NOVEMBER - 20228Samuel Levy, MD, Founding Partner, Lauxera Capital PartnersByTranslating an idea for a Medtech innovation into a product with clinical evidence and regulatory approval is an odyssey. It's an odyssey I know well as I had the privilege of stewarding a Medtech innovation from an idea on a napkin to commercialization in 40 countries with my co-founder and talented colleagues at Allurion Technologies. The capabilities, deep content knowledge, and execution bandwidth needed to animate this journey are daunting. A rich, fragmented and highly capable Medtech innovation services outsourcing ecosystem has blossomed over the past two decades to enable agile startups and ambitious strategics to accelerate product launches. The Pharmaceutical industry transformed its drug development processes 25 years ago integrating high performance contract research organizations into core functions. Medtech has lagged Pharma, but the winds are changing. Medtech products are becoming more and more complex with the advent of machine learning, surgical robotics, and deep software integration needs. These product attributes increase regulatory complexity, put pressure on quality systems, and make clinical trial execution more challenging. The European MDR quagmire has been an additional source of pressure as more than 500,000 medical devices are submitted for re-certification from a handful of notified bodies. These industry macrotrends drove my private equity firm, Lauxera Capital Partners, to launch a strategic sourcing initiative focused on doing great deals in the MedTech innovation services sector. The sector is booming. MedTech spending on outsourced services has grown at a 12%CAGR over the past five years driven by numerous macro trends. Following a Covid-driven year-over-year decline in 2020, MedTech clinical trial starts boomed in 2021 necessitating substantial provisioning of outsourced clinical trial services. Broad clinical trial execution challenges linked to staffing shortages and Covid-related disruptions persist and are dragging out trial timelines while threatening data integrity and operational bias. Within the startup segment, venture capital funding levels have surged driven by strong investor interest in software-intensive MedTech products. Recently introduced reimbursement paradigms for digital therapeutics (such as DIGA in Germany) necessitate clinical data generation, a robust quality system and regulatory approval. To foster MedTech innovation, accelerate market access for life-saving medical devices and capture value linked to the above trends, Lauxera Capital Partners has made two investments focused on Medtech innovation services. End to End Medtech Innovation Services: VeranexTHE RISE OF THE OUTSOURCED MEDTECH INNOVATION SERVICES Medical Device Clinical Trial Starts (#)Total VC Investment in MedTechIn My Opinion
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