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Medical Technology Industry Companies Are Hot, But the Biopharmaceutical Industry Still Rules

Medical technology companies saw an increase in funding opportunities in 2018.

It turns out that 2018 was a big year for the biomedical sector. Both medical technology companies and biopharmaceutical companies made tremendous year-over-year advances in funding. However, medical technology industry companies actually outperformed biopharmaceutical industry based on percent growth. And specific areas of the medical technology industry are really accelerating in the financing arena. From medical devices to diagnostics, medical technology industry companies seem to have investor attention. But will they overtake biopharmaceutical industry in total funding dollars?

infographic comparing medical technology and biopharma companies

infographic comparing medical technology and biopharma companies

Medical Technology Companies —By the Numbers

From venture capital to private investments and IPOs, medical technology industry companies have many ways to raise capital. And for 2018, all these options were utilized. In total, medical technology industry companies acquired $20.5 billion in financing from nearly 500 total transactions. This number reflected an incredible 38 percent increase in funding obtained in the previous year.

At the same time, biopharmaceutical industry companies also performed well. In fact, biopharmaceutical industry companies more than tripled the financing of medical technology industry companies in 2018. But in terms of growth, biopharmaceutical industry companies experienced less than a 30 percent growth rate compared to 2017 figures. This fact has some analysts reevaluating investor patterns and what it may mean in the near future.

The Big Winners Among Medical Technology Industry Companies

While nearly all types of companies within the medical technology industry sector saw significant growth, advances in some categories were more substantial. Specifically, medical technology industry companies developing devices saw financing growth of 40 percent. A total of 260 medical device companies accounted for $13 billion, or 63 percent, of the total funding. Interestingly, the lion’s share of these companies were based in California, where venture capital funding is more accessible.

Though the second-place category among medical technology industry companies is distanced from medical devices, it is still noteworthy. Diagnostic companies were responsible for 18 percent of all financing dollars for medical technology companies in 2018. And specific specialties also represented sources of significant funding investments. In fact, orthopedics and oncology funding for medical technology industry companies received a third of the overall funds combined. This case has notable implications for future developments in medical technology industry innovation.

Notable Financing Events Among Medical Technology Companies in 2018

Out of the nearly 500 funding transactions involving medical technology companies, some of the more major ones deserve some recognition. Hologic Inc., involved in diagnostics for women, acquired over $1 billion in financing notes this year. Likewise, Grail Inc., which develops oncology diagnostics, completed $300 million in Series C funding. And multiple IPOs occurred in the U.S. and abroad resulting in sizable funding results. The growth impact regarding funding of medical technology companies is clearly a global phenomenon and not a regional one.

The biopharmaceutical industry remains a growth industry.
Which medical technology companies and biopharma companies will see growth in 2019? That’s a good question…

Not included in the figures of medical technology company financing are the IPO funds involving Siemens Healthineers in Germany. This IPO resulted in $5.2 billion of funding revenues raised. While its inclusion would have skewed the figures, it further highlights the growing trends favoring medical technology companies. These same trends are expected to continue into 2019 according to several analysts.

Are Investors Concerned About Biopharmaceutical Industry Companies?

With greater investments for medical technology companies, it is reasonable to question if biopharmaceutical companies are losing their investment appeal. Biopharmaceutical industry companies certainly face greater regulatory pressures by comparison. Likewise, biopharmaceutical industry companies have more extensive R&D processes and failures. And pricing policies and product competitions remain up in the air in many markets. These factors may be playing a role in persuading investors to preferentially choose medical technology industry companies at present.

While these are legitimate factors in analyzing biopharmaceutical industry companies, this sector remains dominant when it comes to financing. Also, biopharmaceutical industry companies are still enjoying sizable growth in funding with numerous mergers and acquisitions this year. With precision medicine, stem cell research and other biomedical advances, biopharmaceutical industry companies should continue to receive strong funding support.

Looking Ahead in 2019

Overall, both medical technology industry companies and biopharmaceutical industry companies are expected to continue to advance in funding in the near term. Likewise, mergers and acquisitions, which have been frequent lately, are also likely to continue into 2019. Both scientific and technological developments will continue to drive both these sectors forward aggressively. But as evidenced by 2018, biopharmaceutical industry companies will likely continue to receive greater funding despite recent medical technology industry sector surges.

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