BUSINESS NEWS
In 2006, U.S. venture capital investment in the medical device and equipment industry rose substantially over 2005, according to a report released by Ernst & Young LLP (New York City) and Dow Jones VentureOne (San Francisco). During 2006, the industry recorded 239 deals—20 more than in 2005. Overall, 2006 investment in the industry totaled $2.63 billion, representing the largest annual capital invested in industry on record.
Last year, the healthcare industry as a whole—encompassing medical devices and equipment, biopharmaceuticals, medical services, and medical software—saw a deal flow increase of 5% and a capital investment increase of 12% over 2005 levels. Overall, healthcare companies attracted 628 investment deals, for a total of $8.25 billion (see table).
|
Year
|
Healthcare VC
Investment ($ billions) |
Medtech VC
Investment ($ billions) |
Medtech % of
Total Healthcare ($ billions) |
|
2000
|
9.48
|
2.18
|
23
|
|
2001
|
6.81
|
1.91
|
28
|
|
2002
|
5.95
|
1.75
|
29
|
|
2003
|
6.25
|
1.86
|
30
|
|
2004
|
7.26
|
1.73
|
24
|
|
2005
|
7.33
|
2.18
|
30
|
Across all industries, U.S. venture capital investment reached $25.75 billion, an 8% increase over 2005 levels. In addition to the medical device and equipment industry's strong showing, the rise was due in part to strong numbers in the information services and alternative energy industries.
Data related to the report from Ernst & Young and Dow Jones Venture- One are available at http://www.venturecapital.dowjones.com/press/statistics.html.
On a regional basis, the medical device financing trend was echoed by a new report from BioEnterprise (Cleveland), which reported that 2006 investment in Midwestern medical device companies totaled $356 million--an increase of more than 70% over the $205 million reported for 2005.
 |
| Shah |
"The region has always been rich in research and industry assets," says Baiju Shah, president of BioEnterprise. "That rich base is now translating into a growing stream of high-quality healthcare start-ups due to progressive policies and programs such as state investments in research institutions, creation of new capital sources, and professional technology development groups."
Of the $792 million attracted by 135 Midwestern healthcare start-ups in 2006, medtech companies accounted for about 45% of the investment, with biopharmaceutical companies accounting for an additional 44% and healthcare software and services companies attracting the remaining 11% of funds. In 2005, medical device companies attracted 37% of investments, with biopharmaceuticals and healthcare software and service companies accounting for 35% and 28%, respectively.
