business plan for a medical device company

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Medical Device Business Plan

NOV.06, 2023

Medical Device Business Plan Sample

A medical device business plan is a document that outlines how to start and run a successful company that produces and sells products that diagnose, treat, or prevent diseases or injuries. Navigating the vast and expanding medical device sector presents thrilling opportunities alongside complex hurdles. A well-crafted business plan illuminates the route to success. Articulate your vision, milestones, tactics, and budgetary forecasts.

A business plan should also demonstrate how you will stand out from the crowd, satisfy users, adhere to regulations, and uphold ethical standards. A medical billing business plan is a specific type of medical device business plan that focuses on how to provide billing and coding services for healthcare providers.

In this article, we will provide you with a medical device business plan sample that you can use as a template or a reference for your business plan. We will cover the following sections:

• Executive Summary
• Company Overview
• Industry Analysis
• Customer Analysis
• Competitive Analysis
• Marketing Plan
• Operations Plan

Management Team

• Financial Plan

Executive Summary Section of Our Medical Device Business Plan

Business overview.

Medix is a medical device company that develops and sells innovative and affordable devices for diabetes management. We aim to enhance the well-being and health results of those managing diabetes. We aim to offer user-friendly and dependable products that assist in tracking and regulating blood sugar levels.

Products and Services

Medix offers two main products:

• Medix Glucometer – A smart glucose meter that connects to a mobile app via Bluetooth and provides accurate and instant readings of blood glucose levels.
• Medix Patch – A wearable patch that continuously measures blood glucose levels through the skin without needing finger pricks or test strips.

Customer Focus

Medix focuses on serving people with diabetes, seeking convenient and affordable solutions to manage their condition. According to the IDF Diabetes Atlas 10th edition report , 537 million adults (20-79 years) live with diabetes – 1 in 10. Experts predict that this number will rise to 643 million by 2030 and 783 million by 2045. Therefore, there is a huge demand for effective and accessible diabetes care products.

Leo Clark and Aria Bennett, two experienced entrepreneurs with biomedical engineering and business administration backgrounds, founded Medix. Leo is the CEO and head of product development, while Aria is the COO and head of marketing and sales. A team of qualified engineers, designers, developers, marketers, salespeople, and advisors supports them.

Success Factors

Medix has several competitive advantages that will enable it to succeed in the medical device industry:

• Innovation with cutting-edge technology to create novel devices
• High standards of quality and safety in every aspect of devices
• Customer satisfaction by providing user-friendly devices
• Social impact by addressing a major health problem globally

Financial Highlights

Medix seeks $5 million in seed funding to launch its products and scale its operations. The company projects to generate $1.2 million in revenue in the first year, $3.6 million in the second year, and $10.8 million in the third year, with a gross margin of 60% and a net profit margin of 20%. The company expects to break even in the second year and reach a valuation of $50 million by the end of the third year.

Company Overview Section of Our Medical Device Sales Business Plan

Who is Medix Medical Supply?

Medix dedicates itself to developing and selling innovative, affordable, and reliable devices for diabetes management. Our products help people with diabetes to monitor and control their blood glucose levels with ease and effectiveness, leading to better health outcomes and an improved quality of life.

Medix Medical Supply History

Medix is a company that provides innovative solutions for diabetes care. It was founded by Leo Clark and Aria Bennett in 2023, who both personally experienced the challenges and frustrations of living with diabetes. These challenges included frequent finger pricks, expensive test strips, inaccurate readings, and complicated insulin injections.

They started Medix with their personal funds and an incubator grant to address these issues. Medix developed two products – the Medix Glucometer and the Medix Patch – to make diabetes monitoring and treatment easier, more accurate, and more affordable.

The Medix products have received regulatory approvals from the Food and Drug Administration (FDA) and the European Medicines Agency (EMA). They are now ready for launch in the US and European markets. For more information, please refer to our dentistry business plan .

Legal Structure

Medix, an LLC registered in Delaware, USA, has obtained ownership by Leo Clark (60%) and Aria Bennett (40%). Additionally, the company has applied for a patent for its products in the US Patent and Trademark Office (USPTO).

Industry Analysis Section of Our Medical Device Business Plan

The medical device industry is one of the world’s most innovative and dynamic sectors. Fortune Business Insights reported that the global medical device market was valued at $512.29 billion in 2022 and can grow from $536.12 billion in 2023 to $799.67 billion by 2030, at a CAGR of 5.9%.

The medical device industry is driven by several factors, such as:

• The increasing prevalence of diseases and the aging population
• The rising demand for minimally invasive and personalized treatments
• The advancement of technology and digitalization
• The emergence of new markets and segments

Customer Analysis Section of Our Medical Supply Business Plan

Demographic profile of target market.

Medix’s target market is the US market, which ranks third for the highest number of people with diabetes. We target diabetic people looking for convenient, affordable solutions to manage their condition. 

According to the National Diabetes Statistics Report by CDC, here are some interesting stats about why the US market is best for Medix:

• 37.3 million people have diabetes (11.3% of the US population)
• 28.7 million people are diagnosed, including 28.5 million adults
• 8.5 million people are undiagnosed (23.0% of adults)
• 96 million people aged 18 years or older have prediabetes (38.0% of the adult US population)
• 26.4 million people aged 65 years or older (48.8%) have prediabetes

The demographic profile of our target market is as follows:

• Age – We target all ages, mainly the young and middle-aged, who are tech-savvy and have more money to spend. A CDC report says 34.1 million adults aged 18 years or older—or 13.0% of all US adults—have diabetes.
• Gender – We target both males and females, as diabetes does not discriminate by gender. A NIDDK (NIH) report says a higher percentage of men (41%) than women (32%) have prediabetes.
• Income – We target all income levels, mainly the low and middle-income who need better healthcare solutions. An NCBI (NIH) report says 80% of the adults worldwide with diabetes live in low- and middle-income countries (LMICs).

Customer Segmentation

Based on our market research and customer feedback, we have identified four main customer segments for our products:

• Segment A – Tech-savvy innovators who value quality, performance, and convenience. They share their views online.
• Segment B – Cost-conscious buyers who seek affordable and effective products. They trust their peers’ recommendations.
• Segment C – Health-conscious improvers who want products that motivate and support them. They join online health communities.
• Segment D – Compliance-driven users need products that ensure safety, security, and simplicity. They depend on their health providers and caregivers.

The table below summarizes our findings:

Based on the table, we have decided to target segments A and B as our primary segments, and segments C and D as our secondary segments.

Competitive Analysis Section of Our Medical Equipment Producer Business Plan

Direct and indirect competitors.

Our direct competitors are other medical device companies that offer similar or substitute surgical medical equipment for diabetes management. Some of the major players in this category are:

1. Abbott – A global healthcare company that offers a range of products for diabetes care with mobile apps for real-time data and insights.

• Strong brand recognition
• Global presence
• Innovation capabilities
• Customer loyalty

Weaknesses:

• Limited availability
• Technical issues

2. Dexcom – A medical device company specializing in CGMs for diabetes management. These devices use sensors to record and transmit data to a receiver or a smartphone.

• High accuracy
• Reliability
• Convenience
• Customer satisfaction
• Short sensor lifespan
• Skin irritation

3. Medtronic – A medical technology company that offers a range of durable medical equipment for diabetes care, such as insulin pumps, CGMs, and APSs. The system connects to a mobile app to monitor and control settings.

• Leadership position
• Advanced technology
• Clinical evidence
• Customer support
• Safety concerns
• Regulatory hurdles
• Competition

Our indirect competitors are other healthcare providers or solutions that offer alternative or complementary ways to manage diabetes, such as medications, diet plans, exercise programs, coaching services, etc. Refer to our hospital business plan to learn more.

Competitive Advantage

Medix’s unique value proposition and competitive advantage over its competitors are:

• Medix is more innovative
• Medix is more convenient
• Medix is more versatile
• Medix is more affordable
• Medix is more user-friendly

Marketing Plan Section of Our Medical Device Business Plan

Promotions strategy.

We will promote our products using online and offline channels to attract and retain customers. Our promotional mix consists of:

• Advertising – Online platforms (e.g., Google Ads, Facebook Ads) and offline media (e.g., newspapers, billboards) to deliver relevant and engaging messages.
• Public Relations – Press releases, media interviews, podcasts, webinars, etc., to generate positive publicity and exposure. Social media platforms (e.g., Facebook, Twitter) to interact and communicate with customers and stakeholders.
• Sales Promotion – Discounts, coupons, free samples, free trials, referrals, loyalty programs, etc., to stimulate sales and repeat purchases. Contests, sweepstakes, giveaways, etc., to create excitement and buzz.
• Personal Selling – Direct sales, telemarketing, email marketing, etc., to contact and persuade customers to buy our products. Online platforms (e.g., Amazon, eBay, Shopify) to sell our products directly.

We will use a value-based pricing strategy that reflects the value and benefits of our products and our competitive advantage. We will also offer competitive pricing that matches or undercuts our competitors’ prices.

We will charge $100 for each Medix Glucometer and $50 for each Medix Patch. We will also generate recurring revenue from the sales of test strips ($0.5 each) and insulin cartridges ($10 each). We estimate that each customer will use an average of 100 test strips and 12 insulin cartridges per year.

Operations Plan Section of Our Medical Device Business Plan

Operation functions.

We do these core activities to offer our products and services to our customers:

• Product Development – We research, design, test, and improve our products using agile methods, customer feedback, market trends, and tools like GitHub, Jira, Figma, etc.
• Manufacturing – We produce our products on a large scale and high quality by outsourcing to a reliable contract manufacturer.
• Distribution – We deliver our products to our customers quickly and cheaply using direct and indirect channels in different regions or countries.
• Customer Service – We support and assist our customers before, during, and after their purchase using various channels and methods.

Milestones and Timeline

We have these specific goals and objectives to track our progress and success in our operation functions:

• June 2024: Complete R&D, testing, prototyping of products
• September 2024: Obtain regulatory approvals and certifications
• December 2024: Launch marketing campaign and product launch in the US
• March 2025: Market research for Europe entry
• December 2025: Launch Europe marketing, market entry
• March 2026: Invest in production capacity
• June 2026: Expand manufacturing workforce
• December 2026: Evaluate production, increase to 100k units/month

Management Team Section of Our Medical Device Business Plan

Founders and co-founders.

Leo Clark, a biomedical engineer with type 1 diabetes, and Aria Bennett, the daughter of a type 2 diabetic and a business administrator, founded Medix. Leo is responsible for the product development function, while Aria leads the marketing and sales function. Both have several years of experience working in their respective fields and personal and professional experience with diabetes.

Other Key Team Members

• Alice Lee – Our chief engineer
• Bob Chen – Our chief developer
• Carol Wang – Our chief designer
• Dave Jones – Our chief marketer
• Emma Smith – Our chief salesperson

Financial Plan Section of Our Medical Device Business Plan

Key revenue and costs.

Medix’s main sources of revenue, along with pricing, are:

• Medix Glucometer – $100 for each Glucometer
• Medix Patch – $50 for each Patch
• Test Strips – $0.5 for each test strip
• Insulin Cartridge – $10 for each cartridge

We estimate that each customer will use an average of 100 test strips and 12 insulin cartridges per year.

Medix’s main categories of expenses are:

• Cost of Goods Sold (COGS) – Our main cost of goods sold is the cost of materials, components, parts, and additional supplies. We estimate that the COGS per unit is $40 for the Medix Glucometer, $20 for the Medix Patch, $0.1 for the test strip, and $2 for the insulin cartridge.
• Operating Expenses (OPEX) – Our main operating expenses are the costs we incur for running and operating our business, such as salaries, rent, utilities, marketing, advertising, R&D, etc. Our OPEX will be 40% of our revenue in the first year, 35% in the second year, and 30% in the third year.

Funding Requirements and Use of Funds

Funding Requirements – We seek $5 million in seed funding to launch our products and scale our operations. We have already raised $500,000 from our savings and a small grant from a local incubator. We need an additional $4.5 million to cover our expenses for the next 18 months until we reach the break-even point.

Use of Funds – We will use the funds for the following purposes as highlighted in the below chart:

Key Assumptions

• Market size for our products is 10% of the total number of people with diabetes in the US and Europe
• Market share is projected to grow from 107,000 customers in 2024 to 444,000 customers in 2026
• Sales volume is projected to grow from 321,000 units in 2024 to 1.33 million units in 2026
• Gross margin is projected to be 60% in all three years
• Net margin is projected to grow from 20% in 2024 to 30% in 2026

Financial Projections

Based on the above assumptions, we have prepared the following financial projections for the next three years:

Income Statement

OGSCapital – Your Partner for Medical Device Startup Success

With over a decade of experience, at OGSCapital, we have helped various entrepreneurs craft winning business plans. Our consultants provide end-to-end support – from market research and competitor analysis to realistic profitability forecasts. We understand the medical device industry inside-out, including regulations, manufacturing, and distribution.

Whether you need help with your hospital feasibility study , medical equipment manufacturing business plan, or medical supply store business plan, we tailor our approach to your specific product and goals. Partner with us to launch your startup on the path to profitability and rapid growth.

Frequently Asked Questions

How to start a medical device business.

A strategic business plan is a key ingredient in a startup medical device company. But that alone won’t cut it – the company also requires a talented group of professionals, structured product development procedures, a plan for meeting regulatory guidelines, and effective marketing tactics. A distributor or a medical equipment supplier can help distribute the devices.

How profitable are medical devices?

The medical equipment industry is booming with high growth potential. The average operating margin for medical equipment and supplies companies averages 2.87%. The medical device market will grow at a CAGR of 5.5% to 5.9% from 2022 to 2030.

How do I market my medical device?

As highlighted in our Medical Clinic Business Plan , some popular marketing channels to market a medical device include online platforms, social media, trade shows, conferences, webinars, publications, referrals, and testimonials. A medical equipment rental company can also help market the device.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Medical Device Business Plan Template

Written by Dave Lavinsky

Medical Device Business Plan

You’ve come to the right place to create your Medical Device business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Medical Device businesses.

Below is a template to help you create each section of your Medical Device business plan.

Executive Summary

Business overview.

MediTech LLC is a medical device company that sells Class I medical devices to hospitals, clinics, and other establishments in the medical industry. We manufacture a long list of devices including surgical instruments, syringes, and bandages. We know that patients can’t receive quality care if medical professionals don’t have good tools. Therefore, our mission is to provide the best medical devices in the industry so that all hospitals and clinics can provide the best care possible.

MediTech LLC is founded by Sarah Nelson. Sarah has considerable experience as a surgeon and used hundreds of medical devices throughout her career. She knows exactly what it takes to make high quality medical products and has made it her mission to create the best medical devices in the industry. Her expertise and knowledge of the industry will give us a considerable advantage over the competition.

Product Offering

MediTech LLC sells a long list of Class I medical devices. Class I medical devices are low risk devices and are unlikely to cause any harm to users. These include bandages, surgical tools, bedpans, gloves, and surgical masks. Our product list will grow and change depending on which devices are in high demand.

Customer Focus

MediTech LLC will primarily serve hospitals, clinics, and other medical organizations. Some products will be sold in stores to the public, including bandages, gloves, and face masks.

Management Team

MediTech LLC was founded by Sarah Nelson, a licensed and experienced surgeon. While working in the medical industry, she was frustrated by the quality of the medical devices she used. Her hospital routinely purchases low quality devices to save costs and this would affect the quality of her care. She researched what it would take to make higher quality versions of these products and decided to start a company that provides better quality devices for an affordable cost.

