The evolution of technology enables the design of smarter medical devices. Embedded Sensor Systems play an important role, both in monitoring and diagnostic devices for healthcare. The design and development of Embedded Sensor Systems for medical devices are subjected to standards and regulations that will depend on the intended use of the device as well as the used technology. This article summarizes the challenges to be faced when designing Embedded Sensor Systems for the medical sector. With this aim, it presents the innovation context of the sector, the stages of new medical device development, the technological components that make up an Embedded Sensor System and the regulatory framework that applies to it. Finally, this article highlights the need to define new medical product design and development methodologies that help companies to successfully introduce new technologies in medical devices.