Medtechs: Fusing physical, digital & biological is ‘current imperative’
According to the 2017 Pulse of the industry report, medtech companies in the US and Europe, in aggregate, expanded their top-line by 5% in 2016 and grew their total bottom line by 17%. The growth was reportedly driven by mergers and acquisition (M&A) and portfolio optimization strategies, as well as by continued focus on capital efficiency and research and development (R&D) investments.
In addition, says the report, technological advances in sensors, along with advances in AI, are broadening the definition of “medtech” to include digital products and data-driven services. As a result, industry convergence is expected to continue to accelerate, lowering barriers for new entrants, especially those that specialize in software-based or other customer-focused services.
“Medtechs continue to use M&A, collaborations with new entrants and new technology investments to navigate an array of uncertainties. To achieve sustainable growth though, medtechs must embrace more data-driven strategies that co-create value for all industry stakeholders and participate in emerging outcomes-driven care delivery platforms that are highly personalized,” says Pamela Spence, EY Global Life Sciences Industry Leader.
“They also need to balance internal R&D investments with innovations in the new, connected economy such as augmented reality (AR), additive manufacturing (AM), and artificial intelligence (AI) so their R&D bets deliver a lasting, competitive edge. Embracing ‘The 4th Industrial Revolution,’ which fuses the physical, digital and biological, is a current – not future – imperative.”
Financing for medtechs – including early-stage companies – continues to be available, and with an increasingly global focus. In 2016-17, China became one of the leading regions for total equity capital, with more than $1 billion being raised in 16 medtech financings. Asia-based investors also participated in three of the year’s largest venture rounds in US and European medtech companies.
“There is financing for medtechs, particularly those that are developing tools for the biopharma industry, which is eager for novel technologies that either improve drug development or deliver differentiated therapies,” says John Babitt, Partner, Ernst & Young LLP – Life Sciences, Transaction Advisory Services. “At the same time, as companies continue to implement longer term strategies built on new technologies and partnerships, they must continue to focus on capital efficiency to maintain – or improve – future growth trajectories.”
Looking forward, the report sees product-centric medtech innovations increasingly being bundled with services and solutions, enabling real-time patient engagement, remote monitoring, and more targeted care delivery. Emerging holistic care platforms may be created that evolve from a disease- or technology-specific focus to managing complicated patients across the care continuum. Such platforms, the report says, have the potential to enhance both patient experience and create new revenue opportunities. For example, by linking big data with new knowledge from precision medicine, it will be possible to create precision health offerings that promote preventive interventions before symptoms of disease manifest.
For more, see Medical technology report 2017: Pulse of the industry.
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