510(k) Review Times Increase Because of Poor Submissions

FDA recently released a report analyzing 510(k) review time. The analysis showed that review times have increased due to the poor quality of data and information provided as part of the 510(k) submission. FDA requests for additional information from submissions steadily increased from 38% in 2001 to 77% in 2010. Requests for additional information obviously increases review time.

CQ has been involved with quite a few 510(k)s during this period of time, ranging from large to early stage start-up medical device companies. Some of the companies we’ve worked with were submitting their very first 510(k), while others were “old pros”. Based on my experiences and anecdotes from my business partner, I definitely agree with the conclusions of this analysis. There were some 510(k)s that probably lacked key data and information. And we received requests for additional information from FDA. The submissions which were more thorough had quicker reviews. Yes, sometimes these also received requests for more information. However, these cases were usually handled via email correspondence and phone calls, all while not stopping the review time clock.

Start-ups seem especially anxious to submit a 510(k) to FDA, usually because this milestone is directly linked to a fund-raising event. I blogged about this some time ago. I think the more meaningful milestone is 510(k) clearance but understand somewhat why there is emphasis on the submission. Regardless, the FDA analysis indicates quality of submission has a direct correlation to review time. Start-ups (and others submitting 510(k)s) take note.

You can read a couple other posts on this topic by clicking the links below:

New FDA study: Insufficient 510(k) submissions causing bulk of 510(k) review delays

FDA 510(k) Reviews Result in More Questions Than Ever

 

Venture Capital vs. Boot Strapping

Venture capital (also known as VC) is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made in cash in exchange for shares in the invested company – typically those in the high tech or biotech industry. Venture capital firms typically comprise small teams with technology backgrounds (scientists, researchers) or those with business training or deep industry experience who pool their money.

Bootstrapping refers to a self-sustaining process that proceeds without external help. Therefore no VCs are involved and the company is built on it’s own and is the most common way to create a start-up. In fact, the use of private credit card debt is the most known form of bootstrapping. There is considerably more risk for the founders when bootstrapping, but the absence of any other stakeholder gives the founders more freedom to develop the company. Hey, if Dell can do it so can you!

There are different types of bootstrapping:

  • Owner financing
  • Minimization of the accounts receivable
  • Joint utilization
  • Delaying payment
  • Minimizing inventory
  • Subsidy finance
  • Personal Debt

SO, our question is this — does the kind of money you receive affect your company’s trajectory & it’s milestones? What are your thoughts?

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Is Now A Good Time to Start A Business?

Last week, I attended the Indiana Biomedical Entrepreneur Network where we discussed whether the current economy provided a good platform for starting new businesses. There are definite strengths in starting a business, for example:

  • cost of doing business is lower in Indiana
  • the economy presents new opportunities to reset your priorities and gain access to new resources
  • the economy brings potential customers with new problems that need new solution

In reality, anyone can submit the necessary paperwork to “start” an Indiana business. In fact, there seems to be a direct relationship between business layoffs/cut backs and an influx of new start-ups. But, being out of work is not a good enough reason to start a business and starting a business is not the same as sustaining a business. As the stats for small business start-ups show, sustaining your business isn’t a walk in the park, regardless of the industry.

Small Business Openings & Closings in 2008, according to the U.S. Small Business Administration Office of Advocacy, September 2009:

  • 627,200 new businesses, 595,600 business closures and 43,546 bankruptcies
  • 7 out of 10 new employer firms survive at least two years, and about half survive five years

The bottom line is that anytime is a good time to start a business as long as you have a strong VALUE PROPOSITION – regardless of the economy.

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