Tag Archives: Medical

How Do You Expand Business Development Efforts? Four Thoughts

Situation: The CEO of a software company needs to increase revenue to cover expenses. He doesn’t want to cut salaries because if employees leave it will be hard to find replacements with the required skills. The better solution is to increase revenue. How do you expand business development efforts?

Advice from the CEOs:

  • Look at the markets which are growing rapidly:
    • Gaming. This is currently a good investment area. Large casinos are spending heavily on high end projects, and people just keep gambling!
    • Medical imaging. Potential targets include:
      • Pharma and Biotech R&D and Marketing/Sales – the ability to show how a drug binds with the cell receptors and how this impacts the cell is interesting to both groups. Also look at Medical schools. This is where you find the top researchers and they love teaching and presentation aids.
    • Military markets, particularly simulation spaces and unmanned vehicles. They value realistic simulated environments. Also look at training programs that value visually intensive simulations including marine and naval applications, aircraft, and battlefield simulations.
  • Consider the company’s business focus and strategy. How can it move from a “next project” model to a recurring revenue model? Is it possible to write client agreements to include a piece of the recurring revenue stream from client products?
    • Look at what the company does and package this as a product/service vs.an hourly problem-solving model. Focus on where the market is going. For example, iPhone apps – cheap to the customer, so millions buy them People now interact differently using electronic media. This opens new options.
  • What is the company’s key focus – Product Leadership, Operational Excellence or Customer Intimacy? How is the company’s differentiating strength presented consistently to client audiences?
    • It is important to clearly define the company’s niche – what makes it truly different. The communication must be clearly understood both by the engineers, and the business development and marketing people.
  • Invest additional funds in business development – with payments highly weighted on success.

How do you Respond Strategically to Market Uncertainty?

Interview with Kevin Moser, CEO, Dfine, inc.

Situation: The medical device industry faces uncertainty due to potential changes in reimbursement, increased regulation accompanying health care reform, longer FDA approval timelines and the economy. How does this impact strategy for an early stage medical device company?

Advice:

  • First and foremost it puts a premium on focus. We compete in a market dominated by large incumbents. When introducing new products in the past we would have blanketed the market to maximize early market share. Now we are being much more selective in terms of where we compete and putting more effort into targeted geographies.
  • This focus is accompanied by more caution and control of spending. We will only hire a new sales rep, for example, if we are assured that there is a significant customer base in the market that rep will serve.
  • Similarly, we are being much more cautious in our capital equipment decisions, and if an employee leaves we do not automatically replace that individual.
  • In terms of price planning, where in the past we would have counted on annual price increases, we now plan for the potential of prices decreasing over time to reflect new pressure on reimbursement and cost containment. As another example, in 2012 there will be a new tax on medical device companies. We assume that this will reduce our margins where in the past we might have passed it on to the buyer. Reduced margins will also impact our new product investment strategy.
  • The big change in long-range planning is that we are focused on slow, sustainable growth – maintaining both gross and net margins and profitability. This is a major change from five years ago when our focus was on maximizing rapid market penetration for new products. We want to be self-sufficient financially and thus avoid having to rely upon future fund-raising rounds.

You can contact Kevin at kevinm@dfineinc.com

Key Words: Medical, Device, Reimbursement, Regulation, Health Care Reform, FDA, Focus, Product Introduction, Spending Control, Hiring, Pricing, Growth