Red tape is one of the big issues facing start-ups in the healthcare sector

TRYING TO DO business in the medical world is possibly one of the the most complicated sector known to man. Getting a product to market takes a large amount of due diligence, research and trials. Then imagine trying to sell anything to an Irish public health service that is running at a deficit of €200 million. Your commitment to your product or service must be supreme.

Of course, the level of regulation is understandable. When dealing with something as important as human health, one must be sure that all facilities and resources being used by doctors, nurses and other care-givers have been stringently tested before entering the healthcare market.

The Irish Medical and Surgical Trade Association (IMSTA) is the representative body for all medical technology supply companies in Ireland, from plasters to MRI machines.

“The principal issue for any company, from a start-up to a major multinational, is access to market,” explains Justin Carty, president of the IMSTA.

“You can’t sell anything that’s not CE marked . This is controlled by the Irish Medicines Board. You can’t sell anything without their authorisation.”

Easier said than done. “Getting CE marking for a medical device is an extremely onerous task,” says Paul Maguire, CEO of Arann Healthcare.

“There are myriad rules and regulations you need to become au fait with very quickly. A number of consultants we’ve been working with have helped us with that. The best way to do it though, is to put in your own quality assurance system into the company from the get-go.

“CE marking is the norm in this business. If you have a great product, you just accept you must put in place these aspects. It’s just an added step in the process.”

Once this has been done, in an ideal situation a new company would develop its product further by working with clinicians.

“You would need to have the authenticity of your product trialled well before you go to the market,” stresses Carty. “In devices it’s called a clinical investigation, in drugs it’s called a clinical trial.”

The next logical step, according to Carty, is missing in the Irish system. “The product or service should then come before some sort of national body able to evaluate its clinical impact and the cost benefit of it,” he says.

“Before any new device goes to market the Government should be able to say, ‘Let’s trial that, see how it works, and decide whether it is needed and whether it will save money in the long term.”

In the absence of such a process, products go straight to market after they are clinically trialled. But there’s no guarantee something will sell, particularly if it’s a small company.

The public sector will only deal with tried and tested manufacturers, so it’s incumbent on a small company to either reach critical mass very quickly or join forces with a larger healthcare device provider to help get their product to market.

The good news for healthcare device companies is that a product rarely has to be altered for a different country. “Patients are patients everywhere,” says Carty. Plus the CE marking is accepted across Europe.

The US and Asia are a different story, however. “In order to get licensed in the US you have to go through the Food and Drug Administration,” explains Maguire.

“Japan and Korea have their own equivalents, but those markets are very hard to get access to.”

Even if you do get regulatory access abroad, new challenges must be faced. “Once you go to an international market, they are going to ask for successful commercialisation elsewhere, usually in the place it is being developed,” says Carty.

“If you go to the UK or anywhere else with a new product, you’ll be asked who is buying it in Ireland?” The chicken and egg strike again.

“It’s particularly challenging to sell anything right now in an environment of austerity,” says Carty.

“Even if your product is the best there is in the market and will save money in the long term, it is more likely that a cheaper product will be picked up on first.”

DEVELOPING A NOVEL PRODUCT IN A TOUGH BUSINESS TO CRACK: ARANN HEALTHCARE TARGETS HARMFUL BUGS TYPICALLY FOUND ON HARD-TO-CLEAN ITEMS

Arann Healthcare has developed something timely and useful. Its product “effectively, rapidly and safely targets those harmful pathogens commonly found on hard-to-clean objects in healthcare facilities, such as mattresses, cushions, bed frames, wheelchairs and commodes”,

Healthcare associated infections (HCAIs) are a major concern to patients and healthcare providers alike. There are dozens we are aware of, but MRSA would be the one most people know by name.

So any product that can reduce their numbers and make hospitals cleaner, more hygienic places, must be welcomed.

But is a product’s merit enough to get it to healthcare, one of the hardest markets to break?

Arann Healthcare is fortunate to have a mentor who couldn’t be more perfect in terms of expertise. Business consultant Peter Scallan is the former executive director at Celtic Linen Ltd, a company with one branch that deals exclusively with hygiene and infection control products for the healthcare industry.

This marriage was organised by the Mentorprogramme run by the MBA Association of Ireland, the representative body for the 6,000 graduates holding Masters in Business Administration degrees, in conjunction with the Guinness Enterprise Centre.

“They’re at an exciting stage,” says Scallan. “The product is almost ready to go. But there’s still a lot to take into consideration.

“The core issues are still the same as when I was working directly in the sector in that healthcare providers are taking care of people, so there’s a natural conservatism about new technology.

“It’s not like in other markets where you can just try new things. Everything is done at a pace. Every single base needs to be covered.

“If I was to develop a consumer good, I could just pick a supermarket and run a trial. You can’t do that with healthcare. The start-up company has real challenges.”

Scallan is confident of Arann’s prospects. “Their product is completely unique and helps to solve a very serious problem in the healthcare market. Infection in hospitals comes from ordinary things, like a teddy bear in an isolation ward.”

So the due diligence has been performed and the product should be in demand. But there’s more to it than that. “We’re currently trying to identify the right partner to help get us into market,” explains Paul Maguire, CEO of Arann Healthcare.

“We also haven’t fully decided on an appropriate sales model. There are loads of different sales models in the healthcare sector and the challenge is knowing how best to sell our equipment to the healthcare market. But any sales model will need to be tweaked in order to work with potential partners who might have their own ideas.”

It is key for a small company in Ireland to partner with a more established player. “You need to be more renowned and established in the sector for the HSE to consider you,” says Maguire. “Companies of our size wouldn’t even qualify for tenders. So you always have to partner.”

The company recently got some good news. Under the Government’s Action Plan for Jobs initiative, a healthcare innovation hub was set up and Arann Healthcare was one of six companies chosen to link up with hospitals under a HSE remit. “This is a direct route for a new company’s innovation to get to a trial phase,” says Maguire.