Pitfalls and Challenges for Diabetes Technology Start-Ups

Introduction

When dealing with start-ups, you keep seeing the same “mistakes,” especially those that do not know how to develop a medical device and document it accordingly. The topic of ISO 13485:2016 and/or FDA 21 CFR Part 820 is often not known; however, it is not that difficult if one understands the logic behind it.

The ISO as well as FDA medical device guidelines are all geared toward the safe design, manufacture, and distribution of effective medical device products. The standards outline expectations for the foundational aspects of quality management, specifically:

• Management responsibility (commitment, patient and customer focus, quality policy, planning, authorities, communication, reviews, etc).

• Resource management (ie, infrastructure, involvement of qualified human resources, and provision of other resources).

• Product realization (ie, planning, design/development, purchasing, production, equipment controls, etc).

• Validation, verification, and improvements.

• The general and documentation requirements for the quality management system (QMS).

Start-ups need to follow these standards from the beginning to ensure adequate documentation, which can be reviewed by the authorities and notified bodies during the approval process. As a first step, the manufacturer must define the key product requirements and intended use (KPR), ie, describe what you want to develop in the first place.

Ultimately, product requirements define a product’s purpose, functionality, and features without any uncertainty. It is free of vague language, laying out the exact parameters needed to make the device function as intended. Think of it as a guide that ensures every team member is on the same page as you turn a simple idea into a reality. The KPRs are the first step in this process and define the fundamental cornerstones of the to-be-realized product.

Clear requirements keep the team working well together, making the design process more efficient and ensuring your submission to the authorities is handled adequately. Well-written requirements take extra time initially, but they avoid delays and extra loops later in the development.

In principle, this initial specification of the KPRs should be done for every development. It helps a lot to think about where you want to go and what the solution should be able to do! Nevertheless, only a few start-ups take the time to define the KPRs at the beginning and many just “muddle along.”

Also, topics such as realistic time and financial plans are most often an issue. Please keep in mind that 75% to 90% of start-ups in the health care sector do not survive, and diabetes start-ups are not immune to this problem either. The inadequate financial planning is correlated with the unclear picture of the product and KPRs and the time to develop these!

Let us have a look at different topics that are of relevance for start-ups (and sometimes also bigger companies) with a focus on diabetes when developing new products. We believe that it is worth considering such aspects to have a “successful” product in the end. Success can be defined differentially; however, most often it means selling/licensing to a large manufacturer or bringing a product to market.

Addressing Real Unmet Needs

There is still a significant unmet need in diabetes and several opportunities to improve the standard of care. However, this does not mean that every new product will necessarily address a genuine unmet need. The key is to avoid a solution (= product) looking for a problem, in addition to involving people with diabetes in product development and design at an early stage ¹ to ensure a strong product/market fit with a differentiated product that people want.

Tapping Into Large Market Opportunities

Start-ups need to develop products for a large enough market to give potential investors confidence that their business is scalable and will generate an adequate return. Otherwise, it is difficult for start-ups to find investors who, at the seed to Series A stage, seek opportunities that can generate a return of at least five to ten times the amount they invest. It should be noted that many investors consider type 1 diabetes to be “too small a market” to justify investment.

Managing the Project Risks Well

The medical device industry is built on trust, between those who design, develop, and manufacture devices, and the patients who depend on those devices to work safely and effectively. This is especially true in the diabetes technology space, where a device failure (eg, over-dosing of insulin) might lead to short-term significant risk for the user. Imagine this from the perspective of a person with diabetes using the newly developed medical device. The patient probably thinks very little about the risks of the technology about to be used.

The final users accept the risks of the medical device, which has been designed, developed, and later manufactured. Moreover, this is exactly why risk management is so important and should be implemented from the beginning even in a start-up. You have to understand the key risks for the users of the medical devices you design and develop and work on an adequate risk mitigation plan.

An Excellent Team

This tip sounds like a cliché, but an experienced and highly motivated team is required to overcome any difficulties that arise and also give investors confidence they should invest in that team over the thousands of other cases they see each year.

Convincing Data and User Engagement

A positive evaluation of the product in the early stages of development is crucial to its success. For example, participants in clinical studies should be asked whether they would continue to use the product after the study has been completed. In addition, compelling preclinical or clinical data are key to convincing investors of product safety and effectiveness.

The Right Investors and Partners

Start-ups should choose their partners carefully, ie, they need to find a group of investors who “understand the journey,” such as reasonable timelines for development and return on investment. A single investor is arguably always the most difficult to manage as they often lack this understanding. The best investors bring not only capital to the table but also know-how, networks, and support for start-ups in good times and bad.

Manufacturing

It is also important to proceed with caution when selecting distribution, production, and strategic partners, as many start-ups have little in-house expertise in manufacturing products in sufficient quantities and quality, which often leads to problems in practice. ² Again, investors need to be confident that start-ups have the right partners to avoid such problems.

Navigating Regulatory, Reimbursement, and Go-To-Market Challenges

To successfully reach the market and benefit people with diabetes, diabetes technology start-ups must secure the necessary regulatory approvals and develop a well-thought-out go-to-market plan. This includes building a solid business model, which is important in the complex world of health care, with a clear understanding of who pays and the different roles of patients, payers, and providers in this process.

Building a Strong IP Position

Start-ups must not only protect their inventions via patents and other types of IP protection but also ensure they do not infringe upon IP belonging to others and risk legal action. Ultimately, most if not all of the value of a start-up is in its IP, so the benefit of a strong IP strategy can significantly outweigh the cost of putting this in place.

Summary

This list of topics is not complete and many more comments can be made to each topic; however, the idea was to provide a summary of the complex and challenging task to build up a successful start-up.