A medical device startup had engaged a leading regulatory law firm to guide its FDA strategy.
The client was told their product could be class I exempt, securing the quickest and easiest path to market. While technically optimized from a regulatory perspective, the strategy did not address a more important question: whether the product would succeed commercially under that regulatory category.
The company assumed that avoiding the need for approval would lead to faster business success. Faros identified a critical gap in that assumption: regulatory success does not guarantee market adoption. Furthermore, if the product was class I exempt, it would not receive adequate reimbursement. Worse, it would be lumped in with products that charged an order of magnitude less than the client’s product.
Although their previous Regulatory consultants had identified the most efficient regulatory pathway, they neglected to consider the effect of such designation on its commercial value which, especially in the US, is driven by insurance. While Faros’ approach may take longer to complete, it will assure not only pre-seed (friend and family) funding but also A/B (venture/CVC) funding based on strong ROI.
Faros evaluated the product through a broader commercial lens, looking beyond FDA approval alone.
Rather than optimizing only for the fastest regulatory pathway, Faros encouraged the leadership team to evaluate the downstream business implications of each decision, including reimbursement, physician adoption, fundraising, IP strategy, clinical design, and go-to-market positioning.
In this case, a less desirable regulatory classification (Class II) enabled the client to charge the amount needed to justify their business.
This also had downstream implications on their fundraising strategy, as they needed to raise more to support a longer time to market. However, having a viable path to a profitable business also addressed concerns investors had about their original strategy, thereby increasing their fundability.
