MedCity Influencers, Devices & Diagnostics

Medtech is well-positioned for investment and growth following surge in biopharma

The success of biopharma and medtech are not mutually exclusive. In some ways, medtech is actually drafting off of the recent surge in interest and investment in biopharma.

The success of biopharma and medtech are not mutually exclusive. In some ways, medtech is actually drafting off of the recent surge in interest and investment in biopharma. Awareness of infectious diseases such as Covid-19 is fueling advancements in diagnostics, medical devices and digital medicine.

But there’s more at play in the growth of medtech.

In addition to advancements in diagnostics, there’s a recent and growing interest in medtech from pharmaceutical companies who are looking to diversify their offerings and extend patent life, which includes investing in everything from neurostimulation devices to control seizures and improve digestion, heart rate, etc., to virtual reality for chronic and acute pain relief.

Experts predict medtech’s momentum will continue to build. According to a report from BCC Research, the medtech industry will boast a compound annual growth rate of 5.6% from 2020 to 2025, reaching revenue of nearly $800 billion by 2025.

Before Covid-19, product differentiation, pricing pressures, and aging products challenged the medtech industry. The pandemic created opportunities for improvements in all these areas, forever changing how patients receive healthcare and the business models that initiate those efforts. As evidence of backing for these industry advances, in the first quarter of 2021, digital health companies in the United States raised a milestone $6.7 billion.

Multiple factors currently drive investors’ interest in medtech. More breakthroughs in technology and innovation continue to open and expand opportunities. Additionally, an increase in the global elderly population, a rise of chronic lifestyle illnesses such as diabetes, and an emergence of healthcare access in new markets create a larger demand for growth.

Advances in technology such as 3D printing have improved efficiencies. Manhattan’s Stanley Children’s Hospital used 3D technology to print a replica of a child’s heart to rehearse an advanced procedure before the actual surgery. Researchers at KU Leuven in Belgium applied 3D printing to create quicker, cheaper, and easier-to-use lateral flow tests that can be used in pregnancy and Covid-19 self-testing.

With the World Bank reporting that roughly 9% of the world’s population is over 65 years old and continues to trend upward, medtech companies have responded to the need this creates. Forum Virium Helsinki, innovation company for Helsinki, Finland, co-created the Health and Wellbeing Project, a program focused on developing medtech that provides patient-centric healthcare services. One result of this project is a multi-sensory room pilot using AI and smart technologies to treat senior citizens struggling with memory loss.

Empowered by advances in medtech and digital health, patients have control over their healthcare journey now more than ever before. Virtual platforms allow patients to seek medical treatment without leaving their homes. Products once only sold to physicians and healthcare practices can now be purchased directly by the patient.

Headquartered in California, Eargo, a designer of hearing aids made to fit inside the ear, sells directly to consumers. Having gone public in October of last year at $18 a share, Eargo stock closed at $33.68, up 87.1%.

As another example, San Diego-based DexCom offers patients a glucose monitor that sends information via Bluetooth directly to a smartphone. The data then can be uploaded and distributed using the Internet cloud. Providing direct-to-patient access helped the company’s stock rise 60% in 2020.

The global pandemic brought to light the disparity of various communities’ access to healthcare, in particular, for lower-income and minority populations. Technological advances like those used in response to Covid-19 to reach these groups for testing, treating, and vaccinating will likely be incorporated into future healthcare planning. In addition, many predict all levels of government will allocate more resources towards digital health services due to the direct impact that the health of these specific populations has on the overall economy. This focus on diversity creates vast and fertile ground in which medtech can grow.

Recent evolutions in healthcare created these trends that draw investors to the medtech industry. Strategically approached, they can tap into the full potential medtech investments offer.

Photo: Eightshot Studio, Getty Images

Rob Lake is Managing Director, Head of Life Sciences, Runway Growth Capital. He joined Runway Growth Capital in 2020 as Managing Director and Head of Life Sciences. Prior to Runway, Rob was Managing Director, Life Sciences with Bridge Bank (a division of Western Alliance Bank), a commercial bank that provides venture debt, where he founded and built the life sciences practice. Prior to Bridge Bank, Rob served as Executive Director, credit and portfolio management for Oxford Finance, LLC, a venture debt lender, where he helped build out the west coast practice. Previously, he has held leadership positions with Silicon Valley Bank, Fifth Third Bank, FINOVA Capital Corporation, and the American Medical Association. In the past decade, Rob has deployed over $1.5 billion of debt to life sciences and health care companies. Rob graduated with a bachelor’s in business administration from Aurora University.

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