Monetize your Science

© DOUG ROSS

Brian Fahey walked into Stanford University Hospital looking for problems. With nearly full access to the hospital’s departments and operating rooms, Fahey’s search seemed unbounded. During this time, he observed a number of patients on ventilators, some of whom succumbed to the potentially lethal problem of developing pneumonia—from the ventilator itself. The problem wasn’t unique to Stanford University Hospital, affecting roughly 60,000 people a year in the United States, with more than half a million patients at risk—a problem that can cost a hospital more than $40,000 per patient. A biomedical engineer by training, Fahey found this problem “particularly compelling,” he says. “People that are on the ventilator are, by definition, critically ill and fighting for their lives, and we have just made them sicker.”

During his 6-week-long stint at the hospital, through the Stanford Biodesign’s entrepreneur training program, Fahey and four of his classmates found about 350 problems, or unmet clinical needs. The program brings PhDs, engineers, and clinicians together for a crash course in entrepreneurship in the biomedical sciences. Over the course of 10 months, fellows identify problems and carefully whittle them down to those with marketable solutions. Some even succeed in starting their own company on the basis of projects initiated during the course.

While a researcher can apply for a spot in the Stanford program during a sabbatical year, Stanford only admits eight fellows per year; programs like it are similarly small and highly selective. Alternatively, scientists can try to train themselves how to think about their science from a more translational perspective. The first thing that fellows learn is that “the best way for your research to be valuable is to be working on the right thing, [which] starts with a disciplined process of understanding what the need is,” says Stanford Biodesign alumnus Ross Venook. Here are tips on finding the right clinical problems and testing your solution for market feasibility—two of the most important first steps for any entrepreneur.

Learn to identify an unmet need
“There is a tendency for scientists to mistake an observation for a need,” says Fahey. But observing a problem is only the first step—identifying the need takes defining the source of the problem. If a physician is struggling to insert a catheter, for example, an observer might conclude that the physician needs a better catheter, Fahey explains. However, the “need” in this case is a better way to access the vessel—a problem that could be solved by a different tool altogether. Henry Ford once said, “If I had asked my customers what they wanted, they would have said a faster horse,” Fahey quips.

Don’t try to solve the first need you find, make a list
The Stanford program and at least four other entrepreneurial programs ask their students to rack up a few hundred needs from which to start discussing potential projects. This process teaches students “to digest the observations that [they’ve] made [and turn them] into important clinical needs,” says Venook, who is currently a senior research and development engineer with the Neuromodulation business of Boston Scientific.

Camp out in a hospital
As part of the Stanford program, students spend 6 to 8 weeks at hospitals, speaking with clinicians. “It’s sort of pedestrian to say, ‘To do translation work, you should work with doctors,’ but I think that’s a big key,” Venook says. Getting full access to a hospital can be tough, but there are other options. Look at the literature for an MD that works in your particular area of interest, and introduce yourself. “You would be surprised how open people are to talk about their challenges every day,” says Brenda Jones of the University of Michigan Medical Innovation Center. “You might be turned down [at first], but more often than not, you’ll get someone who’s willing to talk to you,” agrees Fahey.

Visit other labs
Researchers tend to “fall in love” with their own techniques, says Fahey. “Instead of taking your skill set and trying to apply it to everything,” think broader, he says. Visiting other labs, such as diagnostics labs, where researchers are working day in and day out on a particular assay system, and learning about the tools they use can inspire you to think of new ways to solve a problem or improve the efficiency of a particular solution. “Find someone to collaborate with, [and] your likelihood to solve problems is really improved,” Fahey says.

Search the news
Other than talking to doctors, reading the news can reveal great problems in need of solving, says Marie Johnson,ﾠdirector of the Medical Devices Center Fellows Program at the University of Minnesota. “It’s just being a detective,” she says. For example, Medicare recently announced that it will stop covering hospital-acquired infections, Johnson says. That means the hospitals will have to cover the costs, and will likely look for products that effectively decrease the frequency of hospital-acquired infections.

Also, watch the news for adverse events relating to drugs or medical devices and diagnostics, and scan Medicare and insurance company Web sites for appeals, grievances, and issues they no longer cover.

Befriend industry scientists
Next time you’re at a conference, chat with folks from biotech or pharma companies. A great way to find unmet needs is to ask industry experts. “Companies tend to be looking to academia to find the solutions,” says Samara Freeman, a graduate of the UC Davis Business Development Certificate Program.

