Entrepreneurship can be defined as the pursuit of opportunity with scarce resources. Biomedical and health entrepreneurs do the same thing with the goal of creating value by deploying innovation.
The definition includes three key elements: process, user-defined value creation and innovation.
Most doctors don't understand the difference between an idea, an invention and an innovation. An idea is a thought that sticks in your head. An invention is an idea reduced to practice that may or may not have any economic or commercial value. An innovation is something that is new or done in a new way that gives customers more value when compared to the existing offerings.
There's also a major difference between biomedical entrepreneurship and health entrepreneurship. Biomedical entrepreneurship refers to commercializing drugs, devices, biologics, vaccines, diagnostics or combined products. Health entrepreneurship is about creating value in digital health products or services, care-delivery innovation or new business processes, services or platforms.
Healthcare in the U.S. consists of mostly a sick-care system that accounts for the large majority of the almost $3 trillion in annual spending. The rest is for disease prevention and wellness. Some note that the focus on illness vs. prevention is a primary reason for our cost conundrum. Health entrepreneurship, particularly in the area of digital health—the application of information and communication technologies to manage patients and their care—has exploded. These innovations have the potential to cut costs as they improve quality.
Significant differences exist between the innovation pathways for biomedical and health technologies, including:
- Intellectual property protection is usually of more importance in the biomedical sector. Digital health technologies rely on speed to market and rapid scaling as a barrier to entry.
- Regulatory approval can be a long, expensive and risky process for drugs and devices. That applies to digital health, too, but is often less onerous.
- Reimbursement and payment for biomedical innovations are often dependent on getting the appropriate payment codes and third-party payments high enough to generate a profit.
- Business models differ between the two and are constantly changing.
- The amount of capital necessary to get a drug or device to market is frequently higher than the capital needs of health innovation by several orders of magnitude.
- The Food and Drug Administration may not have jurisdiction over many health innovations—for example, a digital health app that is not deemed to be a medical device but rather something that provides information and education to users. Other regulatory agencies, such as the Federal Communications Commission, are also involved. For example, whether Internet neutrality is maintained will have a significant impact on the design, development and deployment of digital health technologies such as telemedicine, remote sensing and medical information portals.
- The targeted customers vary depending on whether you are offering a biomedical or health product.
- The ability to validate your business model using the Lean startup method will vary and can be more challenging for biomedical innovators.
- Biomedical entrepreneurship often requires a different skill set than health entrepreneurship. For example, biomedical entrepreneurs must navigate intellectual property, regulatory and reimbursement hurdles that are much higher than others, so they need the knowledge, skills and abilities in those domains to confront the issues. Digital health physician entrepreneurs rely on rapid technological innovation, speed to market and quick adoption and penetration, scaling quickly, to achieve a dominant market position. Consequently, medical marketing and social media skills are critical.
- Biomedical entrepreneurship is riskier. One big reason is that, unlike most digital health products and services that do not require demonstration of safety and efficacy, medical tech and biotech entrepreneurs must demonstrate clinical efficacy. That involves expensive and time-consuming clinical trials, which fail in a substantial number of cases. A failed trial can sink the prospects of a product ever making it to market.
Biomedical and health entrepreneurship are major economic drivers, in the U.S. and abroad. While they vary in significant ways, both are part of a continuum delivering value to patients, the entrepreneurs and their investors, local and regional economies, and U.S. global competitiveness. These innovators, including a growing cadre of physicians, are on the front lines of the battle against disease and disability. Patients and their doctors are seeing the results of that work every day.