Stagnant Medtech Investment Scene Should Look to Digital Devices

Following a boom in large medtech mergers over the past few years, the landscape for medical device deals remained steady in 2017, largely due to regulatory and reimbursement issues, according to GlobalData, a data and analytics company.
 
While the total number of medtech deals in 2017 to date remains stagnant with approximately 2,700 deals annually for the past four years, there was a slight rise in capital raisings in 2017. However, the number of mergers and acquisitions continued to decline.
 
Jennifer Ryan, Healthcare Analyst at GlobalData, said, “A number of factors are contributing to the stagnant investment scene in medtech. Regulatory approvals are becoming more time-consuming and challenging to acquire, particularly through the FDA, the gatekeeper to the world’s largest medical device market. However, even a product’s market approval is no longer evidence that it will be successful. As the world’s population ages and requires more involved care, the reimbursement scene is becoming increasingly important. Additionally, favorable reimbursement is becoming more difficult to obtain. A growing focus on long-term patient outcomes and healthcare expenditure means devices must also now demonstrate that they will benefit value-based healthcare initiatives on top of the traditional safety and efficacy requirements.”
 
Despite the small uptick in capital raisings, including equity and debt offerings, private equity, and venture financing, medtech continues to struggle with investment and venture capital.
 
Many larger companies are resorting to strategic acquisitions of smaller market players who have managed to grow their technologies to a stage with positive market potential rather than simply market approval.
 
“Moving into 2018, players focused on innovating with digital medical devices are more likely to secure investments or be acquired more quickly than those focused on traditional devices, as physicians and patients alike continue to call for modern technologies,” Ryan added.
 
Four thousand of the world’s largest companies, including over 70 percent of FTSE 100 and 60 percent of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s data, analysis and solutions. GlobalData’s mission is to help clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.