Ask for anecdotes
Clinicians or industry scientists are often unable to recognize problems or bottlenecks in their procedures and methods. They simply adapt an imperfect technique to get the job done. To identify such unseen needs, ask the clinician or industry professional “to tell stories,” Jones says, “and then listen for workarounds, accommodations, difficulties.”

Search a company’s “needs” lists
Some companies, such as General Mills, detail their specific needs on the Web, where you can view their innovation opportunities directly. For example, a need on the General Mills Website might read: “getting rid of salt” from food products, says Freeman. One possible solution would be to find a salt replacement. Currently, the company has 38 such needs listed on the General Mills Worldwide Innovation Network.

Whittle down quick and dirty
The next step is to narrow your list of needs to a few worthy of more intense follow-up. Unfortunately, “it’s more of an art than a science,” Fahey says. Start by brainstorming solutions to the problems and shelf the ones that don’t inspire an immediate idea. Next, size up your potential market size. On the first pass, “you just have to use rough estimations,” he says. His team, for instance, decided to bucket market size into “small, medium, or large.” All else being equal, go for the product that will reach the largest markets first.

Find your market size on PubMed
It’s not enough to identify people who will buy the technology; you need to have enough customers for the product to make money. To find out how big your market is, identify the prevalence and incidence of the problem your product seeks to solve by scouring the literature on PubMed for epidemiological studies as well as other databases, such as the Healthcare Cost and Utilization Project (HCUP) database, which provides statistics on hospital reports nationwide. Treatments for congestive heart failure, for example, exceed $38 billion dollars annually, affecting about 10% of people over the age of 75. “You can’t just design for one person,” Johnson says.

Make sure you’re worth at least $500 million
In addition to prevalence and incidence numbers, the HCUP database provides cost estimates, which can allow you to estimate how much the problem costs the system. Multiplying these costs by the prevalence numbers you already acquired can tell you how much money is spent on a problem each year. From a venture capitalist standpoint, Johnson says, your product must be worth “$500 million or more.” A viable product could have a small market—if it solves an expensive problem, it could be just as valuable.

Talk to 20 customers
For a solution to be a good one, somebody’s got to use it, says Andrew Hargadon of the UC Davis Business Development Program. In the last stage of the weeklong program, students call the customers in front of the entire class for a final check of their ideas. Hargadon recalls a group that found a way to cheaply measure different types of vitamin D in the blood. When they called a doctor, his “first response was, ‘That’s really interesting,’” Hargadon recounts. His “second response was, ‘You know, I’d never do that.’” Because vitamin D is so cheap, the doctor would rather prescribe a supplement than bother with a test. It’s the “rule of 20,” he says. You can’t “get started in your business until you’ve talked to at least 20 customers that tell you, ‘That’s what I’m looking for.’”

Let the competition guide your strategy
To figure out what you’re up against, check the IP databases on the United States Patent and Trademark Office Web site. If you find something similar to your product, Johnson says, it doesn’t mean you should scrap the idea, but it may affect how you should market it. You could overcome an infringement by paying royalties, or licensing the patent. Alternatively, you may want to contact those companies developing similar products to see if they would be interested in purchasing your idea. “You have to be aware [of what’s out there],” Johnson says. (Your local tech transfer office can likely help with this.)

Watch for up and coming technologies
It’s not enough to look at established technologies, says Youseph Yazdi, director of the Center for Bioengineering Innovation and Design at the Johns Hopkins University—you also have to look at what’s in the pipeline. Products under development represent your future competition, which will affect your marketing strategy. For current information, search the databases of public information on clinical research, such as uptodate.com and clinicaltrials.gov.

VentureXpert by Thomson Financial and VentureOne by Dow Jones Financial Information Services, “are very rich databases,” says Yazdi. They provide detailed information on what companies are currently working on and who’s funding them, but tend to be quite expensive. Check to see if your library has an institutional subscription.

Check the regulatory and reimbursement requirements
Determine which regulatory class your product falls into, says Jones, by checking the FDA Web site. It is important to understand the process of getting your product approved. That will influence your product’s timeline, and affect the overall development costs and potential revenue. Medical devices, for example, are divided into three classes that vary significantly in their regulatory requirements.

Also, check hospital billing codes, Jones adds. Your product may fall under a preexisting code if you are proposing a modification to an existing technology. A technology that requires a new code will be more time consuming and expensive for hospitals, says Jones, potentially making a it less attractive.