Why This Is Important
There aren’t many meetings dedicated to the business of medical devices. The work AdvaMed and MassMEDIC do on behalf of our industry and the statistics they provide are valuable indicators telling us how to plan and prepare our strategies to sustain growth in our industry. At AdvaMed 2016, data were presented that made it clear that the medical device startup ecosystem, critical to the health and growth of medtech innovation, is at risk.
Medtech Innovation Is at Risk
According to statistics presented at AdvaMed 2016, U.S. venture capital investment has been declining since the early 1990s. Medtech venture capital activity has increased substantially over the last 15 years, but predominately in later-stage companies. This means the investment community is reducing its risk by capitalizing more in the segment of mature startups, usually those that have established a sales trajectory. The high cost of medtech marketing and sales present a challenge for entrepreneurs who struggle to find funding to establish the sales curve desirable to risk-averse investors.
An Alarming Trend
In Chart 1, investment in medtech, other biosciences, and information/communications technology (ICT) is reported. ICT start-ups have grown the most over the period between 1978 and 2012. Data presented at AdvaMed 2016 reported that the number of new medtech firms created each year has declined from 1,500 annually in the late 1970s/early 1980s to approximately 600 in 2012.
This trend is important because it has grown increasingly difficult to innovate at big medtech companies. The core of new innovation in medtech comes from startups. At a recent industry event, panelists spoke about this problem. “Large companies are very, very risk averse,” said a panelist from Bard Access Systems (a division of CR Bard). “…innovation, at least new concepts, take money and time, and usually that doesn’t float well when you look at it from a management perspective.”
The Critical Role of AdvaMed and MassMEDIC in Medtech Startups
At the MassMEDIC Showcase 2016 meeting, 21 medtech entrepreneurs presented innovative new technologies for surgery, digital health, diagnostics, imaging, implantables, injectables, and orthopedics. At AdvaMed, the MedTech Innovator global virtual accelerator showcased 20 semi-finalists. Green Sun Medical won the $200,000 grand prize with the development of a novel spinal brace for adolescent idiopathic scoliosis patients that allows the patient to move and generate the constant corrective forces necessary to reverse the condition.
Get Involved in Innovation
U.S. medtech startup leadership is still undisputed, but the global decline in medtech entrepreneurship continues. Along with calls for better reimbursement processes, the warning call delivered at AdvaMed 2016 warned how medical innovation is at risk, and that, ultimately, will lead to all of us suffering the consequences.
1 http://bit.ly/mpo021701 [PDF]
Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical where she boosted the company valuation prior to its acquisition by Covidien/Medtronic, director of marketing for Philips Medical and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy and innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services and assesses prospective acquisitions. Shepherd has taught marketing and product development courses, and is a member of the Aligo Medtech Investment Committee (www.msbiv.com). She can be reached at 855-343-3100, ext. 102 or at mshepherd@medi-vantage. Visit the Medi-Vantage website at www.medi-vantage.com.