Every good thing has an end. Bringing a new medical product to the market is a journey that should be planned with a certain point in the future as a divergence to another path. Most innovations will start with a small team, perhaps with the backup of a few investors. At some point some members of the team may want to move on, or the investors may want to recoup their investments, or you may want to shift your attention to something else. An exit strategy is important in defining how this will happen while giving the best returns.
Accordingly, you can take on any one of these exit paths;
Make the innovation a cash cow
This is the path to take if you would like to retain control of the venture and the direction of your innovation. It involves streamlining the distribution channels, coming up with an effective and lean corporate structure that can compete in the industry. One common strategy involves ceding day to day management and retaining a supervisory role.
Do an Initial Public Offering (IPO)
An IPO is a way of ceding some control of the venture while raising more capital for the venture. This involves listing the business on the stock exchange for members of the public including individuals and private companies. You could sell half the shares in the business and remain with a controlling majority if you would like to retain a dominant say in the affairs of the company. An IPO comes with more scrutiny which might be a threat to your trade secrets.
Merge or Acquire
A merger involves joining together with an entity with the same objectives to have a larger pool of resources, or to enable smoother sharing of resources. This is very common in the medical world, with most of the big pharma having undergone several mergers e.g. GlaxoSmithKline Your lawyers will work out a new corporate arrangement with varying degrees of control. An acquisition involves buying another entity to access its resources including patents and innovations. The acquired business is completely absorbed and has little say in the new formation.
This is a simple sale of the innovation to an interested party without much fuss about retaining ownership in the new entity. This could be from an irresistible offer or simply a plan for complete retirement from the industry.
An exit strategy is an essential component of any business plan. It gives you a sense of what to do when your innovation is firmly in the market.