Success Factors

MediTech LLC will be able to achieve success by offering the following competitive advantages:

• We will provide the best quality medical devices in the industry. Our devices will help improve the quality of care that our clients give their patients.
• MediTech will price all of its products moderately so all of our clients and customers can afford them.
• Our founder has years of experience as a surgeon in the medical industry, bringing a vast amount of medical knowledge to the table. This will help us create perfect medical devices and products that all medical professionals will be eager to use.

Financial Highlights

MediTech LLC is currently seeking $1,400,000 to launch. The funding will be dedicated to the facility build out, purchase of initial equipment, working capital, marketing costs, and startup overhead expenses. The breakout of the funding is below:

• Facility design/build: $500,000
• Equipment: $200,000
• Six months of overhead expenses (payroll, rent, utilities): $400,00
• Initial supplies and inventory: $100,000
• Marketing and advertising: $100,000
• Working capital: $100,000

The following graph below outlines the pro forma financial projections for MediTech LLC.

Company Overview

Who is meditech llc.

MediTech LLC sells high-quality Class I medical devices to the medical industry. Our management team knows from experience that patients can’t receive the best care possible if physicians aren’t using the best tools. However, many medical organizations order lower quality devices in order to save on costs. At MediTech LLC, we are committed to making the best medical devices in the industry that are more affordable than the competition.

  MediTech LLC produces a long list of medical devices for the medical industry. These include bandages, surgical masks, gloves, surgical instruments, and bedpans. All of our products are Class I devices, meaning they present a low risk to the user.

MediTech LLC is founded by Sarah Nelson. Sarah has considerable experience as a surgeon and used hundreds of medical devices throughout her career. She knows exactly what it takes to make high quality medical products and has made it her mission to create the best medical devices in the industry. Her expertise and connections in the industry will ensure that MediTech LLC achieves its mission.

MediTech LLC History

Sarah Nelson founded and incorporated MediTech LLC as an LLC in June 2023. Though the company is currently running out of a small rented office, it will move to a large warehouse once the lease is finalized.

Since incorporation, MediTech LLC has achieved the following milestones:

• Developed the company’s name, logo, and website
• Determined equipment and fixture requirements
• Identified and established relationships with potential clients and suppliers
• Begun recruiting key employees

MediTech LLC Services

MediTech LLC manufactures and sells Class I medical devices. These include (but are not limited to) the following:

• Surgical instruments
• Non-electric wheelchairs
• Stethoscopes
• Surgical masks

Industry Analysis

The medical industry is dependent on the access to high-quality medical devices and products. From gloves and masks to EKG machines, every device used in the care of patients needs to be high quality and always in working order. Devices that are poor quality or don’t work properly can cause significant problems when being used to care for patients.

Medical devices are categorized into three classes. Class I devices are devices that pose very little risk to the user. These items include bandages, surgical instruments, and gloves. Class II devices are intermediate risk devices. These include intravenous pumps and CT machines. Class III devices are high risk and require a great amount of regulation. These devices are also critical to sustaining life. These include pacemakers and brain stimulators.

According to Fortune Business Insights, the medical device industry is valued at $539 billion and is expected to grow at a CAGR of 5.9%. Medical devices are constantly in high demand and are essential for the success of the medical industry. Therefore, now is a great time to start a new medical device company.

Customer Analysis

Demographic profile of target market, customer segmentation.

The company will primarily target the following customer segments:

• Medical clinics

Competitive Analysis

Direct and indirect competitors.

MediTech LLC will face competition from other companies with similar business profiles. A description of each competitor company is below.

Smith & Smith

Smith & Smith is a large corporation that sells thousands of products, including cosmetics, hygiene products, and certain medical devices. The medical devices they primarily produce include bandages, ointments, and low risk surgical and physician instruments. They sell many of their products to the general public (such as simple wound care devices) but also sell some devices to the medical industry. They will be a major competitor since they sell primarily Class I devices. However, they currently do not produce as many medical devices as MediTech LLC plans to produce, which gives us an advantage in the market.

MedMonitor is a medical device company that manufactures Class III medical devices. Some of their products include breast implants, pacemakers, implanted prosthetics, and defibrillators. They do sell some Class I and Class II products, such as gloves, wound care items, and surgical masks, but they are not a major manufacturer of these products. As such, we expect that MedMonitor will only be a minor competitor in the market.

MedSource is the source for most of the medical industry’s Class II medical devices. They produce a long list of devices including syringes, testing kits, contact lenses, and blood pressure cuffs. They do produce some products that can be categorized as Class I devices, but their product list does not overlap too much with ours. As such, we expect that MedSource will only be a minor competitor.

Competitive Advantage

MediTech LLC enjoys several advantages over its competitors. These advantages include the following:

• Management : Sarah Nelson has been extremely successful working in the medical industry and will be able to use her previous experience to design and manufacture the best medical devices in the industry.
• Relationships : Sarah knows many of the local leaders, business managers, and other influencers in the medical industry. These relationships will help her have access to quality materials and create an initial clientbase.
• Affordability : Thanks to Sarah’s connections within the industry, we are able to access high-quality materials for our products for an affordable cost. As a result, we can price all our products more moderately than the competition.

Marketing Plan

Brand & value proposition.

The MediTech LLC brand will focus on the company’s unique value proposition:

• High quality medical devices
• Affordable pricing
• Client-focused service

Promotions Strategy

The promotions strategy for MediTech LLC is as follows:

Social Media Marketing

Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. MediTech LLC will use social media to develop engaging content in terms of the company’s product offerings. Engaging with prospective consumers and businesses on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand changing customer needs.

Website/SEO

MediTech LLC will invest in developing a professional website that displays all of the products offered by the company. It will also invest in SEO so that the company’s website will appear at the top of search engine results.

Direct Mail

MediTech LLC will blanket businesses with direct mail pieces. These pieces will provide general information on MediTech LLC, offer discounts, and/or provide other incentives for companies to buy our products.

Advertisement

Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. MediTech LLC will advertise its products in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.

MediTech LLC’s pricing will be moderate, so clients feel they receive great value when purchasing our products.

Operations Plan

The following will be the operations plan for MediTech LLC. Operation Functions:

• Sarah Nelson will be the CEO of MediTech LLC. She will oversee the general operations and executive aspects of the business.
• Sarah is joined by Rebecca Smith who will act as the warehouse manager. She will train and manage the staff as well as oversee general production of our products.
• Sarah will hire an Administrative Assistant, Marketing Manager, and Accountant, to handle the administrative, marketing, and bookkeeping functions of the company.
• Sarah will also hire several employees to manufacture our products and maintain the equipment and machinery.

Milestones:

MediTech LLC will have the following milestones completed in the next six months.

• 02/202X Finalize lease agreement
• 03/202X Design and build out MediTech LLC
• 04/202X Hire and train initial staff
• 05/202X Kickoff of promotional campaign
• 06/202X Launch MediTech LLC
• 07/202X Reach break-even

Sarah Nelson is a former surgeon who is familiar with the most popular medical devices in the industry. She knows better than anyone that low quality products means low quality care for patients. As a surgeon, she was often disappointed with the quality of the medical devices she used. Her hospital would routinely choose the cheapest options to save costs. This resulted in more problems and low quality care being delivered to her patients. She is now passionate about starting her own company that provides high quality medical devices for an affordable cost.

Though Sarah has never run a business of her own, she has worked in the medical industry long enough to gain an in-depth knowledge of the operations (e.g., running day-to-day operations) and the business (e.g., staffing, marketing, etc.) sides of the industry. She will also hire several professionals to help her run other aspects of the business she is unfamiliar with.

Financial Plan

Key revenue & costs.

The key revenues for MediTech LLC will come from the sale of our medical devices and products.

The major cost drivers for the company will include manufacturing costs, overhead expenses, labor expenses, and marketing costs.

Funding Requirements and Use of Funds

• Six months of overhead expenses (payroll, rent, utilities): $400,000

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Number of wholesale contracts:
• Year 5: 100
• Average order value: $5,000

Financial Projections

Income statement, balance sheet, cash flow statement, medical device business plan faqs, what is a medical device business plan.

A medical device business plan is a plan to start and/or grow your medical device business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Medical Device business plan using our Medical Device Business Plan Template here .

What are the Main Types of Medical Device Businesses? 

There are a number of different kinds of medical device businesses , some examples include: Class 1 medical device, Class 2 medical device, and Class 3 medical device.

How Do You Get Funding for Your Medical Device Business Plan?

Medical Device businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Medical Device Business?

Starting a medical device business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Medical Device Business Plan - The first step in starting a business is to create a detailed medical device business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your medical device business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your medical device business is in compliance with local laws.

3. Register Your Medical Device Business - Once you have chosen a legal structure, the next step is to register your medical device business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your medical device business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Medical Device Equipment & Supplies - In order to start your medical device business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your medical device business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful medical device business:

• How to Start a Medical Device Company

How to write a business plan for a medical device manufacturer?

Writing a business plan for a medical device manufacturer can be an intimidating task, especially for those just starting.

This in-depth guide is designed to help entrepreneurs like you understand how to create a comprehensive business plan so that you can approach the exercise with method and confidence.

We'll cover: why writing a medical device manufacturer business plan is so important - both when starting up, and when running and growing the business - what information you need to include in your plan, how it should be structured, and what tools you can use to get the job done efficiently.

Let's get started!

In this guide:

Why write a business plan for a medical device manufacturer?

• What information is needed to create a business plan for a medical device manufacturer?
• What goes in the financial forecast for a medical device manufacturer?
• What goes in the written part of a medical device manufacturer business plan?
• What tool can I use to write my medical device manufacturer business plan?

Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write a medical device manufacturer business plan in the first place.

To have a clear roadmap to grow the business

It's rarely business as usual for small businesses. The economy follows cycles where years of growth are followed by recessions, and the business environment is always changing with new technologies, new regulations, new competitors, and new consumer behaviours appearing all the time...

In this context, running a business without a clear roadmap is like driving blindfolded: it's dangerous at best. That's why writing a business plan for a medical device manufacturer is essential to create successful and sustainable businesses.

To write an effective business plan, you will need to take stock of where you are (if you are already in business) and where you want the business to go in the next three to five years.

Once you know where you want your medical device manufacturer to be, you'll have to identify:

• what resources (human, equipment, and capital) are needed to get there,
• at what pace the business needs to progress to get there in time,
• and what risks you'll face along the way.

Going through this process regularly is beneficial, both for startups and existing companies, as it helps make informed decisions about how best to allocate resources to ensure the long-term success of the business.

To anticipate future cash flows

Regularly comparing your actual financial performance to the projections in the financial forecast of your medical device manufacturer's business plan gives you the ability to monitor your business's financial health and make necessary adjustments as needed.

This practice allows you to detect potential financial issues, such as unexpected cash shortfalls before they escalate into major problems. Giving you time to find additional financing or put in place corrective measures.

Additionally, it helps you identify growth opportunities, like excess cash flow that could be allocated to launch new products and services or expand into new markets.

Staying on track with these regular comparisons enables you to make well-informed decisions about the amount of financing your business might require, or the excess cash flow you can expect to generate from your main business activities.

To secure financing

Whether you are a startup or an existing business, writing a detailed medical device manufacturer business plan is essential when seeking financing from banks or investors.

This makes sense given what we've just seen: financiers want to ensure you have a clear roadmap and visibility on your future cash flows.

Banks will use the information included in the plan to assess your borrowing capacity (how much debt your business can support) and your ability to repay the loan before deciding whether they will extend credit to your business and on what terms.

Similarly, investors will review your plan carefully to assess if their investment can generate an attractive return on investment.

To do so, they will be looking for evidence that your medical device manufacturer has the potential for healthy growth, profitability, and cash flow generation over time.

Now that you understand why it is important to create a business plan for a medical device manufacturer, let's take a look at what information is needed to create one.

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Information needed to create a business plan for a medical device manufacturer

Drafting a medical device manufacturer business plan requires research so that you can project sales, investments and cost accurately in your financial forecast, and convince the reader that there is a viable commercial opportunity to be seized.

Below, we'll focus on three critical pieces of information you should gather before starting to write your plan.

Carrying out market research for a medical device manufacturer

Carrying out market research before writing a business plan for a medical device manufacturer is essential to ensure that the financial projections are accurate and realistic.

Market research helps you gain insight into your target customer base, competitors, pricing strategies and other key factors which can have an impact on the commercial success of your business.

In particular, it is useful in forecasting revenue as it provides valuable data regarding potential customers’ spending habits and preferences.

1. Your medical device manufacturer may discover a trend in consumer preferences for more convenient or user-friendly products. 2. Market research might reveal a trend in demand for products that offer additional features or higher performance than those currently on the market.

This information can then be used to create more accurate financial projections which will help investors make informed decisions about investing in your medical device manufacturer.

Developing the sales and marketing plan for a medical device manufacturer

Budgeting sales and marketing expenses is essential before creating a medical device manufacturer business plan.

A comprehensive sales and marketing plan should provide an accurate projection of what actions need to be implemented to acquire and retain customers, how many people are needed to carry out these initiatives, and how much needs to be spent on promotions, advertising, and other aspects.

This helps ensure that the right amount of resources is allocated to these activities in order to hit the sales and growth objectives forecasted in your business plan.

The staffing and equipment needs of a medical device manufacturer

As you embark on starting or expanding your medical device manufacturer, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is essential for ensuring your business's success.

Both the recruitment and investment plans must align with the timing and level of growth projected in your forecast, and they require appropriate funding.

Staffing costs may include salaries for engineers, technicians, and other personnel who are responsible for designing, producing, and testing the medical device. Equipment costs may include the purchase of materials and supplies such as raw materials, components, and machinery needed to produce the medical device. Other costs may include the cost of renting space for production, purchasing additional machinery, and the cost of maintenance and repairs.

To create a realistic financial forecast, you also need to consider other operating expenses associated with the day-to-day running of your business, such as insurance and bookkeeping.

With all the necessary information at hand, you are ready to begin crafting your business plan and developing your financial forecast.

What goes into your medical device manufacturer's financial forecast?

The financial forecast of your medical device manufacturer will enable you to assess the profitability potential of your business in the coming years and how much capital is required to fund the actions planned in the business plan.

The four key outputs of a financial forecast for a medical device manufacturer are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's take a closer look at each of these.

The projected P&L statement

The projected P&L statement for a medical device manufacturer shows how much revenue and profits your business is expected to generate in the future.

Ideally, your medical device manufacturer's P&L statement should show:

• Healthy growth - above inflation level
• Improving or stable profit margins
• Positive net profit

Expectations will vary based on the stage of your business. A startup will be expected to grow faster than an established medical device manufacturer. And similarly, an established company should showcase a higher level of profitability than a new venture.

The forecasted balance sheet of your medical device manufacturer

The projected balance sheet of your medical device manufacturer will enable the reader of your business plan to assess the overall financial health of your business.

It shows three elements: assets, liabilities and equity:

• Assets: are productive resources owned by the business, such as equipment, cash, and accounts receivable (money owed by clients).
• Liabilities: are debts owed to creditors, lenders, and other entities, such as accounts payable (money owed to suppliers).
• Equity: includes the sums invested by the shareholders or business owners and the profits and losses accumulated by the business to date (which are called retained earnings). It is a proxy for the value of the owner's stake in the business.

Analysing your medical device manufacturer projected balance sheet provides an understanding of your medical device manufacturer's working capital structure, investment and financing policies.

In particular, the readers of your plan can compare the level of financial debt on the balance sheet to the equity value to measure the level of financial risk (equity doesn't need to be reimbursed, while financial debt must be repaid, making it riskier).

