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Medical Device Business Plan

Published Nov.06, 2023

Updated Sep.14, 2024

By: Brandi Marcene

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Table of Content

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-rated document, 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 Start a Medical Device Company

Starting a medical device business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful medical device company.

Importantly, a critical step in starting a medical device company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .

Download our Ultimate Business Plan Template here

15 Steps To Start a Medical Device Company:

• Choose the Name for Your Medical Device Company
• Determine the Type of Medical Device Company You Will Launch
• Develop Your Medical Device Company Plan
• Choose the Legal Structure for Your Medical Device Company
• Secure Startup Funding for Your Medical Device Company (If Needed)
• Secure a Location for Your Company
• Register Your Medical Device Company with the IRS
• Open a Company Bank Account
• Get a Company Credit Card
• Get the Required Company Licenses and Permits
• Get Company Insurance for Your Medical Device Company
• Buy or Lease the Right Medical Device Company Equipment
• Develop Your Medical Device Company Marketing Materials
• Purchase and Setup the Software Needed to Run Your Medical Device Company
• Open for Company

1. Choose the Name for Your Medical Device Company

The first step to starting a medical device business is to choose your business’ name.  

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your medical device business:

• Make sure the name is available . Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
• Keep it simple . The best names are usually ones that are easy to remember, pronounce and spell.
• Think about marketing . Come up with a name that reflects the desired brand and/or focus of your medical device business.

2. Determine the Type of Medical Device Company You Will Launch

The next step is to determine the type of medical device business you will launch. The four main types of medical device businesses are:

• Manufacturers – These companies create medical devices from scratch, using materials and designs they have developed. 
• Distributors – Distributors purchase products from manufacturers and resell them to buyers such as hospitals, doctors’ offices, surgical centers, etc. 
• Retailers – Retailers sell medical devices directly to consumers, such as over-the-counter products like thermometers and blood pressure monitors.
• Service Providers – These businesses provide installation, repair and maintenance services for medical devices.

3. Develop Your Medical Device Company Plan

One of the most important steps in starting a medical device business is to develop your medical device company business plan . The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

• Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your medical device business.
• Company Overview – this section tells the reader about the history of your medical device business and what type of medical device business you operate. For example, are you a manufacturer, distributor, retailer or service provider? 
• Industry Analysis – here you will document key information about the medical device industry. Conduct market research and document how big the industry is and what trends are affecting it.
• Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
• Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
• Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product : Determine and document what products you will offer 
• Prices : Document the prices of your products/services
• Place : Where will your business be located and how will that location help you increase sales?
• Promotions : What promotional methods will you use to attract customers to your medical device business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
• Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
• Management Team – this section details the background of your company’s management team.
• Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your medical device business make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business?

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4. choose the legal structure for your medical device company.

Next you need to choose a legal structure for your medical device business and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the owner of the medical device business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a medical device business together. The partners share in the profits and losses of the business. 

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a medical device business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a medical device business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your medical device business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

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5. Secure Startup Funding for Your Medical Device Company (If Needed)

In developing your medical device business plan , you might have determined that you need to raise funding to launch your business. 

If so, the main sources of funding for a medical device business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a medical device business that they believe has high potential for growth.

6. Secure a Location for Your Company

Having the right space can be important for your medical device business, particularly if you’d like to meet clients there. You may need a place to store and assemble products, or you might need to rent office space. Additionally, if your product requires the use of large equipment, such as 3D printers or milling machines, it will be important for you to find a space large enough to accommodate these needs.

To find the right space, consider:

• Driving around to find the right areas while looking for “for lease” signs
• Contacting a commercial real estate agent
• Doing commercial real estate searches online
• Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

7. Register Your Medical Device Company with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

8. Open a Company Bank Account

It is important to establish a bank account in your medical device business’s name. This process is fairly simple and involves the following steps:

• Identify and contact the bank you want to use
• Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
• Complete the bank’s application form and provide all relevant information
• Meet with a banker to discuss your business needs and establish a relationship with them

9. Get a Company Credit Card

You should get a business credit card for your medical device business to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

10. Get the Required Company Licenses and Permits

The types of licenses and permits you need for your medical device business will vary depending on the state or jurisdiction you are doing business in. However, some of the most common licenses and permits you may need include:

Company License – A business license is generally required to operate a business in a particular jurisdiction. This license allows you to operate your business under a certain name and conduct certain activities.

Tax Identification Number – You will need to register with the IRS and get an Employer Identification Number (EIN). This number is used to track your payroll tax payments.

Professional License – If you are providing professional services as part of your medical device business, you may need to obtain a professional license. For example, if you are a doctor providing medical consultation services, you may need to obtain a medical license.

Health Department Permit – If your medical device business involves selling or distributing products that come into contact with human skin, you will likely need to obtain a health department permit from the relevant authority.

Nearly all states, counties and/or cities have license requirements including:

Zoning Approval : typically at the city or county level, this provides authorization for construction or use of a building or land for a particular purpose

Fire Department Approval : a process by which the local fire department reviews and approves the installation of a fire alarm system.

Depending on the type of medical device business you launch, you will have to obtain the necessary state, county and/or city licenses.

11. Get Company Insurance for Your Medical Device Company

Medical device businesses face a variety of risks that can potentially lead to costly losses. This is why it’s important for medical device businesses to have business insurance.

There are a variety of business insurance policies that medical device businesses can purchase, including:

Product Liability Insurance – This insurance policy provides coverage for damages that may be incurred as a result of a defective product.

General Liability Insurance – This insurance policy provides coverage for damages that may be incurred as a result of accidents or injuries that occur in your business.

Professional Liability Insurance – This insurance policy provides coverage for damages that may be incurred as a result of malpractice or negligence by your employees.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs. 

12. Buy or Lease the Right Medical Device Company Equipment

Medical device businesses need a variety of equipment in order to operate, including:

• Medical devices
• Test equipment
• Lab equipment
• Packaging and shipping supplies
• Office supplies
• Marketing materials

When purchasing or leasing medical device business equipment, it’s important to consider the following factors:

• What type of medical device business you have
• The size of your business
• Your budget
• The amount of space you have available for equipment
• The type of equipment you need

When purchasing medical device business equipment, it’s important to shop around and compare prices. You may also be able to get discounts by buying equipment in bulk or through a supplier. Leasing medical device business equipment can be a more affordable option than purchasing equipment outright, but it’s important to make sure you understand the terms of the lease agreement. 

Some common pieces of medical device business equipment include: 

Lab Equipment: This includes centrifuges, incubators, ovens and autoclaves. 

Test Equipment : This includes pH meters, microscopes and spectrophotometer. 

Packaging and Shipping Supplies : This includes boxes, packing material, labels and tape. 

Office Supplies : This includes computers, printers, fax machines and office furniture. 

Marketing Materials : This includes brochures, website design and trade show displays.

13. Develop Your Medical Device Company Marketing Materials

Marketing materials will be required to attract and retain customers to your medical device business.

The key marketing materials you will need are as follows:

• Logo : Spend some time developing a good logo for your medical device business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
• Website : Likewise, a professional medical device business website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
• Social Media Accounts : establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your medical device business.

14. Purchase and Setup the Software Needed to Run Your Medical Device Company

To run a medical device business, you will need accounting software to manage your finances, a CRM system to keep track of customer data, and a manufacturing or inventory management system to track your product line.

There are a variety of software programs available for each of these tasks, so it’s important to research the options and find the system that best suits your needs. Make sure to ask your software provider about any special requirements the software may have in order to run on a Mac or PC.

Research the software that best suits your needs, purchase it, and set it up.

15. Open for Company

You are now ready to open your medical device business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

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How to Start a Medical Device Company FAQs

Where can i download a medical device business plan pdf.

You can download our medical device business plan PDF here. This is a business plan template you can use in PDF format.

How much does it cost to start a medical device business?

The cost of starting a medical device business can vary significantly, depending on the type of business, the products offered, and the location. The average startup costs for a medical device company vary. These costs include the cost of licensing and permits, research and development expenses, equipment costs, marketing costs, website design and hosting fees, personnel costs, and more.

In addition to these startup costs, you should also factor in ongoing operational expenses such as employee salaries and benefits; rent or lease payments.

How can I start a medical device business with no experience?

If you are starting a medical device business with no experience, it is important to do your research and learn as much as you can about the industry. There are a variety of resources available, including books, articles, and online courses.

Another important thing to keep in mind is that you don't need to know everything about the medical device industry to start a business. You can always partner with other companies or individuals who have more experience in this field.

Finally, make sure to contact your local Small Company Association (SBA) office for help and advice on starting a medical device business.

What type of medical device business is most profitable?

Some of the most profitable medical device businesses are those that offer innovative and cutting-edge products. These businesses often have higher research and development costs, but can also reap greater rewards if their products are successful.

Another factor that can affect the profitability of a medical device business is the size of the market it serves. Companies that serve a large market have the potential to be more profitable than those that serve a smaller market.

Is it hard to start a medical device business?

There are many resources available to help you get started.

However, if you follow the steps above, you should be able to start your medical device business without too much difficulty.

What are the ongoing expenses for a medical device business?

The ongoing expenses for a medical device business can vary significantly, depending on the type of business, the products offered, and the location. The average ongoing expenses for a medical device company range. This includes the cost of licensing and permits, research and development expenses, equipment costs, marketing costs, website design and hosting fees, personnel costs, and more.

In addition to these ongoing expenses, you should also factor in regular updates and upgrades to your products, as well as the cost of maintaining your inventory. You may also want to consider purchasing advertising or marketing materials, or investing in training or certification courses.

How does a medical device business make money?

There are a few different ways that medical device businesses can make money. One way is to sell the products that they develop to hospitals or other healthcare providers. Another way is to provide contract manufacturing services to other medical device companies. Medical device businesses can also make money by providing consulting services or licensing their patents and intellectual property.

Medical device businesses often have high research and development costs, which can be a major expense for the company. However, these businesses also have the potential to reap greater rewards if their products are successful. By selling their products to healthcare providers or providing contract manufacturing services, medical device businesses can generate steady income and profit over time.

A third way for medical device businesses to make money is by providing consulting services or licensing their patents and intellectual property.

Is owning a medical device business profitable?

Yes, owning a medical device business can be very profitable. 

A medical device business owner can earn between $50,000 and $250,000 a year in profit. However, this depends on the size of the business and the type of products or services offered. Additionally, some medical device businesses may require significant upfront investments in equipment and personnel before they become profitable. The potential for success is also greatly affected by factors such as existing competition and market demand.

Some of the key things you can do to make your medical device business more profitable include:

• Invest in marketing and advertising to attract clients
• Offer products that are in high demand
• Provide quality products and services that meet or exceed your clients' expectations
• Keep your operating costs as low as possible
• Make sure you are registered with the FDA and other relevant agencies
• Maintain a good reputation in the industry 
• Optimizing your website for SEO to increase online visibility
• Creating a unique selling proposition
• Building references from clients who are willing to recommend you to their friends

Why do medical device businesses fail?

There are a number of reasons why medical device businesses can fail, such as:

• Lack of capital – It can be expensive to start and run a medical device business, so it's important to have enough financial resources in place to sustain you during the early stages.
• Lack of experience – If you don't have the necessary experience or knowledge in the medical device industry, it will be difficult to succeed.
• Poor marketing – If you don't invest in marketing and advertising, you'll likely find it difficult to attract new clients.

One of the main reasons that medical device businesses fail is a lack of planning. This can include not having a detailed business plan, not doing research on the industry, and not targeting the right customers.

Another reason is a lack of marketing and sales skills. This can include not creating a sales process and not have a clear and strong value proposition.

The last main reason is a lack of financial management skills. This can include not having a realistic budget, not tracking expenses, and not investing in the business.

Who are key players in the medical device market?

The medical device market is made up of a variety of different players, including small businesses, large enterprises, and even individuals.

Some of the key players in the market include:

• GE Healthcare
• Stryker Corporation
• Philips Health

However, there are many other players in your specific target market, and it is important to research the market to identify the key players that may have the most direct influence on the success of your business.

How much should I charge for my medical device products?

Medical device fees can vary depending on the type of medical device products being offered.

However, some common medical device fees include:

• Heart Monitors - $300-$2,000
• CT Scanners - $20,000-$150,000
• Ultrasound Machines - $10,000-$50,000
• MRI Machines - $200,000+

The best way to determine the right fee for your medical device products is to research the rates of similar businesses in your industry, and to also consider the value that you will be providing to the client.

Other Helpful Business Plan Articles & Templates

Medical Device Business Plan Template [Updated 2024]

Medical Device Business Plan Template

If you want to start a medical device business or expand your current medical device business, you need a business plan.

The following Medical Device business plan template gives you the key elements to include in a winning Medical Device business plan.

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

Medical Device Business Plan Example

I. executive summary, business overview.

[Company Name] is a brand new medical device designer and manufacturer, established in 2022 as a C corporation by two college friends. The friends, [Founder’s Name] and [Founder’s Name], developed a cutting edge device during graduate school that has since been improved and FDA approved.

