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Many Medtech Companies Struggled to Find Funding in 2011
A large number of medical device companies, especially startups, had a difficult time finding funding in 2011—with the problem growing worse later in the year. Many fault FDA for the trend. “We are seeing the lack of transparency on the regulatory pathway through the FDA impacting these companies’ ability to raise money,” says Tracy Lefteroff, global managing partner with PricewaterhouseCoopers, life sciences industry services (PwC; San Jose). “They’ve tried to do drastic change on the way that they allow medical devices to be cleared under 510(k)s.
Brian Buntz
December 13, 2011
10 Min Read
.svg?width=850&auto=webp&quality=95&format=jpg&disable=upscale "Many Medtech Companies Struggled to Find Funding in 2011")
A large number of medical device companies, especially startups, had a difficult time finding funding in 2011—with the problem growing worse later in the year. Many fault FDA for the trend. “We are seeing the lack of transparency on the regulatory pathway through the FDA impacting these companies’ ability to raise money,” says Tracy Lefteroff, global managing partner with PricewaterhouseCoopers, life sciences industry services (PwC; San Jose). “They’ve tried to do drastic change on the way that they allow medical devices to be cleared under 510(k)s. They are much more conservative on which device companies need a PMA.”
Another recent trend to emerge is large medical device companies establishing their own venture capital arms. While this will almost certainly increase funding opportunities for the industry, Lefteroff says these venture arms are unlikely to fund early-stage ventures— which is where, perhaps, the most funding is needed.
For overall funding conditions to improve, the public markets must become healthier, Lefteroff stresses. The volatility in the stock markets has resulted in a negative sentiment about the profitability of smaller-cap medical device companies. “You need to see, globally, business pick up for a lot of these companies, so that sales continue to increase, profits increase, which will then attract later-stage M&A activity, which all trickles down from there,” Lefteroff says.
Company | Product type(disease) | Gross raised(US $mil) | Quarter |
DynaVox | Other | 141 | Q2 2010 |
GenMarkDiagnostics | Nonimagingdiagnostics | 28 | Q2 2010 |
PacificBiosciences | Research and otherequipment | 200 | Q4 2010 |
REVA Medical | Therapeuticdevices | 78 | Q4 2010 |
CompleteGenomics | Research and otherequipment | 54 | Q4 2010 |
Fluidigm | Research and otherequipment | 86 | Q1 2011 |
BG Medicine | Non-imagingdiagnostics | 40 | Q1 2011 |
Kips BayMedical | Therapeutic devices(cardiovascular/vascular) | 16 | Q1 2011 |
Trading Multiples | S&P 500HealthcareEquipmentIndex | S&P 500 |
Price to Earnings | 14.9× | 14.0× |
