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A Review of Success Factors in NPD: Medical

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Proceedings of the 2011 Industrial Engineering Research Conference
T. Doolen and E. Van Aken, eds.

A Review of Success Factors in NPD: Medical Device Domain

Lourdes A. Medina
Department of Industrial and Manufacturing Engineering
Pennsylvania State University
University Park, PA 16802, U.S.A.

Richard A. Wysk
Industrial and Systems Engineering
North Carolina State University
Raleigh, NC 27695, U.S.A.

Gl E. Okudan Kremer
Department of Industrial and Manufacturing Engineering
School of Engineering Design
Pennsylvania State University
University Park, PA 16802, U.S.A.

Abstract
The success of new product development (NPD) is impacted by a variety of factors that include characteristics of the
product, development process and environment. For medical devices the problem is more complex due to its high
regulated nature and the restrictions these regulations impose on the development process. The Food and Drug
Administration (FDA) has been reported as the first external factor affecting companies' ability to develop new
medical technology. This paper provides a review of empirical evidence literature describing the success factors for
the development of medical devices. The main factors are identified and analyzed in detail through a discussion of
the metrics that could be used for their assessment. Some of the factors identified include: the products complexity
or technical challenge, the experience of the development team, the user involvement, the use of financial analysis in
the development process, and the completeness of the development process.

Keywords
New Product Development, Medical Devices, Success Factors

1. Introduction
New products are developed continuously to satisfy consumers needs, respond to competitions actions and replace
products in their matured stage. Companies also pursue new product development (NPD) to obtain competitive
advantage from developing new technologies or creating new markets. NPD is important for companies to stay
competitive and grow. However, along with the benefits of introducing new products there is a risk of failure,
therefore conducting an effective NPD process is essential.

Success is not a result of just developing a good product. Many researchers have conducted conceptual and
empirical research in an attempt to define NPD success factors [1]. Most studies are survey based, and success is the
result of rating how it is perceived in general or with a basis on specific factors, e.g. meeting the expected profit,
sales, and deadlines. Overall, the measure of success has not been consistent between studies. The results from these
studies show that a variety of factors impact the success of new product development (NPD), which include
characteristics of the product, development process and environment.

In the particular case of medical devices the problem becomes more complex due to the highly regulated nature of
these products and the restrictions these regulations represent for the development process. The Food and Drug
 Medina, Wysk and Kremer
Administration (FDA), which is the regulatory agency for devices to be marketed in the US, has been reported as the
first external factor (1) affecting companies' ability to develop new medical technology and (2) influencing
companies product development priorities [2]. In contrast to the numerous empirical studies on success factors for
NPD, a limited number of studies address the medical device industry. This paper summarizes the literature with
empirical evidence on the success factors for NPD and medical device development, discusses the subjectivity of
such studies and proposes the use of objective metrics for future studies.

2. Success Factors
For more than 30 years, empirical studies have been conducted to define the success factors in NPD. This section
provides an overview of NPD factors, in particular for the development of medical devices. Most of these studies are
survey based, with responses from the industry about their practices. A common approach is to provide a set of
questions that are answered based on two products, a more successful and a less successful product.

2.1 NPD
Ernst [1] reviewed and summarized the empirical literature, from 1979 to 2001, that addressed success factors in
NPD. The studys selection criteria excluded external and internal background data, and focused on factors that
could be influenced by management. Ernst [1] divided the review into five categories that are considered success
factors in NPD: (1) NPD process, (2) organization, (3) culture, (4) role and commitment of senior management, and
(5) strategy. Ernst [1] identified consistencies between the different publications and summarized what he
considered to be the success factors. Table 1 provides a summary of the results, with details for each category.

