Medical Device Development Lifecycle

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Thinking Globally During

Medical Device Development:

Accelerating Products to International Markets

Tim Blair

Director Global Business Development

Seth J. Goldenberg, Ph.D.

Senior Principal Scientist

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Expectations

» Healthcare economy today

» Basics of the product development lifecycle

» Thinking globally when developing your “get to

market strategy”

» Bringing development disciplines together in a

unified, strategic fashion

» Considerations medical device developers should

have in moving devices forward

» Avoiding “unnecessary” failure

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Expectations

» Healthcare economy today

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Healthcare Trends (Innovation)

» MedTech growth ~5% CAGR reaching $500BB in the next 10

years

» Revenue growth in MedTech (5%) will outperform Pharma

(3.8%) 2012-18

» China MedTech growth is ~20% (Consumption and Production)

» LATAM MedTech growth is ~10% (Brazil and Argentina ~20%)

» IVDs expected to lead MedTech growth with global revenues

~$60BB, followed by Cardiology and Diagnostic imaging

» PMA “like” devices available in Europe an avg of 43 months

before being made available in US markets – changing trend?

» First time PMAs decreased 5% in 2012 and a similar decrease

in 2014 (Is this an innovation pattern?)

» Avg. cost > $100MM and 8 years to get a PMA to market

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» Hospital utilization for devices are trending down

» Device revenue / margins continue to get squeezed

(Utilization, Reimbursements, Taxes, Time to Market)

» MedTech spending in RA, QA, CA growing ~3X market growth

» MedTech R&D spending will grow 3.9% / year to reach

$26.7BB by 2018 – but slowing relative to CAGR

» M&A deal value fell 14% in 2013; deal count dropped 15%

» Recent Mega Deals 2014-5 indicate what?

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» Investor $ fell 14% in 2012 to $3.8BB; expanded slightly by the

end of 2013

» Nat’l Venture Capital Association estimates 25-30% of venture

backed businesses fail completely

» Wall Street Journal – of 10 VC backed deals 3-4 fail completely;

3-4 return original investment; 1-2 produce substantial returns

» Define failure? “If failure is defined as failing to see the project

return on investment (specific revenue growth rate, date, or

break even) then >95% of start ups fail.” Shikhar Ghosh

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So what?

» The MedTech Industry will see stable growth, but

struggling to maintain historical profits

» Device Makers have to find growth (M&A, Operational

Efficiencies, Innovation, New Markets – Mega Deals make

sense)

» Device Makers have to control costs more than ever

» Device Makers will be seeking new innovation

models and partners to market their products

» Device Makers have to maintain compliance and

acceptance in current markets which is only getting

more challenging

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A Medical Device - Defined

» A medical device is defined within the Food, Drug, and Cosmetic

Act as:

"...an instrument, apparatus, implement, machine, contrivance, implant, in

vitro reagent, or other similar or related article, including a component part, or

accessory which is: recognized in the official National Formulary, or the United

States Pharmacopoeia, or any supplement to them, intended for use in the

diagnosis of disease or other conditions, or in the cure, mitigation, treatment,

or prevention of disease, in man or other animals, or intended to affect the

structure or any function of the body of man or other animals, and which does

not achieve any of it's primary intended purposes through chemical action

within or on the body of man or other animals and which is not dependent

upon being metabolized for the achievement of any of its primary intended

purposes"

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A Medical Device - Defined

» A medical device is defined within the Food, Drug, and Cosmetic

Act as:

"...an instrument, apparatus, implement, machine, contrivance, implant,

in vitro reagent, or other similar or related article, including a component

part, or accessory which is: recognized in the official National Formulary, or

the United States Pharmacopoeia, or any supplement to them, intended for

use in the diagnosis of disease or other conditions, or in the cure,

mitigation, treatment, or prevention of disease, in man or other animals, or

intended to affect the structure or any function of the body of man or other

animals, and which does not achieve any of it's primary intended purposes

through chemical action within or on the body of man or other animals and

which is not dependent upon being metabolized for the achievement of any of

its primary intended purposes." is not a drug.”

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FDA Classifications

Lowest risk classification. FDA Review is not typically required. Usually 510(k) exempt.

• Bandages

• Many surgical tools

FDA clearance is typically needed via FDA 510(k) process. Applicant must show “Substantial Equivalence” to a previously cleared “Predicate Device”

• Intravascular guide wires

• X-ray machines

Highest risk classification. Approval is usually obtained through FDA’s Premarket Approval (PMA) process

• Pacemakers

• Heart valves

See NAMSA’s whitepapers for more information.

