking than larger firms. The startup excitement creates a unique bond and strong work ethic among employees. More yes, less blocking. Startup firms are less risk-averse; they try new ideas and see if they work. Bottoms-up approaches are more likely to become reality. Larger organizations just try to profit off what they already know. You see a lot of people moving around and people not excited about what they’re doing. A smaller company takes a bottoms-up approach. People in the lab are experimenting and seeing what they can do.”
That experimentation and bottoms-up approach is what sires the revolutionary innovation sought by OEMs, which tend to have a higher burden of quality and compliance to ensure they can adequately scale-up core technologies. Large multinationals also have more lengthy commercialization paths, due to the bureaucratic makeup of their organizations.
Nevertheless, large companies are not at a total disadvantage to startups: their size and resources makes it easier for them to market new products and fund new research.
“Startups are extremely focused on solving their immediate problems while hitting their funding milestones. This can sometimes lead to punting technical challenges into the future with the mindset of ‘that’s the acquirer’s problem to solve,”’ Millar Inc. CEO Tim Daugherty said. Headquartered in Houston, Texas, Millar develops catheter-based solid-state pressure sensors.
“Established companies and OEMs don’t generally have this luxury (if you can call it that) because they have to ultimately launch and commercialize the device, including any tradeoffs accepted during development,” he added. “This naturally leads to a difference in speed of development, with established companies being more accepting of longer development timelines. Each approach has its pros and cons, but when an established company can isolate its R&D team and create an internal group with a startup mentality, they can recreate that speed to market mentality and then iterate and improve the device in future generations.”
Established companies obviously have the bandwidth to attempt such mimicry. Startups’ exploits, by contrast, are largely dictated by funding, which can be difficult to obtain. Case in point: A report last year from AdvaMed Accel and the Deloitte Center for Health Solutions found that just 5% of the global deal value in 2020 went to medtech startups, as opposed to 13% for biopharmaceutical firms.
There are various reasons for the oversight: the longer exit times associated with startups and early-stage companies, as well as medtech’s inconsisstent regulatory process and variability in coding and reimbursement pathways. Conservativism among investors doesn’t help, either.
Yet startups survived remarkably well during the pandemic—better, actually, than many of their larger cohorts. Millar’s Daugherty noticed a fascinating dichotomy forming between companies, based soley on their size.
“As a contract development and manufacturing organization, we saw an interesting difference in how our startup customers handled the pandemic compared to strategics and companies operating commercially,” Daugherty told MPO. “The startups were battling their burn rates and kept moving forward, with many seeing it as a chance to get ahead of their competition by not shutting down. The strategics were more likely to pause or cancel projects to manage the hit to their P&L (profit and loss). Post pandemic, we are seeing paused projects come back online as procedural volumes recover and investment in R&D becomes feasible again.”
“Since startups are not selling a product yet, the impact of COIVD was not reduced sales revenue, but a risk to running out of cash before they can make enough progress to raise additional capital. Every startup knows their monthly burn rate, so they had to find ways to keep working,” he said. “As places shut down because of the pandemic, employees took equipment to home labs or garages so they could keep moving forward. They made sure the projects didn’t stop because they couldn’t afford for them to stop. They only have so much money. They’re working on a fixed amount and during COVID-19, it was even harder to raise new money. They had to keep going.”
Why Outsource R&D?
Regardless of size, medtech firms are not always willing to or capable of conducting their own R&D. Cost management is one of the major reasons organizations seek outside help in conducting product development research, though there are other benefits as well.Outsourcing R&D can provide a company with much-needed fresh ideas or a global perspective. It also gives companies access to a wider talent pool—an advantage that has become particularly valuable amid the pandemic-induced skilled labor shortage.
“Outsourcing lately seems to be a bandwidth issue. With affiliated changes from the pandemic, many [companies] do not have adequate staffing,” stated Justin Bushko, principal at medical device design firm Concise Engineering Inc., based in Clearwater, Fla. “This is partly due to workers leaving the market and partly due to additional projects being undertaken to accelerate growth. These two factors in tandem create a significant deficit in some organizations. Those that have been successful with outsourcing efforts have excelled. Those that are still playing it safe internally are now attempting to outsource their first project in years.”
In addition to its staffing perks, outsourcing R&D can be more cost-effective and expedite time to market.
“In my opinion, [companies] do not outsource R&D, but [rather] are looking for additional resources for their product development. More specifically, they are looking for supplementary resources to add to their own development teams or complementary resources to get access to skills and technology they don’t have in-house,” Freudenberg’s Gerdin noted. “That way, OEMs can focus on their core competencies, like treating a specific lesion. When you outsource parts of the product development, you can get the product to market faster because you don’t have to start from scratch. You just have to ask the right people the right questions...”
Indeed, asking the right questions and finding the right people are key to successfully outsourcing research projects. But the latter is more challenging to achieve than the former.
The “right” outsourcing partners are trustworthy, honest, flexible, and reliable. Most importantly, they should be knowledgeable about both the product and company for which they are providing service.
“Outsourcing a project and finding strategic partners is not that different than in the past. The credentials of the firm are critical,” Bushko said. “Do they focus on medical, or are they just breaking in to medical? Have they been successful releasing products, or are they just a prototype shop? The initial sales cycle offers some indication of the working relationship, but the team often changes once the official project starts. Avoid putting too much effort on who and focus more on the approach that will be utilized. Do they know the lingo? Have they done this before? Are they trying to apply experience from a different realm into medical? Are they assuming common sense prevails?”
All good questions.
With only one right answer.