How Much Does it Really Cost to Develop a Medical Device? A Conversation with Kapstone Medical's Experts
Hayden Kapitan, Business Development Executive at Kapstone Medical, recently sat down with Brogan McGuire, VP of Engineering, and Justin Rowland, VP of Business Development, to tackle the perennial, million-dollar question (hopefully not literally): How much does it actually cost to develop a medical device? Here’s their enlightening discussion.
Hayden: Working with start-ups powered by passionate entrepreneurs, who may or may not have experience in the medical device industry, we get this question all the time. We've seen some estimates out there, including one recently that cited an astronomically large dollar figure.
Justin: That team must not have known what they were doing!
Hayden: While we know there is going to be some variance, Brogan, you've been a part of many product development teams launching new devices. What's the lowdown?
Brogan: Let's circle back to a specific answer at the end of our conversation, but first, why don't we establish the factors that lead to a wide range of total costs?
Innovation
Brogan: If the device is novel, it may require numerous iterations. There may be tricky manufacturing, assembly, or material challenges to figure out. If it was easy, someone would have done it already, right? That mantra applies here.
Testing
Brogan: Testing is a critical component of medical device development and significantly influences both costs and timelines. Depending on the device, testing can range from basic bench tests to complex clinical trials. Bench testing involves lab experiments to ensure the device performs as intended. This stage can uncover design flaws or performance issues that require additional development work. Animal studies might be needed to demonstrate the device's safety before it can be tested in humans, adding more time and expense. Clinical trials, which test the device on humans, are the most costly and time-consuming. These trials must adhere to stringent regulatory standards, and any issues that arise can delay progress and increase costs. Each phase of testing is essential to ensure the device's safety and efficacy, but they also extend the development timeline and add to the overall expense.
Regulations
Brogan: Regulations sometimes change, and while it's rare that a bomb will be dropped by the regulatory bodies at the start or middle of a project, even an expert consultant can't predict every detail that will need to be addressed or every question the FDA will ask. We'll do our best.
Manufacturing or Supply Chain Challenges
Brogan: Manufacturing and supply chain challenges can also play a significant role in the overall cost and timeline of medical device development. Once a device design is finalized, setting up manufacturing processes can be complex. This includes creating molds, developing assembly lines, and ensuring that all manufacturing processes meet regulatory standards. Supply chain issues, such as sourcing high-quality materials or dealing with supplier delays, can also impact timelines and costs. Additionally, scaling up production from prototypes to full-scale manufacturing often requires substantial investment in equipment and facilities. Any disruptions in the supply chain, such as material shortages or logistic delays, can cause significant setbacks and add to the costs.
Justin: Great list, Brogan. I'll add in a fifth, "catch-all" category: There will always be unknowns that come up. COVID-19, a hurricane affecting a facility (I kid you not), political or environmental changes—those can affect medical device product development.
Partnering with an expert or team that has done new product development (NPD) many times will help decrease the risk, but even a team like us here at Kapstone, who have done it enough times, can tell you it's impossible to nail down the exact timing and cost.
Hayden: OK guys, so even a company like Kapstone that has completed decades of medical device projects should be able to give at least an unofficial number. Even if it's not apples-to-apples for every medical device project, what is the ballpark?
Device Classification and Cost Estimates
Justin: Let's try to categorize or group it by device class. I'll base this on FDA classifications. We'll assume starting more or less from scratch and going through FDA clearance/approval. Anything beyond that depends on the go-to-market strategy and costs with launching. These estimates include labor, materials, testing, etc.
- Class I (the least risky): For a 510(k) exempt but non-GMP exempt device, this is really device-dependent. We've done truly simple, one SKU systems. Total costs could be $200k to get to market and maybe 12 months best case (not including production runs).
- Class II (middle risky): Assuming a 510(k) and middle of the range complexity, ballpark $500k but could run north of 7 figures if clinical testing is needed or desired. Best case is 18 months but typically ends up running longer.
- Class III (most risky): This could be a wide range. At a minimum, for a me-too device, it is probably $1.5M. If truly innovative and clinical trials are needed, easily north of $5M. This is on the order of 3+ years and usually closer to 5.
Brogan: I think these are good ballpark estimates. There may always be things that come up, but generally, we at Kapstone can come up with an estimate in a project proposal and lay out the details in a project plan before we start the project in earnest.
Hayden: For startups asking this question of how much is needed, the product development process is typically phase-based. While we would ideally have all of the funding guaranteed up front so that there aren't any pauses in the middle, we can break up the process to make it "bite-sized" as we go along, in order to minimize the risk for all involved.
Developing a medical device is a complex and multifaceted endeavor, influenced by numerous factors ranging from the novelty of the device to regulatory hurdles and unforeseen challenges. Testing lead times and manufacturing challenges are significant components, contributing to both the overall cost and timeline of the project. While it's impossible to pinpoint an exact cost and timeline, understanding these elements and partnering with experienced professionals can provide a clearer path forward. At Kapstone, we pride ourselves on our expertise and our ability to navigate these complexities, ensuring our clients have the best chance of bringing their innovative devices to market efficiently and effectively.
