Although several big medtech firms fared well last year, few would argue against the opinion that 2013 was not a great year to be in the business of medical technology. But how bad was it, really?
EP Vantage recently published a report, “Medtech 2013 in Review,” that says things were pretty bad—especially for early-stage firms. “With less money coming in,” the report explains, “large firms are avoiding risky acquisitions of early-stage companies. Venture capitalists are following suit, with most awarding investments cautiously to companies with approved products.”
Mergers and acquisitions, the report says, were down only 16 percent in number from 2012, but the total value of those acquisitions totaled $19.3 billion, which was less than half the amount spent in 2012.
While EP Vantage reports that device makers raised just over $3.6 billion in venture capital investments in 2013, the MoneyTree Report that Thomson Reuters compiles for PriceWaterhouseCoopers (PwC) and the National Venture Capital Association only counts $2.1 billion in VC financing rounds in 2013 their Medical Devices and Equipment category.
The differences in the ways the two groups count VC investments spread far apart when numbers of deals are contemplated. EP Vantage counts only 325 funding rounds completed last year, while PwC's number is 308. Both agree, however, that it was a bad year. EP Vantage calls it the worst year since 2008, while PwC's figures count 2013 as the worst since 2004.
FDA has its own numbers on how bad it was. The agency granted only 23 Premarket Approvals (PMAs) in 2013, compared with 41 in 2012.
Blogger Michael Causey looked at the Affordable Care Act tax situation. Citing studies from the Emergo Group and AdvaMed, and comments from the Medical Imaging & Technology Alliance (MITA), Causey reports that no one “says the tax is good for the industry — the reaction has ranged from sort of bad to really bad.”
According to Causey, AdvaMed says that nearly 40 of its member companies reported that the tax forced a total of 14,000 layoffs, and big reductions in R&D and start-up company investment. The effects of that, he says, “may be with us for awhile.”
Stephen Levy is a contributor to Qmed and MPMN.
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