Navigating the Evolving Landscape of Medtech: Trends Shaping the Future
The field of medical technology, or medtech, is constantly evolving as innovations and advancements are made nt only in their field by in science. From artificial intelligence to data security, there are many factors shaping the future direction of medtech. In this article, we will explore the key trends which are expected to have a major impact on the industry during 2024 and into the foreseeable future.
Medtech requires some of our smartest brains, many of whom are not drawn from the medical profession as we know it, but rather from pure science and applied engineering. As such, in attracting our finest go around the world, the industry must offer excellent conditions to retain people in a rapidly changing world.
The major centre for and funder of global medtech is the USA. Major issues within the USD do impact on the demand for and the availability of funds for investment into the sector vis other sectors. The rapid global technical changes in other areas, such as artificial intelligence, are impacting on the availability of money, places and people plus the cost to the sector. US inflation and the reaction to it, such as via higher interest rates, impacts on the availability of funds. The IRA (Inflation Reduction Act) is seeing money taken for the future revenue opportunities.
MedTech is in a living world and is impacted by seeing the US medical finance system “saving” funds by reducing the prices of drugs and other products paid to big pharma which commercialises most of medtech. If big pharma sees that the amounts which they will receive from their first and most lucrative market is permanently reduced there will be an impact on the price they are prepared to pay for new medtechs. This will in turn impact on the early stage funding market at investor recalibrate the expect sale and royalty prices.
The Impact of Finance
The healthcare industry continues to evolve and change due its technological advancements, regulatory changes, and shifting healthcare paradigms. Over the last twenty years the level of investment has been cyclical. In April 2024, Dykeman et al reported “Today, the medtech industry is well-positioned for continued growth with an aging world population that has large unmet medical needs. The forecast for the med-device market is strong, with expected global revenue of $595 billion in 2024 and an estimated 6.1% Compound Annual Growth Rate from 2022 to 2030.1 The medtech sectors with the largest prospective profits include cardiovascular, orthopedic, neurological, urological, and diabetes.[1] The sector has a clear and growing demand for money (“finance”).
This is impacting both on new and established companies and technologies.
Any new project seeking funding must clearly differentiate itself form ongoing competitors and especially those who had gone before and failed. With so many new technologies constantly emerging in the medtech space, there is bound to be some overlap and competition among products. In these cases, companies must find ways to differentiate themselves and clearly articulate their value proposition to secure funding. It will be interesting to see how this trend plays out in the coming years and how companies navigate the increasingly competitive landscape.
The funding challenge in 2024
In 2024 the globe is in a period of uncertainty which is impacting on invest across the economy. Today, venture capitalists are highly selective and more discerning in medtech investment valuations. Fundraising is hard work, particularly for early-stage companies, as fund investors are prioritizing their existing investments, risk mitigation, and more immediate returns on their investment capital. At Projects RH we are working with a company that needs to raise capital which will be locked up in a development phase for four years and this is commonly not aligned with the investor's risk profile. Potential investors are seeking more clinical data even of it is not part of the official FDA accreditation process.
Our clients need to differentiate themselves and clearly articulate their unique value proposition in order to secure funding.
Intellectual Property – the Great Differentiator
As Projects RH works with Medtechs and Biotechs it is clear that one of their greatest assets is their intellectual property (IP). The rise of open-source technology provides a challenge to those who use differentiation alone as part of their moat. It will become increasingly important to have patents and trademarks.
The Final Proof
Most parties in the sector are planning an exit once the technology is proven. Amazingly, the sector is like the resources sector with a hierarchy of exploration, development and commercialization companies, so the market between is critical. It is a world of farm-in, acquisition or IPO. The final proof only lies at the end when a product has earned market acceptability. He lies the clear difference with resources. If you produce gold it will sell at the market price but if you produce a better cure for the common cold it needs to achieve market acceptability.
