Opportunities for investment in European medtech

Bernard Ross of Sky Medical Technology says that the European medtech market has grown in recent years and he expects it to keep rising since the region is ripe with innovation.

By 2030, one in every five US citizens will be of retirement age. This means more people will be relying on healthcare with fewer people employed to pay for it. The global aging population is driving demand for medical care to grow exponentially and covid-19 has accelerated the need.

Pressure is mounting on the US healthcare system as well as European medtech companies to provide new, cost-effective ways to address this growing demand. And this is creating promising investment opportunities for venture capital.

Pioneers in science

The European medtech sector has seen substantial growth in recent years and that trend is expected to continue. The medtech market in Europe is estimated to be worth more than €120 billion, according to MedTech Europe. Germany, France and the UK are leading the way in research, development and implementation of new medical devices.

CEO Bernard Ross Sky Medical
Bernard Ross, Sky Medical Technology

UK science in particular offers huge potential for investment, being home to some of the world’s leading research institutions, such as the University of Oxford and the University of Cambridge. Many of modern medicine’s most valuable innovations were born in Europe, including the original stents, the clinical thermometer and a range of spinal treatment devices. Today, the UK is at the forefront of clinical trials for covid-19, and international scientists have praised British researchers’ anti-covid-19 work.

The European medtech market is ripe with innovation, powered by major technological advancements and a growing use of wearable medical devices. In 2019, nearly 14,000 patent applications were filed with the European Patent Office (EPO) in the field of medical technology, representing a growth of more than 1,000 patents compared to the previous year. The medical technology field accounts for 7.7 percent of the total number of applications, second highest among all the sectors in Europe.

Rise of European medtech

European technology is increasingly attracting US investors, too. The amount invested into Europe from US-based investors in 2019 was close to $10 billion, double the amount from 2015. A recent report shows that 20 percent of all rounds raised in Europe now include at least one US investor. This is compared to just 9 percent in 2015.

Why do European companies make attractive investments? Europe has lower entry valuations compared to the US, largely due to lower living and labor costs. This results in highly-capital-efficient investment opportunities, as valuations are not so over-cooked.

Investors in the European medtech market are optimistic about prospects in the region, with an industry that employs more than 730,000 people and includes roughly 500,000 different medical technologies. With 41.5 percent of all European medical device exports going to the US, there is clearly a demand for UK innovation to meet US healthcare needs.

Meeting global demand

There is a growing need for value-based medical technology that successfully balances cost-effectiveness and improved patient outcomes. With European medical technology innovations already playing a fundamental role in changing how healthcare is delivered, the potential impact of medtech companies is likely to be a significant opportunity for the US healthcare system while offering a healthy ROI for investors.

As many sectors continue to suffer with the market disruption brought about by covid-19, medtech is one of the few sectors to has mostly escaped the global downturn. Unlike other markets, rising demand for healthcare is guaranteed, presenting a stable investment which has huge potential for growth as technology continues to evolve.

Europe has a significant presence in the global medtech market, but the challenge is to remain a leading player. To do that, it needs sufficient investment and leadership. Europe already has the ingredients for a high potential start-up and scale-up environment that can nurture growing businesses into competitive global players. Now is the time for US investors to leverage their experience and make a real impact globally.

Bernard Ross is CEO and founder of venture-backed Sky Medical Technology, a growth-stage medical devices company.