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CE Mark ClassificationsLowest risk classification. Non-sterile and /or non-measuring function; No Notified Body involvement

Class IIa - Manufacturing systems audit

Class IIb - Manufacturing & product design audit (Technical File)

Highest risk classification. Manufacturing & Design Dossier audit

See “The Medical Device Regulations” by Kathe Clark for

detailed information.

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Variability in Medical Device Classification

» Different device classification can significantly impact

path for approval

» For Example:

A device in the US could be a drug in the EU or other

foreign markets

A 510(k) orthopedic device in the US is frequently a Class

III in China and will require local clinical data

Mexico and Chile fast track FDA and Canadian approvals

» Understanding the differences is optimal to planning

appropriately for your launch - ensuring all testing,

regulatory, quality, reimbursement, and clinical

requirements are aligned to the commercial

promises is critical

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Expectations

» Basics of the product development lifecycle

» Thinking globally when developing your “get to

market strategy”

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Common Mistakes in

Medical Device Development

» Technology not “disruptive” enough – actual better

put “technology did not make industry take notice”

» Me too product that failed to understand GPO or

Hospital Network objectives

» Poor reimbursement planning – lack of code,

coverage, or payment may prevent funding and

WILL impact adoption in the marketplace

» Failed to address the Health Economics of today

» Failed to employ Human Factors Research

» Undefined regulatory pathway – poor indication

strategy (idea is to focus on starting smart)

» Unclear Global Market Strategy

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Common Mistakes in

Medical Device Development

» Underdeveloped time and cost analysis – milestone

strategies were poorly established and poorly

communicated

» Ideas, IFUs, owner’s manuals aren’t accepted or

understood in the chosen markets

» Failure to hire the right team, overcoming turnover,

over paying executives, managing conflict, and a

recognition that outsourced specialists are likely

better, faster, and cheaper (FTEs are often the

biggest line item in a budget – why?)

» Engineering and Manufacturing misaligned or

incomplete (GMP)

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So what?

» Devices fail to reach their objectives for many

reasons; a singular strategy on its own is not enough

in getting to revenue – tomorrow’s innovators will

have to do more with less – we need to innovate

innovation

» Today’s “buyers” of innovation have changed and/or

need to be identified early

» An early, well defined global strategy is critical to

success

Customized for speed

Optimized to reduce risk and take advantage of

market intelligence

Global knowhow and communication

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Ideas for Development Success

» Unmet needs need a defined “get to market strategy”

that includes regulatory, compliance, testing,

reimbursement, financials, and other disciplines

Speed to market relies on this harmonization

» Have solid and expanding IP – even blocking IP

» Work with FDA (and other notified bodies) early and

often (Pre submission meetings are free)

» Have a platform, an evolution

» Have passion, take beachhead everyday

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Expectations

» Bringing development disciplines together in a

unified, organized, strategic fashion

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Product Development Process

Concept/FeasibilityDesign Validation /

PreclinicalClinical Market Approval Post-Market

Aligning your Get to Market Strategy Across All Phases

and Disciplines is Critical to Success

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Medical Device Development Process

» A strong team

who understands

the process is

critical to

investors or

project leaders

» Communication

across the team

is critical to

success

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Note: Product Development is not a single event. Developing a

device is a process that evolves, goes in circles, and rarely has an

endpoint that resembles the draft document. It’s not linear and

there is no definition for the development process. The

development process is messy and there are many tradeoffs along

the way.

Factors:

How are you communicating the process?

Who is the owner of the process?

What are the assumptions / risks?

What downstream disciplines can you introduce early?

Medical Device Development Process

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Communication: Developing a Path to Market

» Great ideas must have a strong documented vision

amongst all stakeholders

http://newproductvisions.com/blog/wp-content/uploads/2013/11/Expectations.jpg

http://newproductvisions.com/blog/wp-content/uploads/2013/11/Expectations.jpg

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Owner of the Development Process

» Managers of Innovation – the owner of the process

Large Industry – Product Manager, a person who

often has one foot in engineering and the other foot in

marketing; owner might be higher to the P&L holder

Start Up – President or Founder / Inventor, a person

with an idea to address a market need

» Responsibility of this owner / manager

Build the “strategic marketing” plan, communicate the

plan, manage the resources, manage the costs, and

manage the risks

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Market Strategy

Note: Despite doomsday scenarios, the MedTech space is

expected to reach > $500BB in the next 10 years, up

from $270BB in the current decade

Differentiation

Reimbursement

Clinical Evidence

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Market Strategy – Your Story, Your Value

» Market evaluation

» What else?

