Ey-Pulse-Med Tech Industry-Report-2024

In an unceasingly
complex environment,
how can MedTech
adapt to thrive?
Pulse of the MedTech Industry
Report 2024
Contents
To our clients and friends 3
The year in review

The MedTech landscape in 2024 4
EY perspective
Taking on the top-line challenge: Where can MedTech go to find growth? 14
Guest perspective
Boston Scientific’s growth playbook: M&A, R&D and global market execution 18
EY perspective
MedTech manufacturers struggle for profitability as input costs rise 21
Guest perspective
How J&J MedTech balances organic growth with strategic acquisitions 24
EY perspective
Turning MedTech’s commercial challenges into true growth opportunities 27
EY perspective
The rise of AI is shifting the MedTech landscape and where it’s going 31
Guest perspective
The role of AI in MedTech’s future: a deep dive with AdvaMed 35
EY perspective
Seizing the moment: MedTech’s opportunity to enter consumer health 39
Databook 42
Financial performance 43
Financing 46
Merger and acquisition (M&A) 52
Data exhibit index 54
Acknowledgments 55
Pulse of the MedTech Industry Report 2024 02

To our clients and friends
The 18th annual Pulse of the MedTech These pressures pose a particular challenge for the
smaller companies in the sector, which are also battling
Industry Report finds the medical for venture capital (VC) amid historically low numbers
technology (MedTech) industry still of funding rounds, an anemic initial public offering (IPO)
market and limited M&A activity. These factors together
progressing and growing — but,
leave the smaller MedTechs — the “emerging leader”
increasingly, walking a narrow path class of companies with annual revenues of less than
between converging top-line and US$500 million — increasingly unable either to access
public markets or seek an exit via M&A. More than half
bottom-line pressures. of the companies in this class have less than two years
MedTech recorded its sixth successive year of unbroken of cash on hand, representing a threat to the industry’s
top-line growth and is now a US$587 billion industry. innovation ecosystem.
It continues to innovate, with 2023 showing a record To get back on track, companies will need to optimize their
number of FDA product authorizations, both pre-market portfolios to focus on high-growth therapeutic areas and
approvals (PMAs) and 510(k) approvals, and the new technologies, seeking the right mix of organic and inorganic
products reaching the market include highly differentiated investments to tap the potential of industry innovation.
launches in areas such as cardiovascular. Moreover, They will also need to focus on the efficiency of their
MedTech continues to push toward new frontiers, as operating models and optimize costs to restore marginal
ongoing breakthroughs in artificial intelligence (AI) hold growth. Part of this challenge will be refining commercial
the possibility of making devices smarter, smaller and and go-to-market strategies to improve engagement with
more personalized. the industry’s stakeholders and drive greater market
Despite this continued push outward on the boundaries of penetration. Growth and profitability aren’t out of sight
innovation, the industry is struggling with fundamentals. for MedTech, but adapting to thrive through a series of
Some of the space’s fastest-growing companies saw transformational changes might be required to achieve it.
their valuations plunge on the back of disappointing Despite a turbulent environment, we remain confident
second-quarter earnings in summer 2024, and even the in the MedTech industry’s resilience and creativity.
strongest MedTech companies struggle with increased Innovation is the lifeblood of the industry and health care
input costs, reimbursement challenges and a shifting continues to adopt and adapt to new technologies and
sales environment. changing needs of MedTech companies’ most important
As the worst of the pandemic fades further in the rearview customers... the patients they serve every day. It is this
mirror, so do the sales surge and investor excitement shared mission and willingness to employ innovative
that drove MedTech during the public health emergency. ideas that will propel the success of MedTech products,
Companies in the diagnostics and the research and companies and the industry into the future.
laboratory equipment segments have experienced a marked
slowdown after the pandemic uptick, while other MedTechs
Jim Welch
are wrestling with issues including slower-than-anticipated EY Global MedTech Leader
uptake of new products and procedures in hospitals and Ernst & Young LLP
continued challenges to reimbursement rates.
The cost of MedTech inputs — from energy to raw materials John Babitt
to labor — has risen, while inflation and broader financial EY Americas MedTech Transactions Leader
volatility have left companies exposed to increasing selling, Ernst & Young LLP
general and administrative (SG&A) expenses. The net

effect is downward pressure on profit margins in addition Arda Ural, PhD
to the increasing challenge of sustaining revenue growth. EY Americas Life Sciences Sector Leader
Ernst & Young LLP

The year in review
The MedTech landscape in 2024

The MedTech industry in 2024 faces mounting challenges as it seeks to
regain its growth trajectory. While the industry chalked up another year of
growth in 2023, with revenues rising to US$587.6 billion, the 3.8% annual
growth rate was the sector’s lowest since 2017.
Figure 1
MedTech financial performance 2023, overview
2022–2023
2022 2023 H1 2024 % change
change
Public data company

Total revenue $566.0 $587.6 $291.0 $21.7 3.8%
Conglomerates $215.3 $192.3 $87.4 -$23.0 -10.7%
Pure-play companies $350.7 $395.3 $203.6 $44.6 12.7%
Commercial leaders $327.7 $374.4 $194.0 $46.7 14.3%
Emerging leaders $23.0 $20.9 $9.6 -$2.1 -9.1%
R&D expense $33.2 $34.4 $16.6 $1.1 3.4%
SG&A expense $112.7 $127.2 $65.5 $14.5 12.8%
Net income $12.5 $25.8 $7.5 $13.3 106.1%
Market capitalization $1,572.8 $1,716.2 $1,746.7 $143.4 9.1%
Number of employees 1,206,987 1,241,347 - $34,359.2 2.8%
Number of public companies 455 433 418 -22 -4.8%
Source: EY analysis, Capital IQ and company financial statement data.

Numbers may appear to be inconsistent due to rounding. Data shown for US and European public companies.
The industry’s performance in the first half of 2024 underlined the increasing
struggle to achieve growth in the current operating environment — one
punctuated by reimbursement challenges, slowing procedure volumes and
The industry’s
tighter hospital budgets. While some MedTechs reported strong growth
in the first quarter of the year, the second quarter of 2024 turned into a performance in the first
chastening experience for several industry players as they missed on earnings half of 2024 underlined
expectations and received immediate negative market feedback (see Figure 2),
the increasing struggle
tempering the optimism felt at the start of the year.
to achieve growth in
the current operating
environment.

