Phase Gates in Medical Innovation

Medical innovation has dramatically changed the way the Healthcare industries manage and treat diseases. Technological advances have driven the innovation of new equipment, drugs and medical procedures, thus saving countless lives and enabling humans to live longer and healthier lives.

Investment in medical innovation drives the advancement of the Healthcare industry. These investments provide growth opportunities not only for organisations, but for society. It has become both a vital and valuable economic activity throughout the world.

Phase Gate processes are a staple for successfully delivering new innovations in the Healthcare industry. These processes have proven to be crucial in the industry for providing guidance in delivery, right from the ideation stage to commercialisation. Though very successful, these processes currently focus only on product and technical development activities and scope delivery. Rarely do these processes provide guidance to investors on front-end activities such as opportunity assessments.

Developing a Medical Innovation framework that emphasises on the investment lifecycle of new innovations is key to expanding capital investment and growth in the industry. Establishing this framework provides clarity in risks of new ventures whilst supporting organisations to manage time, cost, and the complexities of the highly regulated industry.

A clear framework to address this was developed through a comprehensive study by Souenksen and Yadzdi from their paper Stage Gate process for life sciences and medical innovation investment. In their paper, they developed a Phase Gate model that promotes investment in medical innovations through early stage risk mitigation. It forms and emphasises on how new innovations are proposed and evaluated.

The Proposed Investment Model

The Phase Gate model proposed by Souenksen and Yadzdi does a great job in describing an otherwise complex process. The model defines the strategy for organisations and investment groups to embark on investments into medical innovations. The model involves four phases each separated by decision gates. Each phase defines activities that reduce the risk of the innovation for investors, thus boosting the level of confidence that the right investment decision is being made.

The four phases bring new innovations from establishing a vision, deciding on a strategy to portfolio management, evaluation and exit.

  • Stage I: Vision and Investment Strategy

The initial phase in this process is to establish a strategic focus and vision. With this approach, investment goals, commitment and portfolio metrics are defined from the start and drive the innovation moving forward. This process also establishes an end-to-end stakeholder network within the process to ensure all perspectives are accounted for throughout the process.

  • Stage II: Venture search, screening, and rapid pre-evaluation

The second phase involves information gathering and venture searches with quantitative filtering. This is supported by stakeholder advisory and evaluation checklists. The outcome of this phase is the final prospect selection after which due diligence agreements are formed.

  • Stage III: Due diligence and negotiation of terms

The Due Dilligence phase involves the full evaluation of Investor Packages from potential ventures. Investor Packages can be developed based on a standard process to ensure full transparency of information is available throughout for all prospects in the evaluation process.

  • Stage IV: Portfolio Management, Evaluation, and Exit

Upon the final venture selection, Portfolio Management is required for ongoing management of performance against the established metrics. Ongoing monitoring of investments allows investors to re-evaluate a given investment and re- investor exit based on performance.

This framework introduces a robust and transparent process in medical innovation investments. The goal of this process is to minimise perceived risk in a complex industry with stringent regulations. This will support the economic growth in the industry with limitless social benefits.


Syazwan ShahBusiness Analyst at Axceligent Solutions

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