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Top 5 Trends in the Medical Device Industry
Release time:
2025-03-12 09:43
Tight funding, mergers of large medical device companies, and the difficulty in discerning changes in regulatory direction have been trends experienced by medical device industry insiders for years. However, at a panel discussion hosted by Greenberg Traurig this month, the industry increasingly senses that such developments are having unexpected impacts.
The MASSDEVICE website recently published five trends that are changing the game in the medical device industry, trends that similarly influence and reflect the development of related industries in China:
1. Young innovative companies are increasingly reliant on "grants"
Eric Geismar of EPG Consulting, who has collaborated with the industry association SoCalBio to advise young medical companies, including how to market themselves to investors, stated: "In my experience, funding is tight and likely to become tighter."
Geismar notes that accounting regulations for investments from large medical device companies have changed, so investment companies must increase or decrease the value of their equity investments at the end of each year. Large medical device companies used to invest in startups simply to connect with them and gain board seats. "Now it's harder for them; they really want to see results before investing significant capital—ideally, clinical trial results for a product; animal testing results may not be enough."
Due to numerous mergers in this industry involving multimillion-dollar deals, fewer wealthy medical device companies exist. So where can medical device startups obtain funding before Series A? One answer is grants, including the highly competitive Small Business Innovation Research (SBIR) program overseen by the U.S. Small Business Administration (SBA).
2. More results stem from academic incubation
Early-stage funding through academic research grants is also becoming increasingly common. But this is also problematic, as companies need connections within academia to secure research funding. An expert stated: "The best research happens in universities; while basic research development lags somewhat, many great ideas originate there."
Interestingly, universities are now strengthening evaluations of professors seeking tenure, assessing the number of technologies they've licensed. Once a technology is licensed, such deals are lucrative for professors, and universities also receive royalties from licensing agreements.
3. Valuation considerations in an uncertain regulatory environment
Meanwhile, regulatory uncertainty on both sides of the Atlantic is making it increasingly difficult to value medical device companies and their technologies.
The "Implant Files" released by the US-based International Consortium of Investigative Journalists and the Netflix documentary "Bleeding Edge" have increased public scrutiny of the US FDA 510(k) approval process. The FDA is now working to move away from using the decade-old "predicate device" pathway and create a new 510(k) pathway based on objective safety and performance standards.
In Europe, scrutiny of medical devices is also increasing with the implementation of the new Medical Device Regulation (MDR). Fayerberg says: "Previously, US medical device companies might have had earlier approval and sales in Europe than in the US, but getting into the European market will now take longer." This means that obtaining regulatory approvals will increase costs for medical device companies.
4. Collaboration between medical device companies and high-tech consumer product companies will strengthen
Collaboration between medical device companies and consumer technology companies is strengthening as more products are introduced to monitor people's health and identify problems early.
Geismar says: "You can see Google and Apple working with many device companies to improve their own products while developing new products for the device companies." Partnerships with consumer electronics companies allow medical device companies to sell products not only to doctors and healthcare professionals but also to the public.
5. Keeping up with the rapidly changing intellectual property landscape
One of the most important considerations for medical device companies as they transition to more connected medical devices is intellectual property.
Patent lawyers have long worked to protect intellectual property for products such as catheters and stents; the strategy was to identify differences in the market for similar products. However, the situation is changing as more supplementary technologies, such as connectivity features, software, augmented reality (AR), and artificial intelligence, are now available. There's an expectation that the United States Patent and Trademark Office will provide more guidance so companies can know what is and isn't patentable in these supplementary technologies.
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