As an early-stage healthcare investor, a common question I ask myself when speaking with entrepreneurs is “if this is a business or just a product?” By that I mean, can this company build a sustainable revenue model, establish lasting relationships with customers, and reliably deliver against its value proposition at scale? Or is it only developing a product that it will likely license or sell to another company for sales and distribution with limited potential for significant growth? Both are valid strategies for generating shareholder value, but each presents very different growth opportunities, risk profiles, and value propositions to key healthcare stakeholders.
For MedTech entrepreneurs, there is meaningful opportunity to create added value for consumers, payers, and providers by leveraging a broader platform strategy and building a business centered around their medical device. Strong examples of companies successfully implementing this strategy are digital health solutions leveraging connected devices as a core component of an integrated value proposition. Rather than focusing solely on developing a novel medical device, these companies address the broader market opportunity by answering the questions: How can I provide value to the end consumer? What information, tools, and services can I equip them with to help them better manager their personal health conditions?
“Understanding how your product creates value for consumers and identifying ways to supplement that value through wraparound services and data driven insights is a powerful way for founders to maximize their company’s potential”
Our 7wireVentures’portfolio company, Livongo, pioneered this model. Livongo is the market leader in Applied Health Signals, leveraging connected medical devices, including glucometers, blood pressure cuffs, and digital scales to continuously collect data, remotely monitor consumers, and help them manage their chronic conditions. To further empower the consumer to take control of their health, Livongo also provides a companion application, personalized insights, and access to 24/7 coaching support.
A similar use case can be found with 7wireVentures’ portfolio company, Clarify Medical, which enables consumers to self-manage and treat chronic skin conditions like psoriasis and vitiligo using UVB phototherapy from the comfort of their homes through a connected handheld device. The device syncs with a smartphone to monitor dosing and duration of treatment, remotely share data with the patients’ provider, and enable care partners to intervene when necessary to drive treatment adherence.
One final platform solution serving consumers with chronic health needs is Aire Health, which offers a connected portable nebulizer for the treatment of respiratory disorders, such as asthma. The company’s device connects to a mobile app to enable consumers to predict and monitor their respiratory triggers and symptoms, as well as pre-program regular medication reminders.
There are a few lessons we can draw from these examples. The first is that companies can meaningfully enhance the functionality of medical devices by pairing tech-enabled services to create more wholistic care solutions. Livongo has delivered significant value toits customers by providing an ecosystem of digital tools and services that help consumers live healthier lives. The second is the importance of collecting and utilizing data. Connected devices are a near endless source of valuable longitudinal health data and leveraging that data to drive actionable insights for consumers is a great way to deliver personalized, real-time care. The third is the value of understanding consumer needs and applying human-centered design principles in the early stages of product development. For both Clarify and Aire Health, the companies knew that making the devices portable and easy-to-use would increase adoption by allowing consumers to easily fit their treatment protocols into their busy schedules.
Not every medical device lends itself to becoming a full fledged digital health business. But understanding how your product creates value for consumers and identifying ways to supplement that value through wraparound services and data driven insights is a powerful way for founders to maximize their company’s potential.