MedTech has known an incredible acceleration in the past few years to help people live longer, healthier, and happier lives.
Global health care spending is projected to increase at an annual rate of 5.4% to $10.059 trillion in 2018–2022, a considerable rise from the 2.9% ($7.724 trillion) in 2013–2017 representing 7% of Global GDP ($150 trillions). This increase is a result of the expansion of health care coverage in developing markets, the growing care needs of elderly populations, advances in treatments and health technologies, and rising health care labor costs. Per-person health care spending is expected to continue to vary widely, ranging from $11,674 in the United States to just $54 in Pakistan in 2022. Efforts to close this gap will be constrained by higher population growth in developing economies.
There are three main categories of medical technologies:
For the MedTech market overall, we should expect 450 B$ of sales in 2019 from which 110 B$ were spent in Europe (source US International Trade Admin).
The Covid-19 pandemic magnifies the importance and acceleration of the development of this industry driven by patient needs, availability of data and value-based health-care imperatives.
The pandemic accelerates trends, spurring the switch to a digital economy and workplace with a long-lasting impact on the organization of medical labor. Furthermore, demand for health care—and, therefore, medical technology—will be continuously growing.
The massiveness and availability of data obviously has a major impact. Data and analytics are now widely used in business to solve a range of problems. In health care, the stakes are arguably much higher, but the tools are just as applicable. Increasingly, large data sets — originating from patients records, sensors, imagery and genomics or environment — and powerful analytics can be used to cut through the fog that clouds decision making, guiding physicians and clinicians toward the best diagnostic tests and care pathways — ultimately leading to better outcomes. These data are currently major enablers of the medicine of tomorrow that can be called "P5": Precise, Preventive, Predictive, Participatory, Personalized, impacting dozens of sectors like illness prevention, epidemiology, AI based diagnostics, treatment and chronic care monitoring, thus resulting in the strong development of biotech devices but also e-healthcare applications (on line bookings, telemedicine, quantified self, etc.)
Value Based healthcare as the ability for healthcare providers to improve measurable patient health outcomes is proving to be an especially important criterion in fast-growing MedTech markets to support better care episodes and pathways (hospitals dealing with pre and post-operative care, management of chronic care, etc.)
The specific needs of emerging markets — with the lack of well-developed health care infrastructures and, in particular, the absence of a critical mass of highly trained clinicians (who have been the traditional customers for MedTech products) — make it imperative for companies to develop new solutions that support the delivery of good health outcomes at a much lower cost and in a much more integrated way.
Consequently, there is a huge potential of growth and Investment opportunities in MedTech driven by reinforced vital imperatives of the planet and by current financial market trends
Maturing healthcare tech companies can be good targets for PE firms ready to apply rigorous analysis and invest in growing companies in US and European markets. Healthcare companies with a strong technology component are valued end of Q1 2020 on average at 17.4 times earnings, compared with 15 times average across the industry, with lower multiples for companies without strong technological components. For example, pharmaceuticals average 15 times and healthcare providers average 11.4 times (source Prequin). In recent years, well-managed healthcare tech companies have performed even better, with some exits at 23 to 25 times EBITDA in developed markets.
Thus, investing in healthcare tech is key for PE firms, and the fear of too low multiples is surely unfounded while there is a good rationale for high or even very high multiples. Many healthcare tech companies serve growing markets and market positions, once secured — especially as part of a platform or suite of solutions—are often defensible with strong entry barriers. Such assets are worth their higher multiples and especially given the strategic nature of human healthcare and welfare.
Opportunities are various and plentiful:
This new trendy industry calls for bold strategic investment decisions as we are in a real human “strategic bubble”
Let The New P5 Medicine criteria guide innovation & use this approach as the lens to identify corporate opportunities.
Develop a strategic vision “Invest to win”, both therapeutically as well as geographically, in remaining new opportunities and near-term roadmap to be best positioned in a MedicalTech digital market.
Reimagine by using data and analytical assets in new ways to develop proprietary insights and create competitive advantage
Win in emerging markets by carefully assessing where to play, creating the right product portfolios and distribution models, and, in many cases, finding the right deal partners.
INUO Strategic Impact has the tools and expertise to support your strategic goals and create sustainable EBITDA
Full Potential Impact: definition and implementation of a robust ESG strategy, including identification of immediate risks and vulnerabilities across the value chain and design of a remediation roadmap based on disruption scenario analysis, reevaluation of the supply chain, alignment of companies KPIs with adequate ESG metrics, identification of relevant ESG best practices, preparation to ESG certification by a third party agency.
100-360! Full Efficiency Impact: 100 days to diagnose and deliver sustainable EBITDA-positive operational results, enabling the financing of a Full Potential Impact transformation program, whose monetizable results obtained after 360 days are characterized by ROIs of the order of 3 to 5
Founding Partner, CEO
Specialist of corporate strategy and transformation, Chiheb practiced for more than 30 years as a partner in leading global strategy consulting firms such as Deloitte and Kurt Salmon where he was CEO for eight years , in the US, Europe, Africa, and Japan and as a Tech entrepreneur.
Chiheb is a recognized Expert at identifying opportunities, developing new ventures and start-ups, validating with stakeholders innovating strategies, bringing in financial partners and actively participating in developing or turning around companies in special situations all around the world.
Chiheb held an MBA from Ecole Nationale des Ponts et Chaussées and Ms of Engineering from ENSIMAG
Associate Partner, HealthCare Expert
Specialist of business unit strategy and innovation, Michel practiced for 35 years in the high-tech industry (Valeo, Texas Instruments, …) and in leading global strategy consulting firms such as A.T. Kearney, working in Automotive, Telco and Service Industries.
Michel is a recognized expert in the Healthcare sector especially regarding the Digital Disruption. He has initiated innovative projects for the last years in this field and has validated innovating strategies for various stakeholders. He has published many articles about innovation and healthcare.
He is an associate professor at HEC Executive Education and Centrale-Supelec. He is also a European expert at EIT Health.
Michel is Graduated from L’Ecole Polytechnique and Telecom ParisTech.
Get in touch