The scandalous MDR from the view of a startup founder
Earlier this year, Philippe wrote an article entitled ‘Scandalous Medical Device Regulation (MDR)’ which highlights the frustrations startups are experiencing because of the strict requirements of the MDR to approve medical devices.
A huge supporter of the reason behind these regulations, Phillip does think it was a much needed step to curb unethical businesses practices for financial gain which puts patients at risk.
Unfortunately, the shortage of Notified Bodies required to take part in the implementation of these policies has led to disruptions in the startup supply chain and they are at a higher risk of going bankrupt as their businesses are put on hold to await certification.
In his article, Philippe raises several other issues including how the disappearance of startups due to these regulations will affect the entire healthcare ecosystem. Prior to co-founding Dianosic, Philippe worked for 15 years for huge multinational corporations in the MedTech and pharmaceutical industry like Pfizer, Johnson & Johnson (Ethicon, Acclarent) and LivaNova.
In episode 9 of Career Diaries by Elemed, Elena and Philippe discuss his transition from multinational companies to becoming a CEO, the qualities necessary to become a startup founder, his take on why only 3% of VC funding goes to women and, of course, his thoughts about the MDR from the view of a startup founder.
How Philippe became Co-founder of Dianosic, an ENT startup
While Philippe was working at LivaNova, opportunity came knocking at his door, when a former customer from Acclarent, called him with the idea of a product. The product was in the ENT field and the customer, who is a French Surgeon, had identified several unmet needs in the ENT sector.
Despite finding the idea exciting and knowing that the surgeon was creative, Philippe was, at first, hesitant to join the startup. Several weeks later, Philippe started pressure testing the idea with a couple of other people that he knew in the field of ENT which helped him make up his mind to leave the corporate space and co-found Dianosic.
Dianosic’s mission is to provide solutions that change patient’s lives in both intranasal bleeding (epistaxis) and chronic sinusitis. With their medical devices, they aim to prevent surgical procedures and hospitalization.
Their devices are safe, economical and easy to use which allow patients to resume their day to day actives quicker.
They are also working on a long term project in the field of chronic sinusitis with an implant which you leave in the nose for about 12 months. This device has a steroid that is encapsulated and is absorved over time to treat the underlying disease.
Moving from a company to a startup; should you make the leap?
Some of the fears that stop people from making the shift are:
- The high level of risk.
- Losing the comfort of being in a large corporation.
- Their salary.
- Their family.
If you overthink making the move, you’ll paralyze yourself from ever leaving. Even if you list the pros and cons of founding a startup, and the pros outweigh the cons, as long as you keep second guessing yourself, you will always find a reason to stay at a company.
During the coronavirus crisis, it’s become evident that being employed by big companies doesn’t equal job security. Virgin Atlantic is testament to that, having laid off thousands of employees during the pandemic.
“Don’t wait to be in your late fifties to think, well, the startup can be an exit door. That’s not an exit door. That’s an opportunity.”
Focus on the good reasons; I want to be excited about something new, I want to do something on my own which is very rewarding, starting from literally zero and bring that to the patients.
Philippe advises that one of the most important things to do before making the move is securing the support of your partner. If not, it will create a lot of friction and the transition will be harder than it needs to be.
What it takes to work in a startup
To work in startup environment, you need to:
- Be a risk Taker – There’s a lot to lose. The startup may never take off and you might have to look for a job. But there’s also a lot to gain. Look at the long term benefits to guide you.
- Accept that failure is inevitable – Working for a startup, you have to be okay with the fact that you will fail many times over. Instead of looking at it negatively, think of failure as an opportunity and a teacher. The faster you are able to accept and deal with failure, the faster you will grow. Don’t let your pride get in the way.
“With startups in the US, for example, if you did not create a first startup that failed before you create a second one that will eventually succeed, investors will look at you in a strange way. You will be suspicious because failure is part of the game.”
- Be persistent – Running a startup is like running a marathon. It’s going to take some time before you can see great results. Focus on the milestone that you’re working towards while keeping the big picture in mind.
- Be flexible – During the Covid-19 crisis, we’ve seen companies pivot faster than ever in order to survive. An example is how gyms couldn’t offer services at their locations and pivoted to offer virtual classes and are now reaching more people than they were previously.
Changes are the norm with startups and you have to be able to discern when to stick with a goal, even when it doesn’t seem to be working, or when to pivot.
As the CEO of a startup in Medtech, what is your take on the new MDR?