They can also use your balance sheet to assess your medical device manufacturer's liquidity and solvency:

• A liquidity analysis: focuses on whether or not your business has sufficient cash and short-term assets to cover its liabilities due in the next 12 months.
• A solvency analysis: takes and longer view to assess whether or not your business has the capacity to repay its debts over the medium-term.

The cash flow forecast

A projected cash flow statement for a medical device manufacturer is used to show how much cash the business is generating or consuming.

The cash flow forecast is usually organized by nature to show three key metrics:

• The operating cash flow: do the core business activities generate or consume cash?
• The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
• The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?

As we discussed earlier, cash is king and keeping an eye on future cash flows an imperative for running a successful business. Therefore, you can expect the reader of your medical device manufacturer business plan to pay close attention to your cash flow forecast.

Also, note that it is customary to provide both yearly and monthly cash flow forecasts in a business plan - so that the reader can analyze seasonal variation and ensure the medical device manufacturer is appropriately funded.

The initial financing plan

The initial financing plan - also called a sources and uses table - is an important tool when starting a medical device manufacturer.

It shows where the money needed to set up the business will come from (sources) and how it will be allocated (uses).

Having this table helps understand what costs are involved in setting up the medical device manufacturer, how the risks are distributed between the shareholders and the lenders, and what will be the starting cash position (which needs to be sufficient to sustain operations until the business breaks even).

Now that the financial forecast of a medical device manufacturer business plan is understood, let's focus on what goes into the written part of the plan.

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The written part of a medical device manufacturer business plan

The written part of a medical device manufacturer business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.

Let's go through the content of each section in more detail!

1. The executive summary

In your medical device manufacturer's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your medical device manufacturer, current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

The second section in your medical device manufacturer's business plan should focus on the structure and ownership, location, and management team of the company.

The structure and ownership part provides an overview of the legal structure of the business, who the owners are and how much each has invested and owns. If you are seeking financing it is important that the reader gets a clear picture of which legal entity is receiving the funds, and who controls the business.

The location part should give an overview of the premises from which the company is operating, and why that location is of particular interest (catchment area, accessibility, amenities nearby, etc.).

When describing the location of your medical device manufacturer, you may want to emphasize its access to a highly-educated workforce, competitive costs, and strong transportation networks. You could point out its proximity to a major metropolitan area, which could provide access to potential customers and other resources. Additionally, you might want to highlight that the region has a long history of successful manufacturing operations and is home to a wide range of industries. All of these factors could make it an attractive option for a third party financier.

Finally, you should introduce the management team. Explain each member's role, background, and experience.

It is also important to emphasize any past successes that the members of the management team have achieved, and how long they've been working together, as this will help potential lenders or investors understand why they should trust in their leadership.

3. The products and services section

The products and services section of your business plan should include a detailed description of what your company offers, who are the target customers, and what distribution channels are part of your go-to-market. 

For example, your medical device manufacturer might offer customers a variety of medical devices such as hearing aids, catheters, and wheelchairs. They might also provide customers with repair services and product maintenance in order to ensure the product is functioning properly and safely. Additionally, they might offer educational resources about their products to teach customers how to safely and properly use the device. These services and products help customers stay healthy and safe while using medical devices.

4. The market analysis

When you present your market analysis in your medical device manufacturer business plan, it's crucial to include detailed information about customers' demographics and segmentation, target market, competition, barriers to entry, and any relevant regulations.

The main objective of this section is to help the reader understand the size and attractiveness of the market while demonstrating your solid understanding of the industry.

Begin with the demographics and segmentation subsection, providing an overview of the addressable market for your medical device manufacturer, the key trends in the marketplace, and introducing different customer segments along with their preferences in terms of purchasing habits and budgets.

Next, focus on your target market, zooming in on the specific customer segments your medical device manufacturer aims to serve and explaining how your products and services fulfil their distinct needs.

For example, your target market might include elderly individuals who need medical devices to help them maintain their independence. This segment includes people who need wheelchairs, walkers, hearing aids, and other medical devices. Additionally, they often have insurance plans that cover these medical devices, making them a viable target market for a medical device manufacturer.

Then proceed to the competition subsection, where you introduce your main competitors and highlight what sets you apart from them.

Finally, conclude your market analysis with an overview of the key regulations applicable to your medical device manufacturer.

5. The strategy section

When you write the strategy section of your medical device manufacturer business plan, remember to cover key elements such as your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

In the competitive edge subsection, elaborate on what makes your company stand out from competitors. This becomes especially important if you're a startup, aiming to carve a place for yourself amidst established players in the marketplace.

The pricing strategy subsection should demonstrate how you plan to maintain profitability while offering competitive prices to attract customers.

Outline your sales & marketing plan, detailing how you'll reach out to new customers and retain existing ones through loyalty programs or special offers.

For the milestones subsection, outline your company's achievements to date and your main objectives for the future, complete with specific dates to set clear expectations for progress.

Lastly, the risks and mitigants subsection should address the main risks that could affect your plan's execution. Explain the measures you've put in place to minimize these risks, assuring potential investors or lenders.

Your medical device manufacturer could face the risk of product failure or recalls. This could be due to a defect in the device itself, or it could be caused by user error or misuse. In either case, this could result in large financial losses, as well as serious damage to the manufacturer's reputation and brand. Another risk your medical device manufacturer may face is increased competition from other manufacturers. This could result in lower profits as well as a decrease in market share for the product. It could also lead to price wars and other competitive tactics, which may be costly and time consuming.

6. The operations section

In your business plan, it's also essential to provide a detailed overview of the operations of your medical device manufacturer.

Start by covering your team, highlighting key roles and your recruitment plan to support the expected growth. Outline the qualifications and experience required for each role and your intended recruitment methods, whether through job boards, referrals, or headhunters.

Next, clearly state your medical device manufacturer's operating hours, allowing the reader to assess staffing levels adequately. Additionally, mention any plans for varying opening times during peak seasons and how you'll handle customer queries outside normal operating hours.

Then, shift your focus to the key assets and intellectual property (IP) necessary for your business. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, make sure to include them in this section.

You might have key assets such as proprietary technology and brand recognition. For example, the manufacturer could have patented technology that is used in the medical devices they produce, or they could have a well-known brand name that is associated with quality and trust. Additionally, they could have valuable intellectual property such as designs, trademarks, and trade secrets that they could use to protect their products from being copied or counterfeited.

Lastly, include a list of suppliers you plan to work with, detailing their services and main commercial terms, such as price, payment terms, and contract duration. Investors are interested in understanding why you've chosen specific suppliers, which may be due to higher-quality products or established relationships from previous ventures.

7. The presentation of the financial plan

The financial plan section is where we will present the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of what goes in your medical device manufacturer business plan, let's look at the solutions you can use to draft yours.

What tool should I use to write my medical device manufacturer's business plan?

In this section, we will be reviewing the two main solutions for creating a medical device manufacturer business plan:

• Using specialized online business plan software,
• Outsourcing the plan to the business plan writer.

Using an online business plan software for your medical device manufacturer's business plan

The modern and most efficient way to write a medical device manufacturer business plan is to use business plan software .

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

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Hiring a business plan writer to write your medical device manufacturer's business plan

Outsourcing your medical device manufacturer business plan to a business plan writer can also be a viable option.

These writers possess valuable experience in crafting business plans and creating accurate financial forecasts. Additionally, enlisting their services can save you precious time, enabling you to concentrate on the day-to-day operations of your business.

It's important to be mindful, though, that hiring business plan writers comes with a cost. You'll be paying not just for their time but also for the software they use, and their profit margin.

Based on experience, a complete business plan usually requires a budget of at least £1.5k ($2.0k) excluding tax, and more if revisions are needed after initial meetings with lenders or investors - changes often arise following these discussions.

When seeking investment, be cautious about spending too much on consulting fees. Investors prefer their funds to contribute directly to business growth. Thus, the amount you spend on business plan writing services and other consulting services should be negligible compared to the amount you raise.

Another aspect to consider is that while you'll receive the output of the business plan, you usually won't own the actual document. It will be saved in the consultant's business plan software, which will make updating the plan challenging without retaining the consultant on a retainer.

Given these factors, it's essential to carefully weigh the pros and cons of outsourcing your medical device manufacturer business plan to a business plan writer and decide what best suits your business's unique needs.

Why not create your medical device manufacturer's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a medical device manufacturer business plan is a terrible idea.

For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.

As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.

That's for the forecast, but what about the written part of my medical device manufacturer business plan?

This part is less error-prone, but here also software brings tremendous gains in productivity:

• Word processors don't include instructions and examples for each part of your business plan
• Word processors don't update your numbers automatically when they change in your forecast
• Word processors don't handle the formatting for you

Overall, while Word or Excel may be viable options for creating a medical device manufacturer business plan for some entrepreneurs, it is by far not the best or most efficient solution.

• Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
• A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
• A business plan has 2 main parts: a financial forecast outlining the funding requirements of your medical device manufacturer and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your medical device manufacturer business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

• How to write a business plan to secure a bank loan?
• Key steps to write a business plan?
• Top mistakes to avoid in your business plan

Do you know entrepreneurs interested in starting or growing a medical device manufacturer? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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How To Write a Business Plan for Medical Device Manufacturing in 9 Steps: Checklist

By alex ryzhkov, resources on medical device manufacturing.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Marketing Plan

Are you considering starting a business in the booming medical device manufacturing industry? With the consistent demand for medical devices and strong support from insurance companies, it's no wonder that the sales-based model is one of the most common and profitable business models in the US. In this article, we will guide you through the process of writing a business plan for your medical device manufacturing venture in nine easy steps.

Let's start by looking at the latest statistical information about the industry and its growth. According to a report by Grand View Research, the global medical device manufacturing market size is expected to reach a staggering $625.2 billion by 2028. This growth can be attributed to factors such as the increasing prevalence of chronic diseases, advancements in healthcare technology, and the rising geriatric population.

To capitalize on this lucrative market, it's crucial to have a well-defined business plan that covers all essential aspects of your medical device manufacturing venture. Let's delve into the nine key steps that will ensure your business plan is comprehensive and effective.

• Conduct market research and analyze industry trends
• Identify target market and customer needs
• Assess competition and market positioning
• Determine the feasibility and profitability of the business
• Define the company's mission, vision, and goals
• Establish a detailed financial plan and budget
• Create a product development and manufacturing strategy
• Develop a marketing and sales strategy
• Identify the legal and regulatory requirements for the industry

By following these nine steps, you will ensure that your business plan covers all the essential areas necessary for a successful medical device manufacturing venture. Stay tuned as we explore each step in detail in the upcoming sections.

Conduct Market Research And Analyze Industry Trends

Before starting a medical device manufacturing business, it is crucial to conduct market research and analyze industry trends . This step will provide valuable insights into the current market dynamics, competition, and customer needs. By understanding these factors, you can craft a business plan that aligns with market demands and maximizes your chances of success.

To begin, gather information on the overall healthcare industry and the specific segment of medical device manufacturing. Look for reports, industry publications, and market research studies that provide comprehensive data on market size, growth projections, and key trends. This will help you gauge the market's potential and identify emerging opportunities.

Next, identify your target market and customer needs. Determine the specific types of medical devices that are in high demand and understand the challenges faced by healthcare providers or end-users. This information will guide your product development efforts and shape your marketing strategy.

Market research also involves assessing the competition and market positioning. Identify the key players in the medical device manufacturing industry and analyze their product offerings, pricing strategies, and customer base. This analysis will help you identify gaps in the market that you can capitalize on and differentiate your products from competitors.

To ensure the feasibility and profitability of your business, analyze the financial aspects of the industry. Consider the costs involved in manufacturing, distribution, and marketing. Evaluate the revenue potential by estimating the sales volumes and pricing strategy. This analysis will give you a clear picture of the investment required and the expected return on investment.

Once you have gathered and analyzed all the necessary data, you can define your company's mission, vision, and goals . This step will help you align your business plan with your long-term objectives and ensure that all your strategies are focused on achieving them.

Tips for conducting market research and analyzing industry trends:

• Utilize online resources and databases to gather industry reports and market data.
• Engage with healthcare professionals and potential customers to gain insights into their needs and preferences.
• Attend industry conferences and trade shows to network with industry experts and stay updated on the latest developments.
• Consider hiring a professional market research firm to conduct a comprehensive analysis.
• Regularly monitor industry publications and news sources for any new trends or regulatory changes that may impact your business.

By thoroughly conducting market research and analyzing industry trends , you will be equipped with the knowledge and understanding needed to develop a solid business plan for your medical device manufacturing venture.

Identify Target Market and Customer Needs

Identifying the target market and understanding customer needs is a crucial step in developing a successful business plan for medical device manufacturing. By identifying the specific group of customers who would benefit from your products, you can tailor your offerings to meet their unique needs.

Here are some important factors to consider when identifying your target market:

• Demographics: Analyze the age, gender, income level, and location of your potential customers. This information will help you understand their healthcare needs and preferences.
• Medical Specialties: Determine which medical specialties are most likely to use your devices. For example, if you are manufacturing devices for orthopedic surgeons, you should focus your marketing efforts on this specific group.
• Market Size: Estimate the size of your target market to understand the demand for your products. This will help you determine the potential revenue and growth opportunities.

Understanding customer needs is equally important as it allows you to develop products that address specific challenges or pain points. Here are some steps to identify customer needs:

• Conduct Surveys: Create surveys to gather feedback from potential customers about their current medical device usage, challenges, and areas for improvement. This will provide valuable insights for product development.
• Engage with Healthcare Professionals: Interact with healthcare professionals, such as physicians and nurses, to understand the gaps in the existing devices and identify opportunities for innovation.
• Stay Updated on Industry Trends: Keep a close eye on industry publications, conferences, and online forums to stay informed about the latest advancements and emerging needs in the medical device field.
• Consider conducting focus groups or interviews with potential customers to gain deeper insights into their needs and preferences.
• Collaborate with healthcare providers and industry experts to validate your assumptions and ensure your products align with market demands.
• Regularly revisit and update your understanding of the target market and customer needs as they may evolve over time.

Assess Competition And Market Positioning

In order to successfully navigate the competitive landscape of the medical device manufacturing industry, it is crucial to assess the competition and understand your market positioning. This step involves a thorough analysis of your competitors and their products, as well as an evaluation of your own strengths and weaknesses.

Begin by researching and identifying the key players in the medical device manufacturing industry. This includes both direct competitors who offer similar products and indirect competitors who provide alternative solutions to the same customer needs. Analyze their product offerings, pricing strategies, distribution channels, and market share.

Next, evaluate your own market positioning by identifying your unique selling points and competitive advantages. Consider what sets your medical devices apart from those of your competitors. This could be factors such as superior quality, innovative features, or competitive pricing. Determine how these unique aspects of your products can attract and retain customers in the market.

• Tip 1: Conduct regular competitor analysis to stay updated on their strategies and identify emerging trends.
• Tip 2: Focus on differentiating your products from the competition by offering additional value or addressing unmet customer needs.
• Tip 3: Utilize market research tools and surveys to gain insights into customer preferences and identify gaps in the market.

By thoroughly assessing the competition and understanding your market positioning, you can develop strategies to effectively compete and differentiate your medical device manufacturing business. This step will also enable you to optimize your marketing and sales efforts, target the right customer segments, and tailor your products to meet their specific needs. Remember, a comprehensive understanding of the competitive landscape is essential for success in the medical device manufacturing industry.

Determine The Feasibility And Profitability Of The Business

Assessing the feasibility and profitability of your medical device manufacturing business is crucial before investing time, effort, and resources into it. This step helps you evaluate the potential success and sustainability of your venture, ensuring that it aligns with your goals and objectives.