This technology helps solve medication compliance challenges observed and experienced by [Founder’s Name] and [Founder’s Name]. It works by automating the dispensing and refill of medications, as well as providing automatic reminders when it is time for a dose. The device will be available in three versions, intended for the consumer, elder care, and travel markets. Products are customized to meet the needs of each of the three markets.

Helping patients with medication compliance is the bottom line goal of [Founder’s Name] and [Founder’s Name] at [Company Name].

Products Offered

[Company Name] produces three versions of its medication dispenser. These devices have various features specific to their respective markets, and all dispensers feature smart connections. These devices have been approved by the U.S. Food and Drug Administration.

Customer Focus

[Company Name] serves consumers of all ages. The demographics of current and potential clients and customers of our clients are as follows:

• 131 million people in the U.S. use prescription drugs
• 53% of all Americans aged 18 to 34
• 62% of those aged 35 to 49
• 75% of those aged 50 to 64
• 87% of those aged 65 to 79
• 91% of Americans aged 80 or older

[Company Name] recently entered into a contract to supply a 25-location regional pharmacy chain.

Management Team

[Founder’s Name] and [Founder’s Name] comprise the management team of [Company Name], and are in the process of securing additional management and staff personnel.

[Founder’s Name] holds a graduate degree from Florida State University in engineering. She is the CEO of the C corporation and her primary occupation is to present the vision of [Company Name], while encouraging major corporate relationships with retail pharmacies across the United States. She is a former regional sales manager for a major medical device corporation, with a track record of 10 years in that role, garnering over 25M in sales.

[Founder’s Name] holds an MBA degree from University of Alabama, with a focus on corporate strategic management. He is a former sales representative for a major medical device corporation, with a track record of 15 years in that role, garnering over 20M in sales.

Success Factors

[Company Name] is positioned in several ways to become a well-established corporation for the following reasons:

• Founders are highly-experienced in the medical device industry
• Founders have a contract to supply 25 retail pharmacies, which have a combined total of more than 100K customers
• Founders have patented these medical devices
• [Company Name] has a track record of continuous improvement to the original product, as technology progresses
• Founders have staff with experience in medical device manufacturing

Financial Highlights

[Company Name] is currently seeking $430,000 to launch. Specifically, these funds will be used to build on property, pay salaries, market services, and pay for research and development, including prototyping and concept modeling, as follows:

• Manufacturing center design/build: $150,000
• Working capital: $120,000 to pay for salaries, and overhead costs until [Company Name] reaches break-even
• Concept modeling, prototyping, and CAD-drawn sampling: $80,000
• Patenting and Trademarking: $50,000
• Marketing, advertising, customer presentations: $30,000

Top line projections over the next five years are as follows:

II. Company Overview

Who is [company name].

[Company Name] is a brand new medical device designer and manufacturer, registered in 2022 as a C corporation by two college friends. The friends, [Founder’s Name] and [Founder’s Name], developed a cutting edge device during graduate school that has since been improved and FDA approved. The device uses technology that helps solve medication compliance challenges.

In an informal survey of physicians within the greater Los Angeles area, [Founder’s Name] and [Founder’s Name] found that 56% of patients report some issue with medication compliance. In most cases, these patients rely on their memory to take medications as prescribed. Because memories can be faulty, physicians are eager to find a solution which will easily increase medication compliance.

Both [Founder’s Name] and [Founder’s Name] have personally experienced problems with medication compliance. Both have taken prescription medications since college, and quickly learned how easy it is to forget a dose or two. They soon discovered that this is a common experience, and the two of them embarked on a solution-finding mission: that of creating a device which minimized or entirely eliminated medication non-compliance.

The search led to an array of potential solutions, and with the help of their college professors and mentors, they prototyped several until they arrived at the first iteration of the device they build today. While they were still in school, the pair were awarded a patent for the device. Some years later, when their dreams began to coalesce into a solid plan, the founders took steps to ensure the device was approved by the FDA.

[Company Name]’s History

[Company Name] was formed as a C corporation. The history of the device is substantial. Extensive experience within the medical device industry provides the backbone of this corporation’s history, with high projections for profitability and multi-stage growth in the years to come.

[Company Name]’s Products

The devices produced by [Company Name] are designed to dispense, refill, and remind patients to take their prescription medications. This device offers a simple solution to medication compliance issues.

Significant advances in the process of concept and discovery, prototyping and production will be patented and trademarked as appropriate. The patents and/or trademarks will add to the value of the medical devices produced.

III. Industry Analysis

The U.S. medical device industry is projected to grow a healthy 3.3% over the next five years, with an increasing demand as time continues. The industry is in a growth cycle, and exhibits high profitability. An aging population and rising community expectations will drive demand for medical devices over the coming years. With the rise of chronic conditions such as diabetes, heart disease, cancer, AIDS, and hepatitis, prescription sales increased an estimated six times faster than population growth, resulting in a dramatic increase in the average number of retail prescriptions per capita. This represents a significant opportunity for [company name].

IV. Customer Analysis

Demographic profile of target market.

[Company Name] will serve the entire United States, targeting several customer segments within that market.

The largest market is retail pharmacies. There are 828,738 pharmacies in the U.S., as of 2022. Pharmacy and drug store staff members typically assist in recommending products to potential customers, as well.

The end consumers are the patients who take prescription medications. They include patients who take medication for chronic conditions, as well as those with acute conditions.

Customer Segmentation

The customers of [Company Name] can be segmented into primary and secondary segments.

Primary Customers:

• Chain Pharmacies
• Independent Pharmacies
• Hospital Pharmacies
• Online Medical Product Retailers

Secondary Customers:

• End Consumers
• Home Health Care Providers
• Families of Elderly and Disabled Patients

V. Competitive Analysis

Direct & indirect competitors.

MedTime – direct competitor Established in 2018, MedTime is a privately held business that has developed the first and only in-home medication manager that intuitively sorts and dispenses medication. The MedTime device has audible and digital reminders; automates refills; and provides real-time as well as historical adherence data. MedTime operates on a subscription fee and offers a free 90 Days Risk-Free trial. Each subscription comes with a MedTime smart dispenser. Additionally, the subscription gives access to a medication management app that gives pill-time reminders and missed-dose alerts, tracks what was taken and when, and gives remote caregiver monitoring for safety and medication schedule management with HIPAA-compliant security. The subscription also has automatic refills with free delivery and access to a 24/7 live support.

MedMonitor – direct competitor MedMonitor is a privately held business that provides services that simplify medication management and improve medication adherence. MedMonitor offers an automatic pill dispenser that reminds users when it is time to take their medication through flashes, beeps, text messages, and phone calls. The dispenser also provides the user’s caregivers, family members, or pharmacists with notifications about dosage activity, which can be monitored remotely through a patient profile’s on MedMonitor’s website. The subscription comes with a dispense device that is filled for several weeks, depending on the number of dosages per day, optional Locking, refill trays, an optional Medical Alert that has a two-way voice channel with the medical alert professionals, and an interactive screen that can be personalized. Additionally, the subscription comes with access to a secure website, where users and caregivers can easily program their unit’s medication schedule remotely, set up preferred notifications and review reports.

MediBox – direct competitor MediBox is a privately held business that developed a medication dispenser designed for people who have a hard time remembering to take their medicine. It reminds patients to take their medications, automatically dispenses a 90-day supply of up to 16 different medications, and sends messages to family and caregivers if they miss a dose. The MediBox is easy to setup, provides refill alerts and fast refills, provides a picture of the pills for each dose given, has a tilt sensor alerts for possible tampering or incorrect dosing/spillage, is lockable, and is the only medication dispenser tested to significantly improve adherence in an FDA approved clinical trial.

Competitive Advantage

[Company Name] has several competitive advantages over competitors, listed as follows:

• Founders have experience and in-depth understanding of the target markets, as well as direct contact with over 200 decision-makers in this industry
• Founders have several years of experience in sales and marketing of medical devices throughout the U.S.
• Patented and trademarked medical devices will increase value of the corporation

VI. Marketing Plan

The [company name] brand.

There are many medical device providers within the U.S. industry; there is only one, [Company Name], which delivers an affordable device proven to increase medication compliance.

Promotions Strategy

[Company Name] will promote its devices via the following methods:

Public Relations [Company Name] will make a series of press releases as the company continues in phase one of growth. Each announcement will present current notes of interest, such as medical device innovations, key company personnel additions, patents received, or trademarks confirmed. Each press release will contain forward-looking statements. Press releases will be sent to newspapers, industry newsletters and social media outlets.

Social Media [Company Name] will build activity on Instagram, Facebook, and, in particular, LinkedIn. These media markets will help drive traffic to the website and serve as a source for new hires and competitor information.

Website The website for [Company Name] will be primarily an introduction to the corporation, with successive pages demonstrating pictorial examples of its device improvements, concept models and CAD-drawn samples. A “From the Bench” article written by one of the founders shall be dropped monthly to add to reader interest.

Partnerships [Company Name] will partner with various philanthropic organizations in giving to charitable causes, including those that support the medical device industry. This effort will create potential target markets, as well as serve as a way of giving back to the customers served.

Medical Device Trade Shows [Company Name] shall be represented at booths at national industry trade shows, where the company will be highlighted via video presentations and examples of its devices.

Medical Conferences [Founder’s Name] and [Founder’s Name] shall both serve as company representatives on expert panels or in seminars. They will represent [Company Name] as industry leaders and as experts within the medical device industry.

Pricing Strategy

The pricing strategy for [Company Name] will be based on models that conform to the pharmacies, physicians’ offices, caregivers and patients who purchase the devices.

VII. Operations Plan

Functional roles.

[Company Name] contains the following functional roles:

Research & Development Role

• Direct responsibility for technological advances relating to the device
• Responsible for production of prototyping, 3D printing, and CAD-drawn samples
• Oversight of staff members who work with every phase of production

FDA Administration Role

• Direct responsibility for timely FDA review and approval process
• Oversight of timelines for customization process; in tandem with R & D

Administrative & Human Resources Role

• Direct responsibility for all office functions and administrative procedures, including financial accounting and tax processes
• Customer relations responsibility
• HR responsibility (until future HR Director hired)
• Oversight of maintenance staff and inventory, stock, and supplies
• Marketing & Sales Manager
• Responsible for all marketing and sales promotions and presentations
• Responsible for representation of the company at trade shows and in seminars or other industry events
• Oversight of sales representatives

VIII. Management Team

Management team members.

[Company Name] was founded by [Founder’s Name] and [Founder’s Name]. The corporation shall be under the direction of the founders who share equal shares of the corporation. Each founder will be responsible for a portion of the functional roles within the corporation and those who operate it.

Given the history of the founders within the medical device industry, building a staff of teams will be done with purposeful and serious thought and with an understanding of which team member will perform best in each role.

Hiring Plan

[Company Name] will hire the following personnel as soon as possible in phase one of growth:

• Research & Development Director
• FDA Administrative Officer
• Administrative & Human Resources Director
• Administrative staff members (2)

IX. Financial Plan

Revenue and cost drivers.

The revenue for [Company Name] will be generated by sales of medical devices offered to pharmacies, physicians, caregivers, and patients.

[Company Name] will produce the three current versions of its medication dispenser, as well as developing continuous improvements to the devices offered by [Company Name].

The major costs for [Company Name] will include overhead (including employees, building and material costs), costs for research and development, prototyping, 3D printing, and costs related to FDA approval processes.

Capital Requirements and Use of Funds

[Company Name] is currently seeking $430,000 to launch and take the company through phase one of the growth cycle. Specifically, these funds will be used to build on property, pay salaries, market products, and for research and development, including prototyping and concept modeling, as follows:

Key Assumptions

  5 Year Annual Income Statement

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Medical Device Development Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Medical and Healthcare

Are you about starting a medical device development company? If YES, here is a complete sample medical device development business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a medical device development company. We also took it further by analyzing and drafting a sample medical device development marketing plan template backed up by actionable guerrilla marketing ideas for medical device development companies. So let’s proceed to the business planning section .

In order to become a business player in the healthcare industry, you don’t necessarily need to become a medical doctor, a pharmacist or a nurse. If you are interested in the healthcare industry, one of the many businesses that you can successfully start is a medical device development business ; it is a business that is promising and profitable in the united states of America.

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The Medical device development business basically develops and manufactures various devices that are used in the healthcare industry. Just like most businesses, the medical device development business is open to as many people that are interested in the industry as long as they have the required experience and qualifications.

If you are sure this type of business is what you truly want to do after you must have conducted your feasibility studies and market research, then the next step to follow is to write a good business plan.

The truth is that it is one thing to have a fantastic idea cum business plan, and another thing for the business plan to translate to money (profits), and that is why it is important to assemble a team of dedicated staff to work with you if you want to be successful in your business.

Below is a sample medical device development business plan template that will help you successfully write yours with little effort.

A Sample Medical Device Development Business Plan Template

1. industry overview.

Medical device development business is under the Medical Device manufacturing industry and players in this industry include manufacturers of electromedical and electrotherapeutic apparatuses such as magnetic resonance imaging equipment, medical ultrasound equipment, pacemakers, hearing aids, electrocardiographs and electromedical endoscopic equipment.