Outsourcing
As the medtech industry continues to grow and become more complex, many companies are turning to outsourcing as a way to increase efficiency and reduce costs. By outsourcing various aspects of product development and manufacturing, medtech companies can focus on their core competencies and bring products to market faster. In addition, outsourcing allows for access to established specialized expertise and resources not otherwise available.
The cost of operations in the US remains high and many markets in the post-COVID-19 world are looking for local or close-by manufacturing. At Projects RH we are seeing manufacturing continuing in Mexico for the NAFTA and LatAm markets, China, Taiwan and Thailand for Asia; and the Middle East and Central Europe for European and the North African markets. We also see the growing involvement of Indian manufacturing.
The AI Factor
Artificial intelligence (“AI”) is transforming the medtech industry as with many other sectors as it is streamlining healthcare delivery and improving clinical trials, patient testing, diagnostics, and personalized treatments. By harnessing AI’s power, medtech companies can develop innovative solutions that enhance patient outcomes, optimise resource utilization, and changing the way healthcare is delivered.
As we work with clients in the healthcare business the team at Projects RH is seeing more resellers of pharmaceuticals (Drugs Stores or Chemists) entering into the provision of telehealth. The medical practitioner seeing patients far away will have access to online data and diagnostic tools including review of laboratory tests and x-ray results for remote systems which the patient has been allowed access. The computer-aided medical recommender will prepare recommendations for the online doctor which medical professionals will be reluctant to reject.
We have already seen the impact of AI and available technology in medical imaging devices which today can analyze medical images and detect abnormalities with greater accuracy than human radiologists. This raises both ethical and social issues. AI, however, will lead to a more personalized approach to medicine by medical devices analysing a patient's genetic information and medical history to provide tailored treatment options In turn permitting healthcare providers to tailor individualized treatment plans for patients based on their unique needs and characteristics.
From working with the team at Neva Healthcare we are aware that AI-powered wearable devices with SaaS and real-time communications will track patients' vital signs and health data in real-time, allowing for early detection of health issues and better management of chronic conditions. This will be with us in the next few years. One of the growing concerns is that the AI data set may not represent the specific patient’s type.
The new gold – Data and its protection.
One of the greatest benefits of modern medtech is the data that is created by its application and the predictive ability to protect individual using individual and population-based data. This offers a huge risk mitigation potential.
The corresponding challenge is to protect individual and communities from data becoming subject to cyber threats. This is leading to more devices offering remote monitoring and SaaS (software as a service) enhancements including feedback to the user.
Conclusion
The trends driving the directions of MedTech will raise a number of ethical questions such as the movement of data between owners (us), creators (medtech), health authorities, insurers and aggregators / outsources (such as AI techs and big data companies such as Google). There will need to be some type of reconciliation between efficiency and privacy.
At Projects RH we are working with clients who are parts of the puzzle and each of the medtech and biotech clients is making a contribution on the information site and / or assisting the end client without doing the online assessment which results in the clinical path for an individual.
Technology is part of our journey. At Projects RH we have decided to embrace MS Copilot for Microsoft 365. When our IT people recommended it I said “When” and “..next Saturday”. Why did the team say yes – the good is better than the bad. Imagine if we had stayed with Lotus 123 two decades ago. We would have lost so many opportunities. AI and change I medtech is the same.
Do you agree that despite the issues and challenges we have little choice but to accept the wonders that MedTech’s ongoing developments will bring?
We thank the teams at Neva Healthcare lead by John Stephens and at Ad Solis / AdAlta led by Tim Oldham for keeping us focuses on the markets for MedTech and BioTech.
By Paul Raftery, CEO of Projects RH. We are happy to receive questions of comments at paulraftery@projectsrh.com
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[1] Dykeman, D.J., et al; “Six Trends Reshaping Medtech In 2024” published on-line by Medical Product Outsourcing, Online Magazine, “MPO-Mag” Issue 1 April, 2024.