Alignment with regulatory, testing and clinical plans to

provide the right data with optimal speed

Sound post market clinical data should be used to

differentiate you in the market – Health Economics is

here to stay

“Clinical data is the number one driver of a company /

project’s value”

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Incremental Products

Market Strategy Decision

Define • V1.0

Refine • V2.0

Extend • V3.0

Disruptive Products

Unmet Medical Need

Technology Leap

KOL Demand

Product Approval

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Example Products

» Incremental

Infusion Lines

Catheters

Needle Protection

PICC lines

Syringes

» Disruptive

Venous Stents

Mini Pacemakers

Robotic Surgery

Electronic Medical

Records

Phone Apps

Note: Both types of products face similar challenges,

although a few exceptions where disruptive products

have additional challenges

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Careful Evaluation of Market Opportunities

» In depth analysis of market opportunities in specific

sectors / therapies is crucial

» Over estimation of market size can lead to not

reaching sales goals or to imperfect business and

legal decisions downstream

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China

» Rise in GDP driving healthcare growth

» Driven by government initiatives

» Average heath expenditure is very low (~$200), yet higher in

urban centers that have better insurance systems

Source: EvaluateMedtech

0

1000

2000

3000

4000

5000

6000

US

$

GDP & Healthcare Spend per Capita (Current US$)

China Health Care Expenditure China GDP

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0

2000

4000

6000

8000

10000

12000

14000

US

$

GDP & Healthcare Spend per Capita (Current US$)

Brazil Healthcare Expenditure Brazil GDP

Brazil

» Average heath expenditure is ~$900 per person

Source: EvaluateMedtech

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So what?

» The device development process is challenging

Iterative

More than just an unmet need or IP

» The global medical device market is complex

Filled with opportunity with the right know how

Minimize mistakes with the same know how

Stay align with those who know

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Concept / Feasibility



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Concept / Unmet need: Is my idea any good?

Validation

» Feasibility and Effectiveness (Pre-clinical)

Does the concept do what we thought it would do?

Form, fit, function (Bench, Animal, Anatomical)

» What do I need to change or modify?

Designs

Marketing Strategy

Regulatory Strategy

» Beginnings of Safety (should it align with the clinical study?)

» Beginnings of Indications

» Beginnings of Sterilization

» Beginnings of Packaging

» Beginnings of Manufacturing

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Unmet Needs

Design Input

Design Process

Design Output

Medical Device

Early Design & Development: Verification & Validation

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Global Strategic Considerations

» What are global regulatory / testing requirements for

my product?

Don’t expect to go to China for an orthopedic product

without clinical data

Many markets outside of US/EU prefer testing to risk

assessments

Testing

Labeling/IFU

Clinical

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Regulatory Strategy

» Early decisions impact all decisions downstream

» Frequent regulatory feedback can speed approval

Regulatory

Preclinical / Clinical

Prototype / Design

Concept

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Reimbursement: Incremental Product

Considerations

Coverage Whether a service or

product fits the legal

definition of a

medically necessary

covered benefit

Coding “Fit” of a new

procedure into an

existing code

description

Payment Whether the

procedure code

assignment to a DRG

group results in

adequate payment

Market opportunity / reimbursement

processes

» Which markets present the best opportunity

for your specific indication? Regulatory path

and indications for use aligned?

» What are the coverage, coding, and

payment processes and related timelines in

each market?

» Which markets are the easiest and fastest

to receive reimbursement? Revenue, Data?

» How healthcare is delivered in China may

be significantly different than US/EU?

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Reimbursement +

Disruptive Product Considerations:

» Market opportunities / reimbursement processes

Does the procedure fit into an existing code?

Can KOL publications and clinical evidence support a

new CPT code?

» Clinical usage and economic data

What is the evidence needed to support approval and

premium payment? US & EU are quite different

Does the economic premise of your product hold up in

a foreign context?

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Quality/Compliance

» Quality system compliance often the most time

consuming and complex component of device registration

» Development must comply with all quality standards

Proper Design Controls / Process Controls

Proper qualification of suppliers with proper documentation

Review of all local and international requirements

» Most quality systems are too large or non-existent

» Think about how your quality manual will integrate with

your manufacturing strategy as you prepare for testing

and clinical activities

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Quality/Compliance

Manufacturing

Quality System

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Concept / Feasibility



» Beginning of the Process

Idea / unmet need developed

Early Designs and Validation Process, iterative

R&D Bench and Animal models

Regulatory Strategy, global discussion with regulators

early and often

Reimbursement Strategy, think early and often

Quality / Compliance, be Goldilocks

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Design Validation / Preclinical



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Testing

» Safety models

» Efficacy models – understand your IFU related to

predicates

» Validation of Safety

» Understand regulatory guidance documents

» If entering multiple markets, consider testing gap

analysis

China uses older versions of ISO standards and has “Chinese

National Standards” that could differ from US/EU or MHLW

requirements

Additional test group in parallel could provide significant savings if

alternative is complete repeat of testing to enter global markets

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Testing Disruptive Product Considerations

» Alignment of preclinical data with regulatory and

clinical experts will greatly expedite time to market

» Strategic consideration should be given to larger

preclinical data harmonized with smaller clinical data

– FDA is open minded, other markets may not be

» Strategic testing decisions – the whole product or

test the components?

