Historically, in the business world, salespeople and sales activities were typically seen and described as both critical and tactical. A question was asked and an answer given. A tactical sales plan was prepared and then executed. Sales goals were typically short-term.
Along those same lines, MedTech start-ups were encouraged to start sales and grow them as fast as possible. Start-ups that didn’t achieve acceptable sales milestones were considered failures. VC’s focused on quantity vs quality of sales.
Times have changed! Today’s MedTech startups need to be much more strategic in their sales plans.
Why? There are two main reasons:
1. The cost of a MedTech start-up generating global sales of a single product has become prohibitively expensive and unaffordable. VC’s can’t and won’t fund this commercialization strategy.
2. The major Strategics, including Medtronic and others, are becoming increasingly desperate for new technologies and growth opportunities. According to a recent article by the Boston Consulting Group, established multinationals (aka Strategics) must:
- Drive growth through disruptive innovation and expansion into emerging markets.
- Use mergers and acquisitions to increase scale and build complementary offerings.
This is where strategic commercialization comes into play. In a nutshell, strategic commercialization is a highly targeted sales process where a limited number of customers enter into a partnership process that clinically validates the product, its rate of adoption in a competitive clinical setting at a certain sustainable price point.
So, here are the steps and considerations a MedTech start-up needs to consider as it approaches the strategic commercialization stage:
· Identify and secure up to 20 highly targeted KOL early adopters for initial sales
· Obtain agreement for continuous two-way collaboration and communication
· Continuous clinical support to optimize clinical success and feedback, ideally
organized around a PMST (post-marketing study) leading to a publication
· Key endpoints around safety, efficacy and adoption
· Determine mutually acceptable commercial price-point(s)
· Fine-tune/iterate the product and support team process through real clinical
feedback
· Position for strategic exit
Let me expand on the final point. An exit/purchase to a Strategic buyer will be greatly facilitated if the strategic commercialization process validates KOL acceptance, happiness and clinical adoption at an attractive price point.
Using these metrics, a Strategic buyer, using its global marketing and distribution infrastructure, can readily calculate the global market value of the start-up’s technology. And then… a deal is born!