Figure 2
MedTech stock valuations vs. S&P 500, 2024 year to date (YTD)
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
01-Jan-24 01-Feb-24 01-Mar-24 01-Apr-24 01-May-24 01-Jun-24 01-Jul-24
EY US commercial leaders EY EU commercial leaders EY US emerging leaders

EY EU emerging leaders S&P 500
This list included companies such as Dexcom and Edwards Lifesciences,

which have among the strongest growth stories in the therapeutic devices
segment in recent years (see Figure 3).
Figure 3
Biggest therapeutic device market cap growth stories, 30 June 2019–30 June 2024
Market cap as of Market cap as of

Company US$ change CAGR 2019-H1 2024
30 June 2024 30 June 2019
Intuitive Surgical 157,791 54,693 103,098 21%
Stryker 129,618 58,654 70,964 16%
Boston Scientific 113,219 48,904 64,315 16%
DexCom 45,089 10,644 34,446 30%
IDEXX Laboratories 40,237 16,041 24,195 18%
Edwards Lifesciences 55,662 32,020 23,642 11%
Siemens Healthineers 64,320 41,832 22,488 8%
Alcon 44,136 27,822 16,314 11%
ResMed 28,117 16,226 11,890 11%
Straumann Holding 19,749 9,932 9,817 13%

Data is arranged in descending order on the basis of change in market cap (column “US$ change”).

In their Q2 2024 reporting, MedTechs singled out various challenges: Dexcom
cited the issues associated with sales force realignment, reimbursement
factors and a reported reduction in revenue per customer as a result of rebate
eligibility and channel mix; while Johnson & Johnson highlighted pressures
in the Chinese market, where government efforts to deploy volume-based
procurement (VBP) models have impacted the company’s MedTech revenue.
The broader implication for MedTech is that a challenging operating

environment has resulted in a headwind for growth while input costs continue
to increase, putting further pressures on profitability. From raw materials to
labor expenses, energy, shipping and other supply chain overheads, MedTech
today is operating in a higher-cost environment compared to the period before
the COVID-19 pandemic. While industry revenues recorded 3.8% growth in
2023, sales, general and administrative (SG&A) expenses rose by 12.8%.
Looking back to MedTech’s position at the end of 2019 when the world was
on the brink of the pandemic, industry revenues have grown with a compound
annual growth rate (CAGR) of 8.3% in the four-year period to the end of 2023.
Over the same period, however, SG&A also climbed year over year with a CAGR
of 9.8%, while net income for pure-play companies declined, with a negative
2.4% CAGR for the 2019–23 period. Annual revenue growth has struggled to
keep pace with SG&A growth over this period, contributing to uneven income
The broader implication
growth (see Figure 4). for MedTech is that a
challenging operating
environment resulted in
Figure 4
a headwind on growth
Pure-play MedTech SG&A and revenue annual growth rates (AGRs)
and net income, 2019–23
while input costs continue
to increase, putting
further pressures on
SG&A AGR (%) Revenue AGR (%) Net income (US$b)
profitability.
25% 50
20% 40
Net income (US$b)
15% 30
AGR (%)
10% 20
5% 10
0 0
2019 2020 2021 2022 2023
1. “DexCom (DXCM) Q2 2024 Earnings Call Transcript,” The Motley Fool website, July 25, 2024, https://www.fool.com/
earnings/call-transcripts/2024/07/25/dexcom-dxcm-q2-2024-earnings-call-transcript/.

The dearth of IPOs in recent years and consolidation have impacted the
number of public companies and employment numbers across the sector. The
number of pure-play public MedTech companies fell 4% to 433, the lowest
since 2019. Excluding companies operating in the research and laboratory
equipment segment, which is somewhat independent of the therapeutic,
diagnostics and imaging segments in terms of business environment, the
industry ended the year with 350 public companies, fewer than the 355 it
had in 2019. This is due to a combination of factors. For instance, there have
been fewer companies going public since the start of 2022, and many smaller
companies had to close their doors due to lack of funding options. Though
total employee numbers grew by 3%, this was a marked slowdown from the
12% CAGR of the 2018–22 period.
Figure 5
Number of pure-play public MedTech companies and

employees AGR (%), 2019–23
Number of employees AGR Number of public companies
25% 460
Number of employees AGR (%)
Number of public companies

20% 450
15% 440
10% 430
5% 420
0% 410
2019 2020 2021 2022 2023
Layoffs within the sector have been widely reported in the industry news,
with estimates of 14,000 jobs cut between January 2023 and July 2024 as
MedTechs restructure, close sites and seek other cost savings.2 The impact of
these cuts has landed disproportionately on the diagnostics sector. Diagnostics
companies have been hit particularly hard by the backslide after the pandemic
drove a dramatic spike in demand for home tests and similar products. The
ongoing COVID-19 hangover can arguably be cited for many of the challenges
the industry now faces. Examples of these challenges include the fading of
both the extraordinary and distorted patterns of demand for certain products
and procedures, as well as a drop in investor interest in MedTech after a
valuation surge and a wave of IPOs after the height of the pandemic in 2020.
To some extent, a consolidation and retrenchment within the sector was
the inevitable sequel to the unusual highs of the pandemic, and the growth
challenges of 2023 and 2024 should be seen in this wider context.
2.“MedTech firms have cut more than 14,000 jobs in the past 18 months,” MedTech Dive website, https://www.MedTechdive.com/news/
medical-device-layoffs-tracker/720928/, July 17, 2024.

One reason to be positive about the industry’s underlying fundamentals is the
healthy pace of new product approvals, particularly in the artificial intelligence The FDA announced
(AI) space (see our deep dive on the topic later in the report). The FDA’s Center
that, in 2023, it had
for Devices and Radiological Health noted in its annual report that in 2023
it authorized the highest number of novel devices in its more than 40-year authorized the highest
history (excluding emergency use authorizations).3 The number of 510(k) number of novel devices
approvals rose for the fourth consecutive year to reach a record 3,325, while
on record.
pre-market approvals (PMAs) soared 77% as review and approval timelines
recovered from any lingering bureaucratic backlog following the public health
emergency (see Figure 6).
Figure 6
Number of FDA PMA and 510(k) approvals, 2013–24 YTD

Number of 510(k) clearances Number of PMA approvals
3,500 50
3,000
40
2,500
30
2,000
1,500
20
1,000
10
500
0 0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Source: FDA website.

