The evolving MedTech industry

The global medical technology (medtech) industry continues to grow, but its long-term growth outlook is at risk due to underinvestment in R&D and lack of collaboration between industry providers, payers and patients. 

According to the recent EY (Ernst & Young Global) report, Medtech is experiencing major transformation. In the future, industry value will be driven by the personalised, patient-centered care models. Delivering this will require medtech to work outside the comfort zones of its traditional business models. The transformation will bring better outcomes for patients and value-based payers.

Key findings from the report

Metrics suggest the medical technology industry is strong, but warning signs remain.

• Revenue grew 7% year over year, but the annual growth rate has yet to rebound to pre-2008 levels.
• Robust R&D spending demonstrates a commitment to innovation, but capital allocation trends suggest there is still more focus on nearterm growth via share repurchases.

Healthy IPO and venture financing totals were a positive, but a two-year decline in total financing may signal the public market’s declining appetite for medtech. The total value of M&A increased more than 50%, but average deal values fell as buyers outside the sector became increasingly prominent. Robotic surgery, diagnostics and artificial intelligence (AI) provide signposts to how medtechs will create value in the future.

• The robotic surgery market attracted major M&A interest as buyers invested more than US$6 billion on new platforms.
• Non-imaging diagnostics companies outpaced the broader industry in both revenue growth and share of early-stage venture financing, underscoring the technology’s importance for personalised medtech innovation.
• AI remains a top area of innovation, with at least 33 algorithms winning US regulatory approval since the beginning of 2018.

For long-term success in a data-driven future, medtech must address some key challenges.

• With health data breaches on the rise, medtechs must develop secure data ecosystems in which connected devices can easily exchange and use data.
• As care shifts from traditional settings, medtechs needs to develop faster, more flexible and multidirectional supply chains that meet the real needs of its customers.
• As new entrants play a more important role in care delivery, medtechs must invest in data-driven, value-based care approaches.
• To thrive in the shifting health care environment, medtechs need to adapt their business models, first determining who is the customer they are best-placed to serve and what data are required to drive maximum value.

Contact us for a copy of the report.

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