Price to Book | 2.5× | 2.1× |
Price to Tangible Book Value | 10.2× | 4.2× |
Market Cap / Total Revenue | 2.3× | 1.2× |
Market Cap / EBT Excl. Unusual Items | 10.3× | 9.1× |
Profitability | Industry | S&P 500 |
Return on Assets % | 8.7% | 3.5% |
Return on Equity % | 17.3% | 15.4% |
Margin Analysis | Industry | S&P 500 |
SG&A Margin % | 30.3% | 16.1% |
Earnings from Cont. Ops Margin % | 15.5% | 9.1% |
Net Income Margin % | 15.4% | 8.9% |
Net Income Avail. for Common Margin % | 15.4% | 8.8% |
Normalized Net Income Margin % | 13.9% | 8.4% |
Growth Over Prior Year | Industry | S&P 500 |
Total Revenue, 1-Year Growth % | 6.6% | 12.3% |
Earnings from Cont. Ops., 1-Year Growth % | 40.5% | 20.5% |
Net Income, 1-Year Growth % | 38.7% | 21.0% |
Normalized Net Income, 1-Year Growth % | 5.9% | 16.5% |
Common Equity, 1-Year Growth % | 6.3% | 9.4% |
Total Assets, 1-Year Growth % | 7.2% | 5.0% |
Tangible Book Value, 1-Year Growth % | (11.2%) | 14.3% |
Compound Annual Growth Rate (CAGR)Over Two Years | Industry | S&P 500 |
Total Revenue, 2-Year CAGR % | 5.5% | 11.4% |
Earnings from Cont. Ops., 2-Year CAGR % | 30.6% | 96.2% |
Net Income, 2-Year CAGR % | 28.5% | 108.4% |
Normalized Net Income, 2-Year CAGR % | 4.5% | 36.9% |
Common Equity, 2-Year CAGR % | 3.7% | 11.0% |
Total Assets, 2-Year CAGR % | 6.5% | 5.3% |
Tangible Book Value, 2-Year CAGR % | (2.2%) | 14.6% |
Compound Annual Growth RateOver Three Years | Industry | S&P 500 |
Total Revenue, 3-Year CAGR % | 4.5% | 2.3% |
Earnings from Cont. Ops., 3-Year CAGR % | 8.5% | 10.0% |
Net Income, 3-Year CAGR % | 8.3% | 9.5% |
Normalized Net Income, 3-Year CAGR % | 5.4% | 2.8% |
Common Equity, 3-Year CAGR % | 3.3% | 7.4% |
Total Assets, 3-Year CAGR % | 5.1% | 4.2% |
Tangible Book Value, 3-Year CAGR % | 3.2% | 11.0% |
Rank | Company Name | Ticker | Total Revenues ($ mil) | Market Capitalization ($ mil) | Website |
1 | Johnson & Johnson | NYSE:JNJ | 25,610.0 | 175,102.0 | www.jnj.com |
2 | Bayer AG | DB:BAYN | 23,239.9 | 52,362.3 | www.bayer.com |
3 | Siemens AG | DB:SIE | 16,990.7 | 86,114.4 | www.siemens.com |
4 | Medtronic, Inc. | NYSE:MDT | 16,209.0 | 36,463.0 | www.medtronic.com |
5 | Roche Holding AG | SWX:ROG | 15,955.3 | 131,090.2 | www.roche.com |
6 | Hitachi Ltd. | TSE:6501 | 13,959.7 | 24,145.8 | www.hitachi.com |
7 | Fresenius SE & Co KGaA | DB:FRE | 12,303.1 | 16,053.3 | www.fresenius.com |
8 | Koninklijke Philips Electronics NV | ENXTAM:PHIA | 12,288.2 | 18,225.9 | www.philips.com |
9 | Novartis AG | SWX:NOVN | 9,900.0 | 131,948.4 | www.novartis.com |
10 | Covidien plc | NYSE:COV | 9,241.0 | 22,979.5 | www.covidien.com |
11 | Cardinal Health, Inc. | NYSE:CAH | 9,132.1 | 14,925.9 | www.cardinalhealth.com |
12 | 3M Co. | NYSE:MMM | 8,709.0 | 56,291.9 | www.3m.com |
13 | Abbott Laboratories | NYSE:ABT | 7,390.0 | 84,043.1 | www.abbott.com |
14 | Becton, Dickinson and Company | NYSE:BDX | 6,487.8 | 15,995.4 | www.bd.com |
