The healthcare industry is big and getting bigger, worth nearly $2 trillion in 2012. The medtech industry generated $110 billion in the United States and $44 billion in exports. But even as U.S. companies lead the world in research, innovation, and manufacturing, medtech investing has been in the doldrums for the last few years.
The high cost of regulatory risk— the time it takes to get an approval for a drug, device or procedure—is one of the biggest problems facing investors. While a company might have a great idea, it often under-estimates the time it will take to get a product to market. For example, the Robodoc precision surgical system for hip joint and knee replacement is now used throughout the world. But it took 14 years to get medical approvals for the devices. And the average cost of getting a product through FDA pre-market approval is $131 million.
That said, all is not doom and gloom for medtech investors, as per-capita spending on healthcare is expected to continue its upward trajectory in the coming years. The field of healthcare IT is expected to grow, driving demand for technologies compatible with electronic medical records systems.
According to Brian Buntz, editor-at-large at UBM Canon, the global telehealth market is expected to surge by 55% in 2013 spurring demand for diagnostic imaging devices, electronic stethoscopes, portable EKG machines, medical software, and fully equipped telemedicine carts. As medtech continues on its high-tech trajectory, companies producing wireless x-ray technology are expected to see an increased demand. InMedica predicts that, in 2014, nearly 40% of new radiography flat-panel detectors will be wireless. Wearable fitness devices also fall into the high-tech category, with nearly 20 million wearable devices expected to be shipped worldwide in 2013. Heart rate monitors and activity monitors will account for the biggest share of the wearable market.
Overseas, regulation changes in the Southeast Asian countries are providing a single standard for medical device certification in seven countries. According to Buntz, this will help fuel sales of ultrasound, digital x-ray, and medical imaging technology in a market where 600 million people lack sufficient access to healthcare services.