In my role, at the forefront of healthcare commercialisation, I have worked with hundreds of companies in the early stages of their lifecycle and seen them sketch out a pathway to market. However, I have also seen a vast majority of them fail and wither out. 

Healthcare is a challenging sector with tough regulations and a fragmented market structure. In the life of a healthcare startup, there are ample of opportunities for missteps and costly mistakes. Moreover, unlike technology startups such as a consumer app, there are not many options for pivoting out. The traditional technology model of putting out a Minimum Viable Product (MVP) and then iterating to find the business model and user application doesn’t fully work in healthcare. 

Below are three common problems that healthcare startups face:

• Not having a clear value proposition – Most early-stage healthcare companies struggle to understand the buyer’s overall needs and articulate solutions based on impact and opportunity.  A typical healthcare startup journey starts during a founder’s time at a healthcare institution or a previous supplier company or within an educational institution. It is this experience that shapes up the R&D around the product. However, most of the founders (and new founding teams) find it hard to quantitatively highlight how the product or innovation performs better than the standard of care. Indeed, most companies even struggle to make sense of what clearly defines a standard of care, from a commercial standpoint, as market access is inherently complex within healthcare. In our experience, there is evidence-rich data in the contracts (or tenders) that a buyer issues in the market to existing vendors to solve a particular challenge within a disease-care continuum. It is this data that holds the key to truly understand the buyer’s overall need, the infrastructure of the care environment, the comparators being used, and the existing evidence-value-risk dimension for market access. Often startups are not even aware of this dataset and rely on a few pilot programs to lead to eventual market entry. This can be very frustrating as startups, and their clinical sponsors within healthcare organisations eventually realise the contracting intricacies of their setup and the influence of non-clinical stakeholders in the process. In the last two decades, the balance of power in healthcare has shifted towards payers due to constrained budgets and increasing need for quality care. Most startups don’t even look at the existing commercial and contracting landscape before embarking on their product development journey. 

• Poorly defined evidence generation strategy – Startups within healthcare have to collect a lot of evidence and data to get regulatory approval and gain reimbursement from payers within healthcare organisations. A most common mistake is to develop the evidence base linearly, i.e. for each milestone. It is for this reason that many companies run out of capital before the commercial stakeholders have even heard about the product or the innovation. In my experience, the companies that achieve market access engage commercial stakeholders early in the process. They start by analysing the core evidence needs across all stakeholders and develop value messaging around each of the personas (clinical and non-clinical). They approach evidence collection goals as a multi-pronged strategy that involves early engagement with all stakeholders and incorporate feedback iteratively into their data collection processes. 

• Building only a direct-to-consumer commercial model and staying out of institutional channels – Often, startups believe that they can directly target consumers and skip the regulatory approval (and evidence generation) process. This is due to the flawed advice and wrong assumptions that consumers are willing to pay out of pocket for health-related products and services. Barring a few early adopters, most consumers want their health plans or governments to pay for their healthcare. To do business in healthcare, one has to engage in the formal institutional channels and participate in tendering and early innovation contracts, and eventually find a path to the market. I often see startups die while implementing the direct-to-consumer model as they eventually run out of money with poor adoption rates for the core technology. 

Vamstar’s proprietary AI platform helps healthcare startups identify and stay updated with the pulse of the buyer, analyse all evidence base for each indication or disease area, and directly participate in niche contracts (tenders) to build early commercial proof points. We aggregate healthcare demand from millions of contracts to ensure that your product development and go-to-market strategies bear results with interconnected and updated buyer data. 

Due to COVID-19, we are seeing an increasing intensity of commercial contracts (tenders) and early innovation programs being rolled out by healthcare organisations. 

For more details about how we can help you, please contact me at praful@vamstar.io