Grey literature, as well as business developers (Appendix 2)

69 _{Actually, three strategies exist: inshore, nearshore, or offshore production.} 70 _{€2 million has been estimated by experts, Appendix 2.}

the benefit that all knowledge and know-how will remain within the company, but for the cost of investing in the development and execution of a production line. Additionally, other implications have to be considered as well: quality control must be developed in included in the production process, more investments will be made in labour costs, and the liability for wrongfully produced systems will pose a significant threat. A multifold of literature has been written depicting the decision criteria for either one69 _{of these strategies (Meixell and Gargeya, 2005; Kremic et al., 2006; Antràs and Helpman,}

2004). In this case, the decision to in- or outsource should be made by the company. Additionally, the development of a supply chain incorporating in- or outsourcing processes (in which even parts of the production can be in- or outsourced) is not relevant to the research questions, and therefore not included in the scope of this assignment.

15.8 FINANCIAL CAPITAL

The financial capital perspective looks at the necessary investments that need to be done, the business model and business case describing how the company can capitalize on the solution. Investments necessary in this phase of the development, depends solely on the decision of the company to outsource or self produce. The cheaper option would be to outsource the production70_{, mainly due}

to the fact that production assets are incredibly expensive. In this phase, the business model is one- sided. The company delivers the product to the consumer, and the consumer pays for the product or for the analyses provided by the product. Ideally, the consumer allows the company to gain access to the individual analyses of the consumer which are anonymously added to the database. If this access is allowed, the company will become able in phase two to start with the clinical validation of the system as data from several customers over a long period of time is available. As this is quite essential, the company could opt for a reimbursement for the collection and usage of data. The thought process here should be that in the future this database becomes more valuable than the reimbursement could ever be.

Figure 32. Business model illustration during phase one.

* If allowed for by the consumer. For more information, see Chapter 16.8.2 in Phase II. *

Calculating the cost-effectiveness of the system is in this phase very difficult. In this early stage, the availability of the necessary economic data is limited which makes most preliminary calculations difficult. Two options exist: (1) What can be done, is that a business case in this phase should be developed based on the estimated expenditures for each of the six capitals. The company must differentiate three different outcomes (positive, neutral, negative, as per usual) in which a prognosis is made on the possible return on investment. As has been mentioned before, the MVP tactic allows the company to reduce costs of the development, production, and shipment of the product, as well as the necessary infrastructure to operate the communication of results. Such decisions before the actual development of the solution, have more impact on the final costs of the project, than more detailed decisions on specifics later on in the process. (2) The headroom method (Cosh et al., 2007) can be employed to calculate the difference in production and implementation costs, and the maximum reimbursable price. This maximum reimbursable price is deduced from the Quality Adjusted Life Year (QALY): the threshold to determine the cost-effectiveness of a treatment. If a treatment costs more than that threshold, then we, as a society, have decided that the treatment is not cost-effective and should therefore be carefully considered. The lower threshold for preventive care in the Netherlands is determined to be €20.000. The upper threshold for intervention and care is €80.000 (Zorginstituut Nederland, 2015). Based on these thresholds, a manufacturer should be able to calculate if the production and cost price of the system fall within these bounds, and more importantly, if using the system will improve the quality of life for patients. When it does, then the system can become reimbursable. In this case, however, the system has a preventive function, of which the QALY is determined at €20.000. If the company wishes to establish a business case and calculate the cost-effectiveness, then the company must be able to calculate the QALY of using the system versus not using the system.

15.9 SUCCESSFUL COMPLETION

This phase is successfully completed, if the consumer product is developed and sold, creating revenue for the company and proof of the value of the solution. The amount of revenue could be related to the amount of success that this phase has achieved, as more revenue indicates more success, but that is beyond the goal for this phase. The gathering of proof of concept of the solution and its value is what will make the difference in the ability of the company to attract more funds and enter phase 2.

An important distinction should be made regarding the MVP and the upcoming phase 2, where the system will be clinically validated. The company could opt for the development of a second version of the system, with more functionalities and value for its users, to increase the possible (clinically validated) medical applications of the solution in phase 2. The important distinction here is, that the device that will be clinically validated and approved, will be the only device that is allowed to be sold on the European market for its medical application. In other words, the NB might demand a new clinical validation process as consequence for changing the system configuration. The system that the company desires to be eligible for sale, must be the same system that will be clinically validated71_{. Careful}

thought should therefore be put in the decision which product configuration will become the system that will be clinically validated. If the MVP provides insufficient medical applications and benefits, then the company is forced to developed a second version which does have these applications and benefits. When that has been decided upon, the following criteria must be met as well to determine the readiness of the company to proceed to phase 2. First, the company must be able to afford the extra investments necessary for starting the following phase. These investments include (but are not limited to) extra personnel: a clinical validation department including experts in clinical validation studies and study design, and people capable of performing big data analytics. As well as additional office space for the increase in personnel, additional computing power for the additional statistical processes, and additional testing equipment. Second, sufficient amounts of data must have been gathered to perform the clinical validation. To assess whether or not enough volume has been achieved, it is essential to first attract competent people that are able to make such a judgement. Third, preferably, the company should have access to faecal matter from people diagnosed with CRC. This matter can be essential in the validation study as the device must be able to distinguish between healthy and sick individuals.

71 _{Only one exception exists, as Annex IX states that in the case that the device is similar (i.e., “equivalent”, Annex IX Article 4}