To determine the feasibility of your business, you need to analyze various factors that could impact its operations and profitability. Start by looking at the market demand for medical devices, considering both current and future trends. Conduct thorough market research to understand the needs and preferences of your target customers, as well as any potential barriers or challenges you may encounter.

Next, assess the potential profitability of your business by developing financial projections. Consider costs such as manufacturing, research and development, marketing and sales, and administrative expenses. Calculate your revenue potential based on the pricing of your devices and projected sales volume. This analysis will give you an idea of the potential profitability and return on investment for your business.

• Consider consulting with industry experts or hiring a financial advisor to help you accurately assess the feasibility and profitability of your business.
• Do a thorough analysis of your competitors to determine how you can differentiate your medical devices and gain a competitive advantage.
• Factor in potential risks and challenges that could affect the financial viability of your business, such as regulatory changes or unexpected market shifts.
• Regularly review and update your financial projections to ensure their accuracy and relevance in the ever-changing healthcare industry.

By thoroughly evaluating the feasibility and profitability of your medical device manufacturing business, you can make informed decisions and adjustments as needed. This step is crucial to ensure the long-term success and sustainability of your venture in the competitive healthcare market.

Define The Company's Mission, Vision, And Goals

Defining the mission, vision, and goals is a crucial step in writing a business plan for medical device manufacturing. It sets the direction for the company and provides clarity on its purpose and objectives. This section communicates the company's values, aspirations, and how it intends to make a difference in the healthcare industry.

The mission statement conveys the fundamental purpose of the company. It should be concise, clear, and inspiring. Write a mission statement that reflects the core values and goals of your medical device manufacturing business. Consider how your products will impact healthcare and improve patient outcomes. For example, 'Our mission is to develop and manufacture innovative medical devices that enhance the quality of life for patients worldwide.'

The vision statement describes the desired future state of the company. It paints a picture of what the company aims to achieve in the long term. Your vision statement should inspire and motivate stakeholders, including employees, investors, and customers. Focus on the impact your medical devices will have on the healthcare industry. For instance, 'Our vision is to become a global leader in medical device manufacturing, revolutionizing healthcare delivery through cutting-edge technology.'

Setting clear and specific goals ensures that your business plan is actionable and measurable. Start by identifying both short-term and long-term goals. Short-term goals could include achieving a certain percentage of market share or launching a new product line within the first year. Long-term goals might involve expanding into international markets or securing partnerships with key healthcare providers. Make sure your goals are SMART - specific, measurable, attainable, relevant, and time-bound. Use milestones to track progress and adjust strategies as needed.

Tips for Defining Mission, Vision, and Goals:

• Involve key stakeholders in the process of defining the mission, vision, and goals to ensure buy-in and alignment.
• Keep the statements concise and focused, avoiding excessive jargon or vague language.
• Ensure that the mission, vision, and goals are consistent with the overall business strategy and market trends.
• Regularly review and update the statements to reflect changes in the industry or business environment.

Defining the company's mission, vision, and goals sets a strong foundation for your medical device manufacturing business. It shapes the company's identity and provides guidance for decision-making and strategic planning. Ensure that these statements are aligned with your market research and customer needs to maximize the potential for success.

Establish A Detailed Financial Plan And Budget

Creating a detailed financial plan and budget is crucial for the success of your medical device manufacturing business. This step allows you to not only estimate the initial investment required but also forecast future revenue and expenses. Here are the key components to consider when establishing your financial plan and budget:

• Calculate the startup costs: Determine the expenses involved in setting up your manufacturing facility, acquiring machinery and equipment, hiring staff, and obtaining the necessary permits and licenses. Include both one-time and recurring costs.
• Forecast revenue: Estimate the revenue you expect to generate from the sales of your medical devices. Consider factors such as the target market size, competitive landscape, pricing strategy, and anticipated market share.
• Analyze costs of production: Break down the costs associated with manufacturing your medical devices, including raw materials, labor, overhead expenses, and any outsourcing arrangements. This analysis will help you determine the cost per unit and adjust pricing accordingly.
• Include marketing and sales expenses: Allocate a budget for marketing and sales activities, such as advertising, attending trade shows, hiring sales representatives, and implementing promotional campaigns. These efforts are essential to reach your target customers and drive sales.
• Consider research and development (R&D) costs: If your business involves developing and improving medical devices, factor in the expenses associated with R&D. This may include hiring engineers and scientists, conducting clinical trials, and obtaining patents or intellectual property rights.
• Set financial targets: Define specific financial goals for your medical device manufacturing business. This could include targets for revenue growth, profit margins, return on investment, or market share. Setting clear objectives will guide your financial decision-making process.

Tips for Establishing a Financial Plan and Budget:

• Consult with financial professionals: Seek guidance from accountants, financial advisors, or industry experts who can provide valuable insights and help create a realistic financial plan.
• Regularly review and adjust the budget: As your business evolves, it is crucial to monitor and update your financial plan accordingly. Regular reviews will help you identify areas for improvement and make informed financial decisions.
• Consider different financial scenarios: Develop contingency plans and explore various financial scenarios to prepare for potential challenges or changes in the market. This will enhance your business's resilience and adaptability.

Create A Product Development And Manufacturing Strategy

Creating a product development and manufacturing strategy is crucial for the success of your medical device manufacturing business. This strategy will guide your company in the process of bringing new products to the market and ensuring efficient and cost-effective manufacturing. Here are some important steps to consider:

• Identify target market needs: Conduct thorough market research to understand the specific needs and preferences of your target market. This information will help you develop products that meet their expectations and address any gaps in the market.
• Set clear product development goals: Define specific goals and objectives for your product development process. These goals can include creating innovative solutions, improving existing products, or introducing cost-effective alternatives. Having clear goals will keep your team focused and motivated.
• Establish an efficient design and development process: Develop a well-defined process for designing and developing new medical devices. This process should include stages such as concept development, prototyping, testing, and refinement. Ensure that each stage is properly documented and that all necessary approvals and certifications are obtained.
• Collaborate with healthcare professionals: Seek input and feedback from healthcare professionals, such as doctors, nurses, and specialists, throughout the product development process. Their expertise and insights can help you create devices that are user-friendly, safe, and effective in addressing specific medical needs.
• Implement quality control measures: Establish strict quality control measures to ensure that your manufactured devices meet the highest standards of safety and performance. Regular testing, inspections, and compliance checks should be integrated into your manufacturing process to identify and address any potential issues.
• Consider outsourcing manufacturing: Depending on the scale and complexity of your operations, it may be beneficial to explore outsourcing manufacturing to reputable contract manufacturers. This can help you reduce costs, improve scalability, and leverage specialized expertise in manufacturing processes.

Tips for Creating a Product Development and Manufacturing Strategy:

• Stay updated with the latest technological advancements and industry trends to incorporate them into your product development process.
• Set realistic timelines and milestones for each stage of product development and manufacturing.
• Invest in continuous training and development for your product development and manufacturing teams to ensure they stay up-to-date with industry best practices.
• Regularly review and evaluate your manufacturing strategy to identify areas for improvement and optimization.

Develop A Marketing And Sales Strategy

Developing a strong marketing and sales strategy is crucial for the success of your medical device manufacturing business. This strategy will help you effectively promote your products and reach your target market.

1. Identify your target market: Begin by identifying the specific market segments that would benefit most from your medical devices. Consider factors such as demographics, geographic location, and healthcare needs. Understand your customers and their pain points to tailor your marketing and sales approach accordingly.

2. Position your products: Determine how your medical devices stand out from the competition. Highlight their unique features, benefits, and value proposition. Communicate the advantages of your products to potential customers and emphasize how they can solve their healthcare challenges.

3. Create a marketing plan: Develop a comprehensive marketing plan that outlines your strategies and tactics to reach your target market. Include both online and offline channels, such as social media, email marketing, industry publications, tradeshows, and conferences. Allocate budget and resources to support your marketing initiatives.

4. Build a strong brand: Establish a memorable and compelling brand identity that resonates with your target audience. Invest in professionally designed branding materials, including a logo, website, and marketing collaterals. Consistently use your brand voice and visuals across all marketing channels to build recognition and trust.

5. Equip your sales team: Train your sales team on the features, benefits, and specifications of your medical devices. Provide them with the necessary tools, such as marketing materials, product samples, and competitive information. Encourage continuous education and development to ensure your sales team remains up-to-date with the evolving industry trends.

• Engage in thought leadership: Establish your company as an industry expert by sharing valuable insights through blog posts, whitepapers, or webinars. This will position your brand as a trusted source of information and help build credibility.
• Invest in relationship-building: Build strong relationships with key stakeholders in the healthcare industry, such as healthcare providers, distributors, and industry influencers. Attend industry events and conferences to network and establish partnerships.
• Utilize customer testimonials: Collect testimonials from satisfied customers and showcase them on your website or marketing materials. Positive reviews and endorsements can significantly influence potential customers' purchasing decisions.

Remember, a well-developed marketing and sales strategy will help you effectively promote your medical devices and drive sales. Continuously evaluate and adjust your strategies based on market feedback and evolving industry trends to stay competitive in the medical device manufacturing industry.

Identify The Legal And Regulatory Requirements For The Industry

When venturing into the medical device manufacturing industry, it is crucial to have a thorough understanding of the legal and regulatory requirements that govern the industry. Compliance with these requirements is not only necessary for operating a successful business but also paramount to ensuring the safety and efficacy of the medical devices being manufactured.

1. Familiarize yourself with FDA regulations: The Food and Drug Administration (FDA) plays a vital role in the regulation of medical devices in the United States. It is essential to study and understand the FDA regulations specific to medical device manufacturing. This includes regulations related to product design, development, testing, labeling, and post-market surveillance. Non-compliance with these regulations can lead to severe consequences, including product recalls and legal action.

2. Obtain the necessary certifications: Depending on the nature of the medical devices you plan to manufacture, there may be specific certifications required. These certifications demonstrate that your products meet certain quality standards and safety requirements. Common certifications include ISO 13485 for medical device quality management systems and CE marking for products sold in the European Union.

3. Ensure compliance with international standards: In addition to FDA regulations, many medical device manufacturing companies align their operations with international standards. The most widely recognized standards include the International Electrotechnical Commission (IEC) standards for electrical medical devices and the ASTM International standards for a wide range of medical devices.

4. Understand intellectual property laws: Protecting your intellectual property is crucial in the medical device manufacturing industry. Familiarize yourself with patent and trademark laws to ensure that your products, designs, and brand names are adequately protected. Consider consulting with an intellectual property lawyer to navigate these complex legal matters.

5. Stay updated with evolving regulations: The medical device industry is subject to continuous regulatory changes. It is imperative to stay abreast of any updates, amendments, or new regulations that may affect your business. Subscribing to industry newsletters, attending conferences, and actively participating in industry associations can help you stay well-informed.

• Establish a compliance team or hire professionals with expertise in regulatory affairs to ensure ongoing adherence to the legal and regulatory requirements.
• Document all compliance-related processes, including procedures for product registration, labeling, and adverse event reporting.
• Consider seeking guidance from consultants with knowledge and experience in navigating the regulatory landscape of the medical device manufacturing industry.

In conclusion, writing a business plan for medical device manufacturing requires careful market research, strategic planning, and a clear understanding of the industry's demands and regulations. By following the nine steps outlined in this checklist, entrepreneurs can develop a comprehensive and well-thought-out plan to establish a successful medical device manufacturing business. With the right approach and execution, this sales-based business model can be a profitable venture in the ever-growing healthcare sector.

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Home » Healthcare

How to Start a Medical Device Company [Business Plan]

A medical device company is a business that produces different designs and types of medical devices (diagnostic ultrasound products, x-ray machines, medical lasers, syringes and needles, test kits, blood glucose meters, forceps et al). A medical device can be any instrument, apparatus, implement, machine, appliance, implant, software, material, or other similar or related products.

The global medical devices market in 2020 was valued at $456.9 billion, which increased at a compound annual growth rate (CAGR) of 4.4 percent since 2015.  Despite an expected decline of -3.2 percent in 2020, it is expected to rebound with a 6.1 percent CAGR and reach $603.5 billion.

The United States remains the largest medical device market in the world: $156 billion (40 percent of the global medical device market in 2017). By 2023, it is expected to grow to $208 billion.

Steps on How to Start a Medical Device Business

Conduct market research.

The first step in the market research process for your medical device business is to develop market-based research questions in line with your overall business goal and objective. Please note that market research helps businesses measure their reputation in the market over a period of time. It is a great way to measure the progress of your business as well as compare your status to your competitors to see where you are trailing or where you have an advantage.

a. Who is the Target Market for Medical Device Business?

• Medical laboratories
• Medical colleges
• Dental clinics
• Optical center
• Botox clinics
• Medical-related clinics
• Medical device wholesale distributors
• Medical device retailers
• Healthcare centers
• Medical Research institutes
• Veterinary clinics

b. Is Medical Device Business a Profitable Business?

Yes, the medical device business is profitable. As a matter of fact, the global medical device market will reach $745.0 billion by 2030, growing by 5.0 percent annually over 2020-2030 owing to the aging population worldwide, the prevalence of infectious diseases as well as the increasing prevalence of chronic diseases, technological innovation, and penetration of healthcare insurance.

c. Are There Existing Niches in the Industry?

Although there is no niche area in the medical device business, it is common for some medical device manufacturers to specialize in any of the following areas;

• Neuromodulation and spinal devices
• Cardiovascular devices
• Diabetes devices
• Other devices
• Irradiation devices
• Patient recovery and noninvasive devices.

d. Who are the Major Competitors?

• Medtronic PLC.
• Abbott Laboratories
• General Electric Company
• Danaher Corporation
• Boston Scientific Corporation
• Johnson & Johnson
• Varian Medical Systems Inc.
• Siemens Healthineers
• Cardinal Health
• 3M Health Care
• EssilorLuxottica
• Zimmer Biomet

e. Are There County or State Regulations or Zoning Laws for Medical Device Business?

Yes, there are county or state regulations and zoning laws for medical device manufacturers. In the United States, it wasn’t until the Federal Food, Drug, and Cosmetic Act (FD&C Act) in 1938 that medical devices were regulated. Later in 1976, the Medical Device Amendments to the FD&C Act established medical device regulation and oversight as we know it today in the United States.

Please note that if you are planning to house your production factory in a purpose-built facility or propose an extension to an existing building, you must apply to your local planning department for approval. Ideally, an architect experienced in factory planning will draft your initial plans.

They might collaborate with, or seek input from, your local Fire Safety Officer to ensure that the appropriate safety measures have been accounted for, under the safety regulations as defined in the Regulatory Reform Order.

f. Is There a Franchise for Medical Device Business?

No, there are no franchise opportunities for the medical device business.

g. What Do You Need to Start a Medical Device Business?

• A Feasibility Report
• Business and Marketing Plans
• Business Licenses and Permits
• A Good Production facility
• Computers, Laptops, and Servers
• EIN (Employer Identification Number)/Federal Tax ID Number.
• A Corporate Bank Account
• Production Machines, Equipment, and Tools
• Supply of Raw Materials
• Startup Capital

Memorable Name ideas for Medical Device Business

• Two Cent© Medical Device, Inc.
• MT Technologies® Medical Device and More, LLC
• Mike and Co© Medical Device, Inc.
• Medic Solutions® Medical Device, Inc.
• The Expats™ Medical Device, Inc.
• GE Engineering™ Medical Device, LLC.
• San Tamils© Medical Device, LLC
• Sheen Global® Medical Device, Inc.
• Lance Bowline© Medical Device, Inc.
• Wana Bros© Medical Device, Inc.
• Mili Cent® Medical Device, Inc.
• Cletus McPherson® Medical Engineering, LLC
• Stretch® Medical Device, Inc.
• International Engineering Corporation, Inc.
• Garry Holmes® Medical Device USA LLC.
• Emmy Allen® Medical Engineering, Inc.
• Denis Palermo® Medical Device USA LLC
• Fahrenheit ® Medical Device, LLC
• Star Engineering® Medical Device USA LLC
• Back Space® Medical Engineering USA LLC.

