If there’s one business lesson to be learned from the early decades of the 21st century, it is that technology is driving change at a pace that humanity has never seen. And, these advancements are disrupting industries as diverse as transportation and advertising –– even creating new industries like cryptocurrency.
Despite the promise of technology-driven innovations, one industry that arguably is slow to adapt to these trends is the medical device industry. Entrepreneurs like Vivek Kopparthi, co-founder and CEO of NeoLight, have taken notice.
“The medical device industry is built entirely on a 20th century model. Medtech companies build devices at the scale of hospital-grade equipment,” says Kopparthi. “The industry has been slow to realize that the explosion of small, flexible, user-controlled technologies could be applied to medical devices. Applying technology in new ways could, for example, make some hospital-based treatment models obsolete.”
Fueled by this realization and a passion to provide better care models for newborns, Kopparthi co-founded NeoLight, a company that engineers and designs devices to treat health conditions in newborns. Their first innovation (Sky Life), which just cleared the FDA in October 2017, is a phototherapy device that treats an infant with jaundice on a device that a mom or dad can carry out of the hospital and use at home. Picture an oversized iPad versus a machine in the NICU that’s roughly the size of a compact car.
From a purely financial perspective, it is possible that entrepreneurs like Kopparthi have tapped into a sleeping giant of an opportunity. In the United States alone (2015), healthcare surpassed $3 trillion dollars in annual spend. And, with the exception of a few devices and products, the industry is currently being largely run on software and hardware built in the early days of the internet. In short, startups have barely started to enter a major sector of our economy.
So why have so few entrepreneurs taken on this challenge? Two major factors include regulation and time.
“From a regulatory perspective, we are very lucky that the healthcare industry is risk-adverse. Because we are dealing with the health and wellbeing of real people, it’s important that any new technology or idea be extremely vetted by bodies like the FDA,” thinks Kopparthi. “However, this makes it extremely challenging for entrepreneurs with good ideas to enter the space.”
Kopparthi is right. “Lean startup” methods, which have ruled the past decade don’t work well in the world of medical devices. Prototypes cannot be tested on people without first going through rigorous testing and approval. Startups can’t beta test, A/B test, or “try-fail-repeat” when it comes to people, let alone infants with jaundice. And, there are many regulatory hoops that can trip up a company on its quest to bring a product to market while scaring away investment.
This slows down the pace of innovation that we have become accustomed to in the past decade. In a culture where an app can get a billion-dollar valuations in under two years, what drives a startup like NeoLight (which toiled for three years toward FDA clearance) to stay the course? To Kopparthi, the answer is simple.
“Empathy. I know it can be an overused word, but at NeoLight it drives everything we do. Sure, we could have applied our tech to an algorithm that optimizes a supply chain, or creates a fun app for teens. I wake up every day to use my talents to improve people’s lives and that’s what we’re attempting to do at NeoLight.”
These challenges facing entrepreneurs in the med device market are many, and startups entering this space need to match their drive to innovate with a patience to navigate a twentieth century model. However, if more innovators, like Kopparthi, are willing to do so, the healthcare industry is prime for disruption.