Have an idea for a new medical device, technology or service? Getting it to market is a complex, time-consuming process that requires analytical and management skills, great communication, collaboration and leadership, according to Virender Sharma, MD, AGAF, who shared lessons he’s learned as a physician innovator on Saturday at DDW® during a session sponsored by the AGA Center for GI Innovation and Technology.
A gastroenterologist in Scottsdale, AZ, Dr. Sharma is the founder and director of the Arizona Center for Digestive Health. He has developed several innovative products, including EndoStim, a new technology for gastroesophageal reflux disease, and SynerZ, a weight-loss system for people with diabetes.
Dr. Sharma stressed that a physician innovator must to be an entrepreneur, “a doer and executor who can move a science product to a business product,” he said.
The idea must be scientifically sound and have a potentially large, addressable market. Any new technology must have higher efficiency than products currently on the market, as well as lower cost and greater safety.
Dr. Sharma said physicians can be great entrepreneurs because they’re smart, persevere in their work and goals, possess both analytical and management skills, are great communicators and leaders, and are accustomed to working in teams. However, some physicians may be afraid or reluctant to take an idea to market, he noted.
“You need to get used to failures and rejections,” he said.
One of the necessary steps in getting an idea to market is forming a team made up of the physician entrepreneur, a patent attorney and a business professional, or “suit,” he said.
“There’s no ‘I’ in team and no ‘U.’ Surround yourself with team members who have the same mission. Startup companies are full of chaos and uncertainty, and the entrepreneur needs to be able to handle the uncertainty. There’s no secret sauce for developing a successful startup, but a good team can help,” Dr. Sharma said.
Being an entrepreneur is a full-time job and hard work, he added. It’s not for the risk-averse or fortune hunters.
“You should strive to create value, not wealth,” Dr. Sharma said.
Thomas Shehab, MD, a venture capitalist and managing director of Arboretum Ventures, Ann Arbor, MI, offered advice for raising capital. He discussed the so-called value proposition, a term used in a business plan to describe why customers would choose your product over what’s already on the market.
“The customers or stakeholders for a new medical device, method or service include the FDA, the Centers for Medicare and Medicaid Services, private insurers, other physicians, patients and health care executives,” he said.
Dr. Shehab urged physician innovators to consider several questions: What differentiates the new product from products already on the market? Is it clinically superior to what’s on the market? Why is the product compelling to the end user? Why will it displace what’s already in use? How would it fit into a different payment method, such as bundled payments or capitation?
To determine the value of a new product, physicians can use what Dr. Shehab called a pitch deck. The slides in the pitch deck should describe the market for the product, why it’s innovative, its value proposition, the team involved in developing and marketing the product, and its financials. The slides also should include a request for a specific amount of money.
Common sources for raising venture capital include family and friends, grants, institutional investors, venture capitalists and self-funding. In making a pitch to a potential investor, make sure you do your homework on where your product fits into the marketplace and how much capital you want to raise, Dr. Shehab advised.
“Tell your investor your expected valuation — don’t bluff. Be clear on how much you’re raising. Don’t overpromise and underdeliver,” he said.