Data for 510 (k) clearances are updated till June 2024 and PMA approvals are till April 2024
MedTech is a research and development (R&D)-driven industry, and the

rate of new innovations reaching the market — particularly in areas such as
structural heart, renal denervation and robotics — is an extremely positive
sign. Yet, recent earnings reports indicate that converting innovation into
revenue growth has become more challenging due to the growing complexity
of novel products (with associated training and education burdens, as noted
in Edwards’ Q2 earnings call) and the increased emphasis on demonstrating
cost effectiveness and clinical superiority. At the same time, profitability is
exceedingly hard to achieve for many companies in the sector after accounting
for the high costs of doing business.
In short, MedTech cannot be complacent about a return to growth and

profitability, particularly in the wake of the negative growth stories emerging in
the first half of 2024. The industry will need to take action to rebuild revenue
and margin growth. Enabling the innovation ecosystem to remain robust will be
one of the key challenges.
3.“2023 Annual Report, Center for Devices and Radiological Health,” FDA website, https://www.fda.gov/media/175479/
download?attachment.

Emerging leaders facing financial headwinds
in 2024
While the struggles of MedTech’s commercial leaders — that These companies are also grappling with an unforgiving
is, companies solely focused on MedTech and commanding and constrained financing environment. In the 12-month
annual revenues of US$500 million or more — may attract period that ended in June 2024, total industry financing
headlines, the operating environment for companies at fell to an eight-year low of US$27.5 billion. All financing
the other end of the scale is even more challenging in streams were down compared to the previous five-year
2024. The contraction and consolidation within the market average investment. While venture capital investment
is hitting the industry’s smaller players harder. While ticked up 5% to US$7.0 billion, it remained 11.3% lower
commercial leaders overall recorded 14.3% top-line than the average total for the previous five years. Similarly,
growth in 2023, the emerging leaders (those with the IPO market made a slight return in the first half of
annual revenues below US$500 million) experienced a 2024 after five quarters of almost no activity (a subsidiary
9.1% revenue decline. of the German supplier SCHOTT AG that makes pre-filled
syringes went public in 2023). Two companies made their
public debut so far in 2024: Fractyl Health raised US$110
million and Tempus AI raised US$411 million. Both
companies were trading below their IPO price at the end of
the first half of this year.
Figure 7
Capital raised in the US and Europe by year, July 2012–June 2024
Venture IPO Follow-on and other Debt
60
50
40
US$b
30
20
10
0
July 2012– July 2013– July 2014– July 2015– July 2016– July 2017– July 2018– July 2019– July 2020– July 2021– July 2022– July 2023–
June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 June 2022 June 2023 June 2024
Source: EY analysis, BMO Capital Markets, Dow Jones VentureSource and Capital IQ.
Numbers may appear to be inconsistent because of rounding. PIPEs included in “follow-on and other.”

Limited revenue growth and limited access to capital Figure 8
markets together represent an increased challenge for
the emerging leaders that traditionally drive MedTech EY MedTech Survival Index, 2019–23
innovation. As such, their financial position has (excludes commercial leaders)
deteriorated since the high point of 2021. At the end of
US-EU
2021, 52% of MedTechs (excluding the commercial leaders
group) had over three years’ worth of cash available. At 2023 2022 2021 2020 2019
the end of 2023, that figure had fallen to 37%, with 55% of More than
37% 40% 52% 52% 44%
MedTechs now holding less than two years’ cash reserves 3 years
and 40% with under one year remaining.
2–3 years
8% 9% 11% 8% 9%
For these cash-strapped companies, the best bet is to seek of cash
an exit via acquisition. Yet, the emerging leaders confront

1–2 years
another major challenge in the M&A market: Dealmaking 15% 17% 19% 18% 14%
of cash
activity has been extremely limited in recent quarters. The
Less than
99 M&A deals completed during the period from July 2023 1 year of 40% 34% 18% 22% 32%
to June 2024 were the lowest annual total in 15 years. The cash
most recent previous 12-month period in which MedTech

dealmaking slipped below triple figures this century was Chart shows percentage of biotech companies with each level of cash. Numbers may
appear inconsistent because of rounding.
during the global financial crisis, when 90 deals were
completed between July 2008 and June 2009.
Figure 9
MedTech M&A, July 2006–June 2024

Mega deals (>US$10b) Other M&A Number of deals
120 350
300
100
Total deal value (US$b)
250
Number of deals
80
200
60
150
40
100
20 50
0 0
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
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–J
–J
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–
–
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
ly
ly
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Ju
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Sources: EY analysis, Capital IQ and Thomson One.

Chart includes deals with value disclosed (MedTech deal where either acquirer or target is located in the US or Europe).

The 42% drop in deal volume in the 12 months preceding The recent trend toward fewer, bigger deals has become
the end of June 2024 was, however, accompanied by an more pronounced quarter by quarter since the beginning
18% increase in deal value, which hit US$57.7 billion. of 2023. Even though the MedTech industry held US$466
The disconnect between volume and value reflects the billion in dealmaking firepower at the end of June 2024,
year’s pattern of few, but relatively large deals. Overall, and commercial leaders have proven they are willing to
the average deal size was the third largest in the past pay high premiums for specific assets, the low background
decade. Johnson & Johnson’s US$13.1 billion takeout of level of M&A activity increases the challenges for smaller
Shockwave Medical accounted for 23% of the annual total companies that are seeking a financially sustainable future.
M&A investment on its own, and the top five deals together
represented 51% of the overall spend.
Figure 10
M&A activity by quarter, Q1 2023–Q2 2024
Other M&A Megadeals (>US$10) Number of deals
25 70
60
20
JNJ/Shockwave: US$13.1b 50
Deal value (US$b)
Number of deals
15
40
30
10
20
5
10
0 0
Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024

Chart includes deals with value disclosed (MedTech deal where either acquirer or target is located in the US or Europe).

