Medical Technology Growth
Medical technology is receiving a lot of attention from investors, who see major opportunities in the sector. Companies which are developing products to screen the body for health problems have been very successful in raising capital. In fact, between 2015 and 2016, $1.8 billion was raised by such companies, according to the Silicon Valley Bank.
The industry has been experiencing a surge in growth. Historically the medical device technology has relied heavily on the developed market such as North America and Europe. Improving economies in emerging markets have changed the field of play. Healthcare utilisation in these economies has driven a demand for new technologies. As a result, the industry is discovering new avenues. Increased life expectancy is also creating new opportunities for the market. As people live longer, the need for new technology grows. Thirdly, an increased access to broadband allows medical devices to operate remotely. High-speed internet allows data from medical devices to be transferred to a central point immediately, reducing previous delays in healthcare treatment.
As part of the healthcare industry, medical devices are subject to similar vetting as pharmaceutical drugs. In the United States, the FDA governs what can and cannot be used in a medical environment. The approval body breaks down medical devices into three categories. Class 1 are devices that pose the least amount of risk to patients. Class 2 are devices that pose a slightly higher risk to patients such as clinical mercury thermometers. Class 3 are devices which require the most scrutiny. Developers must prove to the FDA that these devices are safe and effective for use by patients.
The source of funding for medical technology tends to come from classic tech investors. These are venture capital funds, who have backed successful companies such as Uber. Such investors have recognised the potential in the sector. However, there is a significant lack of healthcare investors putting up capital for medical device technology. Tech investors recognise that medical technology could be a source for data and analytics. This is information that can create avenues for growth and development. The tech industry has used such data to expand their reach, and access to analytics has generated new opportunities. Despite the unlimited potentials, healthcare companies have not been as willing to invest.
This is a problem which may hurt both the healthcare investors and the medical device companies. Investors with significant experience in the health industry bring with them a wealth of knowledge. The industry can be a minefield of regulatory issues which companies need to overcome with the proper experience. Unlike the start-up tech environment, medical device technology is subject to far greater government approval.
With a lack of healthcare investors coming on board, some medical technology companies have suffered to cost of inexperience. Without a depth of knowledge, these groups have not succeeded in their development. Such a company was ‘Theranos’, which the Wall Street Journal discovered has very little healthcare experience among its board members.
Thankfully for potential investors, many medical device companies bring years of experience to the table. ChroMedX, a medical technology company formed in 2014, emphasises on In Vitro Diagnostics (IVD) and Point of Care Testing (POCT). President & CEO of the company is Ash Kaushal, and has over 25 years in medical product development.
Growth & Expansion
The medical technology industry seems poised to grow and expand. New emerging markets are driving the demand for innovation. In existing markets, policies such as the Affordable Care Act brought millions of people into the health care system who were previously excluded. To ensure the success of this industry requires significant investment. It also needs medical technology companies to bring experience from the healthcare industry to guarantee the success of devices. With a proper blend of capital and knowledge, there are boundless opportunities for the market.