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12/04/2015

Why Are Investors Running Away from Medical Devices?

Photographer: Munshi Ahmed/Bloomberg

Photographer: Munshi Ahmed/Bloomberg

Sabin Russell wrote a great piece in Health Affairs recently, on the drought in investment to develop new medical devices. Read it if you have access. If you don’t, here are some of her main points.

1. Venture capital for device manufacturers has been drying up for a while: “‘For five years, this industry has been in a world of hurt,’ says longtime venture capital investor Jonathan Fleming.”

2. The slowdown is partly the fault of the FDA. Russell describes the experience of NeuroPace, a company making an implant to short-circuit seizures:

“With clinical data in hand, the company applied for FDA approval in early 2010, but it took the agency nearly four years to grant it. ‘They were nonresponsive, arbitrary, and they didn’t hold to their own timelines. It was close to an adversarial relationship,’ says Fischer, who has shepherded products from four different implantable device companies through the FDA’s Premarket Approval (PMA) review process in three decades. ‘In my mind, it took a lot longer than it should have.’ The lengthy review time strained the company’s finances and will continue to pinch until NeuroPace reaches profitability.”

To read the rest of this article, please visit Forbes.

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