Getting back to growth
MedTech companies’ increasing caution on acquisitions In the rest of this report, we examine in more detail the
reflects the growth pressures that industry leaders are strategies MedTechs are pursuing to rebuild growth and
facing. Rather than continuing to expand and diversify their return to profitability, including:
product lines, some of the sector’s biggest players have • The search for high-growth opportunities: What
aimed to streamline their business and concentrate their strategic investments and business model optimization
portfolios in high-growth areas. As a result, divestments initiatives should MedTechs pursue to gain competitive
have become a major theme of industry dealmaking in advantage as they divest from lower-performing
the 2023–24 period. For instance, Danaher continued to business units?
remake itself with a focus on life sciences and diagnostics • Cost optimization: With input costs still high, what
by spinning out its water testing and product identification specific cost containment measures and profit margin
operations as Veralto;4 Baxter sold its pharmaceutical recovery strategies should MedTech’s commercial
solutions business to Warburg Pincus and other private leaders prioritize, and how can smaller companies
remain financially viable?
equity (PE) buyers for US$4.3 billion in 2023 and
announced the sale of its kidney care unit, rebranded as • Commercial: How can MedTechs adapt their
commercial models to overcome recent market
Vantive, to Carlyle Group for US$3.8 billion in mid-2024.
challenges and leverage their go-to-market strategies to
MedTechs will continue their attempt to pivot to high- extract the most value from their innovations?
growth opportunities; at the same time, they must protect • AI: As AI technologies gain momentum in MedTech,
the innovation ecosystem, as smaller companies struggle what strategic investments and integrations are
with limited financial power and acquisitions. Through necessary for companies to harness them for significant
alliances, accelerators, incubators and other partnership growth and competitive advantage?
models, the industry needs to continue to support and • Consumerization: Amid the rise of consumer
nurture grassroots innovation across the sector. Private engagement in health technology, how should
equity and other investment buyers are also on track to MedTechs approach the direct-to-consumer market
to capitalize on this growing trend and connect with a
play an expanded role in supporting innovation, offering
broader consumer base?
financing and exit opportunities to emerging leaders and
facilitating carve-outs as industry leaders continue to
target high-growth segments.
4. “3 MedTech spinoffs that reshaped the industry in 2023, and what to expect next,” MedTech Dive website, November 29, 2023, https://www.MedTechdive.com/news/spinoffs-MedTech-2023-jj-medtronic-
baxter-ge/699981/.

EY PERSPECTIVE
Taking on the top-line

challenge: Where can
MedTech go to find growth?
In February 2024, Elon Musk’s Neuralink announced its successful first
installation of a brain-computer interface in a human patient.5 Proclaimed
by Musk as pursuing the goal of “a closer symbiosis between human
intelligence and digital intelligence,” Neuralink highlighted the radical
frontier of possibilities for MedTech innovation and captured the year’s
biggest VC funding round in the industry.
5. “Musk Says First Neuralink Patient Received Implant in Brain,” Bloomberg website, January 29, 2024, https://www.bloomberg.com/news/articles/2024-01-29/elon-musk-says-first-human-patient-has-
received-brain-implant.

EY PERSPECTIVE
Figure 11
Growth in pure-play MedTech revenues and R&D growth rate, 2000–23
Revenue R&D
25% 30%
Pre-financial crisis Post-financial crisis
25%
20%
20%
Revenue growth rate (%)
15%
R&D growth rate (%)

15%
10%
10%
5%
5%
0%
0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
-5% -5%
Innovation in MedTech does not usually command Analysis of capital allocation strategies shows that the
headlines so dramatically, nor does it typically claim to industry’s big players are returning significant cash
offer this level of game-changing disruption. However, to shareholders in the form of dividends and share
the industry’s steady drumbeat of R&D success was on buybacks: US$23.9 billion in 2023, the second-highest
display throughout 2023, as evidenced in the record level recorded in Pulse (behind only 2022). Of the
number of PMA and 510(k) product approvals during the total capital allocation to R&D, M&A and cash back to
year (see Year in Review). While many MedTech products shareholders, growth investments in R&D and M&A made
are not highly differentiated, the industry has successfully up 63%, the third-lowest total in the past 10 years.
converted incremental innovation into steady growth over
This low return on investment may become an
the past decade, achieving at least 4% revenue growth in
increasingly critical challenge. For MedTech, growth is
each of the past eight years.
no longer a given. Instead, it is a problem that needs to
But, as noted in our Year in Review section, MedTech’s be solved.
innovation-to-growth business model has become
less bankable during the 2023–24 period. Effectively,
MedTechs have two levers for accelerating growth: R&D
spending and M&A/partnering investment. Unfortunately,
recent months have been largely quiet on the dealmaking
front (see Year in Review), while 2023 also saw a dip in
R&D spending growth.

EY PERSPECTIVE
Figure 12
Pure-play MedTech capital allocation, 2014-2023

Cash returned to shareholders R&D expenses M&A expenses Growth investment (R&D and M&A) as percentage of
capital allocation
120 90%
Growth investment (R&D and M&A) as

100 75%
percentage of capital allocation

Investment (US$b)
80 60%
60 45%
40 30%
20 15%
0 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Source: EY analysis, Capital IQ, cㅁㅊ ompany financial statement data.
Solving the growth problem

Some MedTechs are successfully addressing the mix of In a highly diversified MedTech landscape, finding
organic and inorganic growth needed to drive growth; high-growth spaces can be challenging, but it is clearly
our guest perspective from Joe Fitzgerald, Executive achievable in certain niches, including neurotechnology,
Vice President and Group President, Cardiology, Boston urology and digital surgery. The cardiovascular therapeutic
Scientific, highlights the business approach the company area, led by Johnson & Johnson, has undoubtedly been the
has taken to remain among the industry’s high-growth biggest focus of growth investment. Concerns that popular
standouts. As Joe told us, “Consistently growing faster GLP-1 medications for the treatment of obesity would
than your peers requires not only a strong internal pipeline impact sales in this space have largely abated. Johnson
but also a very aggressive external investment attitude”; in & Johnson’s acquisitions of coronary artery disease
Boston Scientific’s case, external investment has allowed specialist Shockwave, and Abiomed, centered on coronary
the company to pivot to higher-growth therapeutic areas. artery disease and heart failure, mean that since the last
quarter of 2022, it has invested over US$30 billion in the
cardiovascular space.