The industry also engages in the manufacturing irradiation apparatus and tubes for applications such as medical diagnostic, medical therapeutic, industrial, research, and scientific evaluation among others. The Medical Device manufacturing industry revenue has increased steadily due to demand for effective and efficient devices. Rising product prices have also supported industry growth.

Revenue is projected to rise over the five years to 2022 as healthcare providers continue to invest in new equipment to keep up with growing demand for healthcare services. New product development by medical device manufacturers will also contribute to industry growth by offering new solutions to health issues.

The Medical Device Manufacturing industry is indeed a thriving line of business in most countries of the world. In the United States of America, the industry generates over $43 billion annually from more than 993 medical device development and manufacturing companies scattered all around the United States of America.

The industry is responsible for the employment of over 94,106 people. Experts project that the industry will grow at a 1.0 percent annual rate between 2012 and 2017. The establishments in this industry that has dominant market shares in the United States of America are Abbott Laboratories, General Electric Company, Johnson & Johnson and Medtronic.

A recent report published by IBISWORLD shows that the Medical Device Manufacturing industry has a moderately low level of capital intensity; for every $1.00 an average industry company spends on labor, they invest $0.06 into capital improvements.

Although the cost of assets can be high for industry operators, not all products can be manufactured on an automated production line.

The report further stated that medical device manufacturers produce a range of products for highly specialized applications, and the production of many of these devices requires hands-on work, which keeps industry labor costs high.

Skilled specialists are needed to research and develop medical devices, and these employees command salaries well above the manufacturing sector’s average wage.

Over and above, medical device development and manufacturing business is a profitable business and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale manufacturing limited devices or you can choose to start on a large scale manufacturing various medical devices not just for the US market, but for international market.

2. Executive Summary

Eden® Medical Device Development Company, Inc. is a registered medical device development and manufacturing business that will be located in one of the industrial estates in Dover – Delaware, United States of America. We have been able to lease a facility that is big enough to fit into the design of the kind of standard medical device Development Company that we intend launching.

Eden® Medical Device Development Company, Inc. will design, develop and manufacture medical devices; we will engage in fabricating medical diagnostic and therapeutic apparatus, marketing and distribution. We are set to sell our products to a wide range of clientele not just in the United States of America, but also all across the world.

We are aware that there are several large and small medical device development companies, which is why we spent time and resources to conduct a thorough feasibility studies and market survey so as to be well positioned to favorably compete with all our competitors.

We will ensure that we engage in continuous improvement of our products so as to suite the ever – changing trends in the healthcare industry .

Eden® Medical Device Development Company, Inc. will ensure that all our customers are given first class treatment whenever they purchase any of our products. We have a CRM software that will enable us manage a one on one relationship with our customers no matter how large the number of our customer base may grow to.

We will ensure that we get our customers involved in the design and manufacturing of medical devices and also when making some business decisions.

Eden® Medical Device Development Company, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our customers’ needs precisely and completely whenever they patronize our products.

Eden® Medical Device Development Company, Inc. is a family business that is owned by Engr. David Eden and his immediate family members. Engr. David Eden has a B.Engr. in Electronic Electrical Engineering, with well over 5 years of experience in the medical devices development industry, working for some of the leading brands in the United States.

Although the business is launching out with just one outlet in Dover – Delaware, but we will ensure that we market and distribute our products all across the United States of America and other countries of the world.

3. Our Products and Services

Eden® Medical Device Development Company, Inc. is in the medical devices development industry to sell our products to a wide range of clients and of course to make profits, which is why we will ensure we go all the way to design, develop and manufacture various medical equipment.

We will ensure that we do all that is permitted by the law of the United States to achieve our aim and ambition of starting the business. Our product offerings are listed below;

• Neuromodulation and spinal devices
• Cardiovascular devices
• Diabetes devices
• Irradiation devices
• Patient recovery and noninvasive devices
• Surgical instruments
• Dental instruments
• Hospital beds and other specialized hospital furniture
• Personal safety equipment

4. Our Mission and Vision Statement

• Our vision is to become one of the leading brands in the medical device development industry in the United States of America and Canada.
• Our mission is to establish a world – class medical device development company that will manufacture a wide range of medical devices and build a brand that will become a household name not just in the United States of America, but also other parts of the world.

Our Business Structure

Eden® Medical Device Development Company, Inc. knows the standards expected from companies that are into the manufacturing of medical devices hence the need for us to conform to industrial best practices. We will ensure that we hire people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all our stake holders.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more. In view of that, we have decided to hire qualified and competent hands to occupy the following positions;

• Chief Executive Officer (Owner)
• Production Manager
• Human Resources and Amin Manager
• Engineers (Production Engineers)

Sales and Marketing Manager

• Accountants/Cashiers
• Customer Services Executive

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
• Responsible for fixing prices and signing business deals
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization
• Responsible for providing direction for the business
• Reports to the board

Admin and HR Manager

• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Sustains office supplies by checking stocks; placing and expediting orders; evaluating new products
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs
• Updates job knowledge by participating in educational opportunities; reading professional publications; maintaining personal networks; participating in professional organizations.
• Improves department and organization reputation by accepting ownership for accomplishing new and different requests; exploring opportunities to add value to job accomplishments.
• Outlines job positions for recruitment and managing interviewing process
• Carries out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversee the smooth running of the daily office activities

Production Manager:

• In charge of approving designs for the organization
• Responsible for managing the daily activities in the production facility
• Ensure that the production facility is in top shape and goods are properly arranged and easy to locate
• Interfaces with third-party suppliers (vendors)
• Controls medical equipment and instrument manufacturing, distribution and supply chain inventory
• Supervises the workforce in the production facility
• Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data generated by customer purchases
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Develops, executes and evaluates new plans for expanding increase sales
• Documents all customer contact and information
• Represent the company in strategic meetings
• Aids the increase sales and growth for the company

Accountant/Cashier:

• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions
• Responsible for financial forecasting and risks analysis
• Performs cash management, general ledger accounting, and financial reporting
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensuring compliance with taxation legislation
• Handles all financial transactions for the organization
• Serves as internal auditor for the organization

Medical Devices Production Engineers

• Responsible for designing, fabricating, developing and manufacturing medical devices such as Neuromodulation and spinal devices, Cardiovascular devices, Diabetes devices, Irradiation devices, noninvasive devices, Surgical appliances, Surgical instruments, Dental instruments, Hospital beds and other specialized hospital furniture, and Personal safety equipment
• Responsible for the manufacturing electromedical and electrotherapeutic apparatuses such as magnetic resonance imaging equipment, medical ultrasound equipment, pacemakers, hearing aids, electrocardiographs and electromedical endoscopic equipment

Client Service Executive

• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries
• Enquires about customers’ needs, recommend, select and help locate the right merchandise, describe a product’s features and benefits.
• make suggestions and encourage purchase of products
• Provides information about warranties, manufacturing specifications, care and maintenance of merchandise and delivery options

6. SWOT Analysis

Eden® Medical Device Development Company, Inc. is in business to become one of the leading medical devices development companies in the United States of America and we are fully aware that it will take the right business concept, management and organization structure to achieve our goal.

We are quite aware that there are several medical device development companies all over the United States of America and even in the same location where we intend locating ours, which is why we are following the due process of establishing a business. We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be welled equipped to confront our threats.

Eden® Medical Device Development Company, Inc. employed the services of an expert HR and Business Analyst with bias in manufacturing to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.

This is the summary of the SWOT analysis that was conducted for Eden® Medical Device Development Company, Inc.

Our strength lies in the quality of our finished medical devices, the power of our team and the state of the art medical device production plant that we own. We have a team of highly trained and experienced engineers and support staff that can go all the way to design and produce top notch medical devices. We are well positioned in the heart of Dover – Delaware and we know we will attract loads of clients from the first day we open our medical device development company for business.

Our major weakness is that we are a new medical devices development and manufacturing company and we don’t have the financial capacity to compete with multi – billion dollars medical device development companies such as Abbott Laboratories, General Electric Company, Johnson & Johnson and Medtronic et al when it comes to manufacturing and selling medical devices at a rock bottom prices. So also, we may not have enough cash reserve to promote our brand the way we would want to do.

• Opportunities:

Our well-equipped medical device development company provides us with unlimited opportunities to sell our products to a large number of hospitals and health facilities. We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they visit our show room and production plant; we are well positioned to take on the opportunities that will come our way.

Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing/spending power. Another threat that may likely confront us is the arrival of a new medical device development company in same location where ours is located. So also, unfavorable government policies may also pose a threat for businesses such as ours.

7. MARKET ANALYSIS

• Market Trends

If you keep tabs with happening in the medical devices manufacturing industry, you will agree that technological advances, the legislative expansion of healthcare access and the improving economy have stimulated demand for medical devices over the last five years, and the aging US population has further contributed to revenue growth due to the high incidence of health issues requiring medical devices among the elderly.

A report published by IBISWorld shows that industry revenue will grow going forward. Over the five years to 2022, this growth is expected to continue, with revenue increasing at a slightly faster rate. The aging baby-boomer population and technological developments will continue to bolster industry growth, but the changing regulatory environment will likely hamper profitability.

So also, technological advances, expansion of healthcare and the improving economy have stimulated demand. Industry operators often have the weak hand in price negotiations and recent healthcare legislation has created a degree of uncertainty for medical device companies.

Lastly, as part of marketing strategies, medical device development companies now ensure that they have showrooms at different locations where they display their products. As a matter of fact, it is even cheaper to purchase directly from these showrooms established by medical devices development companies as against purchasing from medical device retail stores. It is a strategy that helps them increase sales and income for their business.

8. Our Target Market

We have positioned our medical device development and manufacturing company to service businesses in the healthcare industry in and around Dover – Delaware and every other location where our show rooms will be located all over key cities in the United States of America and other countries of the world.

We have conducted our market research and feasibility studies and we have ideas of what our target market would be expecting from us. We are in business to design, develop and manufacture a wide range of medical equipment and instruments for the following customers;

• Medical laboratories
• Medical colleges
• Dental clinics
• Optical centers

Our competitive advantage

Eden® Medical Device Development Company, Inc. is launching a standard medical device development and manufacturing company that will become the preferred choice for hospitals and other healthcare facilities in the United States of America and other countries of the world. Our production plant is located in very good locations.

One thing is certain; we will ensure that we design, develop and manufacture a wide range of medical equipment and instruments that are in high demand in the healthcare industry. We will also go all the way to ensure that we work with some of our high – profile clients in designing, developing and manufacturing of customized medical devices that suits their business.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives. We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Eden® Medical Device Development Company, Inc. is in business to design, develop and manufacture a wide range of medical equipment and instruments. We are in the medical device development industry to maximize profits and we are going to go all the way out to ensure that we achieve our business goals and objectives.

In essence, our source of income will be the supplying and selling of a wide range of medical equipment and instruments at affordable prices . Eden® Medical Device Development Company, Inc. will generate income by selling the following products;

10. Sales Forecast

We are set to go into the designing, developing and manufacturing of various types of medical equipment and instruments and we have put plans in in place that will help us always attract customers cum sales and that will sure translate to increase in revenue generation for the business.

We are well positioned to take on the available market in the United States of America and we are quite optimistic that we will meet our set target of generating enough income/profits from the first six months of operation and grow the business and our clientele base.

We have been able to critically examine the medical device development industry and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. The sales projection is based on information gathered on the field and some assumptions that are peculiar to startups in Dover – Delaware.

• First Fiscal Year: $750,000
• Second Fiscal Year: $1.2 million
• Third Fiscal Year: $3 Million

N.B : This projection is done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor manufacturing same medical equipment and instruments as we do within the same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

Before choosing a location for Eden® Medical Device Development Company, Inc. we conducted a thorough market survey and feasibility studies in order for us to be able to penetrate the available market and become the preferred choice for hospitals and healthcare facilities in and around Dover – Delaware. We have detailed information and data that we were able to utilize to structure our business to attract the number of customer we want to attract per time and the number of products to be sold monthly.

We hired experts who have good understanding of the medical device development and manufacturing industry to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in the United States of America.

In other to continue to be in business and grow, we must continue to sell the medical equipment and instruments that we developed and manufacture which is why we will go all out to empower or sales and marketing team to deliver.

In summary, Eden® Medical Device Development Company, Inc. will adopt the following sales and marketing approach to win customers over;

• Open our medical device development plant in a grand style with a party
• Introduce our business by sending introductory letters alongside our brochure to hospitals, dental clinics, optical centers , medical laboratories and key stake holders in the United States of America
• Ensure that we design, develop and manufacture a wide range of medical equipment and instruments needed in the healthcare sector
• Make use of attractive hand bills to create awareness and also to give direction to our show rooms
• Position our signage/flexi banners at strategic places around Dover – Delaware
• Position our greeters to welcome and direct potential customers
• Create a loyalty plan that will enable us reward our regular customers
• List our business and products on yellow pages ad (local directories)
• Leverage on the internet to promote our business
• Engage in direct marketing and sales
• Encourage the use of Word of mouth marketing (referrals)
• Join local chambers of commerce and industries to network and market our products

11. Publicity and Advertising Strategy

Despite the fact that our medical device development plant is well located, we will still go ahead to intensify publicity for the business. We are going to explore all available means to promote our medical devices development company.

