Phil Frame, partner at NorthEdge, explains why medtech and medical device companies should take advantage of growing investment interest.
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Growing money - finance and investment concept
The healthcare sector has grown strongly in recent years, particularly as the global pandemic reinforced the importance of healthcare worldwide. As a result, there has been an increased focus amongst investors looking to back ambitious businesses within the sector.
The private equity industry alone invested c.$151 billion into healthcare globally in 2021, more than double the previous year. The demand for ambitious, fast-growing healthcare businesses is at an all-time high and two areas that continue to attract external investment are medtech and medical devices.
Medtech: a subsector with ambition
With the pandemic causing a shift in consumer behaviour across several industries, technology remained pivotal to keeping businesses agile and pioneering the way for future change. This is especially true within healthcare, where there are unprecedented levels of demand for tech-based services that are accelerating innovation in the sector.
Most notably technology has supported the shift to a more remote based system of healthcare, using data to derive personal treatments. The tech has encouraged a ‘patient-centric’ operating model, where patients can access healthcare professionals through the most convenient means to them, whether that’s face-to-face, virtual, remote, or even digital care.
From an investment point of view, the medtech industry is flourishing, attracting interest from major players around the world. Global investors completed a record-breaking 96 deals in the subsector in 2021 and with this, deal value has surged to $40.8 billion. Without question, the medtech industry continues to be an attractive proposition for investors like NorthEdge, who work alongside management teams to build better businesses, together.
Playing an essential role in changing markets
The industry has been shaped by the growing ‘consumerisation’ of healthcare. Patients are used to living an on-demand lifestyle and are naturally expecting 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.
And with over 400,000 healthcare apps available for download and more than 200 being added each day, apps are increasingly becoming the number one digital health tool of choice. Consumers are using them to take charge of their health, whether that’s reminding a diabetic to take their medication or managing personal prescriptions online.
With the potential to deliver significant change, it’s no longer a case of if, but when, the medtech industry will revolutionise the wider sector. The speed of adoption rests with businesses that can embrace the latest technology and innovative products and services, pivoting to ever-changing consumer behaviours and requirements.
The demand for medical devices
National surveys tell us that 40% of people want more involvement in the decisions about their care, and similarly, 40% of people living with long-term conditions want more support to manage their health and wellbeing on a day-to-day basis.
The medical device market is perfectly poised to bridge this gap, with recent devices now utilising the latest technology to create bespoke solutions for patients, as well as having the increased flexibility to provide the necessary care at home.
As a result, the UK has grown to become the third largest medical device market in Europe, exporting close to £2 billion worth of goods to the EU every year. The industry is showing no signs of slowing down either, going from an estimated value of £7 billion in 2015, to now exceeding £12 billion and becoming the sixth biggest market globally.
It’s no surprise that the industry has become so attractive to investors in recent years. However, the real win isn’t just centred on businesses who can take advantage of this increased demand, but also for patients who can benefit from the increased number of care options available.
Companies should embrace investment interest
Securing investment undoubtedly leads to opportunities and given there are more than 200,000 healthcare companies in the UK, private equity backing is an exciting solution for businesses looking for that next stage of growth.
Experience with our portfolio company, Platinum Stairlifts, a UK-based designer and manufacturer of stairlift products, demonstrates how external investment can help expand an already successful offering. The company had previously built a reputation for delivering high-quality products and excellent service, but with NorthEdge’s support, it was able to open a new state-of-the-art facility at Foundry Park in Yorkshire. The custom-built facility has significantly increased production capacity and even improved process efficiencies.
The collaboration ensured more than £5 million could be invested in the businesses to spearhead growth and build on existing success. It also enabled Platinum Stairlifts to build on its ESG credentials, as the new site boasts many environmentally friendly design aspects and provides a number of new colleague welfare facilities.
Welcomed collaboration is key
Despite current economic challenges, the private equity industry retains a strong appetite to invest in successful, well-run medtech and medical devices businesses. And in these uncertain times, private equity firms can offer businesses so much more than just funding.
They also provide access to a wealth of experience, proven best practice and a network of experts with specialist knowledge. The right collaboration can provide a unique opportunity for business leaders within medtech and medical devices firms to take a fresh look at their business plans and deliver a carefully crafted strategy for future sustainable growth.