EY PERSPECTIVE
Getting smaller to grow faster and other opportunities in convenient

connected care
Beyond specific therapeutic areas, there are clear trends capabilities in advanced patient monitoring and connected
the industry can identify in its pursuit of high-growth care with AI algorithms enabling real-time monitoring
spaces, including the focus on minimally invasive treatment of cardiovascular patients in hospital. Closer monitoring
modalities, miniaturization of devices, and monitoring and and connected care of patients in the home and hospital
connected care approaches. settings are still a pathway to growth.
Minimally invasive treatment modalities These products and players have in common a growing
One of the major points of differentiation for Shockwave emphasis on smaller, smarter devices that can get closer to
was the company’s development of a minimally invasive patients less obtrusively and make care more comfortable,
alternative to angioplasty as a treatment for coronary connected and convenient. As such, these developments
arterial plaque. Several of the key funding rounds during stand at the intersection of two important trends
the 2023–24 period attack this challenge: among the within MedTech: the increasing use of AI and advanced
year’s top funding rounds were CMR Surgical, developer of analytics to increase the personalization and precision
the Versius platform for minimally invasive surgeries; Axon of interventions, and the growing emphasis on devices
Therapies, developing new minimally invasive procedures being user friendly and providing a better user experience
for heart surgery; and Israel’s Insightec, pursuing both for clinicians and, increasingly, for the patients who
breakthroughs in “incisionless” surgery. are the end users. The growing importance of AI and
consumerization within MedTech is examined in more detail
Miniaturization of devices
elsewhere in this report.
Supporting the move toward minimally invasive procedures
is the trend that sees devices getting smaller. Virtual MedTechs that have grasped the implications of both these
Incision won approval for the first miniaturized robotic trends are well positioned to leverage AI and other digital
surgery system in February 2024,6 while Medical technologies alongside the focus on user experience to
Microinstruments, which focuses on microsurgery and differentiate themselves and lock in market growth and
supermicrosurgery, was among the biggest funding leadership. A clear illustration of this trend is Intuitive
rounds. Beyond surgery, the trend continues with Tandem Surgical. The company achieved and maintained industry-
Diabetes Care rolling out its miniaturized Mobi insulin leading growth as the first mover in the robotic surgical
pump,7 Motif Neurotech winning funding for a miniature field, but subsequently while evolving its product portfolio
neurostimulator,8 and July 2024 seeing Magenta Medical it has also moved beyond the product to achieve significant
win funding9 for the smallest heart pump yet developed. differentiation from the wider ecosystem it has built around
its platform, including services, training and digital layers.
Monitoring and connected care
While MedTechs need to find the right mix of M&A and R&D
The potential for connected care was underscored by
to optimize their product portfolios for growth, ultimately
one of the biggest M&A moves of recent years, Baxter’s
they also need to recognize the differentiation potential of
US$10.5 billion play for HillRom in 2021. In June 2024,
AI, analytics, data and better user experience if they are to
Becton Dickinson announced a US$4.2 billion deal for
sustain high growth rates into the future.
Edwards’ Critical Care business unit, acquiring new
6. “Virtual Incision Receives FDA Authorization for the MIRA Surgical System as the First Miniaturized Robotic-Assisted Surgery Device,” Business Wire website, February 24, 2024, https://www.businesswire.
com/news/home/20240224929002/en/Virtual-Incision-Receives-FDA-Authorization-for-the-MIRA-Surgical-System-as-the-First-Miniaturized-Robotic-Assisted-Surgery-Device.
7. “Tandem kicks off wider US launch of miniaturized Mobi insulin pump,” Fierce Biotech website, February 13, 2024, https://www.fiercebiotech.com/MedTech/tandem-kicks-wider-us-launch-miniaturized-
mobi-insulin-pump.
8. “Motif Neurotech Raises $18.75 Million in Series A Financing to Advance Implantable Device for Treatment-Resistant Depression,” Business Wire website, January 24, 2024, https://www.businesswire.com/
news/home/20240124154216/en/Motif-Neurotech-Raises-18.75-Million-in-Series-A-Financing-to-Advance-Implantable-Device-for-Treatment-Resistant-Depression.
9. “Magenta Medical raises $105M for world’s smallest heart pump,” Mass Device website, July 23, 2024, https://www.massdevice.com/magenta-medical-105m-miniature-heart-pump/.

GUEST PERSPECTIVE
Boston Scientific’s growth

playbook: M&A, R&D and
global market execution
Joe Fitzgerald
Executive Vice President and Group President, Cardiology
Boston Scientific

GUEST PERSPECTIVE
A longtime veteran of Boston Our approach to category leadership and innovation is to

strategize globally and execute locally. Most of the product
Scientific, Joe Fitzgerald has held a innovation emanates from our largely US-based divisions,
variety of roles in the cardiovascular but many decisions are decentralized to local leaders, who
nonetheless keep a strong connection back to us here in
and neurovascular businesses the US. We have specific go-to-market models for Asia and
within the MedTech firm. He Europe, Middle East and Africa, but they are closely aligned
with our global divisional strategy.
currently oversees the development
Our eight operating units are mostly in markets with
and commercialization of Boston 7%–8% underlying unit growth, and as a culture, we expect
Scientific’s cardiology therapies. He our leaders to put together a strategy that will deliver
above market growth. Delivering on that goal doesn’t
sat down with the authors of the report happen by chance; it means not only taking advantage of
to talk about commercial operations product and procedure innovations, but also innovating
locally on commercial models and customizing our go-
and how the company has become a to-market approach. Over the past two decades, we’ve
global leader. built up a pre-eminent supply chain team to support every
aspect of our global launch strategies. The supply chain
Ernst & Young LLP (EY US): What key strategic needs to deliver whatever volumes the business demands,
moves has Boston Scientific made to put it in with the flexibility to scale that up. For example, when
the strong position it holds in the market in we bought the FARAPULSE™ Pulsed Field Ablation (PFA)
2024? System, we began working two and a half years prior to
approval to ensure that, upon launch, we could support
Fitzgerald: In 2012, Boston Scientific was a US$7 billion any possible demand signal. We work across forecasting,
company — with almost half of our revenue that year component supply and manufacturing capacity, and we
coming from stents and cardiac rhythm management deliver strong results.
(CRM), two markets with very low single-digit growth at
best. Unsurprisingly, we focused on changing that. We Boston Scientific is among the top tier of large-cap
diversified, and through focused investments in R&D; MedTech companies, and we have stated our intention
selling, general and administrative (SG&A) expenses; M&A to become the pre-eminent top performer. To achieve
and venture capital (VC), we have grown substantially that goal, we need to continue the journey we’ve been
faster than our competition. To do this we invested in on — investing in attractive markets and growing faster
products like the WATCHMANTM Left Atrial Appendage than the market. But we also need to find non-linear
Closure Device and franchises like Percutaneous Coronary growth engines, the WATCHMANTM device being one
Imaging & Guidance (PCIG). Over a 10-year period we historical example.
also invested for leadership in the electrophysiology (EP)
space and we built our investment profile through our
MedSurg segment in endoscopy and urology, which had
very attractive end markets.