Eden® Medical Device Development Company, Inc. has a long-term plan of exporting our medical devices to other countries of the world and to become a household name in the healthcare industry which is why we will deliberately build our brand to be well accepted in Dover – Delaware before venturing out. As a matter of fact, our publicity and advertising strategy is not solely for winning customers over but to effectively communicate our brand.

Here are the platforms we intend leveraging on to promote and advertise Eden® Medical Device Development Company, Inc.;

• Place adverts on community based newspapers, radio stations and TV stations
• Encourage the use of word of mouth publicity from our loyal customers
• Leverage on the internet and social media platforms like YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote our business.
• Ensure that our we position our banners and billboards in strategic positions all around Dover – Delaware
• Distribute our fliers and handbills in target areas in and around our neighborhood
• Contact hospitals, dental clinics, optical center, medical laboratories and other health facilities by calling them up and informing them of Eden® Medical Device Development Company, Inc. and the products we sell
• Advertise our medical equipment and instruments in our official website and employ strategies that will help us pull traffic to the site
• Brand all our official cars and vans and ensure that all our staff members and management staff wear our branded shirt or cap at regular intervals

12. Our Pricing Strategy

Aside from quality, pricing is one of the key factors that gives leverage to players in the medical device development and manufacturing industry, it is normal for customers to go to places where they can get quality medical equipment and instruments at cheaper price which is why big players in the medical device development and manufacturing industry like Abbott Laboratories, General Electric Company, Johnson & Johnson and Medtronic et al will attract loads of corporate and individual clients.

We know we don’t have the capacity to compete with the market leaders in the industry, but we will ensure that the prices and quality of all the medical equipment and instruments that we develop are competitive with what is obtainable amongst medical device development companies within our level.

• Payment Options

The payment policy adopted by Eden® Medical Device Development Company, Inc. is all inclusive because we are aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Eden® Medical Device Development Company, Inc. will make available to her clients;

• Payment via bank transfer
• Payment with cash
• Payment via credit cards/Point of Sale Machines (POS Machines)
• Payment via online bank transfer
• Payment via check
• Payment via mobile money transfer
• Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our client make payment for all purchases without any stress on their part. Our bank account numbers will be made available on our website and promotional materials.

13. Startup Expenditure (Budget)

In setting up any business, the amount or cost will depend on the approach and scale you want to undertake. If you intend to go big by renting/leasing a big facility, then you would need a good amount of capital as you would need to ensure that your employees are well taken care of, and that your facility is conducive enough for workers to be creative and productive.

The tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a medical device development and manufacturing business; it might differ in other countries due to the value of their money.

These are the key areas where we will spend our startup capital on;

• 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
• Marketing promotion expenses for the grand opening of Eden® Medical Device Development Company, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580
• The total cost for hiring Business Consultant – $2,500
• The total cost for payment of insurance policy covers (general liability, workers’ compensation and property casualty) coverage at a total premium – $9,400
• The total cost for long – term leasing of a standard warehouse and showroom – $250,000
• The total cost for remodeling the production facility and showroom – $20,000
• Other start-up expenses including stationery ( $500 ) and phone and utility deposits – ( $2,500 )
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
• The total cost for Start-up inventory (purchase of medical device making tools and equipment and the purchase of raw materials inclusive) – $250,000
• The total cost for store equipment (cash register, security, ventilation, signage) – $13,750
• The total cost for the purchase and installation of CCTVs – $10,000
• The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000
• The total cost of launching a Website – $600
• The total cost for our opening party – $7,000
• Miscellaneous – $10,000

We would need an estimate of $950,000 to successfully set up our medical devices development plant in Dover – Delaware.

Generating Startup Capital for Eden® Medical Device Development Company, Inc.

Eden® Medical Device Development Company, Inc. is a private registered business that is solely owned and financed by Engr. David Eden and his immediate family members. They do not intend to welcome any external business partner which is why he has decided to restrict the sourcing of the startup capital to 3 major sources.

• Generate part of the startup capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

N.B: We have been able to generate about $350,000 ( Personal savings $200,000 and soft loan from family members $150,000 ) and we are at the final stages of obtaining a loan facility of $600,000 from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.

14. Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business, then it won’t be too long before the business close shop.

One of our major goals of starting Eden® Medical Device Development Company, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running.

We know that one of the ways of gaining approval and winning customers over is to retail our wide range of quality medical equipment and instrument a little bit cheaper than what is obtainable in the market and we are well prepared to survive on lower profit margin for a while.

Eden® Medical Device Development Company, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner.

We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales (POS) Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Leasing of facility and remodeling the factory: In Progress
• Conducting Feasibility Studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Purchase of the needed machines, tools, furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Opening party/launching party planning: In Progress
• Compilation of our list of products that will be available in our store: Completed
• Establishing business relationship with vendors: In Progress

Financial modeling spreadsheets and templates in Excel & Google Sheets

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Business Plan for Medical Device Startup: Unlocking the Secrets for Success

Creating a business plan for a medical device startup is pivotal for its success. It serves as a strategic guide, detailing the path from concept to market.

A medical device startup embarks on an ambitious journey that must begin with a meticulously crafted business plan. This document is not only essential for securing funding but also acts as a roadmap for the venture, guiding every aspect of its operation from development to commercialization.

It highlights the startup’s value proposition, market analysis, competitive landscape, product design and development plan, regulatory strategy, marketing plan, and financial projections. Crafting a plan with clear objectives, realistic timelines, and detailed market understanding positions the startup for a stronger pitch to investors and a smoother transition from prototype to patient. With the healthcare industry’s rapid advancement and regulatory complexities, your business plan must demonstrate thorough research, innovation, and operational preparedness to stand out in this competitive landscape.

Introduction To Medical Device Startups

The realm of medical device startups is a fusion of innovation, healthcare, and groundbreaking technology. With a mission to enhance patient outcomes, these companies embark on a journey to develop impactful medical solutions. This journey, teeming with potential, also brings with it a set of stringent regulations and unique market demands.

Current Landscape In Medical Technology

The medical technology industry is booming with advancements. Innovative medical devices transform patient care every day. The industry is rich with:

• Smart wearables that monitor health in real time,
• Robotic surgical systems enhancing precision,
• High-tech diagnostics for better treatments.

Startups are key players in driving these tech frontiers forward.

Challenges And Opportunities

Challenges in the sector are plenty:

• Tough regulation hurdles ,
• Fierce competition ,
• High costs for research and development.

Yet, the rewards are substantial. Opportunities include:

• Technological breakthroughs with vast market needs ,
• Partnerships and funding from investors eager to back promising ventures,
• Evolution in healthcare creating new niches to explore.

Crafting A Solid Business Plan

Starting a medical device startup is like embarking on a daring voyage. The business plan serves as your map, highlighting the path to success. With precision and clarity, a compelling business plan can secure funding, guide operations, and attract critical talent. Let’s delve into crafting one for your medical venture.

The Executive Summary Snapshot

In a single page, the executive summary captures your startup’s core. It includes your business identity, your product’s benefits, and market potential. Investors often read this first, so it must be brief and powerful. Think of it as your elevator pitch in written form.

Components of an Executive Summary

• Mission Statement: Why the company exists.
• Product Description: What you’re selling.
• Target Market : Who will buy it.
• Competition Analysis: Other players in the field.
• Financial Highlights: Key numbers and projections.
• Team Credentials: Biographies of key team members.

Crafting The Mission And Vision

Clear, inspiring statements shape your medical device startup’s future. The mission describes your current objectives, serving as your company’s compass. The vision projects a future impact, reaching out to inspire and align stakeholders. Both statements should reflect passion, purpose, and precision.

Guidelines for Mission and Vision Statements:

• Keep it concise; usually one to two sentences.
• Ensure it resonates with your team, customers, and stakeholders.
• Make it memorable and motivating.

By adhering to these practices, crafting a business plan turns into an art form. A form that not only lays a solid foundation but also builds the framework for elevating a medical device startup to its pinnacle of success.

Market Analysis Deep Dive

Embarking on a market analysis deep dive is crucial for a medical device startup. It illuminates the landscape, showing where opportunities and challenges lie. With precision and insight, a startup can chart a course to success.

Identifying The Target Market

Determining who will benefit most from your medical device is step one. It involves understanding the needs of different user groups. To nail down your target market, consider demographics, medical facility types, and patient conditions . Tailoring your device to the right audience ensures relevance and demand.

• Demographics: Age, gender, location
• Medical Facilities: Hospitals, clinics, home care
• Conditions treated: Which diseases or issues does the device address?

Competitive Analysis And Positioning

Understanding the competition is key. It helps define your unique selling proposition. A good competitive analysis looks at other products, pricing strategies, and market presence . Positioning your device uniquely can make it stand out.

Product Development And Design

A medical device startup must navigate a complex journey from concept to market. Success hinges on the innovative development of a product that not only meets clinical needs but also is designed for real-world use. Protecting your intellectual property and investing in thoughtful design and prototyping can set your medical device on the path to commercial success.

Innovation And Intellectual Property

In the medical device industry, innovation is the lifeline of progress. Creating a unique solution to health problems gives your product a competitive edge. It is vital to:

• Secure patents early to protect your inventions.
• Perform thorough market and competitor analysis to carve out your niche.
• Invest in R&D to keep your device technologically advanced .

Remember, a well-protected innovation can become your startup’s most valuable asset.

Design Considerations And Prototyping

Designing a medical device is about more than just function . It must be intuitive, durable, and cost-effective. Consider the following:

Prototyping brings your design to life.

• Create multiple prototypes to test and refine the device.
• Use feedback to improve the design before finalizing.
• Ensure the prototype is clinically viable through testing.

This stage is crucial for ironing out issues and paving the way for a successful product launch.

Regulatory Compliance And Approval

For medical device startups, stepping through the gateway of regulatory compliance is crucial. This phase is pivotal and lays the groundwork for a successful market entry. A thorough understanding of the regulations and a clear path to approval are the backbones of this journey. Let’s dive into these components with concrete details to chart the route for your medical device startup’s success.

Understanding Fda Regulations

FDA regulations govern medical devices in the United States. Every medical device startup must comply with these regulations before bringing a product to market. There are different classes of medical devices, and each has its own set of requirements .

• Class I devices have the lowest risk and require general controls.
• Class II devices need special controls, in addition to general ones.
• Class III devices are the highest risk and require premarket approval.

To navigate these regulations , startups need to stay informed and adapt throughout the product development cycle.

The Path To Market Approval

The path to market approval involves critical steps. Each step must be meticulously planned and executed.

• Define your device with precise classification .
• Prepare the necessary documentation and submissions .
• Complete any required testing and quality assurance protocols.
• Submit your application and communicate with the FDA until you receive approval or clearance .

Startups must align their strategies with these steps to ensure a smooth approval process.

Building A Strong Team

Building a strong team stands as the foundation of every successful medical device startup. The right blend of skill, experience, and collaboration can set your project on the path to market triumph. Understanding the core team roles and the strategic impact of an advisory board can give you the edge in a competitive industry.

Key Roles And Expertise Needed

To launch a medical device startup, certain key roles must take priority:

• Chief Executive Officer (CEO): Leads the company and sets strategy.
• Chief Technical Officer (CTO): Oversees device development and innovation.
• Regulatory Affairs Specialist: Ensures compliance with medical regulations.
• Quality Assurance Manager: Guarantees product meets standards.
• Medical Science Liaison (MSL): Bridges the gap between clinical and business sides.
• Marketing Strategist: Crafts the brand and outreach to markets.
• Financial Advisor: Manages funds and forecasts budgets.

The Importance Of Advisory Boards

Advisory boards amplify a startup’s chances for success.

Expert Guidance: Advisors provide direction and expertise.

Industry Insights: They keep the company aligned with current trends.

Networking Opportunities: Advisors expand business connections.

Credibility: Their industry stature can elevate the startup’s standing.

Financial Strategy And Projections

Creating a solid Financial Strategy and Projections plan is crucial for a medical device startup. Perfecting this part of the business takes precision and foresight. It means understanding not just the costs of getting a product to market, but also the timeline for returning investment. This section will guide startups through the process of raising capital, forecasting sales, and conducting break-even analysis.

Funding And Capital Raising

Securing funding is often the first big hurdle for a medical device startup. Knowing where to look for capital and how to attract it is key. Explore multiple funding sources , such as:

• Angel investors
• Venture capital firms
• Government grants
• Crowdfunding

Develop a compelling pitch that highlights the unique value of your medical device. Present clear use cases and solid data on projected market penetration. Financial models must be robust, showing realistic and scalable returns.

Sales Forecasting And Break-even Analysis

Next, project sales with accuracy and logical reasoning. A convincing sales forecast needs to identify market size, competition, pricing , and growth rate . Use data-driven approaches to set achievable targets. Break-even analysis is equally important. This reveals when the startup can expect to start making a profit. Include fixed and variable costs to paint a clear financial picture.

Clear-cut financial strategy and thoughtful projections will not only better position the startup in the eyes of investors but also help in steering through the initial phase of the business. Understand financials, and success in the competitive medical device market is within reach.