Table 1: Summary of Ernst [1] identification of success factors of NPD

The existence of a NPD process contributes its success when it is formal, comprehensive and is conducted
professionally. This is especially relevant for the evaluation and selection of new ideas, development, and
introduction into the market. At the same time, the type and strength of a projects organization for NPD has a very
clear impact on its success. Specific characteristics of the organization are recommended in the table above. The
cultural aspect is addressed frequently in terms of the successful work of product champions. However, Ernst [1] did
not found clear evidence of a relationship between the successful work of product champions and the companys
culture. Meanwhile, a study of French and German product champions demonstrated that the characteristics differed
based on their national culture [3].

Other cultural aspects are also addressed, e.g. Cooper and Kleinschmidt [4, 5] identified entrepreneur climate as a
relevant factor. Similar to the companys culture, the role and commitment of senior management is identified as a
success factor in NPD, as it relates to the senior management support and resource allocation. Specifically,
accountability of senior management is recommended, including defining and monitoring goals and providing
monetary incentives for their completion. Finally, Ernst [1] addressed the NPD strategy as a topic barely examined
by the literature. It has been shown the importance of having a product strategy, a program with strategic focus, and
setting and communicating goals.
 Medina, Wysk and Kremer
2.2 Development of Medical Devices
In addition to the NPD studies, researchers have done empirical research with focus on particular industries. This is
the case of the medical device industry, where six publications are identified and summarized in Table 2. Consistent
with the studies analyzed by Ernst [1], these studies are focused on internal factors that are under the controls of
management. Note that first two studies [6. 7] correspond to the same data set. The majority of these studies, with
the exception of Lucke et al. [8], are survey-based studies conducted in a specific industry with data collection in a
variety of countries. Lucke et al. [8] followed multiple projects over a period of seven years. Only two of the studies
described a specific type of device as their sample, which included: electro-mechanical systems that are external,
non-implantable and with embedded software [8], and surgical, medical and dental instruments and supply industry
with Standard Industrial Classifications (SICs) 3841 and 3843 [9]. In most cases, the surveys were distributed to the
major number of industries within the selection criteria through different venues. However, Millson and Willemon
[9] performed a simple randomization (without replacement) to select the industries to target. The sample was
further reduced by the companies willing to participate and the ones that provided a response.

The type of analysis ranged from very simple graphical representations to more detailed analysis. Some of the
statistical considerations included survey assessment through Cronbachs , correlations of less/more successful
products, Spearman non-parametric correlations (in some cases bivariate), and one-way analysis of variance.
Diverse success measures were used as the independent variable, with the same inconsistency problem observed in
the NPD studies. The success metrics included an assessment of general and specific expectations. Rating methods
were used to evaluate the expectations of meeting objectives of profit, sales, minimum acceptable levels, time,
budget, production schedule and shipping deadlines. Other success measures included the comparison with recent
products and the degree in which the new product represents an opportunity by creating a product category, a new
market (to the firm or overall) or a new technology. Lucke et al. [8] looked at success in terms of the time to market,
and their objective is to demonstrate the importance of experience in the time to market.

Four studies were focused on the definition of success factors. The other two studies were focused on practices
followed by the industry with no indication of a success effect. The factors found to be relevant from the literature
are summarized: (1) completeness of the NPD process [10], (2) perform preliminary market analysis and market
study [10], (3) use of financial analysis [7], (4) end user/customer involvement [7, 9], (5) dissemination of NPD
priorities to staff [7], (6) NPD proficiency [9], (7) experience [8], and (8) technical innovativeness rated through the
complexity/technical challenge [7]. Millson and Wilemon [9] provided details of the customer involvement aspect,
finding positive relationships between: (1) the customer integration in the entire NPD process and entering existing
markets with new products, (2) customer integration during the predevelopment stage and new product success and
new products for existing markets, and (3) customer integration in post-launch activities and the sales of new
products. In contrast to the factors identified for NPD, these factors include components of the NPD process (1, 2, 3
and 4), and organization characteristics (5, 6 and 7). The complexity/technical challenge is not addressed in the NPD
literature reviewed.

