NPI is a distributed activity through the whole development process. It’s not just a layer at the end of it.
This blog is a collection of medical device NPI and commercialization lessons learned. StarFish Medical engineers, New Product Introduction and manufacturing experts share insights gained over 20 years.
Estimating time and budget
Common (inexperienced) thinking is if you have a year to design a device, allocate ten months to designing the product and two months to building it. In reality, the ratio is often closer to 50:50 for design and build. This often causes novices to underestimate and go over budget. While many think the bulk of design work is product design and NPI/commercialization is simple, things like developing a supply chain, qualifying vendors and sourcing parts that meet specs, or preparing regulatory requirments for FDA approval, are critical. These things take significant time.
For many products, one core component will drive the cost and risk. If you design the first version what can be readily sourced for initial prototypes, having to design for the manufacturing version mightdisrupt and change strategic design elements. Involving the supply chain team during conceptual development can make a huge difference in understanding manufacturing tradeoffs early enough to avoid major changes.
For example, take a device designed with a pump which costs $400 (which is outrageously expensive). To switch to much cheaper $10 pumps that could do the job would require additional support circuitry. Once a product is designed around an expensive part, it can be difficult to tear out and will require reconsidering how the enitre device will manage risks.
“When’s the Right Time?”
Going through a few prototype releases, trying to do builds of prototypes (even quite early prototypes), gives you a bit of a read on what the final build is going to look like. If every one of your prototypes is built lovingly by engineers up until the end of beta, you will likely get an enormous surprise. You will also have a bunch of engineers who are completely bored, but that’s a different conversation…
When every one of your prototype builds ends up being a bit of a prototype, it’s time to transfer. It’s really an experiment in “can we make this thing?”. Even if the prototype isn’t super representative of the planned product, it’s still a predecessor to the end product. And if you can’t transfer that prototype so it can be built at least five times, you’re probably heading in the wrong direction.
NPI is more like a bridge to manufacturing than the gatekeeper. You can try to drop something straight into manufacturing, but it’s likely to be unsuccessful. NPI will take a device from being replicable a few times and help shepherd it into many, many “sheeps go over the bridge”.
How early should you consider NPI?
In general, we think NPI should begin very early in the development process, but practically that doesn’t happen as often as it should. We do a lot of late fixing and founders end up with lower exit values than they could have had.
NPI engineers speak product development language, but they are backed up with manufacturing capabilities. A product development engineering team engaging with the NPI team on a very early prototype will talk a similar language. The NPI team help the product development team make sure they have everything needed to actually replicate their prototype.
For example, our product development team recently engaged our NPI team for a new client. The NPI team asked us several high level strategic questions, such as “what’s the target production volume and the target cost?” We took those questions, developed answers with the client, and included them in our very first draft of requirements. That’s one way to engage NPI at the very earliest stage and make sure there’s a flow in the requirements all the way through prototyping and manufacturing.
The of NPI on Exit Value
The potential for NPI to add founder/company value is often overlooked. A lot of startups are built with an exit target in mind. NPI initiatives can often increase an exit value by at least a factor of two. The exit value of a company is based on margin and/or market signals. Investors reward a device with sales that grow in a smooth upward ramp with devices working reliably in the field. If these conditions are not met, they will likely cause a big discount in exit value.
NPI activities often center around DFM (Design For Manufacturing) refinements, smoothing out manufacturing by nailing down processes and validating them properly. NPI also includes strategic sourcing to knock down prices and improve margins, and future margins based upon sales growth. Margin is a big driver of valuation. NPI activities are probably as important in terms of exit valuation as all other activities put together.
Founders want to limit spending as much as possible while they drive up value and minimize their dilution in the early development. The heavy lifting occurs midway when they’ve raised substantial cash, and then there’s a valuable application at the end. It takes much wisdom to know which lever to pull at what time. Most founders will need to have been through that journey a few times to really understand the importance of timing and funding.
An example is a client developing a transducer. Their first round of funding was about $40,000. They allocated $38,000 to designing and $2000 for a bit of manufacturing to get regulatory approval and clinical devices. They actually spent $40,000 on a very simple device and another $100,000 trying to get clinical parts passed by regulatory. There is a huge lack of knowledge in many first time companies that believe they can just make a device and get it out of the door.
If a company doesn’t understand the importance of NPI, chances are they don’t know what “ready” for manufacturing means. We hope this blog has helped identify the role and importance of NPI when commercializing a medical device. We’d enjoy hearing from readers about their experiences.
Astero StarFish is the attributed author of StarFish Medical team blogs. We value teamwork and collaborate on all of our medical device development projects.