Medtech startups outsource R&D

Small medtech companies are finding value in outsourcing their research & development functions, according to a panel at a LifeScience Alley conference last week.

Starting a medtech company comes with a host of challenges, from regulation to financing to reimbursement. One way that companies can overcome those challenges, according to 2 industry experts, is to outsource some of the research and development work – and in the process, create a leaner, more flexible company.

The executives spoke at the recent LifeScience Alley conference in Minneapolis May 20. “Re-thinking the Where, What & How of Product R&D” explored the ways some medical device manufacturers are now outsourcing a number of functions in order to concentrate on core strengths.

According to Phil Deschamps, president and CEO of Helius Medical Technologies, a Newton, Pa.-based company that specializes in neurological therapies, outsourcing technical or regulatory work can be “wonderfully liberating” for a small startup. As a product gets closer to market, this approach gives a company more options, he said.

“I can vary the expertise that I need as the marketplace changes,” Deschamps explained. “It makes me very, very flexible.”

James Kent, COO of FocusStart, a St. Paul, Minn.-based medical technology development company, noted that for a small startup, hiring technical staff can be a tall order. By relying on established R&D firms, a company can move faster and focus on delivering innovation and quality, he added.

“For me, the speed/quality equation creates more value,” Kent said. “Your job becomes managing the project, not individuals.”

Not getting bogged down in personnel management was also a positive experience for Deschamps. Leading a medtech company requires taking a long view, he said, and not having to wrangle a large staff allows an executive to keep the correct perspective.

“When you discipline yourself to get out of the day-to-day and look 16 months out, it makes things easier,” Deschamps said.

Fundraising is also a time-consuming task, something Deschamps said he initially didn’t realize.

“I didn’t appreciate what percent of my time was going to be spent raising money,” he said.

Later in the discussion, Deschamps talked about some of the downsides of outsourcing R&D – for instance, how to ensure that your firm’s work is a priority. He said he put an emphasis on treating the outside R&D consultants like team members – and said that having a product with commercial promise doesn’t hurt.

“I aim to make myself their most profitable partner,” Deschamps said.