Marketing And Sales Tactics

Embarking on the journey of a medical device startup involves meticulous planning and execution. The blueprint for success often hinges on effective marketing and sales strategies . These strategies transform innovative medical products into market staples.

Creating The Marketing Plan

Constructing a robust marketing plan is crucial. It turns a medical device startup’s vision into actionable steps. It addresses market needs and highlights product benefits. It answers key questions: Who are the customers? What sets the product apart?

Conduct extensive market research to fine-tune your marketing message. Create a unique value proposition (UVP) that communicates your product’s unique features. The UVP should be clear, concise, and powerful.

• Identify primary target markets
• Create branding materials that resonate with potential buyers
• Set realistic sales targets and define key performance indicators (KPIs)

Sales Channels And Expansion Strategy

Leveraging the right sales channels can fuel rapid growth. A focused expansion strategy ensures long-term success.

Plan for scalability. Start small and target specific regions or segments. Capture feedback and refine strategies. Outline a phased approach to enter new markets .

• Assess market potential in various regions.
• Partner with local distributors to navigate regulatory landscapes.
• Maximize online presence to reach a global audience.

Risk Assessment And Contingency Planning

Embarking on a medical device startup adventure demands thorough planning. Understanding risks and preparing for the unexpected sets the foundation for success. It’s crucial to identify potential challenges and create effective strategies. Let’s explore how to safeguard your startup’s future.

Identifying Potential Risks

First, we need to spot the hurdles that could trip up the venture . Risks vary widely , from regulatory compliance issues to product development delays. Creating a broad list is a starting point. This list should cover everything that can affect the business.

• Market risks such as competition and customer demand
• Regulatory risks , including FDA approvals and patents
• Financial risks like funding shortages
• Operational risks within production or supply chain activities

Developing Risk Mitigation Strategies

With risks laid out, devising strategies is key. Mitigation is about reducing the chance of an issue arising or decreasing its impact.

It’s also vital to plan for ‘what if’ scenarios . This involves creating a contingency plan. This plan outlines steps to take if a risk turns into reality. It helps ensure the startup remains on the path to success , even when facing hurdles.

• Establish clear steps to respond to risks
• Assign team members to oversee risk management tasks
• Review and update plans regularly

Finalizing The Business Plan

Before a medical device startup can change the world, it must have a solid plan. Finalizing your business plan happens in stages. Take your ideas from rough sketches to polished presentations. Now’s the time to focus on the details that matter.

Refinement And Iteration Process

Turning a draft into a masterpiece needs patience and precision. Refining your business plan is critical. Listen to feedback and be ready to revise. Below is a step-by-step guide for the iteration process:

• Review feedback from advisors and industry experts.
• Adjust strategies for product development and market entry.
• Update financial projections to ensure they are realistic.
• Enhance your marketing plan, highlighting key messages.
• Ensure compliance with regulatory bodies is addressed.
• Finalize operational plans , detailing how your team will execute.

Repeat these steps until your plan shines. A well-polished plan speaks volumes to investors.

Presenting The Plan To Stakeholders

Sharing your final business plan is a big moment. The goal is to impress and inform. Consider these tips for a winning presentation:

• Be concise: Keep explanations short and impactful.
• Tell a story: Share the journey of your medical device, from concept to clinic.
• Focus on value: Stress how your product meets a crucial need.
• Show data: Use graphs and charts to present market research and financials.
• Demo your device: If possible, show your prototype in action.

Your audience needs to believe in both your product and your team. Make sure they see the passion and expertise behind your plan.

Frequently Asked Questions

How do i write a business plan for medical devices.

Begin with an executive summary that outlines your medical device concept. Detail the market analysis, company description, organization and management structure, marketing strategies, funding request, and financial projections . Always focus on clarity and conciseness in each section.

What Is The Success Rate Of Medical Device Startups?

The success rate of medical device startups varies, but generally, it hovers around a challenging 5% to 20%. Market competition and regulatory hurdles contribute to these success odds.

How Do I Start My Medical Device On Startup?

To start a medical device startup, conduct market research, secure intellectual property, develop a prototype, seek FDA approval, and obtain funding.

What Are The Crucial Business Model Elements For Medical Device Startup Companies In Emerging Markets?

Crucial business model elements for medical device startups in emerging markets include value proposition clarity, cost-effective production, regulatory compliance, robust distribution channels, and strong local partnerships. Consideration for cultural adaptability and scalable operations is essential.

Crafting a sound business plan is the cornerstone of any successful medical device startup. This guide has armed you with critical insights to navigate the complex world of healthcare entrepreneurship. Remember to prioritize innovation, adhere to regulatory standards, and execute strategic marketing.

Your journey begins now — pave the way to triumph with diligence and vision.

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Developing Your Business Plan

A Business Opportunity Assessment takes a studied view of the factors that influence a project in given markets and identify risks that might derail a project from achieving commercialization. These often include intellectual property, ownership of the idea, market size and trends, outside influences, regulatory issues, revenue limitations, and current and alternative solutions being used by customers.

Understanding the project in the context of identified threats and opportunities, reveals insight that informs a decision to move forward with the next step towards a commercialization effort. Competitors and prospective customers enlighten the innovator as to where and how they currently buy their products and how they obtain after-the-sale service.

A structured review of these competitive solutions is accomplished by conducting a SWOT (Strength, Weakness, Opportunity, and Threat) analysis. SWOT analyses are used in business strategic planning when decisions about direction, policy or operations need to be made. By performing this analysis on competitors and including the customer’s point of view, insight and direction on how to develop, differentiate and promote the new technology will be gained.

“What doesn’t kill you, makes you stronger” is fine for an exercise routine, but in medical device commercialization, wasted resources, wrong product features, assumptions about adoption, buying, using or any reason at all, has the potential to end your commercialization attempt.

We mitigate errors like those described by embarking on a path to discover what is not known. This uncovers risks that are not known and permits an opportunity to overcome those risks when they are easy and relatively inexpensive to fix and therefor avoid altogether. 

Much as is thought to be known as to who the customer is, every project has twists and turns that result in a shifting landscape. To overcome this undulating hurdle, it is imperative to identify the problem or need from the perspective of each stakeholder who influences the buying decision. Medical device selection, approval and adoption likely have additional stakeholders who have some level of influence, these could include internal clinical review groups, hospital administration, hospital or clinic quality committees, department heads, safety committees, and those involved with distribution or reimbursement. Bring all these opinions to light in order to learn from them what is required for a product/process to be successful in their eyes, which leads to their support.

How a project transforms from an idea into a revenue generating business requires careful consideration because it doesn’t happen by accident. Existing problems have existing solutions. People don’t like change. To overcome inertia (and get someone to pay for the device) the new business needs to understand what outcome would be better than the existing solution. What innovators often do not take into consideration is that their stakeholders fit into an existing business model for some other business that is also vying for the same customer dollars. At a minimum, that business model needs to be understood. Then, devising a replacement business model (which includes the transformed idea into a product needs to consider all the elements necessary to create and deliver that product. The greater this is understood prior to prototyping the less resources will be needed to create a market ready product. 

Without funding, none of the above or aforementioned activities will be accomplished in a timely manner or at all. The need for translational funding varies based on the how far along the development pathway the project is. As a starting point, understand that funding which originates from beyond your own bank account falls into two categories. It is either dilutive or non-dilutive .

When a potential investor wants to give you cash, they want something in return. If what they want is a percentage of ownership, this is described as dilutive funding. Dilutive funding results from investments made by Angel investors, Angel groups, Venture funds, partnerships and possibly family/friends. Dilutive funding refers to a watering down of your ownership percentage. If you are the sole owner, you start off with 100% of the equity of the newly formed company. If there are two owners, you will need to come to an agreement as to who owns what percentage of the company and this agreement may take the form of a partnership agreement (not covered in this guide). Dilutive funding will reduce your equity from 100% to something less. How much less is based on a number of factors; company valuation, amount of investment (equity) which is being infused to the company and risk of failure. Cash or investment for which an investor does not want a percentage of ownership in return for is called non-dilutive funding. Examples of non-dilutive funding includes grants, debt, and gifts. Non-dilutive funding doesn’t affect your ownership percentage.

Product Market document (PMD) is repository of all the business model and customer interviewing information described into concise statements of customer needs. The PMD ensures that all future product development activity is based on customer desires, to create a technology they see value in. The PMD outlines the goal of the product or enhancement, who makes up the target and addressable markets, how the innovation fits into the workflow of users, and potential risks to successful implementation and adoption of the product.

The PMD articulates what the customer wants in the areas of key product capabilities, performance metrics, distribution, documentation and geographic requirements. PMD reduces risk toward the project in two significant ways; 1) it focuses product development on features and benefits that the customers find value in, 2) it ensures that capital and resources are focused on developing features and benefits that are directly related to identified customer value instead of features and benefits that customers will not appreciate or value. With development focused in this way, the end product should be something customers are willing to buy.

Simbex is an experienced medical device and consumer health product design and development partner that excels in transforming your most complex ideas into game-changing commercial solutions.

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Medical Software Business Plan

Start your own medical software business plan

AgaMatrix, Inc.

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Overview AgaMatrix is a development stage venture based in Boston offering proprietary Digital Signal Processing (DSP) technology that dramatically improves the functionality and performance of biosensor devices. AgaMatrix’s core DSP algorithms solve a number of immediate problems in the medical devices market by significantly boosting the performance of biosensors without costly specialized hardware and additional chemicals. Initially, AgaMatrix will sell to medical device makers, specifically, home blood glucose monitors and hospital point-of-care blood analyzers. AgaMatrix anticipates achieving positive cash flow by year three with future target healthcare segments to include the large immunoassay and implantable biosensor sectors; as well as other vertical industries that heavily rely on biosensors, such as the military chemical agent detection, environmental air/water quality monitoring, and industrial processing sectors.

Problem – Glucose Monitors Are Burdensome, Painful To Use Many diabetic patients fail to use home blood glucose devices as prescribed because the regimen is too burdensome or too physically painful. Four to seven times a day, a patient must puncture his or her finger to draw blood onto a test strip for insertion into the glucose biosensor. The average compliance rate for testing is less than 1.5 times a day, resulting in the acceleration of complications caused by diabetes, such as blindness, stroke, and heart and kidney failure. In fact, diabetes is the leading cause of blindness in individuals aged 20-74 and better glucose monitoring compliance is the single biggest key to prevention. Device makers have identified the physical pain of using existing devices as the root cause of non-compliance, and they are seeking ways to reduce the sample size required by their devices. AgaMatrix technology will enable less invasive drawing mechanisms to meet the overwhelming demand for less painful alternatives.

Problems in the hospital blood analyzer market are more related to the lack of the comprehensiveness and accuracy of the devices, which results in reduced adoption levels. AgaMatrix’s value proposition to this market is very clear: devices that are more accurate and sensitive will stand a higher chance of being more readily adopted.

A Software Solution for a Hardware Problem Historically, the biosensor device industry has attempted to overcome problems related to accuracy, sensitivity, and robustness by enhancing the chemical (hardware) aspects of the devices, such as the biological and chemical design of their sensors. By contrast, AgaMatrix is pioneering a software approach based on digital signal processing (DSP) algorithms that has a number of distinct practical advantages, including lower cost, easier/faster upgrade capability, and complementarity with respect to a wide variety of chemistry/hardware-based biosensor technologies.

AgaMatrix’s solution, consisting of a suite of software modules, enables new functionality and dramatically improves the performance of biosensor devices. Performance improvements include the ability to leverage increases in signal-to-noise ratio to reduce blood sample requirements. For the professional healthcare market, AgaMatrix offers the ability to improve the overall accuracy and sensitivity of hospital point-of-care analyzers. Boosting accuracy removes a major roadblock hindering widespread adoption of portable blood analyzers in place of conventional laboratory equipment.

Software DSP solutions have been vital to the success of many other industries where physical limitations would have impaired their growth. For example, in the 1980s, makers of CD players relied on oversampling and error-correction algorithms to compensate for low quality hardware filters and to overcome disk-skipping problems. AgaMatrix’s algorithms provide analogous solutions in the biosensor space.

Business Model – Software Licensing and Royalty Fees from Device Makers Initially, AgaMatrix will operate as a technology licensing company, deriving royalty revenue streams based on device makers’ consumables sales (i.e., disposable test strips and cartridges used in the devices). Revenues will be acquired from the sale of the technology to home blood glucose device makers, hospital point-of-care blood analyzer makers, and minimally invasive and implantable blood glucose biosensor developers.

Therasense – an Illustration of How Disruptable the Glucose Market Is Just a few years ago, the blood glucose market was dominated by four major players (numbers represent annual revenues from test strips): Roche ($1.27B), J & J ($1.09B), Bayer ($650M), and Abbot ($450M). These companies have been around since the 1980’s. Therasense (THER) was founded in 1996, rolled out their first product in June 2000, and leveraged their key differentiator (very similar to what AgaMatrix is offering): the ability to reduce blood sample volume to make glucose testing less painful. In the span of less than two years since their product roll-out, they have achieved $200 million in annual revenues, gone public, and now have a market capitalization of over $800 million. Bottom line: this is a market that is very open to new technological entrants, especially when they are able to reduce pain for the user.