Register Your Business

A. what type of business structure is best for medical device business.

Even though there are several options when it comes to the business structure of a medical device business, the one that most players in this line of business consider is the LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.

Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.

b. Steps to Form an LLC

• Choose a Name for Your LLC.
• File Articles of Organization.
• Choose a registered agent.
• Decide on member vs. manager management.
• Create an LLC operating agreement.
• Comply with other tax and regulatory requirements.
• File annual reports.

c. What Type of License is Needed to Open a Medical Device Business?

• General Business License
• Fire, Health, and Safety Permit
• Zonal Permits (Applicable in some cities)
• Signage Permit
• Operational State Facility Inspections

d. What Type of Certification is Needed to Open a Medical Device Business?

• ISO 13485 Certification (ISO 9001- 13485)
• Product Assurance and Management Systems Certification
• Medical Device Quality and Design Certificate – UCSC
• FDA CFR Part 820
• CMDCP (Certified Manufacturing Device Compliance Professional)
• GMPCP (Current Good Manufacturing Certified Professional)
• GAMP (Good Automated Manufacturing Practice).

e. What Documents are Needed to Open a Medical Device Business?

• Business and liability insurance
• Federal Tax Payer’s ID
• State Permit and Building Approval
• Certificate of Incorporation
• Business License
• Business Plan
• Employment Agreement (offer letters)
• Operating Agreement for LLCs
• Insurance Policy
• Online Terms of Use
• Online Privacy Policy Document
• Contract Document
• Company Bylaws
• Memorandum of Understanding (MoU)

f. Do You Need a Trademark, Copyright, or Patent?

If you are considering starting a medical device production business, usually you may need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for someone to infringe on your work or copy your designs.

Cost Analysis and Budgeting

A. how much does it cost to start a medical device business.

When it comes to starting a medical device business, the startup costs could range from $250,000 to over a million dollars depending on how much equipment the business owner decides to purchase, the production facility, and the space leased. Please note that this amount includes the salaries of all staff for the first month of operation.

b. What are the Cost Involved in Starting a Medical device Business?

• The total fee for registering the business in the United States of America – $750.
• Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
• Promotional expenses for the opening of the medical laboratory for $3,500, as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
• The cost for hiring a business consultant – $2,500.
• Insurance coverage at a total premium – $2,400.
• The cost of payment of rent for 12 months at $1.76 per square foot in the total amount of $275,600.
• The cost for facility remodeling and equipping the facility – $250,000.
• Other start-up expenses include stationery ($500) and phone and utility deposits ($2,500).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $30,000
• The cost for start-up inventory (raw materials) – $150,000
• The cost for store equipment (cash register, security, ventilation, signage) – $13,750
• The cost of purchase and installation of CCTVs: $3,000
• The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
• The cost of launching a website: $600
• Miscellaneous: $5,000

c. What Factors Determine the Costs of Opening a Medical Device Business?

• The size of the medical device business
• The choice of location
• The required licenses and permits
• The type of facility
• The cost of hiring and paying a business consultant and attorney
• The cost for branding, promotion, and marketing
• The cost for furnishing and equipping the facility
• The cost for insurance policy covers
• The cost for registering the business
• Source of your supplies and ongoing expenses
• Cost of recruiting and training your staff
• The cost for the purchase and customizing of uniforms

d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

It is not compulsory to build a new facility for your medical device production business, but, if you have the required finance, it will pay you to build your own facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.

e. What are the Ongoing Expenses of a Medical Device Production Business?

• Rent and lease
• Supplies and inventory (materials and supplies, and packaging supplies et al)
• Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
• Maintenance of machines and equipment
• Salaries of employees

f. What is the Average Salary of your Staff?

• Chief Executive Officer (President) – $75,000 Per Year
• Factory Manager – $55,000 Per Year
• Merchandise Manager – $45,630,000 Per Year
• Engineers and Devices Designers – $45,000 Per Year
• Accountant (Cashier) – $38,500 Per Year
• Marketing and Sales Executives – $38,000 Per Year
• Machine Operators – $35,100 Per Year
• Customer Service Executive – $30,000 Per Year
• Security Guard -$27,000 Per Year

g. How Do You Get Funding to Start a Medical Device Production Business?

• Raising money from personal savings and sale of personal stocks and properties
• Raising money from investors and business partners
• Sell shares to interested investors
• Applying for a loan from your bank/banks
• Pitching your business idea and applying for business grants and seed funding from, government, donor organizations, and angel investors
• Source for soft loans from your family members and friends.

Write a Business Plan

A. executive summary.

Fahrenheit® Medical Device, LLC is a registered medical device production business that will be located in an industrial area in Lakewood, Colorado. We have been able to secure a long-term lease agreement for a facility in a strategic location with an option of a long-term renewal on terms and conditions that are favorable to us.

The facility has government approval for the kind of business we want to run and it is easily accessible. We are in the medical device production business to engage in the production of different types of medical devices. We are also in business to make profits and at the same to give our customers value for their money.

b. Products and Service

C. mission statement.

Our mission is to build a highly successful, profitable business venture; a medical device production business whose brand will be known all around key cities in the United States of America and the globe.

Vision Statement

Our vision is to be among the top 3 medical device production companies in the world.

d. Goals and Objectives

The goals and objectives of a medical device production business are to design and produce different types of medical devices for the healthcare industry .

e. Organizational Structure

• Chief Executive Officer (President)
• Factory Manager
• Merchandise Manager
• Engineers and Device Designers
• Accountant (Cashier)
• Marketing and Sales Executives
• Machine Operators
• Customer Services Executives
• Security Guard

Marketing Plan

A. swot analysis.

• A product that can effectively serve the purpose it was created for
• The best price/deal they can get for any of our medical devices in the whole of the United States of America
• Opportunity to choose from a wide range of medical devices
• Availability of money back policy for first–time customers who just want to try out our medical devices
• Large distribution network
• Excellent customer service
• Financial Constraints
• A new business that will be competing with well-established medical device production brands
• Inability to retain our highly experienced employees longer than we want

Opportunities

• A rise in the demand for medical devices due to the ongoing Covid19 pandemic
• Online market, new services, new technology, and of course the opening of new markets
• Increase of the number of healthcare centers and hospitals within our target market area.
• The arrival of new medical device production business within our market space
• Unfavorable government policy and regulations.
• Economic uncertainty
• Liability problems

b. How Do Medical Device Production Businesses Make Money?

Medical device production businesses make money by selling a wide range of medical devices and also by offering after sales services and maintenance.

c. Payment Options

• Payment via bank transfer
• Payment via credit cards
• Payment via online bank transfer
• Payment via check
• Payment via mobile money transfer
• Payment via bank draft

d. Sales & Advertising Strategies

• Place adverts on both print (newspapers and healthcare magazines) and electronic media platforms
• Sponsor relevant community-based events / programs
• Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
• Install your Bill Boards in strategic locations around your city or state
• Distribute your fliers and handbills in target areas
• List your medical device production business in local directories / yellow pages
• Advertise your medical device production business on your official website and employ strategies that will help you pull traffic to the site.
• Position your Flexi Banners at strategic positions where your medical device production business is located.
• Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.

Financial Projection

A. how much should you charge for your product.

The price of the medical devices depends on the type, size, and brand of the product.

b. How Much Profit Do Medical Device Production Business Owners Make a Year?

It depends, but available reports show that the national average earnings for medical device production business owners are approximately $120,000 per year.

c. What Factors Determine the Amount of Profit to Be Made?

• The capacity of the medical device production business
• The location of the medical device production business is covering (online or strictly bricks and mortars)
• The management style of the medical device production business
• The business approach of the medical device production business
• The advertising and marketing strategies adopted by the medical device production business.
• The number of years the medical device production company is in business

d. What is the Profit Margin of a Medical Device Production Business?

The profit margin of a medical device production business is not fixed. But basically, the medical device industry has been highly attractive, with 5 percent average annual growth and operating margins between 23 and 25 percent.

e. What is the Sales Forecast?

• First Fiscal Year (FY1): $5,950,000
• Second Fiscal Year (FY2):  $7,550,000
• Third Fiscal Year (FY3): $10,680,000

Set Up your Office

A. how do you choose a perfect location for medical device production business.

• The demography of the location (number of healthcare centers and hospitals et al)
• The demand for medical devices in the location
• The purchasing power of medical clinics and hospitals in the location
• Accessibility of the location
• The number of medical device production businesses and other medical devices importers in the location
• The local laws and regulations in the community/state
• Traffic, parking and security et al

b. What State and City are Best to Open a Medical Device Production Business?

• Orlando, Florida
• Los Angeles, California
• Chicago, Illinois
• Boston, Massachusetts
• Silver Spring, Maryland
• Rowland Heights, California
• Portland, Oregon
• New York City, New York
• Atlanta, Georgia
• Dallas, Texas

c. What Equipment is Needed to Operate a Medical Device Production Business?

• Fabricators
• Calibrating Machines
• Digital Machines.

Hire Employees

When it comes to hiring employees for a standard medical device production business, you should make plans to hire a competent chief executive officer (president), production manager, engineers and device designers, merchandize manager, accountant, marketing and sales executives, tailors, machine operators, and security guard.

Launch the Business Proper

You can open your medical device production business by organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.

The bottom line is that with a proper launching of the medical device production business, you will be able to officially inform people in your city that your medical device production business is open for business.

a. What Makes a Medical Device production Business Successful?

• Choose a good location and showroom facility
• Make sure your medical devices are unique and the finishing is topnotch
• Be deliberate with your marketing sales approach
• Encourage the use of word of mouth to promote your medical device production business
• Leverage on all available online and offline platforms to promote your medical device production business

b. What Happens During a Typical Day at a Medical Device Production Business?

• The production factory is open for the day’s work
• The facility is cleaned and well-arranged
• Factory swings into action (production of medical devices)
• Deliveries of orders are made
• Stocks are taken and reports are written and submitted to superior officers
• The business is closed for the day.

c. What Skills and Experience Do You Need to Build a Medical Device Production Business?

• Excellent engineering and technical skills
• Excellent device designs skills
• Excellent customer services skills
• Interpersonal skill
• Accounting and bookkeeping skills
• Business management skills
• Work experience in a medical device production business environment
• Experience in designs and engineering
• Experience in managing people
• Experience in business administration.

More on Healthcare

Medical and Health Business Plan Templates

Written by Dave Lavinsky

In the medical and healthcare industry, where the balance between patient care and operational efficiency is paramount, a comprehensive business plan stands as a critical element for success. It serves as a strategic guide, vital for navigating the sector’s regulatory complexities, technological advancements, and evolving patient needs.

Below you will find an extensive array of business plan examples for a variety of medical and healthcare businesses, including private clinics, medical device startups, telemedicine services, and healthcare consulting firms. Each plan is meticulously crafted to address crucial aspects such as market research, compliance with healthcare regulations, service delivery models, and financial management. These plans are invaluable for professionals and entrepreneurs in the healthcare sector, providing a structured approach to developing services that are not only medically effective but also financially viable and operationally sustainable. They underscore the importance of strategic planning in creating a healthcare business capable of delivering high-quality patient care while navigating the challenges of this highly regulated and competitive industry.

Medical Practice Business Plans

Acupuncture Business Plan PDF Chiropractic Business Plan Chiropractic Business Plan PDF Counseling Private Practice Business Plan Dental Business Plan Medical Clinic Business Plan PDF Medical Practice Business Plan Mental Health Private Practice Business Plan Mobile Health Clinic Business Plan Optometrist Business Plan  

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Assisted Living Business Plan Elderly Daycare Business Plan Group Home Business Plan Sample Group Home Business Plan PDF Home Health Care Business Plan Non Medical Home Care Business Plan Nursing Home Business Plan  

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Medical Equipment Business Plan

After getting started with Upmetrics , you can copy this medical equipment business plan example into your business plan and modify the required information and download your medical equipment business plan pdf and doc file. It’s the fastest and easiest way to start writing your business plan.

Download a sample medical equipment business plan

Need help writing your business plan from scratch? Here you go;  download our free medical equipment business plan pdf  to start.

It’s a modern business plan template specifically designed for your medical equipment business. Use the example business plan as a guide for writing your own.

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About the Author

Vinay Kevadiya

Vinay Kevadiya is the founder and CEO of Upmetrics, the #1 business planning software. His ultimate goal with Upmetrics is to revolutionize how entrepreneurs create, manage, and execute their business plans. He enjoys sharing his insights on business planning and other relevant topics through his articles and blog posts. Read more

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• Medical Device business plan

The medical device field has several unique aspects that are important to address when writing a business plan; for example, clinical & regulatory paths, (including clinical trials, FDA & CE approval) and medical insurance refunds.

Below is a table of contents, for example:

Executive Summary

1. Overview of the business concept

2. Brief description about the industry / market

3. Brief description about the products, strategies, & competition

4. A summary of what is needed to do in order to reach the target (e.g regulatory approvals)

5. Business Model: How are you going to make money?

6. Financial plan – How much capital has been drafted and how much capital is required in the current round?

7. Management’s CV

* This should not be more than three or four pages. You may wish to send the executive summary before sending the  full business plan  to generate more interest.

Condition  Insights   

1. Background on the problem/ illness ; What are the current possibilities for diagnostics/ therapy; characterization of the target audience

Market size and opportunity

1. Describe the market

2. Market size in numbers & geographic description (US / world)

3. Competitors, their market share (if applicable),  strengths  & weaknesses , and prices

4. Distribution channels & the sale process

5. Current reimbursement for expenses

Product and Production Processes of the Company

1. A detailed description of the product and a brief description on future development

2. How “far along” product development is and does the company have proof of the feasibility

4. A clear description of why the product is special, which problem it solves, who will buy it & why, and what prevents others from developing the same product

5. If possible, present a specific economic report that shows value (e.g customer manufacturing efficiency)

6. What changes will the customer/distributor/health provider have to make in order to adopt the product, and how are you going to ease this behavioral transition

Clinical and Regulatory

1. Which regulatory approvals are needed (FDA, CE, PMPA, etc…)

2. Timetable

3. The nature of the clinical trial, an estimated number of participants, the time window followed by the experimenters,  and the  necessary  end points  in order to get a regulatory approval

Intellectual Property

1. Patents filed & their status, etc.

2. Licensing agreements & royalties, etc.

3. Is there a similar patent? If so, how are we different?

Key Personnel

1. The management team & their CVs: relevant past experience, and previous successes (include names of companies)

2. Which key positions are still unmanned and are there any possible candidates?

3. Scientific Advisory Committee, Board of Directors, and other key partners (e.g lawyers, accountants, etc.)

Current Status of the Project and Investment needs

1. The company’s achievements to date (including product development & trials, etc.)

2. The amount of investment required and use of funds

3. The financial history and current investors (capitalization table showing how much each investor holds %, including options for employees)

4. Key milestones that will be achieved until the next fund raising round

5. How much money will be required in order to reach a stage where the company is self-sustaining?

Financial projections

1. Projected revenues as a % of the market

2. Projected income and expenses of the Company with the investment required

3. The expected pricing of products

Footnotes and references

1. Relevant clinical articles

2. Renderings or photos of the product

3. References to relevant information used for various forecast

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How to Build a Medical Device Business Case in 5 Easy Steps

In business, so much of success depends on timing. A product launches too early and is misunderstood by the market; a product launches too late and becomes another face in the crowd.

