Despite Tough Market, Device Industry Stays Strong

Industry is faced with intense challenges--more regulatory scrutiny and oversight, product safety issues, pricing pressures, and limits on how doctors are involved in product development with device companies. Despite the hurdles, industry performance and growth has been fairly solid. Last week Ernst & Young (New York) released its first ever performance report on the device industry, which presented a pretty positive overview of the state of the industry and where it's headed.Venture capital investment broke records last year. Funding increase 37% over 2006 to reach $3.7 billion.

October 2, 2008

1 Min Read
Despite Tough Market, Device Industry Stays Strong

By June, the industry had already raised $1.7 billion, putting 2008 on pace for a similar record level year. According to Richard Ramko, a partner at Ernst & Young in Boston, 20% of venture capital dollars go into start up companies, so good ideas are getting funded too--the money and the need is there, he told MD&DI at AdvaMed 2008.The revenue of publicly traded, nonconglomerate companies also increased 6.4% to $111 billion in 2007. When including revenue from the medtech divisions of conglomerates (J&J, GE Healthcare, etc), revenue was more than $180 billion.Some other points: John Babitt, a senior manager at Ernst & Young in New York City, is seeing larger traditional biotechnology companies migrating into the device market, because there's a shorter time to market than in the drug industry. In addition, he said that larger billion-dollar deals such as the private equity buyouts of Biomet and Bausch & Lomb (2007) will be a lot harder to come by in these economic times.The report also assesses initial public offerings and their performance, and mergers and acquisitions. Ernst & Youngs' Pulse of the Industry is available for download here.

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