GUEST PERSPECTIVE
EY US: How do you strike the capital allocation EY US: You’ve explored direct-to-consumer
balance between organic innovation and external (DTC) channels for products like WATCHMAN.
opportunities? What qualities make a viable DTC program?
Fitzgerald: Consistently growing faster than your peers Fitzgerald: The ideal DTC market is a chronic disease
requires not only a strong internal pipeline but also a state that is large and reachable. For that reason,
very aggressive external investment attitude. Integrating we’ve targeted areas such as spinal cord stimulation,
successfully is vital when spending your cashflow on atrial fibrillation or AFib (via WATCHMAN) and erectile
acquisitions rather than paying dividends or buying dysfunction. Here, you have patients who have been
back stock. Beginning around 2011, we started to suffering for years rather than months. They have tried
operationalize exactly what’s in our playbook: how we other therapies and they are looking for a way to fix or
integrate everything from operations to mid-flight clinical better manage their disease.
trials, R&D, supply chain, the global SAP platform, the
There are now multiple ways to go direct to the patient
finance platform and the marketing group. We’ve done
through social media and search engine optimization.
around 35 deals over the past decade, and each time, we
Some of these concepts have existed for 20 years, but the
take our learnings, tweak the model and improve it.
new algorithms have put us light years ahead of where we
When you find a company that is a hand-and-glove fit with were when they were first introduced. I would emphasize
your organization’s culture, you’ve got dynamite on your that it’s equally important to educate the referring
hands. Our acquisition of Baylis Medical Company Inc. physician so they’re aware of your product as an option.
was an example of this phenomenon and a tremendous
deal for us. We made strategic integration moves as EY US: What other trends within MedTech
there were areas where we quickly integrated fully, but influence your strategic thinking?
others where we didn’t want to disrupt what was already
Fitzgerald: Our end markets are growing 7%–8%, with
working well within Baylis. There were a number of
an aging population and many other factors boosting
products within Baylis that were already approved, with a
consumer demand. Therefore, within 10 years, there
salesforce in both Europe and the United States. We were
could be twice the number of procedures done today — yet
careful about the initial commercial integration, and at
you rarely see a system or a group with a plan to double
the end of the first year, we challenged ourselves to find
the capacity of their catheterization lab, endoscopy unit,
synergies, leveraging our larger salesforce to beat prior
support staff labs and so on. Ultimately, that disconnect
expectations, reduce sales costs and increase EBITDA
could constrain growth, and companies should consider
drop-through. To that end, we experimented, piloted and
alternative sites of service and service technologies.
optimized commercial integration within 12 months of the
Think 45-minute coronary interventional procedures
acquisition.
rather than seven-hour ventricular tachycardia ablation.
Approaches that can improve safety and efficacy while
bending the curve on replicability, duplicability and
minimizing complexity will be key. That’s where our
FARAPULSE PFA System has really disrupted the AFib
market by offering an alternative that is faster and safer,
enabling more procedures per lab, per day. We hear so
much from the provider side about workflow management
as a major goal, and this is one of the areas where we are
focusing our innovation.
This guest perspective has been edited for length and clarity.

EY PERSPECTIVE
MedTech manufacturers
struggle for profitability as
input costs rise
After decades of strong growth, unprecedented disruption in the form of
inflation, supply issues, labor costs, and manufacturing shifts, medical
device manufacturers need to find new ways to create value. Even as
technology helps drive innovation, companies must build sustainable
discipline in creating efficiencies and optimize their SG&A costs, while
shifting to new commercial models.

EY PERSPECTIVE
Revenues for the MedTech industry have been rising at a The COVID-19 pandemic played a major role in how the
fairly steady pace for the last few years, yet net income industry got here. When the world effectively shut down in
has been weak and varied. The gap between the top and 2020, medical device companies in many areas saw their
bottom lines has been cavernous — 2023 industry revenues revenues largely come to a halt.
came in at US$587.6 billion, while net income was only
• Procedure volumes: Elective procedures came
US$24.3 billion, or just 4.41%.
to a standstill in 2020. While procedure volumes
In 2023, profits nearly doubled year over year, but have recovered and remain elevated due to the
the US$12.5 billion the industry claimed in 2022 was aging populations around the world, costs — many
a five-year low. Gains in 2023 were still 9% below the exacerbated by the pandemic — have also remained
pre-pandemic totals in 2019. Even though margins were elevated.
starting to look a little better in the first half of 2024, the
• Supply chain woes: Like most other sectors, the
industry still has a long way to go to show profitability that
MedTech space was hit with supply chain issues that
matches its levels of innovation.
prompted new thinking about supply chain visibility and
efficiency. The most critical supply chain issues have
Input costs are eating up profitability been resolved over the last three years, but medical
device supply chains look fundamentally different
While R&D expenses have remained between 5% and 6% of
today than they did at the start of 2020. Companies
total revenues for the sector for the last five years (coming
in the space have had to rethink not only where they
in at US$33.2 billion for 2023), SG&A expenses ate up 22%
are getting their raw materials but also how they are
of revenues in 2023, clocking in at US$127.2 billion (up
moving parts around the world.
12.8% year over year).
Figure 13
Change in US and European therapeutic device companies’ revenue and net income by
disease category: pure-plays
Revenue Net income Percentage change in revenue Percentage change in net income
3 60%
1 50%
0
Ophthalmic Cardiovascular/ Orthopedic Ear, nose and throat Respiratory All others 40%
-1 vascular
-2
30%
(US$b)
-3
-4
20%
-5
-6 10%
-7
-8 0%
Sources: EY analysis, Capital IQ and company financial statement data.

