[Contribution] The latest start-up trends and start-up common sense that I would like to share with doctor entrepreneurs

Daeryun Lee Il-hyeong, lawyer, "Using the strengths of differentiation... Active start-up in the field of digital healthcare and new drug development"
“For successful business development, it is necessary to prepare in many ways, including understanding technology, utilizing support measures, understanding the law, and understanding the regulatory environment.”

Contributor: Attorney Ilhyung Lee of Daeryun Law Firm (ilhyunglee@naver.com)
Passed the lawyer/pharmacist/patent attorney/American public accountant (Maine) exam
(Former) Attorney at Celltrion Domestic Legal Team
(Current) Head of Daeryun Pharmaceutical Bio Healthcare Center, Law Firm (Limited)

1. Entering

The contributor feels that the number of consultations from entrepreneurs with medical backgrounds has increased significantly recently. In particular, with the advancement of artificial intelligence technology, the healthcare industry paradigm is rapidly changing toward ‘digital healthcare’, and doctors’ interest in and inquiries about starting businesses is rapidly increasing.

The government is also fostering the pharmaceutical and bio sector as a future growth engine, and the startup ecosystem based on doctors' medical expertise is expected to become more active. In this paper, we will look at the recent trends in starting a business for doctors, as well as the core legal knowledge that must be known during the process of starting a business.

2. Major areas of recent doctor startups

Physician entrepreneurs seem to be focusing on areas where they can leverage their differentiated strengths of clinical experience and medical knowledge. The fields in which doctors are actively starting businesses recently are as follows:

First, it is the digital healthcare field. Representative examples include AI-based diagnostic assistance software, remote medical platforms, and digital therapeutics (DTx). Doctors have a competitive advantage in that they have access to abundant clinical data and can accurately identify pain points in actual medical settings. In particular, the performance of AI algorithms depends on the quality of learning data, so the competitiveness of doctors who possess massive amounts of clinical data is strong.

Second, the field of new drug development. We are actively participating in the development of new drugs for diseases with unmet medical needs, such as rare diseases or incurable diseases. Doctor-turned-entrepreneurs are discovering innovative treatment targets based on their in-depth understanding of disease mechanisms and are demonstrating their expertise in clinical trial design.

3. Startup common sense that I would like to share with doctor entrepreneurs dreaming of starting a startup

(1) The need to improve technological understanding

If you are preparing to start a business in the digital healthcare field, we recommend acquiring basic programming knowledge. In the contributor's experience, there is a significant difference in the quality of the results between communicating with developers with an understanding of programming languages ​​and communicating with them without any related knowledge. Even if you are not at the level of a professional developer, understanding basic concepts and terms greatly increases the efficiency and completeness of product development.

(2) Actively utilize government support programs

Due to the government's strong commitment to fostering the pharmaceutical and bio sector, startup support programs have been significantly expanded. In addition to investment attraction support, a variety of programs are being operated, including legal, financial, accounting, and start-up consulting. For entrepreneurs who lack initial capital and expertise, such support measures are like rain in a drought. Although you may be very busy with your current job, we recommend that you actively explore and utilize this information in the early stages of starting a business.

(3) The importance of establishing initial legal relationships

If this is your first time starting a business, it is advisable to seek advice from a legal expert from the early stages if possible. In Korea, awareness of the importance of contracts is relatively low, but in the United States, it is common to systematically conclude a 'shareholder contract' between members at the beginning of a business to clarify the legal relationship.

In the contributor's experience, it is virtually impossible to solve all problems through 'trust' alone in the company management process. It may seem a bit dry in our sentiments, but clearly agreeing and documenting the shareholding structure, decision-making method, scope of authority and responsibility, etc. in advance is a shortcut to preventing conflict in the long run.

In fact, cases where the initial equity structure was set incorrectly and failed to properly start (VCs are reluctant to invest if the founder's equity is too low), or where the business disintegrates due to disagreements between co-founders, are much more common than you might think. It is recommended that initial legal advice be considered as it can be used to prevent such situations and help managers focus solely on management.

(4) Understanding the regulatory environment

As you know, the biopharmaceutical industry is a strongly regulated industry that operates under a complex regulatory system, including the Medical Service Act, Pharmaceutical Affairs Act, Medical Device Act, Personal Information Protection Act, and Bioethics Act. No matter how good a business model is, if it violates the law, it will go out of business. Therefore, it must be reviewed in advance to ensure that the business model does not conflict with current laws and regulations and what permits are required.

4. Conclusion

Physician entrepreneurs have a strong competitive edge in medical expertise. However, in order to develop this expertise into a successful business, various preparations are required, including understanding technology, utilizing government support measures, understanding the law, and understanding the regulatory environment.

The contributor is confident that the challenges of doctor-turned-entrepreneurs will become an important driving force in the development of Korea's pharmaceutical and bio industry, and supports them. Accordingly, starting with this paper, we will continue to introduce legal knowledge that can be of practical help to physician entrepreneurs. We ask for your continued interest, readers.

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[Contribution] The latest startup trends and startup common sense that I would like to share with doctor entrepreneurs (link)