NEW YORK, Oct. 5, 2020 /PRNewswire/ — The global medical technology (medtech) industry, along with many others, has been adversely impacted by the COVID-19 pandemic. In 2019 the medtech industry showed record growth with revenue up 6.3% to $407.2b. The outlook is very different for 2020. The 2020 EY medtech report, Pulse of the Industry, found that in the first half of this year, roughly two-thirds of US commercial leaders (medtechs with more than $500m in annual revenue) and conglomerates with medtech divisions saw revenues drop by 5%, but the collective outlook remains positive.

Due to the high growth of R&D investments and continued investor confidence, the medtech industry is likely to see a quick rebound even as some figures declined. Total M&A deal value from July 2019 to June 2020 plunged 60%, from $67.6b to $27.1b, and medtech valuations fell along with the broader market, bottoming out in late March 2020. Yet, by the end of August 2020, medtech’s valuations were up 50% compared with January 2019, and big medtech players may be contemplating a surge of acquisitions in the near future.

Arda Ural, PhD, EY Americas Industry Markets Leader, Health Sciences and Wellness, says: “COVID-19 had an acute impact on the medtech industry during the second quarter of 2020, delaying or postponing elective surgeries and leading to deferral of revenue. However, the underlying health of the medtech sector remains robust thanks to its operational performance, continued investor confidence and resuming M&A activity. The shift toward digitalization, telehealth and remote-operated business models is accelerating as a silver lining to the tragic impact of COVID-19, but executives will have to adapt to operating in a highly uncertain environment in the foreseeable future.”

The EY medtech report further highlights the supply chain challenges — such as a small base of suppliers and export issues — brought to light by the onset of the COVID-19 pandemic. AdvaMed and EY recently hosted roundtables together gathering medtech CEOs, and through those discussions, found that this crisis has underscored the limitations of the existing supply chain model. Building transparency and resiliency into supply chain operations is key to the industry’s long-term health and, although this has been an ongoing challenge in the past, medtech companies are now working together to solve the problem.

Jim Welch, EY Global Medtech Leader, says: “While the financial performance was way down in the first half of 2020, the impact of the medtech industry during this global health crisis has never been greater, from mass-producing ventilators, sterilizing equipment and personal protective equipment to inventing and distributing the rapidly expanding range of diagnostic tests, the industry, collectively, met the challenge of the global pandemic. Medtech’s work has saved lives, allowed medical facilities to keep running, enabled patients to be treated in hospitals or at home, and overall made it possible for normal operations to be maintained, while simultaneously also helping health systems, governments and the general public wage a global health battle on a scale not previously seen this century.”

The pandemic forced companies to go beyond norms and collaborate to overcome critical challenges. Many sectors of the industry experienced financial losses, but some — the diagnostics segment, for one — have surged. Moreover, this global crisis can help illuminate the way to a better future for the industry, by demonstrating the need to future-proof business models, strengthen supply chains and ecosystem relationships, and accelerate the progress of digital technology and data. In the coming months, the industry may need to determine how to use this technology and data to streamline the supply chain and aid suppliers in achieving greater production. Longer-term, the industry may need to accommodate the ongoing reality of travel restrictions between countries and even within the United States and may also need to bring some manufacturing capacity back to the US or Europe to safeguard the supply base.

Some regulatory norms have already transformed due to the pandemic. The FDA authorized over 250 emergency use authorizations (EUAs) since February 2020. The loosening of regulatory conventions goes beyond EUAs, with the beginning of the pandemic prompting the FDA to ease its policy controlling X-ray, ultrasound and MRI imaging systems and software. Partnerships and continued dialogue will be an ever more vital part of the industry going forward.

Other key findings highlighted in the EY medtech report include:

  • The $35.6b raised through debt represents the highest amount since 2014–2015.
  • The $3.2b in deal value for IPOs is the third highest on record, but just three deals represent almost 85% of that figure, and the total number of deals (14) was the lowest in a decade.
  • After three straight years of record VC investment, the total VC investment for the most recent 12-month period fell 22%, with Q2 2020 showing a particularly steep decline.
  • The total value of non-megadeals under $10b has dropped 41%, while the average deal value across the industry shrank from $463m in the prior 12-month period to $167m.
  • Digital technologies are key to unlocking the power of data, and data is set to power the transformation of medtech and the broader health care ecosystem. Greater collaboration, with competitors as well as customers, built on data can open future growth possibilities.

To read Pulse of the Industry, visit ey.com/pulse.

Notes to editors

About EY
EY is a global leader in assurance, tax, strategy, transaction and consulting services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. For more information about our organization, please visit ey.com.

About EY Health Sciences and Wellness
The rise of the empowered consumer, coupled with technology advancements and the emergence of digitally focused entrants, is changing every aspect of health and care delivery. To retain relevancy in today’s digitally focused, data-infused ecosystem, all participants in health care today must rethink their business practices, including capital strategy, partnering and the creation of patient-centric operating models.

The EY Health Sciences and Wellness architecture brings together a worldwide network of 34,000 professionals to build data-centric approaches to customer engagement and improved outcomes. We help our clients deliver on their strategic goals; design optimized operating models; and form the right partnerships so they may thrive today and succeed in the health systems of tomorrow. We work across the ecosystem to understand the implications of today’s trends, proactively finding solutions to business issues and to seize the upside of disruption in this transformative age.

SOURCE EY

Related Links

http://www.ey.com

Source link

Author: admin