Startups are healthcare innovation drivers. Yet, the barriers to success remain high for early-stage companies.
I represented Finn Partners at MEDinIsrael, an event that showcases more than 100 Israeli health innovators. From hospital technologies, consumer devices, apps, cybermed and more, there was an exciting buzz about the incredible innovation Israel is bringing to the world. Solutions like the Upright posture trainer, Heramed’s home pregnancy monitor and Eyecontrol’s communication device for ALS patients were among the many eye-opening innovations on display.
Israeli medtech professionals are generally highly educated and entrepreneurial-spirited, operating in a risk-taking culture that receives continued support from the government, as well as private investors. And while many Israeli medtech companies are starting to find global success, others still face significant challenges breaking into the market. Of course, many of these challenges are shared by international startups as well. Let’s take a look at five of the most important ones.
- Global Focus: Among the first questions Israeli companies must consider is, where and how will we sell our products? Israeli companies are usually not focused on serving the local market. (The population of Israel is about 8.5 million, with some 60 hospitals throughout the country.) The U.S. remains the top target for most Israeli companies. Additionally, many set their sights on China and India, due to large market opportunities and supporting regulation. Executives are challenged to find local experts in target geographies to help them understand and navigate these markets.
- Regulatory Approval: The quest for regulatory approval among Israeli companies is consistent. Walking from booth to booth at the show, the conversations sounded similar – many exhibiting companies already received CE approval for their product(s), and were seeking FDA reviews. Navigating FDA processes can be difficult and lengthy, and is crucial for many devices and solutions. I sensed an overriding feeling of frustration as companies invest heavily in this process -- financially and psychologically. It is crucial to keep the end goal in mind – it may be long, but the wait will be worth it.
- Reimbursement: This remains a huge challenge and many medtech innovators are still figuring out how to navigate the system. Couple this with the evolution within healthcare reimbursement, including: transition to value-based payments; payer consolidation; growth of high-deductible health plans; and rapid growth of telehealth. These set the tone for market shifts for new product uptake, taking into account payers' potential decisions and factoring in the success or failure of the device or drug.
- Branding Considerations: Many exhibiting companies were still early stage – engaged in research and pilot projects to prove the efficacy and need for their products. Resources and budgets are tight and companies need to focus on and invest in the most critical business-building activities. However, core brand identity and image are also important in this stage. How impactful will a breakthrough idea be if one can’t properly communicate its value? Employees, partners and customers must understand the unique market proposition and how it is superior to existing solutions. Branding and establishing core business and PR messages should not be pushed aside early on, as this will help set the tone for the future of the company.
- PR & Marketing Outlook: Most of the executives I met understood that PR is a “good thing.” However, PR is a broad term and during the years I’ve witnessed that many Israeli executives don’t understand what PR entails and how it can support their business goals. Israeli knowledge and investment in PR and marketing typically lag behind U.S. counterparts and other western countries.
Some companies believe they aren’t ready to invest in ongoing PR efforts because they don’t have enough “news” to announce. This is where we as communicators have the opportunity provide counsel and apply our creativity to build thought leadership and momentum between announcements. On the flip side, those with steady news and some PR budget are cautious about where they spend their marketing dollars, turning to us for guidance about which opportunities will have the greatest business impact.
Israeli medtech companies are eager to jump in fast and learn as they go, with minimal investment. Like their global counterparts, they are nimble and hungry for success. (See my previous blog post about advice for Israel health startups.)
The challenges remain, yet they are easily overcome with focus, suitable partners, and ample (mutual) patience. Some of the innovators will not succeed in the global marketplace and others will. As communication partners, we have a tremendous opportunity to help these game-changing inventors or ideas, services and technologies tell their stories to the world and advance their innovations that improve human well-being.