MD-Squared is one of the consultants on the Fit 4 Innovation Health Tech Market programme, providing regulatory support and accelerating go-to-market. Founder Claus Schaffrath explains why startups can make a major difference in the market.
Tell us a bit about yourself and MD-Squared.
I am a physician and an electrical engineer and spent my last 25 years in Medtech to “translate” between clinical needs and technical innovation. After working clinically and in start- and scale-up environments in Germany I moved to the Netherlands 15 years ago.
Subsequently I’ve held various positions with Philips healthcare in MRI imaging and interventional oncology, before I started MD-Squared six years ago to advise startups in bringing medical devices to the market.
My entire professional career was to be between the clinical and the technical fields, serving as a translator to help the sides better understand each other. When I started the business, I learned that there is a third language, which is the regulatory language. To get things to the market, you have to put evidence in the right shape. What would be the evidence they would need? Would it be a larger or a smaller study? Would they have to follow up with their patients for just three hours or three years, which has a huge impact on how quickly they can be to the market? And how expensive would the studies be? We provide advice. So it’s not just on the regulatory side, but it’s trying to be interdisciplinary and really looking at all aspects.
To what extent is the regulation or the lack of in-house knowledge holding SMEs back from going to market with a medical device?
I think the regulatory environment for medical technology has become ever more complex and challenging over the past years, especially in Europe with a significant change in 2017, which required all European member states to harmonise their legislation by implementing the new Medical Device Regulation (MDR). In 2022 the transition period ended, so every new Med tech innovation in Europe now automatically falls under this new regulation.
Notified Bodies, which have been accredited to assess those devices under MDR appear to be overwhelmed. That’s why you see that the transition period for existing devices gets extended time and again to avoid a collapse of the system.
However, this is of little help for startups, which are now entering the field with their meaningful innovations. They face significant hold up in the process. In spring 2022 MedTech Europe [editor’s note: European trade association for medical technology industries] conducted a survey among startups and found that it takes this group on average between 12-18 months from the submission of the Technical File until receiving CE marking and the licence to sell in Europe. This can be devastating for many startups. To this point they have taken every step to make their business successful: they got the right knowledge on board and hired and trained the right personnel for market launch, but now are in a state of uncertain delay. This even more so as rules and standards for Digital Health Apps and AI are just evolving as we speak.
There is therefore a substantial business risk in the European market with these new rules, and there are not many people with the right knowledge to navigate those processes out there.
“It takes this group on average between 12-18 months from the submission of the Technical File until receiving CE marking and the licence to sell in Europe. This can be devastating for many startups”
MD Squared founder Claus Schaffrath
To what extent is the output of SMEs important for this market?
When starting my business large corporates appeared to be natural first potential clients, but I quickly realised that startups tend to be more agile and also acutely aware of their potential knowledge gaps and shortcomings in this area.
Can you give some examples where your company has helped an SME navigate regulation?
We worked quite a bit in the emerging field of Digital Health applications. For instance, we clearance from the FDA for a Stroke Detection Software, which can alert clinicians on suspect findings in CT scans, thereby allowing our client to be the first European stroke notification app to be marketed in the US. For Software as a Medical Device (SaMD), or algorithms, which can detect cancer or other suspicious lesions for different medical conditions, we engage on behalf of or with our clients to discuss and agree on clinical validation strategies with competent authorities and notified bodies.
Our inter-disciplinary approach is what makes our work different in the eyes of our customers. The purpose and usage of a Medical Device not only poses regulatory questions, but at the same time touches clinical, technical and quality aspects, too. In bringing the right experts together to reflect those aspects as well, we help our clients to make informed business decisions on their way into the markets.
How realistic is it that Luxembourg can attract medtech companies through this programme?
The good thing is software has no home. I can clearly see that if you create a technology hub in Luxembourg, it can radiate across Europe. And one of the advantages of medical device regulations is that once you get your CE certificate granted, it is valid in all 27 member states. So you may have a small hub in Luxembourg, but it can sell across Europe, which is great.
I don’t think it’s implausible if you stimulate the right environment and attract the right people. Money always helps and I think Luxinnovation seems to be committed to making it easier for startups to get appropriate funding. It depends on whether they manage to have the critical mass. And so if you have cross-pollination between different companies there, then it may become increasingly attractive to go to Luxembourg.
The call for applicants for the Fit 4 Innovation Health Tech Market programme has been open since the start of March. It provides 8 weeks’ analysis of a startup’s project/product and identification of the impact of medical regulations, an action plan, up to 12 months’ support to implement recommendations and co-funding amounting to a maximum of 50%.