“There was a need to change the way devices in general have been evaluated for the past 20 years,” but Philippe feels that the strategy that has been used to remedy that is excessive.
Philippe’s grievances with the MDR:
- Too much information required to be submitted for devices, including low risk devices which is cumbersome.
- The process is expensive even for low cost devices and one of the factors contributing to this is because the Notified Bodies are semi-private or fully private structures.
- There aren’t enough designated Notified Bodies which is slowing down the process which could be the end of a lot of healthcare startups.
Philippe’s Recommendations for the MDR
- Startups shouldn’t be charged more while large corporations are given discounts. Instead they should be charged in accordance with their capability.
- A Public European entity such as the European Medicine Agency (EMA) should be in charge of the evaluation instead of Notified Bodies as it’s decided what role Notified Bodies will play.
How MDR has affected foreign Medtech companies
“10 years ago, even a bit less than that, companies had a tendency to go to Europe with medical devices because it was easier to get devices registered in Europe than the US. But currently, as an example, it’s been easier to get our first product registered in the US compared to what it was to get it CE marked.
I think it’s not only a regulatory conversation here that we should have. I think when people tell you ‘well, in Europe, when you get CE marked, you have access to broad markets overnight.’ It’s partly true only because people have a tendency to forget that the CE mark is not the Holy Grail. The Holy Grail is the reimbursement of your devices.”
How has MDR impacted the strategy of startups?
“It depends on the type of devices that you have in your portfolio. Either you have a product that is intra DRG, and if it’s a hospital product that is already paid with the intra DRG, meaning the money the hospital will get to perform the procedure includes materials costs, that’s somewhat fine. It’s just a pricing discussion that you’re going to have with them to define what the right price point is.
If it’s a product that will be reimbursed on an outpatient basis, something you’re going to buy in a pharmacy, or something that is paid on top of the DRG, then the discussion is completely different and you have to think up front, ‘Okay, if I look at the European situation versus, for example, the US, how complex will that be to get my product paid for/reimbursed in those different markets?’”
Investors’ sentiments towards MDR’s increased burden
What investors want to see is a clear roadmap and the MDR has affected this. At the moment, businesses cannot estimate how long it will take for devices to be certified, how long it will take to deliver a product and the total cost of the product. The present situation with the MDR can result in unexpected costs and investors don’t like surprises.
About Philippe's article positive discrimination for startups
The way corporates are treated compared to startups is capitalistic in that both parties are invoiced at the same rate despite the amount of revenue the large corporations earn in comparison to startups. Also, because of the volume of the business of the corporates, they probably receive more discounts from Notified Bodies.
Philippe proposes that there should be positive discrimination towards startups where they are charged less based on the size of their company and receive discounts because of their financial bandwidth. This would support startups and help them compete in the market.
“This is what the European Medicines Agency (EMA) does. They have this small and medium enterprise group of people that collaborate with us and we have special tariffs for services that are paid full price by larger organizations. That’s one example.”
Only 3% of VC Investment goes to women, what are your thoughts?
One of our previous guests, Martha Lawrence, CEO and co-founder of AccendoWave, highlighted the fact that only 3% of VC funding goes to female founded startups.
“Yes, I’ve seen that and well, let me use the word, shocking.” Philippe corroborated this disparity brought to light by Martha, by pointing us to a study carried out by Boston Consulting Group who found that, “For every dollar of funding, these startups (female-founded) generated 78 cents, while male-founded startups generated less than half that—just 31 cents.“
Furthermore, according to this article, women receive less funding to the tune of slightly over 1 million dollars.
“I’m a strong advocate of having more women on board at all levels. Should it be as entrepreneurs, should it be as a member of scientific or strategic boards in companies, we miss women and it’s again, another example of something that is taking too long to change.”
Despite trying to play his part to change these circumstances, Philippe says that at times he finds it difficult to find women in tech. From his experience, there are fewer women in tech compared to men unlike in regulatory/quality, where it’s easier to find women to hire.
What is the legacy you want to leave on the world?
“Wow. Well, I could serve you the usual stuff like, “I want to be a role model.” Nobody can pretend he is or she is a role model because one day something happens and you are no longer one.
So I would rather say, I would love to be perceived as someone who is an optimist because I think I am and if you are an optimist, you believe you can change things without overpromising but you can try to do your best to change a things a little bit in this world. I think it’s Churchill who said, “I’m an optimist. It doesn’t seem too much use being anything else.”