Phil Frame, partner at North Edgeexplains why Medtech and medical device companies should benefit from increased investment interest.
The healthcare sector has grown strongly in recent years, especially as the global pandemic has reinforced the importance of healthcare worldwide. As a result, there has been a growing focus among investors looking to support ambitious businesses within the sector.
The private equity industry alone invested $151 billion in healthcare globally in 2021, more than double the previous year. Demand for ambitious and rapidly growing healthcare companies is at an all-time high, and two areas that continue to attract outside investment are medtech and medical devices.
Medtech: An ambitious sub-sector
With the pandemic causing a shift in consumer behavior across many industries, technology has remained pivotal to maintaining business resilience and leading the way for change in the future. This is particularly true in healthcare, where there are unprecedented levels of demand for technology-based services that accelerate innovation in the sector.
In particular, technology has supported the shift to a more remote healthcare system, using data to derive personalized treatments. Technology has promoted a “patient-centered” operating model, where patients can reach healthcare professionals through the means most convenient for them, whether face-to-face, virtual, remote or even digital care.
From an investment point of view, the Medtech industry is booming, attracting the interest of major players across the globe. Global investors completed a record 96 deals in the sub-sector in 2021, and the deal value increased to $40.8 billion. Without a doubt, the medtech industry continues to be an attractive proposition for investors like NorthEdge, who work alongside management teams to build a better business together.
Play a key role in changing the markets
The industry was shaped by the increasing “consumption” of healthcare. Patients are accustomed to living a customized lifestyle and naturally expect a better customer experience. Technology is the perfect solution to meet these growing demands, especially with 80% of consumers now preferring to use digital channels when communicating with healthcare providers.
With more than 400,000 healthcare apps available to download and more than 200 being added every day, apps are increasingly becoming the number one digital health tool of choice. Consumers use them to take charge of their health, whether it’s reminding a diabetic to take their medication or administering personal prescriptions online.
With the potential to make a big difference, it is no longer a question of if, but when the medical technology industry will revolutionize the broader sector. Speed of adoption rests with companies that can embrace the latest technologies, innovative products and services, while focusing on their ever-changing consumer behaviors and requirements.
Demand for medical devices
National surveys tell us that 40% of people want more involvement in decisions about their care, and similarly, 40% of people living in long-term conditions want more support to manage their health and well-being on a daily basis.
The medical device market is well positioned to fill this gap, with modern devices now using the latest technology to create customized solutions for patients, as well as increasing flexibility to provide needed care at home.
As a result, the UK has grown to become the third largest market for medical devices in Europe, exporting nearly £2 billion of merchandise to the EU each year. The industry is showing no signs of slowing down either, having gone from an estimated value of £7 billion in 2015 to now over £12 billion to become the sixth largest market globally.
Not surprisingly, the industry has become very attractive to investors in recent years. However, the real payoffs are not only focused on companies that can take advantage of this increased demand, but also on patients who can take advantage of the increasing number of care options available.
Companies should embrace investment interest
Securing an investment undoubtedly leads to opportunities, and with over 200,000 healthcare companies in the UK, backing up private equity is an exciting solution for companies looking for that next stage of growth.
Experience with our portfolio company, Platinum Stairlifts, a UK designer and manufacturer of stair products, shows how outside investment can help expand an already successful offering. The company had previously built a reputation for providing high quality products and excellent service, but with the support of NorthEdge, it was able to open a new state-of-the-art facility in Foundry Park in Yorkshire. The specially designed facility greatly increased production capacity and improved process efficiency.
This collaboration ensured that over £5 million could be invested in the business to drive growth and build on current success. It has also enabled Platinum Stairlifts to build on its ESG credentials, as the new site features many aspects of the eco-friendly design and offers a number of new fellow care facilities.
Welcomed cooperation is the key
Despite the current economic challenges, the private equity industry maintains a strong appetite for investing in successful and well-managed medical and medical device companies. And in these turbulent times, private equity firms can offer companies much more than just financing.
It also provides access to a wealth of experience, proven best practices and a network of experts with specialized knowledge. The right collaboration can provide a unique opportunity for business leaders within Medtech and medical device companies to take a fresh look at their business plans and present a carefully designed strategy for sustainable growth in the future.
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