Report finds cautious optimism about the global medtech industry

Frank
May 13, 2018
11 Views

The state of the global medtech industry warrants a mood of “cautionary optimism” as company leaders and investors look to wind up 2017 and look ahead to 2018.

That’s the conclusion of EY’s Pulse of the Industry 2017 report released at the annual conference of AdvaMed, the nation’s largest medical devices lobby group in late September. One of the more significant findings was that net income for medtechs in the US and Europe rose 17 percent, which is one reason for the optimism, explained John Babitt, partner of the Life Sciences Transaction Advisory Services, in a phone interview.

Net income for medtech companies rose to $16 billion, which represents the largest year over year increase since the financial crisis of 2008, Babitt said.

Both Babitt and Arda Ural, principal, Ernst & Young Transactions Services – Life Sciences, found the increase in medtech venture capital investing noteworthy. At $7.7 billion, this represented a 23 percent year-on-year increase, and with investments from traditional VCs and strategic investors.

The report found said that the 2016-17 period saw the three largest medtech VC deals completed since EY began tracking the industry more than a decade ago. Those deals included two diagnostics companies developing liquid biopsy technologies: a $973 million Series B raised by Grail and a $360 million later-stage round raised by Guardant Health, both California companies. The third was a $800 million round that Verily raised, which is the life sciences subsidiary of Alphabet, formerly known as Google.

There were also corporate venture capital investments that married traditional healthcare firms with some of the new entrants in healthcare.

Sanofi and Verily Life Sciences launched the joint venture, Onduo, to develop a comprehensive diabetes management platform. Verily also announced a joint venture with Johnson & Johnson called Verb Surgical, which will use robotics and visualization, among other technologies, to create a digital surgery prototype.

Even excluding such deals, early-stage venture capital saw growth, with about $4 billion raised in 407 early-stage venture deals, according to the report, which defines early-stage as seed first-, and second-round investments.  This figure beat the $2.2 billion raised in the prior 12-month period.

For the first time, according to EY’s analysis, the percentage of total venture capital devoted to early-stage rounds set a new standard, with these startups capturing 52 percent of overall venture dollars, and even surpassing the amount raised in later-stage rounds.

Foreign entities are also pouring in cash into Western medtech startups. Ural of EY said that it was noteworthy the amount of capital that US and European medtech startups raised from Asia. In fact, Asian investors participated in three of the largest venture deals in the period that EY evaluated.

M&A activity was also strong in 2016-2017 and the report found that the total value of medtech M&A in the US and Europe reached $100.4 billion, an increase of 46 percent over the previous 12 months setting an industry record.”

On the IPO front, however, things were less rosy, with one exception being ConvaTec’s, which had a “massive debut.” ConvaTec, based in the U.K, focuses on products for wound care, ostomy care, continence and critical care, and infusion devices and reportedly raised $1.8 billion through its IPO.

A continuing trend in the healthcare world — including medtech — is collaboration.  From the EY point of view, the years ahead will require companies to partner with non-traditional healthcare companies as conventional, device companies will be forced to develop end-to-end systems that appeal to a variety of interested parties: consumers, payers, and providers. For instance, in 2016-17, Royal Phillips partnered with PathAI on a solution to improve both the precision and accuracy of routine diagnosis – using AI – in breast cancer and other diseases. Stryker also is partnering with Microsoft, to use augmented reality in developing the “operating room of the future.” per to the report.

As such unlikely collaborations continue, the most provocative question posed in the Pulse of the Industry report is the following: In a swiftly moving market, for future growth, “do the best partners even yet exist?”

Photo: renjithkrishnan, Freedigitalphotos

 

 

 

 

 

Frank’s source: https://medcitynews.com/2017/10/report-finds-cautious-optimism-global-medtech-industry/

 

You may be interested

Overcoming the stumbling blocks of digital health adoption
About Health
0 shares0 views
About Health
0 shares0 views

Overcoming the stumbling blocks of digital health adoption

Frank - May 23, 2018

Achieving perfection in the realm of digital health adoption is far from an easy feat. Numerous barriers prevent perfect deployment,…

Jean-Claude Van Damme’s youngest son arrested after ‘holding his flatmate at knifepoint’
About Entertainment
0 shares2 views
About Entertainment
0 shares2 views

Jean-Claude Van Damme’s youngest son arrested after ‘holding his flatmate at knifepoint’

Frank - May 23, 2018

Hollywood star Jean-Claude Van Damme's youngest son has been arrested for allegedly taking his flatmate prisoner with a knife. Police were…

Star Wars 9: Release date for Episode IX has been delayed
About Entertainment
0 shares2 views
About Entertainment
0 shares2 views

Star Wars 9: Release date for Episode IX has been delayed

Frank - May 23, 2018

After Star Wars: Episode IX's dramatic change in personnel, which saw J.J. Abrams step in as director after Colin Trevorrow's…

Leave a Comment

Your email address will not be published.

nine − 1 =