While the only external factors in these studies were the customers, the Advanced Medical Technology Association
(AdvaMed) performed a survey to their member companies that focused on external factors of medical device
development. Figure 1 and 2 show their results, which include the top ten factors that affecting companies' ability to
develop new medical technologies and influencing companies' product development priorities, respectively. In
Figure 2 only three factors are repeated from Figure 1: (1) FDA regulation requirements, (2) Medicare coverage and
reimbursement requirements, and (3) availability/cost of capital funding. The FDA regulatory requirements are the
top factor affecting and influencing companies, which responds to the importance of the regulated nature of medical
devices. In both figures, most of the factors are directly related to cost and profit, with the exception of the FDA,
international regulation requirements, intellectual property (IP) protection issues, and overseas market opportunities.
Still, the FDA regulation requirements have associated costs, due to their requirements to perform clinical trials and
the direct costs of submission. In 2007 device manufacturers had to pay $4,158 for Pre-market notification (510(k))
submissions and $281,600 for Pre-market approval (PMA) submissions [11]. While there may be many IP issues not
necessarily related to cost, acquiring a patent is a time consuming and costly process. The patent cost ranges from
$5,000 for relatively simple inventions (e.g., electric switches, paper clips); $10,000 for intermediate complexity
inventions (e.g., simple software, simple RFID device); to more than $15,000 for highly complex inventions (e.g.,
MRI scanners, telecommunication networking systems) [12]. In summary, these costs should be addressed as part of
the financial analysis.
 Medina, Wysk and Kremer
Table 2: Summary of empirical research on medical device development
 Medina, Wysk and Kremer

Figure 1: Top ten factors affecting companies' ability Figure 2: Top ten factors influencing companies'
to develop new medical technologies product development priorities
(Source: AdvaMed [2]) (Source: AdvaMed [2])

2.3 Discussion
While survey-based studies continue to be applied to define success factors in NPD and specifically for the medical
device domain, in these studies subjectivity is a common concern. The results are impacted by the form in which
questions are asked along with the interviewers and the respondents interest for a particular outcome. Empirical
research has shown that the organization position of the respondent leads to an informant bias; this bias may account
for more than 30% of the total variance [1]. The informant bias would concern those studies assessing
organizational characteristics for the correlation with success. Meanwhile, there is also the subjectivity of the
success measure. In the medical device literature success is measured using rating methods to assess the
expectations of the respondents. Some of these studies use specific criteria as a guideline to rate the expectations.
However, the ultimate outcome is still a subjective rating. Further, the use of single respondents per company is
questionable, as this represents a systematic measurement error [1]. This problem is solved with multiple
respondents per company and the application of appropriate methods. In practice, obtaining many responses is a
challenge for survey-based studies.

The shortcomings of this empirical research for NPD are also addressed in terms of the methodological frameworks
used for data collection and analysis [1, 13]. Some specific observations include that these studies provide a flood
of confusing findings [1], making it like a fishing expedition [13] with too many variables, too many factor
analysis, and extensive bivariate testing procedures. Ernst [1] specifies that there is a need for more rigorous
statistical techniques and consistent measures for success and the degree of innovation between studies. Consistency
is necessary for comparability between studies. Due to the inconsistencies between studies, this study was not able
to confirm conclusions from any of the studies in the medical device domain.

Given the limitation of survey-based studies in the current literature, there is a need for more objective metrics in the
evaluation of success factors for NPD and the medical device domain. To motivate research efforts in this direction,
Section 3 provides a discussion on how to improve the current metrics to be more objective.

3. Metrics
This section provides a discussion of the metrics that can be used for the assessment of the success factors identified
for the development of medical devices. The discussion includes the metrics of success and the factor categories of
NPD process, organizational characteristics, complexity/technical challenge and the FDA regulatory requirements.

3.1 Success
The assessment of success in the medical device literature is based on the rating of the perceived success in general
or the expected success with a basis on specific criteria. Still, the measure of success is subject to the respondents
goals, perception and expectations. Many of the criteria used in the definition of success are quantifiable and could
be evaluated objectively. Some of these criteria include: profit, sales, minimum acceptable levels, time, budget,
 Medina, Wysk and Kremer
production schedule, and shipping deadlines. In fact, profitability is identified as an important aspect of success from
the point of view of management science [1]. The use of these values directly would be more consistent than the
current ratings that are based on expectations and may differ by company and respondent. However, normalization
of this data will be necessary to account for the analysis of different products and markets.