Data shown for pure-play companies only.

EY PERSPECTIVE
• Global inflation: 2022 was a particularly hard year for Improving profitability for the industry means embracing
the sector as globally high inflation weighed heavily on technology. Digital supply chain solutions are already
margins. As inflation has started to recede somewhat in helping many companies in the space gain greater
the US, the cost of capital has come down. end-to-end visibility into their complex network of
suppliers, while also giving companies greater resiliency
• Raw materials costs: The cost of materials has
by helping them prepare for business disruptions from
gone up significantly, buoyed by continued supply
the multitude of unplanned risks that companies face,
problems, geopolitical disruptions to key supplies, and
everything from global pandemics to civil unrest to data
inflation itself. This has impacted both medical device
security to natural disasters.
manufacturers, but also the contract manufacturing
organizations (CMOs) that many rely on, which have AI-powered tools and cloud-based solutions are giving
been passing their own costs down to manufacturers. companies the flexibility to create intelligent manufacturing
schedules that fluctuate based on changes in demand
• Labor: Over the last five years, we’ve seen an increase
in the market. These tools build in the redundancies
in the cost of labor due to both inflation and movements
necessary to spot manufacturing errors before they
around the world to pay workers more. For instance,
become costly. They also enable real-time port monitoring
changes to the Federal Labor Law in Mexico have
and notify manufacturers of constantly shifting tax and
increased labor costs by as much as 40% in the country.
trade regulations.
Medical device companies are also facing a shortage of
highly skilled talent. The shift in supply chains has been accompanied by a shift
in manufacturing. The pandemic exposed weaknesses
While many of these issues are macro forces that impact
in manufacturing and has also propagated changes to
companies across industries, MedTech is particularly
federal regulations. Many countries, particularly the US,
sensitive to some of these factors. For instance, copper
are pushing protectionist agendas that require life sciences
and electrical components are both commodities that
companies to move manufacturing onshore or to policy-
are currently up in price. Much like their pharmaceutical
friendly countries. Reshaping the strategic architecture
counterparts, MedTech manufacturers are experiencing
of supply and manufacturing operations requires careful
a paradigm shift related to expenses. Traditionally, both
consideration: many countries outside of China are offering
sectors have benefited from robust profit margins, allowing
incentives to manufacturers to attract investment.
them to devote less scrutiny to financial expenditures.
As the threat of climate change continues to accelerate,
companies need to consider the added costs related to
Strategies for cost optimization
extreme weather, including damage to manufacturing
and efficiency facilities, downtime caused by power outages and delays
Addressing the cost challenge requires a strategic due to weather. One major pure-play MedTech company
reassessment of company operations and a focused began shifting its freight from air to ocean to save costs
review of existing portfolios. MedTech firms must and reduce carbon emissions. Expect to see commodity
streamline their business models to concentrate on and energy costs stabilize as interest rates are reduced.
core areas of impact. Subsequently, it is essential The MedTech industry stands at a crossroads, where
to restructure operations both regionally and at the innovation must meet efficiency to thrive in an evolving
organizational level, and to recruit new talent with the economic landscape. By leveraging technology and
skillset needed to implement innovative strategies. reimagining their operational strategies, companies can
overcome the hurdles of today and pave the way for a more
profitable and sustainable future.

GUEST PERSPECTIVE
How J&J MedTech

balances organic growth
with strategic acquisitions
Jennifer Kozak
Vice President, Business Development, MedTech
Johnson & Johnson

GUEST PERSPECTIVE
After nearly 30 years with the MedTech EY US: Inorganic growth has been a key part
of J&J MedTech’s growth strategy. How do you
division at Johnson & Johnson (J&J),
manage capital allocation between internal and
Jennifer Kozak has seen the sector external requirements?
evolve as it has executed its strategy to Kozak: We are employing both organic and inorganic
become a global MedTech leader. The innovation as we continue to shift our portfolio into
high-growth markets. It’s that combination that is
authors of the report sat down with propelling us forward.
Kozak to discuss the company’s recent We take a well-defined and well-disciplined approach to
acquisitions and the role that M&A capital allocation, agnostic to size and business. For us,
it’s all about finding the best science and technology
plays in executing on that strategy. that will help advance our ability to solve significant
unmet needs in surgery, orthopedics, cardiovascular,
EY US: Johnson & Johnson has evolved as an and eye health.
organization over the past 10 years, and you
M&A has been and will continue to be a critical
have been able to observe it all. For example,
component, but in fact organic investment is probably the
there was a strategic decision to divest some
most important piece of our capital allocation strategy.
well-known businesses including Ortho-Clinical The benefit of our scale, financial discipline, and the
Diagnostics and Cordis. Tell us a little about strength of our balance sheet allows us to pursue multiple
what drove those decisions and the long-term capital allocation priorities at the same time and we are
rationale. ready to pursue the right opportunity at the right time.
Kozak: For J&J MedTech, our focus and strategy have

continued to center on strengthening our current market-
leading business units as well as shifting our portfolio into
higher-growth market segments that offer an opportunity
to address unmet patient needs. M&A has always been
an important part of that effort, and we take a very
strategic and thoughtful approach to it. For instance,
“
in the last five years, we’ve invested over $30 billion in
M&A in high-growth market segments such as robotics,
cardiovascular and heart recovery. We also have a very M&A has always been an
rigorous portfolio management process, looking at how important part of that effort,
we allocate our resources to drive growth and strengthen and we take a very strategic and
our competitiveness. As we routinely assess our portfolio, thoughtful approach to it.
we sometimes identify opportunities for our businesses to
succeed elsewhere. Jennifer Kozak
Vice President, Business Development, MedTech
Our portfolio optimization process is based on two Johnson & Johnson
dimensions. One is the attractiveness of the market, and
the other is our position within that market.