The margins for error are already thin, and in the heavily competitive and regulated medical device industry they become almost nonexistent. So making the right decision isn’t something to take lightly. 

That’s why the most agile companies use a medical device business case to make and present their decisions to company stakeholders, such as product teams, C-suite executives, or investors. 

While there is much to consider when developing medical device business cases, thankfully it doesn’t have to be a shot in the dark. Let’s take a look at some foundational info about medical device business cases, and five easy steps to develop your own.

FREE DOWNLOAD: Click here to download your free PDF copy of our checklist for what medical device investors want to see.

What is a Medical Device Business Case?

When medtech organizations spot a potential market opportunity, they’ll often use a carefully constructed business case as a decision-making tool. When carefully constructed, the business case provides a framework to explore the pros, cons, and potential value for a proposed solution to an ongoing or forthcoming opportunity.

It should be noted that a business case is not the same as a business plan. A business plan is used to outline decisions at the organizational level, such as how and why a business should exist. Business cases, on the other hand,  support product level decisions, such as how and why a new line of products should be developed as a solution to a specific market opportunity.

Business cases are a highly effective and efficient way to communicate a decision to stakeholders. This is largely thanks to its format, in which each step is built atop insights gleaned from the one preceding it, providing the audience with the necessary context as to why the decision should be made. 

However, this iterative process places much more emphasis on the research—faulty data means inaccurate insights and conclusions. So, when working through these five steps for building a medical device business case, be sure to dedicate significant time and attention to each step. 

You’ll also want to consider the following medical device business case best practices: 

Rely heavily on input from subject matter experts (SMEs) and end users

Keep risk and regulations top of mind

Insights should always be grounded in data

Stay realistic about your team’s capabilities and time

Customize your presentation to your audience

Step 1: Define the Current Situation or Opportunity

Key Questions to Answer:

Who is the customer? Who is our customer’s customer? 

What is our problem or opportunity?

How do I best characterize the current situation?

What is the current cost of the situation?

In this first step, you’ll need to clearly articulate the situation, whether it’s a problem to be solved or an opportunity to be leveraged. Try to keep your focus centered on the impact and needs of the customer — and that means all customers, external and internal. 

Keep in mind that all companies are unique, with their own culture, mission, and values. A solution that fits with one company may be a nonstarter with another. Be sure you’re validating your definition of the opportunity or problem with management.

In order to keep track of so many internal and external pain points, speak with as many people as possible — this means talking to different departments and subject matter experts like doctors and surgeons, and device users, if possible. 

Step 2: Develop Success Criteria

What is the value proposition?

What are the benefits and timing of value creation?

What will it look like if we implement the plan?

Another critical definition in a business case is how you’ll determine whether the solution is successful. To do so, you’ll need to find ways to quantify the value to the business once the opportunity is realized or the problem is solved.

Organizing your thoughts around this issue can be tough, especially when they feel fairly nebulous. A good strategy to ground your thinking is to set parameters like timeframe, profit/loss amounts, or budget restrictions. You may find that a situation is more or less dire than you anticipated, and therefore requires a different approach altogether.

You’ll be looking at various KPIs that impact various departments and areas of business. When doing so, don’t forget to prioritize the areas that matter most. As with the previous step, validate the criteria with all department heads, especially those in finance and marketing.

Step 3: Research Alternatives

What alternatives do we have?

How do we deliver the benefits to our customer 

What is the cost of doing nothing?

What relationships do I need to consider?

Great solutions don’t happen without great alternatives. Why? Because great decision making depends on you to be unbiased and properly informed. When we enter the process with a predetermined solution in mind, it’s easy to slip the blinders on and ignore other, more potentially valuable alternatives.

Of course, just as every business is unique, so too are the scenarios and protected impacts of alternative solutions. You’ll also need to refer back to the success criteria outlined in the previous step. These will help you prioritize the KPIs that matter most to your business. 

For instance, an acquisition option of a rival technology may have a shorter timeframe but it also has high upfront costs. Developing a “me-too” product may take longer, but has potentially lower costs in the long run. There may even be hybrid options which combine multiple alternatives. The point here is to ensure you fully explore the spectrum of choices for your business case.

Step 4: Analyze and Select a Path Forward

What key resources are needed to implement the plan? 

What activities are most important and what is the timing?

How do we quantify the financial impact to the company?

Now comes the hardest part of decision-making: deciding. No one wants to end up making the wrong choice, especially when it could result in lower quality medical devices , increased risk for your patients, or the loss of jobs for your internal department. Even for the most confident individuals, that’s a heavy load to bear.

Selecting a path forward should focus on the following areas:

Financial impact

Personnel impact

Resources Needed

External relationships required

Any changes to key activities of the business

For medical device industry veterans, it’s a good chance to adopt a risk-based approach . When considering potential impacts, be as specific as possible — the extent of these impacts may not be apparent on a surface level. 

You may even tap your QA/RA department for assistance with the risk management approaches laid out in ISO 14971 , or using SWOT techniques to identify strengths, weaknesses, opportunities, and threats.

Step 5: Present the Plan

What is most important to convey?

What is best left for the appendix?

Who is my audience and what is the most effective way to present my case?

All the work you’ve put in has led to this moment: a carefully constructed argument that’s communicated clearly. But even with all the analysis, conversations, and ruminating, a poorly prepared presentation could cause the stakeholders to lose faith in your plan..

Your primary focus should be on the why of the business case, and that means demonstrating value to the business. Don’t get muddled down in the weeds of methodology, or in-depth statistical analysis; save extensive data for an appendix provided to attendees. Instead, highlight the basics, and bridge the gap from the current situation to the vision that was cast.

Finally, consider your audience. What are they like? How do they communicate? How many people are involved in approval? How familiar are they with the current scenario? All of these factors should help you in creating a presentation that actually sells them on the idea without feeling like you’re selling anything at all.

Understand the impact of every decision with Greenlight Guru

It’s clear that making decisions isn’t something that’s done in a single moment. These are choices that will have a major impact on all areas of your business and the quality of life for all users. So, while you’re considering your next move, here’s another question: Can you leverage your eQMS platform to ensure you’re making an informed decision?

Greenlight Guru helps your entire team achieve closed-loop traceability by allowing you to efficiently navigate through your quality system, making connections and understanding the relationships within your QMS and how they affect your business.

Contact us today for your free, personalized demo of Greenlight Guru!

Looking for an all-in-one QMS solution to advance the success of your in-market devices and integrates your quality processes with product development efforts? Click here to take a quick tour of Greenlight Guru's Medical Device QMS software →

Etienne Nichols

Etienne Nichols is a Medical Device Guru and Mechanical Engineer who loves learning and teaching how systems work together. He has both manufacturing and product development experience, even aiding in the development of combination drug-delivery devices, from startup to Fortune 500 companies and holds a Project...

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How to Start a Biomedical Device Company

J. michael dimaio.

a SpectralMD, Inc., Dallas, Texas

b Department of Cardiothoracic Surgery, The Heart Hospital Baylor Plano, Plano, Texas

Brittany A. Potz

c Division of Cardiothoracic Surgical Research, Department of Surgery, Rhode Island Hospital, Warren Alpert Medical School of Brown University, Providence, Rhode Island

Jeffrey E. Thatcher

John j. squiers.

d Baylor Scott & White Research Institute, The Heart Hospital Baylor Plano, Plano, Texas

Taking a solution for a clinical unmet need from a mere idea to a profitable medical device company is a long and complex process. After developing a prototype solution, the physician-inventor must quickly file a patent to protect his or her intellectual property. After the patent is secured, the first major business decision arrives: should the inventor sell the patent or maintain ownership? If the inventor decides to maintain ownership, he or she will face a series of hurdles from obtaining additional funding to device development, and ultimately, commercialization and marketing of the product. Although this process is daunting at first glance, and physicians certainly face unique challenges in this endeavor, clinicians are uniquely and strategically positioned to identify clinical unmet needs and, therefore, have the ability to fundamentally transform the way we treat our patients.

Although medical school and residency typically do not provide formal training regarding biodesign or business principles, physicians should be leaders at the cutting-edge of innovation in health care. After all, physicians are uniquely positioned to identify clinical unmet needs and to develop practical solutions with the potential to widely affect patient care. These unmet needs manifest in a variety of ways, but the best method is for the physician to simply pinpoint a problem that routinely bothers him or her during everyday clinical activities. This step of the biomedical design process is the easiest and, unfortunately, is the one at which the vast majority of physicians cease their efforts. After all, successfully addressing a clinical unmet need by developing a novel drug, device, or process is neither straightforward nor guaranteed. Any physician with an insatiable passion to improve some element of patient care, big or small, can nevertheless find success, which may then afford him or her the opportunity to commercialize the solution. Herein, we will provide an overview of the fundamental principles for starting a company in the medical device industry based on our own experience in taking a potential solution for a clinical unmet need from the bench-top to in-human clinical trials.

The “3 Is” Process (Identification, Invention, Implementation)

The initial steps in starting a successful medical device company center on the “3 Is” process (identification, invention, implementation). A detailed description of this process, as implemented in the Stanford Biodesign Program, was provided in a recent issue of JACC: Basic to Translational Science (1) . Briefly, a commercial venture begins with the identification of an unmet clinical need. Physicians, more than potentially any other group of professionals, can provide important expertise at this stage due to their first-hand experience with the need as well as their understanding of the pathophysiology underlying and current treatment methodologies available for the need. Once identified, the unmet clinical need informs the invention of a solution that will ultimately be commercialized. However, this solution cannot be invented by the physician alone; instead, a team approach is often imperative for success. If the physician identifies an unmet need that may be solved by a medical device, for example, he or she might enlist an engineer with the skills to design such a device, from prototyping through final aspects of development. Finally, after a solution has been invented, the team may incorporate a business expert to assist with implementation of the device into the market, including considerations regarding intellectual property, credible reimbursement options, and investment strategies for further research and development (R&D) and commercialization efforts. Fundamentally, the “3 Is” process characterizes the dynamic relationship among professionals in at least 3 different arenas (medicine, engineering, and business) that is required to identify, invent, and implement a commercially viable medical device.

Patenting an Invention

After the physician and his or her team have identified a clinical problem and invented a solution, patenting this solution is critical for protecting the team’s ability to commercialize their medical device. There are 3 important milestones in the process of patenting an invention: the date of conception, the date of actual reduction to practice, and the date of constructive reduction to practice. The date of conception describes when the invention was first conceived in its completed form. The date of actual reduction to practice refers to the date when a working model or prototype was completed. The date of constructive reduction is the date on which the patent application was filed.

Prior to 2013, the United States followed a “first-to-invent” patent system. Under this system, when 2 inventors filed patents for the same invention, an interference hearing before the Board of Appeals and Interferences at the U.S. Patent Office was scheduled to determine the legal date of priority based on the date of conception for each inventor. Although this system was designed to protect inventors’ intellectual property, several major flaws, including the lengthy and costly legal process and difficulties in determining accurate dates of conception, limited its effectiveness. Therefore, in 2011, the U.S. Congress passed the America Invents Act, which introduced a “first-to-file” patent system that gives priority to the inventor who first files a patent application. Beginning on March 16, 2013, the first-to-file system took legal precedent in the United States, the final country to adopt this system worldwide. Therefore, the date of constructive reduction to practice is now used to determine which inventor has priority over a patented technology.

Inventors must navigate the patent system under the first-to-file system in a dramatically different fashion than under the first-to-invent. Previously, inventors who were confident that their date of conception would hold legal precedent had little incentive to keep their inventions secret or to rush toward a patent application. Instead, they could take their time to diligently reduce their invention to practice and to prepare a patent application, knowing that their date of conception would give them priority to the patent. Under the first-to-file system, however, inventors are now most likely to secure a patent by keeping their technology secret from others and by filing for a patent (demonstrating constructive reduction to practice) as quickly as possible. Otherwise, the inventor risks losing the patent to someone who files first, even if the first-to-file party had conceived of the patented technology second.

Another key consideration when filing for a patent is the patent policy at the inventor’s institution. If a physician conceives or creates a patentable medical device or technology through research conducted at his or her institution, it is very likely that the university, practice group, and/or employer has rights to both the patent and any royalties that stem from commercialization of the device that is patented. In fact, many universities generate a significant income from technology and patent licensing of their faculty’s inventions (2) .

Finally, although it may be possible for physicians to patent an invention on their own, hiring a patent lawyer is strongly recommended given the complexities of the patenting system and the speed with which a patent application needs to be filed under the governing first-to-file patent system. A strong relationship with a patent lawyer is also essential to ensure that the inventor is ready to protect his or her invention against potential patent challenges and infringements that may arise after the patent is secured.

License, Assign, or Manufacture?

After the solution has been successfully patented, the inventors are well positioned to bring the patented medical device to the marketplace. The first key decision during this process is whether to license, to assign, or to manufacture their invention. Which option is best depends on a number of factors, including the invention itself, the inventors’ long-term goals and/or level of desire to maintain control over their invention, and the existing market competition for the invention (3) .

When an inventor licenses an invention, he or she allows a third party to commercialize the invention for a certain time period. In return, the inventor receives an agreed upon compensation, also termed a “royalty,” which is typically either a percentage of sales or a 1-time payment. At the conclusion of the licensing agreement, the original inventor regains complete control over the invention from the third party. When an inventor assigns an invention, he or she sells (and therefore relinquishes) ownership of the invention to another party in exchange for a 1-time payment or series of payments. Although the inventor at least temporarily cedes control over the invention in both cases, he or she is no longer faced with the daunting tasks of development, mass manufacturing, commercialization, and marketing of the invention. If, however, the inventor is committed to maintaining absolute control over the invention, he or she can proceed to manufacture the medical device. In this case, it remains the inventor’s responsibility to further develop, mass manufacture, commercialize, and market the product. These activities require significant expertise and financial investments. Fortunately, the necessary financial support required to manufacture and commercialize a medical device can be acquired through a variety of avenues.

Sources of Funding

The primary difference between licensing/assigning and manufacturing a product is that the inventor will need to secure significant funding to begin commercialization of the product if he or she chooses to manufacture. The inventor should expect a net deficit, with costs accumulating due to further development of the invention, mass manufacturing, and marketing expenses, until the product has been successfully commercialized and available on the market for several years. Recent estimations of R&D costs suggest that well over $1 billion are often invested to bring a single new drug to market (4) . R&D costs related to medical devices are significantly less, but are nevertheless typically on the order of tens of millions of dollars per device. Thus, to fully commercialize their product, inventors will likely have to acquire funding from more than 1 source. The 2 primary sources of funding for biomedical companies are the public sector (i.e., the government) (5) and private sector (i.e., venture capitalists) 6 , 7 .

The primary source of government funding for health care innovation and medical device development is the National Institutes of Health (NIH). The NIH spends 53% ($16.5 billion) of its budget on Research Project Grants and 11% ($3.5 billion) on R&D contracts. The rest of the budget is split among research centers, other research grants, research training, intramural research, research management and support, and miscellaneous costs. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs funded through the NIH’s R&D budget are of particular use to physician inventors aiming to commercialize their solution to a clinical unmet need. The intricacies of these programs were outlined in a recent issue of JACC: Basic to Translational Science , and funding can support virtually any project performed by a small business, from preclinical research to in-human clinical trials (5) . Fortunately, the SBIR/STTR Reauthorization Act of 2011 (P.L. 112-81) requires that the NIH actually increase its funding of small business through these programs. Applying for SBIR/STTR funding from the NIH is very similar to the grant-writing and application process with which physician-scientists are already familiar.

