While it is well established in other areas of business, crowdfunding for medical devices presents a new set of challenges and opportunities, and could become a passing fad rather than an encouraging new trend in the healthcare sector, says an analyst with research and consulting firm GlobalData.
According to Shashank Settipalli, GlobalData’s Analyst covering Medical Devices, although medical device regulatory agencies, such as the US Food and Drug Administration (FDA), have not enacted concrete directives on crowdfunded medical devices, questions arise about whether or not a contributor is participating in a sale of an unapproved product.
Threats to Crowdfunded Medical Devices
Perhaps anticipating a regulatory crackdown by the FDA, Cur, a California-based device manufacturer, has updated the terms of service on its website to emphasize that contributors are financing a work-in-progress and are not, in fact, making a direct purchase.
Settipalli explains: “The success of crowdfunded medical technology depends on whether many of these devices eventually achieve regulatory approval. Even though the hurdles of initial financing are overcome, medical devices need to follow the requisite pathways for market entry.
“One of the main threats to crowdfunded medical devices is the difficulty in obtaining consistent success and, as a result, firms seeking crowdfunding need to make their contributors aware of the inherent risks and expectations in the uncertain development process.”
Crowdfunding for Medical Devices Success = Smaller, Simpler Devices
As a consequence, the analyst believes that crowdfunding may be most beneficial for smaller, simpler devices that can quickly earn approval and treat a wider pool of patients with quality of life problems, such as sleep apnea and chronic pain.
Settipalli continues: “Crowdfunding may provide burgeoning start-ups with the vital capital to design, develop, and test devices that treat both rare and commonplace medical conditions.
“Furthermore, by directly involving consumers and end users, entrepreneurs can gauge the market size and unmet needs of a particular therapy area,” the analyst concludes.