The global medical technology (medtech) industry grew by 5% in 2016, a pace last seen before the financial crisis. This strong performance was fueled by mergers and acquisition (M&A) and portfolio optimization strategies, as well as continued focus on capital efficiency and research and design (R&D) investments, according to Pulse of the industry, the 2017 EY medical technology industry report.
Overall, revenue from US- and Europe-based medtechs grew to US$364.4 billion in 2016 after a 3% decline in the prior year. Meanwhile, net income for these companies soared 17% to US$16 billion, compared with a 20% dip to US$13.7 billion in 2015. Additionally, total R&D spending by pure-play medtechs rose 5% to US$16 billion in 2016.
The report shows financing for medtechs, including early-stage companies, is available. Overall, US and European medtech financing increased 101% in 2016, to US$43.9 billion, the second-highest total in the past decade. Venture capital financing climbed to US$7.7 billion, a 23% year-on-year increase and a positive sign for future medtech innovation.
Additionally, the flow of capital is increasingly becoming more global. In 2016-17, China vaulted to become one of the leading regions for total equity capital, as medtechs raised more than US$1 billion in 16 financings. Asia-based investors were also active backers of US and European medtechs, participating in three of the year’s largest venture rounds.
Other key results highlighted in the report include:
- Strong deal-making environment persists: In all, medtech companies in the US and Europe announced deals worth nearly US$100.4 billion, an increase of 46% over the prior 12 months and an industry record.
- IPO climate cools: Excluding one of the industry’s largest medtech IPOs last year US and European medtechs raised just US$547 million in IPO capital during 2016-17, an 8% drop over the prior year’s total.
- Industry market cap increases: The industry’s cumulative market cap increased 26% from 1 January through 31 August, lifted by strong earnings reports and an active deal-making climate.
Read the full news release here.
EY Legal Services Contacts:
Richard Norbruis – Global Transaction Law Leader
Virginie Lefebvre-dutilleul – Law Sector Leader – Life Sciences