In the Life Sciences universe, most people think of biopharma and medical devices as two separate businesses — never shall the two paths cross. However, there are many overlaps and best practices that can be applied to both sectors. It is widely accepted that biopharma companies often spend money early on to do a professional commercial assessment evaluating a product’s potential with key opinion leaders, community providers, payors, hospitals, and sometimes patients. Because medical device companies usually have less funding than biopharma companies, these professional commercial assessments are usually delayed or never done at all. Based on our experience, this is a missed opportunity as the commercial assessment can easily be leveraged to help with fundraising since in many cases the business plan is centered around commercial risk more than clinical or engineering risk. It can achieve a better valuation and maybe close an investor that would not have otherwise invested. Beyond fundraising, commercial assessments can be key to successfully closing a transaction, whether a partnering or M&A. They can help gain credibility with strategics, supporting higher deal values and milestone payments.
What comprises a solid commercial assessment? The answer is research to demonstrate the market opportunity. This includes, but is not limited to, in-depth qualitative interviews with KOLs, quantitative surveys with a larger number of physicians, discussions with prospective payors and constructing a market/penetration model. The goals are to answer key questions such as:
- How have market dynamics changed recently that are positive for the new product?
- Why can a new product be adopted?
- What populations are a prime target for the new product?
- How would new product work best in market?
- What are top uses of the new product?
- What are the reimbursement challenges for the product?
Many of our clients approach us and want to partner their product or sell their company. Others have already commercialized their product outside the US and are ready to explore selling rights to the US. In this particular case, doing a US-focused commercial assessment is the key to getting potential partners engaged. They may want to verify the work done, but they usually don’t have the time or the resources to do this from scratch, and may pass on a deal only for that reason. The same could be said for many institutional investors. Therefore, even an early stage company, should budget money for this assessment, as part of a seed round. The investment will pay dividends in the Series A. We, at Locust Walk, work with many medical device companies of all sizes. We would be delighted to speak with you about assisting you and your company achieve the maximum potential. Please feel free to contact me at: stewart@locustwalk.com.
Written by Stewart Davis. M.D