Despite the support available from the NIH and other government agencies, the likelihood that an inventor will be able to fully commercialize an invention with public funding alone is unlikely. In fact, over the last 2 decades, the number of applications per NIH award has been increasing, with a corresponding decrease in the percentage of successful applications. Worse yet, the total amount of inflation-adjusted funding awarded by the NIH has actually been decreasing for nearly a decade ( Figure 1 ). Even if the inventor does secure NIH funding, the award amount is generally insufficient to advance the medical device through the litany of Food and Drug Administration (FDA) clearance milestones (5) . Therefore, support from the private sector is almost certainly necessary to acquire as well.

NIH Research Project Grants

(A) Because the number of applications per National Institutes of Health (NIH) award has been increasing, the success rate for NIH applications has been decreasing over the last 20 years. Adapted from National Institutes of Health. Data book fiscal year 2015 (Available at: http://report.nih.gov/NIHDatabook/Charts/Default.aspx?showm=Y&chartId=20&catId=2 . Accessed April 25, 2017). (B) After adjustment for inflation, total NIH funding (in thousands of constant 2015 Biomedical Research and Development Price Index [BRDPI]–adjusted dollars) has been decreasing annually for the last decade.

Private sector funding, termed “venture capital,” is typically sought from investors who are willing to tolerate a substantial element of risk inherent to a small business that has not already capitalized its product. Applying for private funding is, therefore, a very different process compared with the grant application process with which physicians are more familiar. Securing venture capital for one’s company requires the physician-inventor to shift from the details of grant applications toward streamlined business proposals. When pitching an investment opportunity to venture capital investors, inventors should use the “10-20-30 Rule of PowerPoint” (8) . This rule calls for the PowerPoint presentation to be no more than 10 slides, covering the 10 topics listed in Table 1 . The presentation should last no more than 20 min, and all text should be no smaller than 30-point font. If the significance of the clinical unmet need, the innovativeness of the solution, and the details of the business plan take more than 20 min (or a font smaller than 30 points) to explain, then the inventor has not sufficiently distilled the concept and cannot expect a venture capitalist to take a risk on the idea.

Table 1

10-20-30 Rule of PowerPoint

Presentations to venture capital investors should follow the 10-20-30 rule of PowerPoint, which requires the presenter to cover 10 specific topics, in 20 min, using 30-point font.

Beyond NIH funding and venture capital, other potential sources of funding include grants from private organizations such as the American Heart Association, governmental agencies such as the National Science Foundation, intramural support via universities, and even friends and family. Although the amount of money needed to get a medical device business off the ground is daunting, always remember that if a clinical unmet need is significant enough and the inventor’s solution is strong enough, funding can be secured.

Equity Distribution

Whereas grants from government agencies or private organizations typically do not dilute the inventor’s ownership of their technology, the inventor must realize that venture capital investments are secured in exchange for equity in the company. In general, equity is initially distributed based on what each of the founding members of the company brought to the table early in the company’s lifecycle. When negotiating with private investors, a number of additional factors will weigh into equity negotiations, including relatively quantifiable aspects, such as the value of intellectual property and patents, business plans and projections, and the amount of capital sought by the inventor, as well as more qualitative aspects, such as the nature of the relationship between the inventor and the investor. Of course, inventors who retain more equity during these negotiations will ultimately retain more voting power, and therefore more control in their company. Inventors can expect to exchange a percentage of equity in the company, as valued by the investor, that is equivalent to the capital investment they are seeking. For example, if an inventor needs to raise $50 million and their investor believes the company is worth $500 million, then the inventor will cede 10% equity and voting control in the company to the investor. Venture capitalists are savvy investors, so significant amounts of negotiation should be expected before they are willing to sign official agreements with the inventor.

Regulation and the FDA

After funding has been secured, the inventor must ensure that the company meets quality control standards per FDA requirements if they plan to market the device in the United States (9) . These standards, termed design control, include quality assurance practices throughout the lifecycle of medical device design that work to verify and to validate that design outputs (the medical device) correspond to design inputs (user needs) ( Figure 2 ). Verification (was the device designed correctly?) and validation (was the correct device designed?) are the 2 sides of the design control coin. All aspects of the design control process must be documented and stored within a “design history file,” which ultimately captures the entire history of design for a completed medical device.

Design Control Process

All phases of the design control process are subject to iterative review, ensuring both verification and validation of the medical device design.

Prior to marketing a medical device, companies typically must obtain FDA clearance or approval, depending on the classification of the medical device. Devices are classified as Class I, II, or III based primarily on the risks associated with the use of the device. Class I devices are considered to be low risk and are subject to the least regulatory controls. These devices (e.g., examination gloves) are often exempt from FDA clearance prior to marketing. Class II devices are incrementally higher-risk devices than Class I and thus require greater regulatory controls to provide reasonable assurance of device safety and effectiveness. These devices (e.g., infusion pumps) require FDA clearance via Premarket Notification, also known as a 510(k) application, that proves substantial equivalence of the device to an existing device that has already been cleared by the FDA. Class III devices are at the highest risk and are subject to the highest level of regulatory control. Class III devices (e.g., implantable heart valves) require FDA approval via a Premarket Application.

With increasing risk, the FDA will require an increasing quality of evidence to support the safety and efficacy of the device for its proposed labeling and indications. Class III devices, for example, usually must be vetted in pre-market clinical trials that require investigational device exemption from the FDA. Very often, these clinical trials require randomization of patients to treatment with the new device or the current standard of care. Additional details regarding medical device classification and FDA approval processes were provided in a recent issue of JACC: Basic to Translational Science (10) .

In general, keeping the design control process current and preparing applications for FDA clearance/approval are both laborious and time consuming. In fact, bringing a medical device from initial conceptualization to market takes, on average, between 3 and 7 years (10) , and even longer for drugs (11) . It is therefore advantageous to work with an experienced quality assurance engineer and a regulatory expert who have previous experience with these tasks to ensure that the medical device can move through the regulatory process quickly and efficiently.

Commercialization and Marketing

After FDA approval has been secured, the company can commercialize and market its medical device, the final steps of product development. Although the goal of advertising is to encourage the commercial adoption of the product, marketing involves analytically identifying consumer behavior to advertise and commercialize efficiently and effectively. The inventor should assemble a team of marketing and commercializing experts who can effectively portray how the medical device solves a previously unmet clinical need and why the value-proposition of the medical device justifies its cost to the consumer.

3 Rules of Success

When inventors take on the challenge of manufacturing their own product, a myriad of difficult decisions will inevitably arise. However, 3 simple rules (12) , if followed throughout all phases of commercialization, will allow the inventor to be successful:

• 1. Better before cheaper. Although it may be beneficial in the short-term to choose the least expensive and/or time-consuming option, a successful company always chooses the best, most reliable option for the long-term.
• 2. Revenue before cost. Successful businesses drive profitability with higher volumes of product or higher prices, not by lowering the cost of the product.
• 3. There are no other rules.

Finally, and most importantly, when the inventor elects to see an idea through the manufacturing process, he or she must be aware that this decision means accepting a new leadership role. As such, the inventor must approach subsequent problems just as he or she approaches clinical work: with the goal of perpetual learning toward mastery of the environment and tools. The leader should develop a team of coworkers who excel in their professions, and he or she should lead by setting an example of hard work and friendly collaboration. It is imperative that leaders first fully trust those with whom they have chosen to work and then naturally relinquish complete control over decisions that they are not the most qualified to make. The leader, like the physician for the patient, must focus on listening, understanding, supporting, and building the team toward shared goals. The leader must also strive to understand the various elements of each multifaceted issue within the company so that he or she can confront future problems with improved decision making. As with most things in life, balance is important, and decisiveness is ultimately a game winner.

Unique Challenges Faced by Physicians During Company Development

Due to their identification of the clinical unmet need and mastery of the clinical environment, physicians are uniquely positioned to develop a company based on their novel solution to this need. Although all of the hurdles discussed previously are presented to any leader of a start-up company, physicians face a host of additional, unique challenges when starting a company due to a variety of factors, including educational background, possible attitude toward lawyers, and a reframing of expectations compared with clinical practice.

During training and while in practice, physicians learn by doing —evaluating new patients, performing procedures, and actively learning from mistakes. When starting a company, however, a new learning mentality is required, one that is more similar to the beginning of a physician’s education in medical school. Rather than learning by doing, a physician entrepreneur should consider the importance of reading and studying to gain essential knowledge and important experience. Recommended reading materials include the Stanford biodesign course textbook ( Biodesign: The Process of Innovating Medical Technologies [13] ), the Harvard Business Review HBR Guide to… books, and the current series of “Translational Toolbox” articles, including this one, in JACC: Basic to Translational Science . Physicians may also consider taking a short intensive course in entrepreneurial leadership, such as the Entrepreneurship Development Program offered annually by the Massachusetts Institute of Technology.

Physicians must constantly remember the importance of seeking out, listening to, heeding, and implementing sound legal advice when starting a company. Although legal professionals are often viewed as adversaries to the practicing clinician, in the form of both potential lawsuits and the increasing bureaucracy of medical practice, expert lawyers should be strongly embraced by the physician entrepreneur at all stages of company development. More often than not, the potential hazards identified by lawyers when reviewing contracts and essential company documents will manifest themselves if the advice of the lawyer is brushed aside. The immediate investment in what may appear to be relatively expensive legal advice is absolutely worth long-term protection against legal troubles down the line in a company’s life cycle.

Finally, many clinicians enjoy practicing medicine due to the instant gratification that arises from providing excellent care to their patients. The immediate joy that accompanies a difficult, but correct, diagnosis of a curable disease or a challenging, but successful, procedure is often not available to motivate physicians as they develop their company. The design control process that dictates progress in any biomedical device process, by definition, requires years of incremental progress toward the final product. Gratification is certainly available at many stages throughout this process, but will likely not be a daily, or even weekly, occurrence. Therefore, physicians must reframe their expectations of and timelines for success when starting a new company.

Conclusions

Taking a solution for a clinical unmet need from a mere idea to a profitable medical device company is a long and complex process. After developing a prototype solution via the “3 Is” process, the inventor must quickly file a patent to protect his or her intellectual property. After the patent is secured, the first major business decision arrives: should the inventor sell (license or assign) the patent or maintain ownership (manufacture)? If the inventor decides to maintain ownership and proceed with manufacturing, he or she will face a series of hurdles from obtaining funding (government or private) to device development (design control and FDA regulation), and ultimately commercialization and marketing of the product. Although this process is daunting at first glance, and physicians face unique challenges throughout, clinicians are uniquely and strategically positioned to identify clinical unmet needs and, with collaboration and conviction, can fundamentally transform the way we treat our patients.

Drs. DiMaio and Thatcher receive salary from and have ownership through stock in SpectralMD, Inc. Dr. Squiers has received consulting fees from SpectralMD, Inc. Dr. Potz has reported that she has no relationships relevant to the contents of this paper to disclose.

All authors attest they are in compliance with human studies committees and animal welfare regulations of the authors’ institutions and Food and Drug Administration guidelines, including patient consent where appropriate. For more information, visit the JACC: Basic to Translational Science author instructions page .

Medical Design and Outsourcing

Starting a medical device company: everything you need to know

June 27, 2016 By Rogene Evans

Once you’ve got some scratch, you’ll need to think about outsourcing product design and development and prototyping services.

All set? Now you need to think about getting your device on the market.  Once you’ve gotten that figured, you should figure out how to keep your FDA or CE Mark approval through your quality systems.

And you still need to get paid, right? You need to build a reimbursement strategy into your plan.

Finally, to protect the intellectual property underlying all of this effort, you need to understand U.S. patent law.

Raising capital in a VC-light environment

Venture capital hasn’t completely deserted the medical device sector, but most analysts agree that VCs are simply not as interested in medtech as they are in other sectors like biotech. Medtech attracted less than $5 billion in 2014, only 5.9% of all U.S. venture dollars that year, according to the Ernst & Young Pulse of the Industry report.

And it’s startups that are feeling the pressure most deeply. VC backing of earlier-stage medtechs now makes up a smaller share of a smaller pie “due to the retreat of several stalwart medtech-focused VCs at a time when corporate venture investors have yet to fill the gap,” according to the report. Seed, Series A and Series B rounds dropped 8% in 2014-2015 from fiscal 2013-2014 and made up only 29% of medtech venture investments in 2014-15.

Think small

Although VC has diminished, other funding sources are out there – the biggest change is that they’re just much smaller:

• Angel investors – Often individuals with deep pockets and an interest in a specific disease or condition. Get busy networking with as many high-net-worth people as you can. • Private placement – Use a private placement – the sale of securities to a relatively small number of select investors – to fund your vision by raising money from individual donors. • Incubators – Public, private or academic incubators offer subsidized business accommodation, academic support and business mentoring, and connections with resources for prototyping, testing and clinical trials. • Entrepreneurial competitions – Universities or large companies, hoping to attract technology partners, often offer technology contests with sometimes significant payouts in cash and in-kind services. • Crowdfunding – Most effective after the early development phase, when the funds are needed for validation or prototyping. The same high risk and high capital needs medical technology that made VCs chary of medical technology make the crowd a less optimal source of cash. • City, state, & county resources – Local governments often use tax breaks and other incentives to draw entrepreneurs to development zones. And your area likely has technical associations formed to boost the industry, some with their own tech incubators. Trade associations offer access to universities or hospitals for clinical testing and connections to local angel investors and competitions. They can also provide opportunities for networking and mentorship.

As Aum Cardiovascular CEO Marie Johnson puts it, “They don’t give you money because they’re in love with the story.” (Johnson raised $5 million for Aum via private placement.) The best advice for any medical device startup is that today, no medtech investment pitch, no matter the source receiving it, succeeds without compelling clinical date, a clear unmet and demonstrable cost savings over current treatments.

Are you ready for an outsourcer? Here’s how to find out.

Outsourcing your product development doesn’t have to mean losing control of your technology. Although it’s one of the biggest decisions a startup will make, working with a contract supplier can deliver unexpected benefits.

Gary Boseck, VP of technical operations at Vention Medical, says there are ways for startups to prepare for the challenges that come with working with an outsourcing partner.

And partnership, he says, is really the key word. “CMOs want their clients to succeed. They have a vested interest in helping develop a technology that has potential in the market and their expertise can contribute to the likelihood of success.”

Getting a trusted CMO involved early in the process could even have some unexpected benefits. Boseck says some CMOs will provide funding for their most promising startup clients. Others hold contests to attract the best startup technologies and assist in developing those platforms for the market.

Readiness is all

It’s not an easy road from ideation to production, Boseck notes. “As the saying goes, ‘If it were easy, someone would have already done it.’” That’s precisely the point: Contract manufacturers have done it, and they’re willing and able to help startups do it as well.

There are a few questions medtech startups should ask themselves when considering whether to look outside the company for product development:

• Can you provide well-defined and stable product requirements? Although adjustments are expected and often necessary, keep in mind that mission creep can kill deadlines, Boseck notes. • Do you have clear priorities? Whatever the challenges, your end goals should be very well defined. • Can you provide timely feedback to the team? Manufacturing can’t take place in a vacuum. Startups, which often have limited staff, should commit to having a dedicated liaison with their CMO partner. • Will you actively engage with the CMO development team? This might be as easy as getting a team member on site frequently. • Do you understand the development process? If not, ask more questions. • What are the terms? Make sure IP and ownership of the work product is well defined.