3.2 NPD process

The success factors that are directly related to the NPD process include the completeness of the process, the end
user/customer involvement, and the execution of a preliminary market analysis, market study and financial analysis.
To measure the completeness of the NPD process, the definition and description of process components is necessary
in order to account for their execution in the development of a particular device. Likewise, the end user/customer
involvement can be measured from the stages in which the customer is involved. Still, a more detailed measure
could be developed to address the degree of customer involvement considering the extent to which the customer
feedback is used. Finally, the execution of a preliminary market analysis, market study and financial analysis
corresponds to a simple yes or no question, while it would be interesting to have more details about the quality with
which these processes are performed.

3.3 Organizational characteristics

The organizational characteristics of dissemination of NPD priorities to staff, NPD proficiency and experience have
to be measured through surveys-based methods. Evaluation reports of employees and some performance metrics
may be considered to increase the objectivity of this process in this process. Years of experience and learning curves
can be considered to quantify the staff experience and capabilities.

3.4 Complexity/technical challenge

The empirical research discussed for medical devices development measure complexity with two rating frameworks.
Lucke et al. [8] uses the complexity as part of the calculation for expected development time (Expected
Development Time = Design Complexity x New Clinical Application x New Technology), which is measured with
a simple ranking of 1-3 with 3 representing the scenario of most complexity. This measure is too general and
subjective, and is not necessarily appropriate for the calculation of development time. Brown et al. [7] shows the
relevance of the products technical innovativeness with a rating of the complexity/technical challenge. They
measure this complexity with a rating of four categories: minor upgrade, major upgrade, new-product existing
technology, and new-product new-technology. Both of these measures of complexity are not complete, missing
components of complexity that can be easily quantified objectively such as: context of use, number of components
and number of functions.

3.5 FDA regulatory requirements

The regulation requirements can be measured after identifying the classification that the particular device is assigned
to. This classification will determine the regulatory class, which further specifies the submission type. Figure 3
provides an overview of the FDA regulatory requirements framework.

HDE
Submission Traditional PMA Modular PMA Streamlined PMA
FDA CDRH Type
Classification of PMA
require
Generic Types of Class III include
Devices Traditional 510(k) Abbreviated 510(k) Special 510(k)
Class III
Preamendments require 510(k)
are assigned to
Devices must demostrate SE

Regulatory require
Class II may Post-market Surveillance
Classes Special
could include
Controls Mandatory Performance
be
Standards
Limitations
are 510(k) Exempt of Device
require mostly Special Labeling Reqs.
releases Exemptions
compliance
Class I from
with could be
Reserved Device
could
have GMP/QS require
General includes Exemptions
Controls includes GMP/QS

Adulteration Misbranding Banned Devices Notification Restricted Devices Device Registration & Listing Records & Report

Figure 3: FDA regulatory requirements framework

 Medina, Wysk and Kremer

4. Conclusion
A review of the literature with empirical evidence on the success factors for the development of medical devices is
provided, addressing both internal and external factors. Eight factors are identified as the most relevant, and the
metrics for their consideration are discussed. A graphical representation explains the FDA regulations framework.
Future research efforts include the development of robust metrics that characterize the success factors in the
development of medical devices. Other research directions for this study include a more detailed examination of
external factors effects in the success and decision making process.

This paper further shows that there is a gap in the medical device literature; there is a clear need for studies solely
based on objective data and from non survey sources. The access and availability to this data represents a major
challenge due to the regulated nature and intellectual property issues of medical devices. Current research efforts,
not explained in this paper, include the use of objective data to study a specific success factor in the medical device
domain.

Acknowledgements
This work was conducted with the support of the Center for Integrated Healthcare Delivery Systems (CIHDS).

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