The build-to-buy approach has gained much traction within the healthcare innovations community due to the search for quick and more efficient pathways to innovate and commercialize emerging technologies. The discussion at LSI USA ’25 by industry experts examined the role of structured build-to-buy partnerships in shaping innovation, investments, and medical technology collaborations while simultaneously addressing the barriers to success.
The panel addressed the reality of build-to-buy business arrangements and examined the rationale and reasons behind successful and unsuccessful deals.
Understanding the Build-to-Buy Model
The conversation started off with explaining the term build-to-buy for current times. In this regard, there are typically two methods used:
- Build-to-buy models that involve innovation funding by strategics
- Portfolio-oriented models where companies invest in technologies that would fill a gap
In both scenarios, partnerships in medtech become very important since strategics and start-ups work closely during product development. The purpose of such models is to reduce the burden of the internal R&D process and investigate new technologies through collaborations.
It was suggested by some panellists that in certain builds-to-buy agreements, there is an aspect of being more like a “build-to-invest relationship”, since collaboration doesn’t necessarily imply acquisition. However, ownership and alignment were key components here.
Why Structured medtech Partnerships Appeal to Investors
Build-to-buy arrangements may be tempting due to the seeming equilibrium between opportunity and risk that they provide to each party involved. Start-ups get access to money, industry know-how, and recognition while established firms benefit from access to innovations without having to take on development risks themselves.
Nonetheless, participants made it quite clear that such an arrangement could prove challenging due to unforeseen changes in the acquisition strategy of an acquiring firm. Changes in its leadership, goals, and even structure could completely reshape the future of cooperation.
As was pointed out by investors attending the event, start-ups run great risks in case the anticipated acquisition does not go ahead. Frequently, companies put years into developing a product but restrict themselves to entering more diverse markets.
This is why structured medical technology partnerships should be prioritized from the very start.
Timing Challenges Can Disrupt Build-to-Buy Deals
Timing is one of the critical issues that came up throughout the debate. The panelists pointed out that lengthy development periods frequently cause stress for both startups and strategic partners.
As the project progresses, there can be changes in priorities and market trends, and expectations can start diverging from each other. Some delegates likened the process to a long relationship where both parties slowly realize the differences in their work processes and culture as they move forward.
Some common problems associated with lengthy build-to-buy projects include:
- Leadership changes or shifting strategy inside the startup
- Delayed product development or launch
- Decreased ability to explore other business possibilities
- Fear of high valuation if the startup’s growth exceeds projections
The panellists agreed that even when innovation is successful, it can cause negotiation difficulties if the demand in the market goes beyond expectations.
The Human Side of medtech Partnerships
In addition to the financial structure and contract aspects of medtech collaborations, the panel stressed that the human element remains one of the crucial components for success.
Acquisition itself is not enough. Companies should also consider:
- Retention of the team
- Integration within the organization
- Alignment of leadership
- Corporate culture
- Motivation of employees after an acquisition
According to the panelists, many innovations within digital health and technologies need further development long after the initial launch date. In case such a talented team quits after the acquisition, the company will lose the knowledge base behind the innovation.
Additionally, highly skilled teams tend to value a meaningful work environment and fast-paced operations more than financial benefits.
Why Certainty Matters in Build-to-Buy Agreements
One of the obvious outcomes of the discussion was the importance of certainty in promoting alignment between startups, venture capitalists, and strategic investors.
Successful collaboration initiatives in medtech have been structured based on well-defined milestones and acquisition terms. As per the panel, such collaborations function effectively when both sides know:
- Which milestones lead to acquisition
- What will happen in the case of failure to meet objectives
- Intellectual property rights
- Protections in case of termination of the partnership
Examples of effective agreements that have been mentioned in the discussion include those that were structured to guarantee acquisition if the milestones are met.
Reputation and Long-Term Industry Relationships
The discussion also highlighted the importance of reputation for creating future opportunities within the medtech industry. The nature of the business being very interconnected, firms not only get judged by results but also by their ability to negotiate and collaborate.
A lack of cooperation, change of leadership, and poor communication will hinder the firm’s prospects when it comes to making deals. Conversely, medtech collaboration can be built on trust and transparency, which can generate long-term industry relationships and innovation.
It was recognized that difficulties within larger organizations, such as leadership change and priorities shifting, may also pose a challenge even when proper planning was conducted. Nonetheless, it is still understood that the success of collaborations is highly reliant on trust, communication, and commitment.
The Future of Build-to-Buy in medtech
The build-to-buy model is expected to remain an important part of the healthcare innovation landscape as organizations continue seeking cost-effective pathways for growth and product development.
The discussion at LSI USA ’25 demonstrated that successful medtech partnerships require far more than funding alone. Long-term success depends on:
- Defined milestones
- Clear governance structures
- Strategic alignment
- Transparent expectations
- Strong working relationships
As companies continue exploring new collaboration models, the build-to-buy approach may offer significant opportunities for innovation when supported by trust, flexibility, and carefully structured agreements. Build-to-buy strategies and medtech partnerships are central to the deal-making conversations at the LSI Asia Summit, where founders, investors, and corporate development leaders come together to shape the next generation of medtech deals. Learn more at lsiasiasummit.com.
