How to Make a Million -- Even a Billion -- Dollars Commercializing Your Great Idea and Questioning Conventional Wisdom
A healthy skepticism toward the traditional ways of doing things is crucial for an entrepreneur -- whether with medical devices, my own field, or for that matter, with any other field. My drive to seek improved alternatives, to ask, "Is there a better way to do what we do?" has always resonated for me, and brought me major success.
In fact, it's resonated for me for at least 28 years, going back to a bit of hubris I demonstrated as a medical student watching a distinguished Harvard surgeon perform surgery to remove a patient's gall bladder (back before laparoscopic surgery and keyhole incisions became the norm) .
"Why are you still using such a large incision?" I inquired, with a cheekiness that could have gotten me booted out of the operating room. The renowned surgeon didn't do that, thank goodness. But he did reply, with a hint of arrogance, that he was using the method he'd always used. After all, his own mentor 40 years earlier had made big incisions; and like his mentor, he adhered to the mantra, "The bigger the incision, the bigger the surgeon.”
I found that odd and even a little alarming. I promised myself I would approach medical challenges differently.
These many decades later, I'm now a heart surgeon myself who has always looked toward better and faster ways to do things, believing that if the good ideas percolating in the medical community could only become real products, they could improve and even save lives.
I personally, and repeatedly, have confronted the big question mark here -- commercial viability -- and I started with a big problem common to open heart surgery, which is how to remove the clots that restrict blood flow to the lungs and threaten cardiac arrest.
The traditional answer has long been to crack open patients' chests and connect them to an artificial heart-lung machine. But one night, I was fed up with this method, which I viewed as surgical overkill. "Couldn't we invent a less traumatic way to do this?" I asked -- in the middle of an emergency surgery, no less.
In fact, that's what we did. My partners, Mike Glennon and Brian deGuzman, and I, developed AngioVac, a tube inserted into a vein which vacuums clots out of the body, avoiding the need for open surgery. That grew into a business called Vortex Medical Inc., which in turn was sold to a public medical device company for $55 million in 2012 and was recently featured on the medical TV drama Grey’s Anatomy.
Out of this success grew our company, PAVmed Inc., which specializes in creating, then commercializing new medical technologies -- fast -- and uses much less capital than was required in the past. Of course our company isn't the only one questioning tradition and innovating in the medical space. Consider two other innovators -- and competitors:
- NeoTract Inc. makes a product to treat the enlarged prostates that so often plague aging males, and cause a frequent need to urinate. The standard treatment had been what jokesters called a “roto-rooter” job, where large amounts of prostrate tissue are removed, risking side effects like sexual dysfunction. Instead, NeoTract commercialized UroLift, which inserts implants to prop open the urinary passageway. Teleflex recently purchased NeoTract for over $1 billion!
- NxStage Medical Inc. CEO Jeff Burbank worked for years on the problem of kidney patients having to travel to dialysis centers three times a week. So, Burbank and his team developed System One, the first widely available home hemodialysis device. Fresenius Medical Care has made an offer for the product, of $2 billion.
Back here at PAVmed, we have used our success with our cardiac-arrest product to develop four strategies to advance our company -- and they're applicable to any company that wants to innovate:
1. Think outside the box.
Although this is a well-worn platitude, all too often, entrepreneurs fail to realize there is a strategic core to the concept. We need to be voracious consumers of innovative, often radical, ideas.
Take the inspiration for our product, CarpX, which treats carpal tunnel syndrome. One of our sales representatives had herself developed this common malady, which causes nerve symptoms in the hands, typically due to repetitive motion like typing and factory work. Standard treatment calls for a cut to a ligament in the palm to relieve the pressure on the nerve.
But recovery is long and painful. We asked why the revolution in minimally invasive procedures had not addressed this condition -- and that led to our inventing our device, which inserts a balloon under the ligament to set it up for bursts of radiofrequency energy that sever it cleanly without the need for the typical incision.
2. Provide more than one product.
Many medical device companies, especially early-stage ones, concentrate on just a single device. But having multiple products in a pipeline offers advantages, including obvious economies of scale. The most important advantage is diversification, which decreases the risk inherent in staking your company's success on just one product. Diversification also enhances versatility by allowing companies to allocate capital according to the most promising products in their pipeline.
In our case, people assumed we would focus on heart-related products, but instead, we forged ahead with a multi-product approach. Today, we have six products in our pipeline, including three lead products, addressing a broad swath of patient medical needs.
Another advantage: Sometimes,the innovation of one product affects the next one. Our product for carpal tunnel, for example, borrowed a balloon feature widely used to dilate heart arteries, and modified it to cut the compressing ligament.
3. Use outsourcing to bring down the costs of bringing your product to market.
Our model limits the fixed costs and permanent infrastructure needed to develop and make products. Engineering, design, manufacturing and regulatory compliance are all outsourced to best-in-class process experts.
We have averaged a cost of $3 million to get our previous products to market, which is less than one-tenth of the industry average.
4. Build a team of experts with complementary skills.
Forging a strong team with complementary skill sets is crucial to our business success. Our management group is comprised of colleagues I’ve known and respected for a long time. deGuzman was my surgical partner; we trained together. Our vice chairman is a veteran of the medical device industry who developed our business model.
Our medical advisors come from the finest hospitals and medical schools in the nation, and our board includes internationally recognized experts in corporate finance, as well as leaders in the medical device industry.
So, that’s how we've created a promising and vibrant medical device company using lessons that apply to entrepreneurial businesses across the spectrum. The next problem we're tackling? How to limit the scarring and collapse of veins when medicine or fluids are injected into them over time, limiting access for further treatments.
Our alternative product for this, PortlO, establishes a pathway into bone marrow to deliver fluids or other treatment, instead of into a vein. It's in the FDA process under the de novo classification program. That means "novel device."
What's your novel device for your industry? And when do you plan to start challenging conventional wisdom with it, paving the way to financial success and perhaps even revolutionary change?