Competitive Advantages There are no direct competitors pursuing our highly unique and proprietary approach, developed over the past seven years by our world-class scientific team. AgaMatrix technology will be complementary to potential indirect competition from the in-house laboratories of major medical device makers. The sustainable competitive advantages that AgaMatrix commands include:

• Superior software paradigm, complementary to chemical (hardware) advances in biosensors.
• Expertise developed over the course of seven years of biosensor research.
• Monopolization of the scientific team responsible for the original paradigm innovation.
• Development lead time of at least two years over potential competition.
• Intellectual property strategy involving two core utility patents (filed) and three defensive utility patents.

Customer Traction We have approached two blood glucose monitor makers and one hospital point-of-care device manufacturer as potential customer targets. There are over 20 other major potential target companies we have not yet approached. The following is a summary of the current status of the companies we have reached:

• Strong interest to partner from two blood glucose monitor companies (discussions with Presidents); details are confidential at this point, but we believe we will be able to close a deal by June 2002.
• Strong interest from a leading blood glucose monitor maker (J & J – discussions with Director-level staff) and the leading hospital point-of-care device maker (i-STAT – discussions with Vice President and Director-level staff).

The Team A current team composed of:

• The three leading scientists pioneering the use of digital signal processing to improve biosensor technology, with an aggregate of over 40 years of direct DSP/biosensor research experience.
• Entrepreneurs who have founded, built and run an enterprise software company.
• An expanding board of veteran advisors made up of medical doctors who have healthcare business experience. 
• An additional technical team of three committed to joining the company post-seed financing, composed of engineers from MIT and Tufts, with technical management experience and an aggregate of over 25 years of commercial engineering experience.

Financing AgaMatrix has been self-funded by the principals of the company since its founding. The company recently closed a seed round of $500K from a number of healthcare angel investors and IncTANK, an early stage venture capital fund. A Series A round is expected in four to five months of approximately $1 million. 

• A world-class scientific team consisting of Dr. Sridhar Iyengar (CTO), Dr. Justin Gooding, and Dr. Ian Harding, the engineering team, and an aggressive business team with start-up and management experience.
• Technology applicable to a number of other vertical markets and protected by a rigorous IP strategy.
• External validation from existing relationships with potential customers and advancement to final rounds in a number of national business plan competitions.

1.1 Mission

AgaMatrix develops solutions to power next-generation biological and chemical sensor systems. The value that AgaMatrix delivers to this market is the ability to dramatically improve the accuracy, sensitivity, and robustness of a range of different sensors for the purpose of making medical diagnostic devices more effective. AgaMatrix’s technology enables the development of devices that will be essentially painless to patients and that will meet the demand for better accuracy in medical diagnostics. It is committed to providing software solutions for a critical hardware problem that affects millions of diabetic patients and hospital patients worldwide.

1.2 Objectives

• Develop technology solutions that will increase the adoption and compliance rates of diagnostic medical devices by improving the functionality and performance of biosensors, specifically for home blood glucose monitors and hospital point-of-care blood analyzers.
• Achieve positive cash flow by year three.
• Reach $50 million in annual revenues by year four.
• Expand into other industries that heavily rely on biosensors, including industrial processing, environmental monitoring, and military sectors. 

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AgaMatrix, Inc., which was incorporated in Delaware in 2001, is an early-stage venture offering proprietary Digital Signal Processing (DSP) technology that dramatically improves the functionality and performance of biosensor devices. AgaMatrix’s core DSP algorithms solve a number of immediate problems in the medical devices market by significantly boosting the performance of biosensors without costly specialized hardware and additional chemicals. Initially, the company will sell technology solutions to diagnostic medical device makers, specifically, manufacturers of home blood glucose monitors and hospital point-of-care blood analyzers. Future target healthcare segments include the immunoassay and implantable biosensor sectors. Its headquarters are located in Cambridge, Massachusetts.

2.1 Start-up Summary

AgaMatrix’s start-up costs amount to $4,900, which covers the initial expenses for opening the first office. These costs include incorporation of the company, design of the company logo and website, purchase of office and IT equipment, and other miscellaneous expenses. The start-up costs are financed by direct owner investment. The assumptions are detailed in the following table and illustration.

2.2 Company Ownership

AgaMatrix is a privately-held Delaware corporation, subchapter C. It was created in 2001. Sonny Vu and Sridhar Iyengar, the company’s founders, own the majority of equity. Members of the board of directors and advisors also hold minority stock positions. All employees of the company are rewarded with stock compensation packages.

AgaMatrix will develop a set of software products that provides critically needed diagnostic functionality to current and next-generation medical biosensors. Optimized for computational efficiency, they are designed to be easily incorporated into a number of leading biosensor platforms. All products that we develop will be powered by our core DSP algorithms with certain features configured and optimized for the relevant applications. Our algorithms will be delivered in a format that is convenient and useful to our customers; as such, each AgaMatrix Product Suite will consist of a core DSP engine supplemented with integration tools, application-specific expansion modules, and professional services. Since our initial product focus is OEM technology, we will work closely with our customers and partners in the development and deployment of our products. The core DSP algorithms will be encoded as a platform technology in modular components that can be rapidly configured as needed for various customers’ applications.

Initially, we are marketing one product for the glucose biosensor market and one product for the hospital POC market:

Suite Name: AccuMatrix

• Target Customer: Smaller Home Glucose Biosensor Manufacturers
• Why Needed: These customers need a method of suppressing interference from other known chemicals in the blood (vitamin C, Tylenol, and uric acid) that can react at the biosensor and give erroneous readings. They need to be able to suppress these interferences without the use of chemical mediators or expensive membranes.

Suite Name: PosiMatrix

• Target Customer: Hospital Point-of-Care Manufacturers
• Why Needed: These customers need a method of alerting the user when unknown chemicals in the blood interfere with the biosensor and give false positives. E.g., the FDA regularly approves new anesthetic gases that are used in surgery; however, the POC makers cannot keep up with these new “unknown” chemicals that may be present in the patient’s blood and can interfere with the device. For one POC maker, it is “medically imperative” for them to avoid reporting false readings; thus, they need a method of identifying when the reading is corrupted by unknown chemical interference so that they may indicate to the user that the reading is not valid.

The core DSP algorithm engine contains all the needed functionality. Using a Configuration Tool, we can rapidly integrate the appropriate Data Modules that are appropriate for the target customer. These Modules contain a library of information that is needed to configure and optimize the core algorithms for the chemicals that are relevant to the customer’s device. Once configured, the algorithms will be delivered in the appropriate software or ASIC-design version for the target device and can be deployed with our Integration Tools by our Professional Services Deployment Team or by the customer’s engineering team. The basic components of each AgaMatrix Suite will include the following:

Core Engine Core DSP technology software and firmware code base will consist of a major portion of the algorithms that AgaMatrix develops. These algorithms will be activated as needed for each customer’s requirements by the Configuration Tools.

Data Modules These are libraries that contain empirical data needed to optimize the core DSP engine for the detection of different chemicals in various operating environments. The Configuration Tools will in part use the data from these Data Modules to customize the software for customers’ various products. We will initially offer the following 2 modules:

• Blood Glucose Data Module: Library of empirical information of the standard chemicals that are commonly encountered in blood glucose measurements. This data is used to optimize the core algorithms for detection of glucose and suppression of common interfering chemicals.
• Point-of-Care Data Module(s): Library of empirical information of the standard chemicals that are commonly encountered in various blood chemistry measurements routinely performed by point-of-care devices. This data is used to optimize the core algorithms for detection of each of the relevant chemicals and suppression of common interfering chemicals.
• Implantables Data Module: Library of empirical information on quantities that are relevant to implantable glucose sensors. This data is used to optimize the core algorithms to correct for sensor deterioration (fouling) effects and suppress signals from interfering chemicals while boosting the signal from glucose.
• Immunoassay Data Module(s): Library of empirical information of the standard chemicals that are commonly encountered in relevant immunoassays. Immunoassay Data Modules will be developed for each immunoassay that is of interest to the customer. This data is used to optimize the core algorithms for detection of the relevant chemicals for the given immunoassay.

Configuration Tools Configuration tools are the front-end interface of the software. This set of tools will allow for the rapid optimization and configuration of the core algorithms for various functionalities and chemicals. These tools are used to select which Data Modules and algorithms are needed for the customer’s application and generate the end product, which can be delivered either as software/firmware for the target device or be delivered in the form of an ASIC design.

Code Integration Tools This set of tools facilitates the integration and customization of software and firmware code base into customers’ products. These tools may be used by our Professional Services Deployment Team when integrating the product into the customers’ end-device, or they may be used by the customer’s in-house engineering teams themselves. Initially, we will include:

• Software Integration Tools: Tools that facilitate the integration of our technology onto microprocessor-based devices.
• Firmware Integration Tools: Tools that facilitate the integration of our technology onto firmware-based devices.

Technology and Development Tutorials These are in-depth, easy-to-use online tutorials consisting of scientific and engineering guides to help quickly bring a development and integration team up to speed on AgaMatrix’s DSP technology. The tutorials will consist of code examples, customization, and integration tutorials.

Professional Support Services Package A set of professional services, including software/firmware development and QA/QC testing, designed to assist in supporting the use and maintenance of the AgaMatrix Product Suites for customers and partners.

Based on initial discussions with potential customers, we believe that we can deliver our product in a format that will be readily usable by their development and integration teams. We will use established processes analogous to those used in the deployment of enterprise software solutions where a Deployment Team will assist the customer in the integration of our product into their devices, as indicated by the professional services component of our product offering.

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Medical diagnostics has the greatest existing opportunity from an industry size perspective as well as the degree of match between existing needs and AgaMatrix’s technology capability. The sub-segments in this market that the AgaMatrix product line is addressing in the short term (within the next two to three years) are the large, high-margin consumer blood glucose monitor market and the now quickly growing hospital point-of-care device market, i.e., customers are makers of these devices. Even by a conservative estimate, the value proposed by AgaMatrix to the glucose market alone would be enough to sustain a viable standalone venture. However, given the minimal incremental effort that would be needed, we will deliver the product to both sub-markets for the benefit of augmenting and diversifying our revenue streams.

The market that we are concerned with consists of advancing medical devices and technologies that allow healthcare professionals and home users to acquire medical diagnostic data such as blood glucose levels (e.g., for diabetics) and various other blood chemistry data (e.g., for emergency care situations) instantly, easily, cheaply, and accurately without having to send blood samples to centralized lab facilities which have longer turnaround times and are more costly. The conclusion that this market should be the company’s initial focus is substantiated by the fact that it has all the relevant characteristics of a market we found to be desirable. These characteristics are discussed below:

• Large existing, robust, high-growth market.
• Converging market forces sustaining industry growth.
• Clear, immediate need for benefits provided by technology.
• Technology delivered would be strongly positioned to participate in emerging trends.

In the medium and long term (three to four years from now), AgaMatrix aims to address needs in the emerging electrochemical immunoassay and implantable biosensor markets.

The Home Blood Glucose Monitoring is the largest, immediately addressable market, over $4.1 billion in size today and growing 13% CAGR. Based on preliminary discussions with several potential customers, AgaMatrix believes that a significant portion of this market can eventually be captured. We expect device makers to pass on the modest costs of AgaMatrix’s technology through the high margins currently enjoyed by the consumable reagents (test strips) they sell. While AgaMatrix technology does not directly improve the test strips themselves, potential customers will incorporate the cost of such technology as part of the total solution cost; development costs of their test devices are already paid for in this way. Diabetics generally are not price sensitive to test strips since insurance usually covers the costs of the strips.

4.1 Market Segmentation

Home Blood Glucose Monitors AgaMatrix will initially target home blood glucose monitoring device makers. One primary dimension along which these device makers compete is the reduction of pain and discomfort from testing that involves pricking fingers to extract blood. By improving device sensitivity, AgaMatrix allows blood glucose device OEMs to reduce the required blood sample size enabling the use of less painful blood extraction mechanisms, a major competitive advantage for such devices according to customer surveys. In one foreseeable application, diabetics would be able to painlessly extract a small amount of blood using automated AgaMatrix-enabled microneedles to test blood glucose levels.

Hospital Point-of-Care Blood Analyzers AgaMatrix will also initially target the hospital blood analyzer market ($300 million in 2001, 25% CAGR) by providing increased accuracy and increased types of tests for these devices. Based on a bottom-up analysis of end user (physicians) and device maker surveys, we believe market penetration for these players has been hindered by the relatively low accuracy (when compared to tests done by centralized labs) and by the limited number of available tests. Physicians are thus forced to wait several hours for results from blood sent to centralized labs, and only use portable blood analyzers in acute emergency situations.

AgaMatrix solves the problem of low accuracy for portable hospital blood analyzers, allowing physicians to use portable analyzers in more situations, thus increasing quality of care, increasing patient turnover, and reducing hospital costs. Our technology could also help boost the yield on current cartridge products, eliminate future cartridge production steps, and provide a broader menu of tests on portable devices, delivering a suite of offerings comparable to traditional large and expensive lab equipment analyzers.