15 | Essilor International SA | ENXTPA:EI | 5,790.7 | 14,520.7 | www.essilor.com |
16 | Olympus Corporation | TSE:7733 | 5,790.3 | 1,581.3 | www.olympus-global.com |
17 | Danaher Corp. | NYSE:DHR | 5,563.0 | 33,349.6 | www.danaher.com |
18 | St. Jude Medical Inc. | NYSE:STJ | 5,412.6 | 12,300.2 | www.sjm.com |
19 | Thermo Fisher Scientific, Inc. | NYSE:TMO | 5,019.7 | 18,055.3 | www.thermofisher.com |
20 | Synthes Inc. | SWX:SYST | 4,689.1 | 19,446.1 | www.synthes.com |
21 | Zimmer Holdings, Inc. | NYSE:ZMH | 4,419.2 | 9,258.1 | www.zimmer.com |
22 | Boston Scientific Corporation | NYSE:BSX | 4,176.0 | 8,681.6 | www.bostonscientific.com |
23 | Hospira Inc. | NYSE:HSP | 4,035.2 | 5,209.7 | www.hospira.com |
24 | CareFusion Corporation | NYSE:CFN | 3,561.0 | 5,514.3 | www.carefusion.com |
25 | Stryker Corp. | NYSE:SYK | 3,282.6 | 18,471.6 | www.strykercorp.com |
26 | Smith & Nephew plc | LSE:SN. | 3,232.0 | 7,773.5 | www.smith-nephew.com |
27 | Getinge AB | OM:GETI B | 3,155.6 | 5,998.0 | www.getingegroup.com |
28 | CR Bard Inc. | NYSE:BCR | 2,861.6 | 7,505.9 | www.crbard.com |
29 | Varian Medical Systems Inc. | NYSE:VAR | 2,596.7 | 6,668.9 | www.varian.com |
30 | Alere Inc. | NYSE:ALR | 2,217.1 | 2,189.0 | www.invernessmedical.com |
31 | Dragerwerk AG & Co. KGaA | DB:DRW3 | 1,955.5 | 1,288.1 | www.draeger.com |
32 | BioMérieux S.A. | ENXTPA:BIM | 1,872.1 | 3,356.3 | www.biomerieux.com |
33 | Sonova Holding AG | SWX:SOON | 1,780.4 | 6,733.0 | www.sonova.com |
34 | Lincare Holdings Inc. | NasdaqGS:LNCR | 1,777.5 | 2,078.2 | www.lincare.com |
35 | Intuitive Surgical, Inc. | NasdaqGS:ISRG | 1,649.8 | 16,749.5 | www.intuitivesurgical.com |
36 | Sysmex Corp. | TSE:6869 | 1,642.8 | 3,515.3 | www.sysmex.co.jp |
37 | Agfa-Gevaert N.V. | ENXTBR:AGFB | 1,607.8 | 373.3 | www.agfa.com |
38 | Bruker Corporation | NasdaqGS:BRKR | 1,606.8 | 2,195.8 | www.bruker.com |
39 | Kimberly-Clark Corporation | NYSE:KMB | 1,568.0 | 27,764.1 | www.kimberly-clark.com |
40 | Medius Holdings Co., Ltd. | JASDAQ:3154 | 1,504.2 | 44.0 | www.medius.co.jp |
41 | Teleflex Incorporated | NYSE:TFX | 1,503.5 | 2,368.2 | www.teleflex.com |
42 | Nihon Kohden Corp. | TSE:6849 | 1,478.2 | 1,066.5 | www.nihonkohden.com |
43 | Pall Corp. | NYSE:PLL | 1,407.9 | 5,828.7 | www.pall.com |
44 | Tokuyama Corp. | TSE:4043 | 1,361.4 | 1,129.3 | www.tokuyama.co.jp |
45 | William Demant Holding A/S | CPSE:WDH | 1,360.9 | 4,374.4 | www.demant.com |
46 | Bio-Rad Laboratories, Inc. | NYSE:BIO | 1,353.0 | 2,778.4 | www.bio-rad.com |
47 | Smiths Group plc | LSE:SMIN | 1,332.8 | 5,744.1 | www.smiths-group.com |
48 | MIRACA Holdings Inc | TSE:4544 | 1,321.4 | 2,185.2 | www.miraca-holdings.co.jp |
49 | ResMed Inc. | NYSE:RMD | 1,275.9 | 4,621.4 | www.resmed.com |
50 | Altran Technologies SA | ENXTPA:ALT | 1,245.0 | 618.1 | www.altran.com |
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