MedTech: A Snapshot of 2021
by Emanuele Chisari
The medical technologies sector has been always considered a minor sister of the more traditional Biopharma vertical. However, the emergence of digital technologies, computational biology and other deep-tech applications to healthcare, has given new life to the sector and also helped the balance of many large companies leading in the sector. As a result, in 2021 for the first time ever, early-stage medical device investment reached $1B, an increase led by Non-Invasive Monitoring (NIM). The need to monitor patients outside the hospital has become very important during the pandemic, paving the way for more investment in tech-enabled service models.
The imaging subsector drew significantly early-stage investment as hospitals looked to optimize procedure efficiency in their most profitable surgical areas. European investment activity focused on NIM and ophthalmology, accounting for close to half the deal activity in each indication.
The overall device investment scaled to new heights in 2021, far ahead of 2020 investments and almost doubling the investment pace if 2018 and 2019, as shown below:
Fig.1 - Seed/Series A and Total Dollars (Deals) from SV Bank report
Technology-enabled services (NIM imaging) continue to attract the lion’s share in investment devices, but company revenue in this sector is vulnerable to supply-chain risks.
As evidenced by these numbers, medical devices are experiencing a great time of innovation and capital injection. Among the many areas that relate to devices, diagnostics is one of the most exciting. After years of backlash due to the Theranos fraud, the sector is regaining the interest of investors and credibility as shown by recent big deals like the GRAIL acquisition by Illumina and the recent announcement of Ultima Genomics.
Total Diagnostics investment hit a record in 2021, surpassing the capital invested in devices by $4B. Seed/Series A deal count was up significantly, doubling the deal pace of the last two years.
The UK continues to be a hotbed for seed/Series A dx/tools activity this year. The Dx Tests deal activity has increased due to the continued consumer demand for home testing as a result of the pandemic. Specifically, this sector seems to be crucial to the future of medical devices investment and innovation. After the scare of the big fraud associated with Theranos, investors are now interested again in the use of innovative technologies for fast, reliable and cheap diagnostic solutions. Personalized diagnostic is already the present, and it is going to be part of the future.
R&D Tools recorded four $20M+ and three of the top four largest early-stage deals. We continue to see significant Seed/Series A activity in computational biology companies. Dx Analytics, which leverages artificial intelligence/Machine Learning algorithms to help clinicians determine the best treatment, experienced more deal activity in 2021, with the largest focus on oncology.
Dx/Tools investments reached new heights in 2021, more than doubling the dollar totals from 2018 and 2019.
Fig.2 - Seed/Series A and Total Dollars (Deals) from SV Bank report
There were 40 $100M + financings in 2021, more than tripling 2020’s activity, where twelve of these financings yielded $1B + valuations.
Overall, MedTech is in good health and shows promising trends for 2022 and the next few years. Its new identity made of deep tech and digital solutions holds great hopes for the investor and operators in this area.