With almost all of the major players trying to develop an “artificial pancreas,” commercializing implantable glucose biosensors that can regulate an implanted insulin pump has been the Holy Grail for the industry. The artificial pancreas allows diabetics to lead a near normal lifestyle without the constant pain and inconvenience of finger pricking and insulin injections. One of the key challenges in the development of implantable sensors is eliminating the use of toxic chemicals currently needed to correct for cross-sensitivity effects that reduce the accuracy of the sensor. AgaMatrix’s technology minimizes these effects without having to use toxic chemicals, thus eliminating a key barrier to the development of complete implantable glucose monitoring and insulin pump systems. Such breakthroughs could lead to adoption of implantable devices on the order of today’s cardiac pacemaker. These large players have expressed initial interest in using AgaMatrix’s technology in these next-generation implantable devices.

Electrochemical Immunoassays Immunoassays are tests that measure biological and chemical species associated with the body’s immune system. Currently, the majority of immunoassays are performed via color-changing tests strips (for simple non-critical applications like home pregnancy tests), or via time-consuming laboratory procedures for more critical tests (like cardiac markers). In hospitals and clinical labs alone, millions of these immunoassays are performed daily. These laboratory assays are based on complicated optical and radioactive detection instrumentation. Leaders in the industry are developing electrochemical immunoassays because electrochemical technologies are generally recognized to be more cost effective, robust, and possibly faster than optical methods given the fact that no complicated sample pre-treatment processes are needed. One of the main challenges to commercializing this new technology is achieving the low detection levels needed for such measurements. AgaMatrix’s technology can be eventually embedded in these devices to overcome the sensitivity issues that currently hinder their commercialization.

4.2 Industry Analysis

The medical diagnostics industry is prone to disruptions because of technological innovations. We have found the following current industry needs are immediately addressable by AgaMatrix’s technology based on a survey of potential customers in the blood glucose and Hospital point-of-care (POC) market:

Near future market needs prompted by emerging trends

We have also identified a number of needs for which AgaMatrix is aligned to be a major technology provider. For the sake of conservatism and maintaining a focused company positioning in the healthcare arena, we are not pursuing available applications in environmental monitoring, industrial processing, and military biological/chemical warfare agent detection. Instead, we consider our primary expansion markets to be other segments in the healthcare market including the immunoassay and implantable/minimally invasive biosensor markets, with some initial penetration into the latter in Y2 and Y3.

4.2.1 Competition and Buying Patterns

Based on a prior art search and our cross-disciplinary technology expertise, we believe we are the only solution provider of our kind to medical device manufacturers. However, AgaMatrix indirectly competes against other biosensor-enhancing technologies. Rival technologies include advances in physical designs such as improvements in chemical reagents used in these devices and the integration of permselective membranes that are intended to materially filter out interfering chemicals from contacting the sensor. We have identified the research efforts of the following companies as potential competition due to their efforts to solve the same problems, albeit through very different approaches.

Strategy and Implementation Summary

AgaMatrix’s strategy will be built upon sustainable advantages from superior software technology, in-house expertise, monopolization of a scientific team, and development lead time over competitors. In addition, the company will deploy a strong intellectual property strategy of defensive and offensive patents to create an IP minefield to make litigation for competitors as costly as possible. Coupled with an aggressive marketing and sales strategy, AgaMatrix is positioned to be the leading provider of technology that enables biosensor devices used in medical and other life science applications.

5.1 Competitive Edge

Advantage #1: Superior and Complementary Software Paradigm Potential indirect competition could lie within R&D departments of medical device OEMs who are striving to create both incrementally higher-performing biosensors for existing products. The R&D teams are also striving to make revolutionary advances which enable implantable biosensors such as blood glucose monitors. However, based on secondary market research and on first-hand conversations with potential customers/partners, the observed historical trend in this industry has been to approach chemical problems with chemical experts. We believe that our multi-disciplinary software approach fills a missing piece in the development of these devices.

From a technological standpoint, our software-based solutions achieve the same goals of interference suppression as rival chemical solutions; however, because we obviate the need for these chemicals, most of which are toxic, products deployed with AgaMatrix technology will be suited for in vivo applications, such as some minimally invasive and implantable glucose monitors. Furthermore, our technology can simultaneously monitor multiple chemicals, both the target analyte and any interfering chemicals, engendering low-cost multi-analyte sensors which are not readily viable with current chemical-based sensor enhancements.

From a marketing standpoint, our products have the advantage of being software-based, engendering many of the potential benefits that other software-based products traditionally enjoy. One of the principle advantages that end users would have is the ability to upgrade the software as new, better algorithms are developed, a benefit that cannot be as easily realized with other physical and chemical technological advances. From a cost-saving standpoint, many of the permselective membranes that are currently designed to be used in biosensor devices are too expensive to be used in all applications. As such, our software solutions would provide a cost benefit advantage to our customers.

Regardless of other traditional technology advances in sensor design, our DSP technologies will ultimately prove to be complementary. Our noise-filtering algorithms will increase the signal-to-noise ratio enabling greater sensitivity and lowering detection limits. In many applications, membrane filters are not fully effective; as such, our interference suppression algorithms can compensate for the limitations of such membranes. Additionally, rival empirical improvements cannot address other limitations of these devices, such as sensor deterioration, where our technology may be applied to auto-correct for such sources of error.

Advantage #2: In-House Expertise As is the case with chemical and life science research, one of the most resource-intensive aspects of the development time lies in optimizing empirical protocols and avoiding unforeseen pitfalls; most of the knowledge comes from “hands-on” experience, not only theoretical background. Furthermore, expertise in multi-disciplinary areas as ours requires specialized knowledge. AgaMatrix’s scientific team has been involved in biosensor research for an aggregate of over 40 years. The foundational research for our current technology was initiated seven years ago, and our scientists have developed and optimized many of the techniques that are vital to the continuing development and validation of AgaMatrix’s products. To date, we have developed the groundbreaking technology approach, the experimental protocols, the validation mechanisms, and the core algorithms. Our extensive in-house expertise in working on bridging biosensor systems and DSP technologies represents a significant barrier to any potential competitor.

Advantage #3: Monopolization of Scientific Team The technology that AgaMatrix is built upon has been inspired by research performed throughout the past decade at the University of Cambridge. The original scientific team that achieved these breakthroughs boasts inimitable credentials and has remained intact to form the current AgaMatrix R&D team. In the ensuing years, AgaMatrix has developed new technologies and is moving towards its commercialization. We believe that our virtual monopoly on the intellectual resources that have been responsible for the technological advances that AgaMatrix owns represents a significant competitive advantage over potential competitors. As is the case with any empirical endeavor, much of the in-house expertise comes in the form of a close working knowledge of the practical aspects of technology development. With the current R&D team already experienced in the relevant technologies, and having worked together in the past, much of this knowledge has already been acquired.

Advantage #4: Development Lead Time Over Potential Competition In sharp contrast to the typical chemistry-based approach, AgaMatrix’s technology is based upon a multi-disciplinary core competency. Our competitive capabilities are derived from a unique confluence of electrical engineering and life science disciplines, a roadblock for potential competitors entrenched in traditional “wet chemistry” research paradigms.

5.2 Marketing Strategy

Presenting compelling value through superior technology Because of AgaMatrix’s revolutionary, proprietary technology, we are positioned to be the market leader in biosensor enhancing solutions. AgaMatrix offers a novel approach that clearly provides significant value to our customer and ultimately the end user. The AgaMatrix solution delivers value in two ways: by improving the performance of their product against competing products and by increasing customers’ market share and revenue. Communicating this value to the device manufacturers, as well as branding our technology to defend market share, is the fundamental philosophy behind our marketing strategy.

Becoming a competitive standard The core AgaMatrix technology is a unique approach to improving biosensors systems in a way that substantially increases performance and adds value to the end user. In a competitive marketplace, we will present our technology to medical device makers as an industry standard that they must adopt to be able to compete. Examples of this kind of standard-setting technology include the adoption of Windows platforms on PCs and auto-focus and red-eye reduction capabilities on cameras. Specific selling points include elimination of cross-interference, improvement in accuracy, improvement in signal to noise ratio, improvement in device robustness, reduction in sample requirements, and increase in market acceptance of product. The value proposition will differ depending on the needs of each customer.

Marketing to end users by marketing the end product AgaMatrix will market to end users through partnership with the device makers; to add value, our technology must increase their bottom line profit. AgaMatrix can do this if end users appreciate the advantages AgaMatrix enhancements bring and if they require our products for a healthcare “standard of care.” The desire for end users, such as doctors and patients, to use the best and most effective technology for diagnosis and treatment of health problems will drive demand for AgaMatrix-enabled devices. Therefore, AgaMatrix will develop a marketing plan with our partners to increase the awareness of the clinical advantages of our devices. The AgaMatrix-enabled label will become a moral imperative to clinicians in the same way that advanced digital imaging technology is used by radiologists and cardiovascular specialists.

In summary, AgaMatrix will market both to the device makers we sell to and end customers, who will drive demand.  Because device makers are concerned about increasing their bottom line through value-add to their products as well as through production cost reductions, AgaMatrix will sell to them on the basis of value rather than on any other consumer-based premise. End users, such as healthcare professionals and customers, demand standard of care. Therefore, AgaMatrix will co-market its brand as a necessary technology for healthcare diagnostics.

5.3 Sales Strategy

Phase 1: Sales to medical device manufacturer partners In the first stage of bringing AgaMatrix technology to market, the company will approach and partner with medical device manufacturers. Such partnerships have the added advantages of product development that is supported by the partner’s engineering, finance, marketing, and management.

Phase 2: Becoming the “competitive standard” With a base of customers who can vouch for the product value, AgaMatrix aims to become the competitive standard that all players must adopt. Specific marketing tactics in this stage include: increasing market awareness through trade shows (e.g., Medical Device Expo, SensorExpo) and technical conferences, advertising in trade journals and publications (e.g., Sensor Magazine, Medical Device and Diagnostics Magazine), and retaining “Thought Leaders” from industry and academia who will corroborate our claims.

Phase 3: Branding for mind share and market domination AgaMatrix will brand its proprietary DSP technology to associate enhanced solutions with our identity. A consistent, strong, and clearly defined brand will add yet another barrier to entry and market penetration. Increased awareness of the advantages we deliver will give rise to increased demand for the end product.

5.3.1 Sales Forecast

The sales forecast is based on a royalties pricing model.  However, a revenue model based on licensing fees is also described and provided for comparison purposes, below.

Charging on a royalty-based per-use fee, AgaMatrix will initially sell OEM technology solutions to manufacturers of biosensor-based medical devices that will enhance their products’ performance.  Because AgaMatrix technology is software-based and is optimized for minimal hardware requirements, it can be easily integrated into existing sensor devices, boosting functionality on a cost-effective basis.  By embedding our technology within their devices, OEMs will realize substantial gains (20% to over 100%) in performance dimensions such as accuracy, sensitivity, and robustness.  Technology OEM royalty-based business models are not new in this business.  Our ability to quickly provide performance upgrades in the form of easy-to-integrate software/firmware updates provides a number of technical and sales advantages over the existing development paradigm, which relies on “wet” chemistry approaches. 

5.3.2 Pricing Model and Revenues

The primary value proposition that AgaMatrix presents to medical device manufacturers is increased revenues through increased market share from product advantages over other competing devices and from premium pricing for increased functionality and performance of their products.  Because the new product offering from the manufacturer contains “best of” technology and is in the healthcare space, they can charge a premium for their product, which will translate into revenues to AgaMatrix.  Another value proposition which a potential customer (i-STAT) actually brought to our attention is that our technology could very likely reduce production costs for them by allowing them to eliminate the need to use costly membranes in their products.

The pricing for our product can be either “value-added” pricing on the price of the medical device or based on device usage, depending on the revenue model used by our customers.  In the case of the blood glucose market, revenues are driven not by the device, but rather by recurring revenues from consumable test strips.  For example, the test strips that LifeScan sells retail for approximately $0.70 each.  These test strips are supposed to be used three to four times a day, although the pain associated with testing has reduced compliance to about 1.5 tests per day per patient.  AgaMatrix will share in the revenues this model generates.  For example, every time a test strip is analyzed by the device that LifeScan sells, AgaMatrix technology will be utilized to provide a more accurate reading.  Therefore, AgaMatrix will enter into a royalty-based fee agreement with device manufacturers, such as those in glucose monitoring, where consumables generate revenue.  Preliminary conversations with Hypoguard indicate a general willingness to this type of pricing model.

Another example of how our royalty will work could be through the partnership with Company X.  Company X manufactures and sells a point-of-care device for approximately $5,000.  Test cartridges are priced at around $3.40 each and can perform 5-6 different tests once.  For Company X, our product would solve an existing problem with the performance and reliability of their cartridges.  Cartridges would be priced approximately $4.00 – $5.00.  Company X manufactures these cartridges for $0.12-$0.16 each and should be amenable to sharing the increased margins.  For cases in which consumables are not used, premium pricing of about +20% will be used depending on the added value that can be delivered to the end user.  The following table summarizes a conservative revenue forecast based on royalties.