Another important aspect of engaging with a CMO is the selection process, often a rigorous and challenging one, Boseck says. Some CMOs actively try to entice startups, but just because they claim to be experts “they may not meet your specific requirements,” he cautions. Boseck advises budding medtech entrepreneurs to evaluate CMOs based on the following criteria:

• Their expertise matches the project need. This should encompass design expertise, clinical familiarity, and component and assembly experience. • The CMO offers the full spectrum of needed services. These should include concept ideation and prototyping, clinical production and scalable commercial production. • The CMO is accessible and responsible. This is the due diligence portion of the analysis. You’ll need to talk to a variety of clients, and conduct some online research, just to start. A good CMO has a reputation for building good working relationships, with an emphasis on trust and transparency.

Quality and compliance for startups: What you can ignore and what you can’t

Quality systems might be the last thing on your startup’s mind, as other activities take precedence. But it’s not a good idea to overlook the development of your quality system at the beginning.

“I think it’s a good idea to put process and product planning in place right from the start, simply because once things get going, they get going fast,” notes Timothy Lozier, director of marketing for ETQ. “You might be too worried about R&D, product and supply chain, and then market approval, to think about compliance. But it will come to you, and you don’t want to get caught off-guard.”

“Establish a quality management system that suits the company size and expected growth,” adds Christine Santagate, client solutions advisor with Regulatory Quality & Solutions. “Make sure that it’s something that the current staff can manage and maintain. When a company institutes a [quality management system] that’s too large, they set themselves up for failure to comply with their own system.”

Implementing and maintaining a QMS is a crucial part of regulatory compliance. The medical device quality system is primarily concerned with production and post-production. FDA 21 CFR Part 820 defines the quality regulations for the U.S. market. Otherwise, ISO 13485 can be used to build a quality system for global markets.

Although it’s time-consuming and expensive, establishing a total quality management system need not be as challenging as it sounds. The key is to build the system as you develop, focusing on the relevant aspects of quality and ignoring the others until they’re needed.

“You have to find something you can scale with,” says Lozier. “There are systems out there that let you start off small-scale and simple (yet effective), but as you grow you can grow the solution with your business.”

Startups should begin building their quality and compliance programs during the development phase, he advises, by focusing on design controls, risk management, document control and record management, and supplier management.

Design controls, essential for a QMS, can also help with the design process by capturing key aspects of development to prove your product meets user needs and is safe and effective. Likewise, risk management works with design controls to create documents and records throughout product development, to demonstrate that you’ve considered the risks and are doing something about them. Document management is the process that helps those pieces of the puzzle stay together.

“The concept of planning and gaining control over the process is that as you grow, you’ll always have them to lean on,” Lozier explains. “People can follow a process, but if it’s not documented, then you run into issues.”

Lozier emphasizes centralizing documentation, process and product planning.

“Too often, companies take that first step towards documenting their processes, but it resides in spreadsheets, file systems, and other, more decentralized, often manual methods. Having a system that’s able to manage and track these things, as well as serve as a central resource, is important to ensuring consistency in the operation. One source of the truth outweighs the risks associated with errant copies floating around the operation.”

Lozier cites tools that offer free or scalable methods to handle compliance events, issue actions, and launch corrective & preventive actions (CAPAs). ETQ, for example, offers traqpath, a free download, and VERSE, a cloud-based quality management system that brings in document control/training and CAPA. In addition, both tools have a supplier component to them, which can help startups send actions and CAPAs to suppliers through secure external assignments.

Many vendors have programs that are specifically designed to help companies scale compliance.

“These aren’t expensive tools, but are built with startups in mind,” says Lozier. “The benefit is that if you’re a startup and you’re looking to just put the pieces in place, you can do that for a low cost to your business, or even for free. That way, you’re not ignoring it, or factoring in major investment on something you may not need now.”

Committing assets to compliance is a “future-proofing” investment, he says. “You’re going to have to meet the compliance standards and regulations as you grow, and, just like documenting your processes and controlling and tracking your quality and compliance operations, you don’t want to be caught in growth mode and playing catch-up.”

How to plan your regulatory strategy

The regulatory burden for startup medical device businesses might be the most rigorous of any industry, and with good reason – making products for implantation or use in the human body requires hurdling a pretty high safety and efficacy bar.

So building a regulatory strategy from the very beginning is crucial, and there some key considerations every medtech startup should keep in mind, according to Christine Santagate, client solutions advisor at Regulatory Quality & Solutions.

First off, Santagate advises, startups should remember to budget for the testing and related costs associated with regulatory processes.

“The regulatory strategy is really an extension of the overall business plan and the costs associated should roll up into the overall budget. Unfortunately, testing and registration costs are sometimes overlooked when creating a business plan,” she explains. “The testing times and costs of sterilization validation, environmental testing, aging, biocompatibility and possibly clinical trials are sometimes not fully understood, as the initial focus is usually on technology and not on the entire life cycle.”

Another early consideration is where to pursue approval first. The relative ease of obtaining a CE Mark in Europe compared with the FDA’s more stringent requirements has been an attraction in the past, but Santagate says that’s changing.

“It used to be easier to gain approval in Europe, but things are changing quickly. With the updated ISO 13485 and pending IVDR updates, notified bodies [in Europe] are going to have their hands full,” she says. “Small startups should focus on gaining approval in the country that allows the most opportunity and is manageable and sustainable for their small staff.”

If the U.S. is the first target for commercialization, planning a detailed approach ahead of time helps determine which pathway to pursue, depending on the type of device being developed. It can help to find a trusted partner with the expertise in this area, to develop a regulatory strategy up front and identify potential paths to market – and its associated risks.

“This strategy will assess applicable FDA regulations, device classification options, potential predicate device and product claims, indications and contra-indication options, and potential regulatory risks based on the company’s marketing claims, product requirements, risk analysis, etc.,” Santagate notes. “The advantage in working with a consulting group is that they stay up to date on all regulation changes. A group like R&Q has 80+ full time consultants with experience spanning nearly all FDA device classes and they can provide an experienced, independent review.”

If your device is Class III, requiring the FDA’s most-stringent pre-market approval path, establishing a relationship with the agency and keeping the lines open should be your primary considerations.

“Make sure that indications are clear and supported and that any study design is robust and appropriate data points are collected to support the submission,” Santagate advises. “It’s all in the preparation – this is a long process and up-front focus and attention to detail will be well worth the effort.”

Santagate says a sound regulatory strategy can be an unexpected benefit for startups on the funding trail.

“Potential investors are able to see that the company has a planned path forward, based on risk. It provides an additional layer of preparedness and overall understanding of the full funding requirements – and how those funds will be used,” she says.

Reimbursement tops the ‘must-do’ list

Five years ago, if you asked a medical device executive about their top worry, regulatory – specifically, the cost and uncertainty around winning favor with the FDA – nearly always came first.

Today, those same executives are more likely to cite reimbursement as their top issue. Driven by the declining number of physicians owing their own practices – 70% in 2002, compared with about 25% in 2011, according to the U.S. Medical Group Management Assn. – and the resulting shift to group purchasing organizations, reimbursement has vaulted to the top of the list of must-do items for new medical device concerns.

“Reimbursement comes up in just about every discussion I’ve ever had with investors,” says David Rosa, the former president & CEO of Sunshine Heart in Eden Prairie, Minn. “Today, they’re all looking to de-risk their investment, and they all want to know, up front, the likelihood of reimbursement.”

“The hardest questions you’re going to get are on the reimbursement side,” adds Preceptis Medical president & CEO Steve Anderson. “It goes to the heart of everything we’ve been doing. Five years ago, we would’ve said, ‘Oh, reimbursement, I don’t need to worry about that.’ But this is the big issue today. It’s a big issue, and a big opportunity.

“It really is all about the money. The first real money we spent was on an outside analysis on reimbursement strategy. So it was fundamental to everything we’ve done,” Anderson says.

In fact, Minneapolis-based Preceptis chose to develop its therapy to help children with hearing problems in part because of its relatively simple reimbursement path, he adds.

Bob Thompson, president of Gahanna, Ohio-based Comprehensive Reimbursement Solutions, says the key is targeting a truly unmet need.

“There’s a lot of opportunity out there,” Thompson says. “If you direct your products toward unmet medical needs, you’ll see the benefits – particularly if you deal with the quality and cost-control issues that hospitals and payers are feeling.”

The challenges vary by country, so it’s important to become familiar with the ins and outs of local reimbursement policies in your target markets before you start spending on product development. One challenge common to most markets is the gap between reimbursement rates and the actual value of the technology. In many countries, rates are set using cost-based formulae by device or procedure type.

Because winning reimbursement hinges on clinical data, startups should plot their reimbursement strategy in parallel with their clinical and regulatory plans. That’s because collecting Class I data from randomly controlled trials and post-approval Class II data is key to a favorable review from a payer. Startups should also have a strategy for disseminating that data to peer-reviewed publications and at medical conferences once it’s collected.

In the U.S., an increasing number of payers are exploring value-based reimbursement models, not least the Centers for Medicare & Medicaid Services. Last July Medicare announced a program to bundle reimbursement payments for hip and knee replacement procedures, saying it wants to “hold hospitals accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries.”

Startups that can demonstrate that their devices both improve outcomes and can be reimbursed based on that improvement stand a better chance of winning a favorable decision from payers.

February 1, 2018 at 9:00 am

Nice write up.

My question is, whether does a medical start-up needs to be ISO13485 or just their contract supplier needs to be?

If the company is already ISO9001 certified but intends to diverse into a medical device design company (but gets contract manufacturers to manufacture and control the quality), is the ISO9001 good enough? Pls advise. Thanks.

February 21, 2018 at 5:07 pm

Good question, Raymond. I don’t have the answer. Any readers able to help Raymond on this?

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America's facing a retirement disaster. There's a better way.

• Australia's superannuation system mandates employer-funded retirement contributions.
• US retirement plans, by contrast, depend on employee contributions to accounts like 401(k)s. 
• If the US adopted Australia's retirement model, it could impact wage levels.

For many around the world, retirement can be a mixed bag .

Australian retirees rate their retirement happiness at 70 out of 100, according to a survey of 1,000 Australians over 60 in February by the independent researcher YouGov and investment management company Challenger Limited. Money was ranked behind good physical health as the key to a happy retirement.

Meanwhile, the US retirement system has become anxiety-inducing for many, as older adults struggle to make ends meet . More than half of Americans over the age of 65 are earning under $30,000 a year, according to a report from Sen. Bernie Sanders published in March and based on National Retirement Risk Index data.

What's more, Pew Research Center data shows that Americans over 75 are the fastest-growing age group in the workforce, a demographic that could double in the next decade. That's because many can't afford to stop working.

In the US, retirement accounts are a company benefit that employees can choose to contribute some of their paychecks to throughout their careers. Companies are not federally required to offer any kind of retirement savings account for employees or provide any monetary support for retirees. And many Americans living paycheck to paycheck aren't able to save enough to stop working.

Australia , however, requires that employers make regular contributions to a retirement fund for each employee — a system called superannuation.

Catherine Reilly, a fellow at the financial research firm TIAA Institute and a non-resident scholar at Georgetown University's Center for Retirement Initiatives, said Australia's system makes sure all adults have a retirement fund.

"Everybody is put into a plan," she said. "Whereas in the US, you only get put into a plan if you'd work for an employer that offers it."

Seventy-one percent of nonretired Americans said they are at least moderately worried about being able to fund their retirement , according to a Gallup poll of 1,013 US adults in April 2023.

Reilly said there are structural differences in how America and Australia handle savings for older adults. And while it may be tough to implement Australia's system halfway around the world — but the US could get close, she said.

Australian retirement system puts saving responsibility on employers, not employees

America's current retirement infrastructure includes two major categories: defined contribution plans and Social Security .

Defined contribution plans , which include 401(k) and IRA accounts allow employees to save and invest money that they make throughout their career, usually by depositing a percentage of their regular paycheck directly into the accounts.

Companies might also contribute to an employee's 401(k), but they are under no federal requirement to do so. The retirement accounts an employee has access to and what benefits they retain after they stop work all depend on what retirement package an individual company offers.

In a 2024 letter to investors , BlackRock CEO Larry Fink said the US retirement system puts undue pressure on employees to decide how much money to save and invest. With the rising cost of living in many US cities, it can be difficult for Americans to predict how much money they are going to need, an issue Fink called an "impossible math problem."

Fink encouraged American policymakers to study Australian superannuation , saying the "benefits could be enormous for individual retirees." 

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Social Security also comes into play when Americans retire, providing monthly government income benefits based on an individual's reported earnings. The federal insurance program is funded by taxes and provides income to retirees and workers with disabilities. Many retirees collect Social Security checks in addition to living off their 401(k) savings.

However, the Social Security trust is expected to be depleted by the mid-2030s unless there's an invention.

Traditional fixed-income pensions are no longer a common company benefit in the US, but are still offered by select government and public service jobs .

In Australia, however, companies are legally required to contribute 11% of an employee's monthly paycheck into their retirement account. This money can go into stocks, property, cash, or bonds — the employee has a choice. Employees can also contribute money, but much of the savings responsibility falls on their employer.

The employer contribution amount is set to increase to 12% next year.

Once they reach retirement age, which is between 55 and 60, depending on birth year, Australians can access the fund with their savings and investment earnings.

"It does level the playing field because everybody is put into a plan," Reilly said, adding that Australians have more choice in where and how their retirement money is saved.

As Reilly explained, superannuation also allows retirees to access their money all in one place.

This differs from the American system, where retirees' money is often held between a 401(k), other accounts, and outside investments. If an American employee works at multiple different companies during their career, Reilly said it can also complicate their retirement funds.

Additionally, Australian government age pensions aren't the same as Social Security. Retirees must meet a low enough asset criteria to access the age pension. Reilly said the more limited pension might be a disadvantage of the Australian system because many people's retirement is almost entirely dependent on their superannuation funds.

If the US adopted superannuation, it could impact employee salaries

Although the Australian government sets the terms for superannuation, it is managed by the private sector. Employers manage the retirement funds for their employees without much political oversight.

If America adopted superannuation, Reilly expects the system would work similarly — the federal government could establish what percentage of an employee's income employers need to contribute, but then companies could organize the retirement funds on their own.

She pointed to pooled-employer plans , a retirement fund strategy that is already being tried in the US, allowing multiple companies to contribute to a single retirement fund for an employee if that person chooses to work at different companies throughout their career. Some individual states, such as California and Colorado, also require that employees are automatically enrolled in some kind of retirement plan.

"In the US, the infrastructure for having the private sector manage these funds — that all exists already," Reilly said. "And I think that would be a sensible way to do things."

Still, Reilly cautioned that applying Australia's retirement system to the US could negatively affect employee wages . Because, for companies, it would be "very unpopular," she said.

When a company hires someone new, she said they consider the total cost of employing that person. This includes salary, bonuses, and benefits . If US employers become legally required to contribute to retirement funds, Reilly said companies may lower their employees' salaries to offset this new cost.

Still, a system like superannuation could help ensure a retirement fund for the 56 million private sector employees who don't have retirement benefits through their employer, The Pew Charitable Trust reported in January.

Did you retire and later choose to return to work? Do you feel like you can't retire because of your financial situation? Reach out to this reporter at [email protected] .

Watch: Nearly 50,000 tech workers have been laid off — but there's a hack to avoid layoffs

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