» Discussion/Education with global testing groups and

foreign regulatory experts are key to success if going

abroad

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Design Validation / Preclinical



» Having a global preclinical / testing plan that is

harmonized with your regulatory, reimbursement,

and clinical plans will:

Reduce your risk

Optimize your products for the right pre market or

post market studies

Optimize your products for the right markets (more

than just one market with incremental costs)

Reduce unnecessary testing or research

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Clinical



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Clinical

» Validation of Safety and Efficacy work

» Typically required by regulators for disruptive

products, but not always for incremental products

» Global site selection and patient selection criteria are

critical

» During clinical trial design, reimbursement strategy

and “motivation” of KOLs / Sites must be considered

» Understand foreign requirements that best treatment

after the study to be provided at $0 for chronic

indications / or sponsor requirements for treatment

costs beyond the standard of care

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Clinical

» Keep costs down on clinical trials and consider

publication planning in supporting commercial goals

but be careful – don’t sacrifice time or approval

» Is additional data worthwhile to differentiate, or should

this be a post market strategy?

» Health Outcomes & Health Economics are here to

stay

Note: Clinical data is the number one drive of a company’s value.

Valid data in today’s healthcare market is critical in getting to market

and thriving in the market even if not required for regulatory approval.

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Clinical



» Clinical data is #1

Watch the stock tickers

Watch the big exit start ups

» Maximize the clinical phase – but don’t create

unnecessary red flags by trying to do more than is

required (marketing and clinical are different things)

» Seek strategies (global sites, community hospitals)

that impact enrollment and study execution over big

name KOLs and Institutes

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Market Approval



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Regulatory Submission

» Submitting the dossier is just the

beginning

» Several rounds of discussion may

be required before acceptance

» Regulations on response times are

constantly changing (Brazil and EU

are changing)

» Understand the global agency

timetables to reduce risk / optimize

your get to market strategy

» Is distribution tied to your foreign

registration?

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Regulatory Approval



So Your Device is Approved Now What?

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Manufacturing Strategy

» Begin scaling your manufacturing strategy

Contract manufacturer OR Equipment in house (decision

likely made during the feasibility stages)

Scale in step with Distribution Strategies

» Optimization of the manufacturing process (still

understanding GMP guidelines)

Stability

Process improvements

Compliant

Reproducibility

Document Controls

Product Accountability

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Distribution Strategy

» What is your strategy for commercial adoption?

» Significant physician training & KOL development

maybe required in international markets, particularly

for disruptive products

» Conference and Tradeshow adoption strategies

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Post-Market

» Ongoing clinical evaluation to further

validate patient safety, product efficacy

» Collect data to differentiate your

technology and pursue product

improvement

» Collect marketing data to publish and

promote product to KOLs

» Sales Force Training (direct or indirect)

» Physician Training, particularly for first

to market & disruptive products

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Product Development in Summary» Failure to explore global market opportunities will lead to less

than optimal results

Investors / Sr. Management want global strategy

» Collaboration across product development life cycle is key to

success, it’s not linear, seek partners who know

» Alignment of regulatory, reimbursement, testing, quality, clinical,

manufacturing, and distribution across the global market

strategy is essential (too few companies have this mapped)

Time, cost, burn rates – don’t let the project die! Develop the right

milestones for you and your investors

» Convincing preclinical and clinical data, ideally linked to positive

health outcomes is key to product adoption

» No product is alike; regulatory bodies, reimbursement, testing

guidelines and market conditions are constantly changing

Customized development strategies must be employed

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Thank you

NAMSA

Headquarters

6750 Wales Road

Northwood, OH 43619 USA

Telephone:

866.666.9455 (toll free)

+1 419.666.9455 (direct)

+1 419.662.4386 (fax)

[email protected]

Tim Blair

Director Global Business

Development

[email protected]

Seth J. Goldenberg, Ph.D.

Senior Principal Scientist

[email protected]

Medical Device Development Lifecycle

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