An alternative pricing model would be to charge an annual licensing fee for each device enabling AgaMatrix technology.  The value proposition to customers is the same: devices enabled with AgaMatrix technology will be more accurate and therefore require smaller blood samples and result in less pain, which will increase device and test strip sales. Pricing structures and terms of the company’s software modules and services will ultimately be determined by negotiations with customers. The most likely scenario will be a hybrid pricing model of flat licensing fees on devices and royalties on test strip sales. The following table summarizes a conservative revenue forecast based on a licensing structure.

5.4 Intellectual Property Strategy

With a fully developed IP strategy consisting of core utility patents (currently filed as provisional applications) and defensive utility patents to be filed imminently, and based on our technological leadership, we believe that it would be far more beneficial for potential customers to purchase our technology than to develop it in-house.

5.5 Milestones

The following tables summarize the company’s developmental goals (month-to-month for Y1). Product Milestones are listed separately, below.

5.5.1 Year 2 and 3 Milestones

• Business Milestones
• Secure two major paying POC customers
• Secure another small paying glucose customer
• Secure one major glucose beta customer
• Operational Milestones
• Move to larger office 
• Hire 6 scientists, 8 engineers
• Hire product management and operations staff

Year 3 Milestones

• Secure one major paying glucose customer
• Secure one major implantable beta
• Expand to other POC players

5.5.2 Product Milestones

The following table summarizes the product development vision. Future products will all contain updated core DSP algorithm software, associated tools, and documentation of performance results, ensuring that we maximally leverage our existing technology base as productization evolves.

5.5.3 Summary of Current Accounts

Web Plan Summary

AgaMatrix’s website will be a dynamic marketing tool for the company that serves the needs of business development, sales, and recruiting. The company site will provide information about AgaMatrix’s products and services for target customers and potential business partners, such as marketing collateral, technical white papers, and new product updates. As the company grows,  its recruiting needs can be addressed by posting career opportunities and FAQs about the company. AgaMatrix.com will also communicate company news to create and maintain positive public relations with the community and investors. The goal will be to implement a functional and professionally designed website that can be adapted to meet the company’s growing needs.

6.1 Development Requirements

Creation of future versions of the AgaMatrix website will continue to be outsourced to Nathan Bailey, a professional graphics designer with over 15 years of experience. The contractor will work with the marketing department to conceptualize the company’s logo and overall design. It will be maintained in-house and major site redesigning will be made through a contractor. 

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

The following are the current members of the AgaMatrix Team. Once a permanent CEO is on board, Sonny will transfer to a Director of Product Management role.

Sonny Vu, Chief Executive Officer and Founder Sonny brings management and entrepreneurial experience from having worked in several of Microsoft’s product groups and having launched and built FireSpout, an enterprise software company. At Microsoft, he worked in a number of product development groups, including the natural language group responsible for shipping linguistic technologies to over 16 applications in 22 languages. While at FireSpout, Sonny created the original technology vision, recruited the technical teams, developed and managed the technology development and various operational processes, and developed the intellectual property strategy. Originally a mathematician by training, Sonny was a Ph.D. candidate at MIT prior to working in the software industry.

Dr. Sridhar Iyengar, Chief Technology Officer and Founder With 10 years of research and engineering experience in DSP and mathematical modeling of chemical systems, Sridhar drives and directs the implementation of AgaMatrix’s technology vision. He is the leading expert in the core DSP/electrochemistry interdisciplinary approach used by AgaMatrix. Combining his background in electrical engineering and biological sciences, Sridhar conceived and pioneered the concept of using a DSP approach to enhance biosensor performance. His work in the years following his breakthrough Ph.D. research is the cornerstone for AgaMatrix’s intellectual property with two key patents filed under his name and another three defensive patents to be filed during the summer of 2002. Sridhar obtained his Ph.D. from the University of Cambridge as a Marshall Scholar.

Craig Bolon, Vice President of Engineering With more than 35 years of management and technical experience in software and hardware engineering, Craig is responsible for executing AgaMatrix’s product development initiatives. He brings his leadership experiences from being a hands-on development engineer, team leader, general manager, engineering director, and entrepreneur. Craig has a proven track record of delivering on-time, on-budget projects while working on commercial product development in software and instrumentation for organizations such as Schlumberger, Polaroid, Betagen, Exxon, and MIT. His commercial product development work has spanned the fields of molecular biology, chemical analysis, electronic imaging, speech recognition, and mechanical design software. Craig has invented key technologies and holds a number of software and hardware patents. He holds a degree in particle physics from MIT.

Dr. Paul J. Kelly, Advisor Paul is the founder and former CEO of Gemini Genomics plc, until its merger in 2001. A physician who specialized in endocrinology, he has more than 25 years of experience in medicine, and research in clinical and commercial settings. He has published extensively in over 90 publications, has an issued patent, and has held faculty appointments at the University of New South Wales and St. Vincent’s Hospital in Sydney, Australia. After launching Gemini Genomics in Cambridge, England, Paul went on to list the company on NASDAQ, in the most successful IPO of 2000 in the UK. He has served on national governmental advisory bodies, as well as on the boards of public and private companies, and non-profit institutions. Paul graduated in Medicine from the University of New South Wales, Sydney, and received his Doctor of Medicine degree for his thesis in the genetics of osteoporosis also from the University of New South Wales. He is a Fellow of the Australasian College of Physicians.

7.1 Personnel Plan

The personnel table assumes steady growth in employees over the next year. We expect head count to reach 14 employees by end of year one. We are in the process of implementing a strong benefits policy (with fully-paid medical, dental, and life insurance, plus a profit sharing and 401K plan). Employees generally earn competitive salaries and receive generous equity packages.

Financial Plan investor-ready personnel plan .">

The following subtopics highlight the financial plan for AgaMatrix.

8.1 Break-even Analysis

The break-even analysis demonstrates that AgaMatrix will have a sales level running comfortably above break-even starting in year two. Depending on which pricing model is used – either royalties, licensing, or both – average revenue could vary significantly, but the table shows a fair estimate given our revenue projections.   

The business will have very few fixed costs – most laboratory equipment can be leased, as will the real estate for our offices. All costs are expected to be variable for modeling purposes, giving the company flexibility to adapt as needs and environmental conditions may change. Because AgaMatrix technology is software-based and is optimized for minimal hardware requirements, it can be easily distributed and integrated into biosensor devices with advantages of economies of scale. As volume increases, average variable costs will significantly decrease.

8.2 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• We assume a slow-growth economy, without major recession.
• We assume of course that there are no unforeseen changes in technology to make our products immediately obsolete.
• We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.

Financial projections are predicated upon targeting the life sciences vertical exclusively. Within the life sciences market, blood glucose will drive the majority of revenue. However, the point-of-care testing market will contribute modest revenue in the near term, accompanied by a substantial contribution from the implantable market in the medium and long term.

8.3 Projected Profit and Loss

Gross and operating margins

Gross margins will be approximately 85% on the core product offering, which will be delivered in the form of software. Such margins are typical in the software industry; we have not modeled in support revenue streams for our products, assuming this will be handled entirely by our OEM customers. In year one, we expect a loss, as we grow the business from a small base by conserving cash. Beginning in year two (post-institutional funding), as we ramp up the business more aggressively, operating expenses as a percent of revenue will fall as we hire a critical mass of personnel for marketing, sales, and research and development. By the end of the forecast horizon, operating margins will once again exceed 30%.

Profit potential and durability

AgaMatrix is expected to be net income positive beginning in its second full year of operations. Profitability is expected to grow rapidly following year two, once the business is able to leverage the investment from the year two ramp-up. AgaMatrix has the potential to be an enduring standalone business, supported by a diversified revenue stream within the life sciences vertical (blood glucose, point-of-care testing and minimally invasive/implantable devices), with the opportunity to expand into other sub-segments in the healthcare sector and new verticals for long-term growth.

8.4 Projected Cash Flow

The financial outlook is positive as the company rolls out and meets its milestones. After financing, cash flow will be negative for year one. By year two, AgaMatrix expects to be cash flow positive.

8.5 Projected Balance Sheet

Our projected balance sheet shows an increase in net worth. The monthly projections for the first year are in the appendix. Net worth is negative initially because the company does not expect to secure its first paying customer until end of year one.  

8.6 Financial Risks and Contingencies

We have identified several critical risks and assumptions that must be addressed to ensure AgaMatrix’s success. 

Market Risks

Risk #1: Corporate R&D labs of our customers/partners may develop competing DSP-based technologies to enhance their own electrochemical sensors based products.

See section 4 for a detailed discussion of competition and AgaMatrix’s sustainable competitive advantages.

Risk #2: Other technologies may be developed to improve sensor performance.

Other technology solutions designed to improve sensor performance have been generally hardware-based introducing additional costs and at times toxic chemicals.  For example, MEMS-based infrared sensors, being developed as an alternative to electrochemical sensors, are expected to be much more costly despite increased performance.  Similarly, mediators such as ferrocene are used to deliver accurate readings, but are toxic and less effective than AgaMatrix’s solution.  AgaMatrix software-based solution improves performance while being cost effective and safe.

Risk #3: As a pioneer in electrochemical applications for DSP algorithms, AgaMatrix may not be able to convince customers to adopt such a revolutionary solution.

Developers of blood glucose monitors and portable blood analyzers have never considered using a software-based approach to solving their accuracy and cross-interference problems.  There is thus a psychological barrier that we believe can be overcome through a simple, concrete demonstration of low-cost performance gains which we can provide.

Risk #4: There may not be enough computing power and memory on blood glucose monitoring devices and portable blood analyzers to support AgaMatrix’s software.

The algorithms have been optimized for computational speed and are designed for use on devices with very little CPU resources.  Initial customer feed back shows that AgaMatrix’s algorithms can be incorporated in next-generation ASICS designs for blood glucose monitoring devices, as well as into current microprocessor-powered portable blood analyzers.

Risk #5: Implantable blood glucose sensors may be prolonged from the marketplace indefinitely.

Although most blood glucose monitoring device companies are trying to develop implantable sensors, other technical and marketing issues may prevent the eventual adoption of the artificial pancreas.  AgaMatrix’s technology will accelerate the development of the artificial pancreas by not requiring toxic mediators.  However, AgaMatrix cannot solely depend on this market’s development, and has thus chosen to focus on existing markets to drive short to medium term revenue.

Risk #6: AgaMatrix must prove out the technology on blood samples.

Despite a high confidence in the technology, we must still create experimental data sets created from tests using actual blood samples.  These data sets will be shown to customers as proof of the technology’s effectiveness.  AgaMatrix is confident that after initial funding, lab space and equipment can be quickly secured to produce these data sets.

Risk #7: AgaMatrix may face regulatory delays from FDA approval.

We will work with our customers to ensure that the technologies that are deployed into their devices will incur minimal regulatory risks thereby complying with the FDA’s less onerous regulations for a “derivative device” (compared to the approval process for a completely new device).

Risk #8: AgaMatrix needs to determine customer willingness to pay and secure concrete deals with customers.

Several conversations with potential customers have already reached the level of discussing potential pricing structures so we believe there is some genuine interest.

Risk #9: Each OEM customer will require a custom-built version of the AgaMatrix software.

The software suite will be designed to be a modular and scalable platform technology.  We will construct a set of configuration and integration tools designed to translate our core technology into suitable deployment formats. 

Risk #10: University of Cambridge may have claims to AgaMatrix’s technologies.

The technology is based on 3rd generation algorithms that AgaMatrix alone has been developing for two years.  1st and 2nd generation technologies were developed at the University of Cambridge and validated the proof of concept of using a DSP approach to solving many of the outstanding problems in biosensors. Our 3rd generation technology is fundamentally different from the earlier technologies and has overcome a number of critical limitations, on both the theoretical and empirical sides, that prevent commercialization.  AgaMatrix owns all rights to these 3rd generation technologies.  The 1st and 2nd generation technologies, while illustrative of the concept, do not pose any commercial threat due to fundamental technological limitations

Financial Risks

Risk #1: Working Capital Management – We expect to be running a significant working capital deficit because of the time it will take to establish payment schedules (e.g. quarterly royalties from partners) and receive payments from large OEM vendors while, as an early-stage company, we will simultaneously have to make payments on our supplies on a short-term basis.  Managing the cash conversion cycle will be critical to ensuring liquidity and solvency.

Risk #2: Seasonal, Cyclical, or Highly Volatile Cash Flows – at this time, we expect there to be volatility in our cash flows based primarily on the new product introduction cycles of major medical devices manufacturers.  Therefore our revenue and cash flow streams will not be smooth throughout the year, but will be stronger during times of new product introduction. By targeting three different market segments early on (blood glucose, point-of-care, and implantable devices) we aim to mitigate this risk.

Risk #3: Concentration of Customers – The blood glucose market and portable blood analyzer markets are dominated by an oligopoly of a handful of companies.  It may be difficult to diversify our customer base sufficiently to prevent large swings in our revenue and cash flow based upon the actions of a small number of customers. To diminish this risk, we will initially target smaller players who will move more quickly and provide us with greater leverage when we go to negotiate with larger customers.

8.7 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7373 or NAICS code 541512, Computer Systems Design Services, are shown for comparison.

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