The Finnish health-tech industry continues to hit new records year after year. With €1.92 billion in exports last year, it is now the largest high-tech export segment, and its growth seems to be limitless.
But what is actually behind the health-tech hype, and what does it take for a new company to break into the global market?
To get these answers directly from the insiders, we met two passionate entrepreneurs, Tuomas Neuvonenand Jani Virtanen, co-founders of the medical device company Sooma Oy. Their first product, a brain stimulator device called Sooma tDCS™, is already on the market throughout Europe and Asia for the treatment of depression. How did they make it in just a couple of years after the company was first founded?
The story began in 2009, when Neuvonen and Virtanen both worked at a neurostimulation company called NexStim. Although Virtanen left the company earlier, they continued a tradition of having their lunch breaks together. During these breaks they enjoyed insightful discussions on brain stimulation research—this is where the idea of Sooma was born.
According to The Finnish Health Technology Association, currently more than 300 companies operate in the health-tech sector. In addition to a handful of well-established global players, a vibrant start-up scene has recently been born. One bright example of this is Sooma’s home base, The Health Innovation Village, a start-up ecosystem founded by GE Healthcare.
After Sooma was founded in 2013, the speed of development has been fast. When asked where the achievements stem from, Neuvonen and Virtanen mention the initial success in funding and being a step ahead—always whenever possible. This has meant active networking with researchers and physicians even before the device prototype saw daylight.
But most importantly, Sooma’s team had something that many others in the field were lacking: “When you look around, almost none of the start-ups have the know-how on quality issues and design control. If you have to outsource these, it gets very expensive—and slow,” notes Virtanen.
Currently, Sooma employs six persons. In addition, they have outsourced device manufacturing from their own basement to Innokas Medical, and they utilize external help for sales and marketing. This also seems to be the case for many other Finnish companies, as a recent report states: “There will be even a thousand new positions available in the health-tech sector in 2016—and most of the jobs will require skills in software programming, or sales and marketing.”
Development from the first idea into something that the company can actually sell doesn’t always proceed smoothly.
The bottleneck for Sooma, and also for many other newbies in the field, was the regulatory approval of the product: “It can be a very tough situation for a start-up to sit and wait for the third party’s decision—especially if you don’t have anything else to sell in the meanwhile,” describes Neuvonen. Sooma’s device was granted the critical CE-label after 9 months of waiting, and intensive sales activities began immediately:
“Currently, our key focus is to prove, both to ourselves and to the investors, that we can really sell the product.”
But how do you actually break into the global health-tech market with a new product and only a handful of people? Sooma’s team was happy to share what they have learned during the journey.
Key Elements of Success in the Global Market:
- Generate and deliver high-quality data
- Understand the local market and its dynamics
- Develop and offer a user-friendly application
No matter to whom and where you are selling the product, it always comes back to the need for high-quality data. Even more importantly, success depends on how well you deliver that message:
“We have to be able to offer the information in a form that is easily understandable by the customers, who might not be familiar with the technology,” says Neuvonen. He continues: “The customers always want to know the outcome; what they can actually get out of your product in clinical practice.”
This leads us to lesson number two: understand the local market. Although market analyses might be helpful, the best feedback comes only by being present and understanding what the customers are really thinking about.
For Sooma, this has meant attending exhibitions around the world to network with locals as well as competitors. Sometimes the feedback was very practical, such as the need for smaller head caps in East Asia. Or the country might have a different balance between private and public healthcare systems, which means adjustments to the sales strategy. In most cases, these are things you can only learn by doing.
And finally, the advice that every start-up company should consider from very early on: make your application as user-friendly as possible. For a team full of engineers, this can be a major challenge. But thanks to critical discussions with investors and early trials in real-life settings, Sooma’s prototype—a large black box with complex functionalities—has evolved into a light-blue hand-sized device with a single function. This can be difficult, Neuvonen admits:
“To be honest, we are secretly proud that we were able to kill our inner engineers—we only kept the things that were absolutely needed.”
Indeed, usability is the key to success, as labor costs are the greatest expense in the clinical setting. The simpler the product, the less resources are required.
Finally, it is easy to share Sooma’s optimistic view of the future. For them, it means broadening sales, and maybe launching the next innovative product. For the Finnish health-tech sector, which manufactures and develops the vast majority of its products domestically, it means a growing need for motivated experts. With various skills, they will be ready to respond to the demand for innovative healthcare solutions—and the need exists already, as Virtanen concludes:
“We are pretty sure that there are plenty of customers for everyone in the field.”
Sooma Oy is a medical device company founded by Tuomas Neuvonen (CEO) and Jani Virtanen (COO) in 2013. The company develops non-invasive brain stimulation devices that can be used for the treatment of neurological and psychiatric disorders. Their first product, Sooma tDCS™ device, is CE approved for the treatment of major depression.