GUEST PERSPECTIVE
EY US: You recently acquired Abiomed and EY US: You have also gone early with
Shockwave. Tell us a bit about your thinking on transactions like the Laminar acquisition. How
these transactions, including the integration have you convinced stakeholders about the long-
approach that has contributed to what you think term growth prospects vs. the clinical risk of
will make these opportunities a success? taking on an early technology?
Kozak: Cardiovascular intervention is one of the largest Kozak: Whether it’s early or late, we always start
and fastest-growing disease areas in MedTech. It has with our strategy and the impact that we can have on
significant unmet patient need. Both acquisitions patients. If it’s earlier stage, we need to have confidence
accelerated our ongoing effort to shift into high-growth that we have the right capabilities to be successful.
markets where we feel we have the capabilities that add With respect to Laminar, we are very committed to
value and where we can have a leadership position. elevating the standards of care in electrophysiology
and for patients with atrial fibrillation (AFib). Laminar
Abiomed was the first to market and is a leader in heart
is focused on eliminating the left atrial appendage for
pump technology in the treatment of heart failure and
patients in nonvalvular AFib to prevent strokes, and has
coronary artery disease. Its portfolio today addresses a
a differentiated approach compared with other products
large patient population and is continuing to expand into
that are either on the market today or in development.
new areas such as acute decompensated heart failure and
long-term, chronic heart failure with strong innovation Our recent acquisitions really demonstrate our
and clinical data. commitment to patients and to innovation. We’re tackling
some of health care’s biggest challenges by investing
The addition of Shockwave enhances our business
in the right technology and innovation—organically and
position in two of the most innovative and fastest-growing
inorganically—to improve patients’ lives.
segments in cardiovascular: coronary artery disease and
peripheral artery disease. Shockwave is a leader in the This guest perspective has been edited for length and clarity.
space with tremendous growth potential. Both companies
nicely complement our established global leadership
position in electrophysiology.

EY PERSPECTIVE
Turning MedTech’s
commercial challenges into
true growth opportunities
The challenges MedTechs have experienced during the 2023–24
period have placed more emphasis than ever before on the need for
companies to develop successful commercial models. Optimizing
go-to-market tactics has become a key part of the growth strategy.

EY PERSPECTIVE
As Joe Fitzgerald, Boston Scientific’s Executive Vice We’ve seen this type of scenario elsewhere as well. The
President and Group President of Cardiology, told us shift to post-acute sites of care is also driving changes
(see guest perspective in this report), companies cannot in selling models. These sites are often smaller entities
use a one-size-fits-all approach for different products with financial constraints that require financial solutions
and markets: “We expect our leaders to put together a and targeted marketing, as well as sales rep allocation.
strategy to deliver above-market growth. Delivering on Some product categories no longer require the traditional
that goal doesn’t happen by chance; it means not only sales model that utilizes a large number of sales reps.
taking advantage of product and procedure innovations, Instead, many product categories are now driven by
but also innovating locally on commercial models and group purchasing organizations (GPOs) and distributors,
customizing our go-to-market approach.” As Fitzgerald resulting in the need for a segmented sales strategy
explains, Boston Scientific combined locally adapted that differs by product segment and customer segment.
commercial engagement strategies with forecasting-driven For example, for product categories that are largely
supply chain flexibility as part of an end-to-end approach to influenced by GPOs and distributors, the investments
boosting demand and delivering sales volumes. should be shifted toward managing those large
relationships and hospital procurement vs. asking sales
The need for local tactics has been demonstrated in
reps to call on health care providers (HCPs) who have little
2023–24 by the Chinese government’s reshaping of the
influence.
domestic reimbursement landscape and the impact this
has had on top-line MedTech growth. Imaging giants Johnson & Johnson’s Q2 2024 reporting also noted the
Philips and GE HealthCare have both been affected by impact of China’s value-based procurement (VBP) model
Chinese market challenges, with Philips citing the impact on decreased revenues.12 While value-based controls
of the government regulation on approval times in on pricing remain a factor only in specific geographies
China,10 while GE reports headwinds from China’s for now, these commercial models ultimately contain
anti-corruption drive and delayed government stimulus.11 opportunities as well as obstacles for MedTech. The
The fact that specific market factors within the Chinese industry has already begun to utilize commercial models
business landscape have hit earnings demonstrates that more closely tie sales to the value a product
the need for commercial models that are adapted to provides, emphasizing both economic and clinical value.
anticipate and meet these local challenges. For instance, a company that manufactures cardiac
pacemakers could offer a pricing model where the initial
cost of the device is lower but includes a performance-
based component where additional payments are made if
the pacemaker leads to improved patient health metrics
Johnson & Johnson’s Q2 (such as reduced hospital readmission rates or better
management of heart rhythm disorders during a specific
2024 reporting also noted the
period of time). This approach aligns the interests of
impact of China’s value-based HCPs, patients and the device company with achieving
procurement (VBP) model on better health outcomes, and it may help drive uptake at a
time when companies are looking for new approaches to
decreased revenues.
bolster growth.
10. “Philips results hub,” Philips website, July 29, 2024, https://www.results.philips.com/downloadcenter.
11. “GE HealthCare reports second quarter 2024 financial results,” GE HealthCare website, July 31, 2024, https://www.gehealthcare.com/about/newsroom/press-releases/ge-healthcare-reports-second-
quarter-2024-financial-results.
12. “Johnson & Johnson Second Quarter 2024 Earnings Call and Webcast,” Johnson & Johnson website, July 17, 2024, https://www.investor.jnj.com/events-and-presentations/events/event-details/2024/
Johnson--Johnson-Second-Quarter-2024-Earnings-Call-and-Webcast/.

EY PERSPECTIVE
Turning commercial strength into a compelling growth strategy

Similarly, other factors limiting the commercial Other MedTechs are similarly emphasizing the strength
performance of MedTech companies at the midpoint of their commercial teams as a positive differentiator and
of 2024 may in reality offer opportunities to rethink one of the keys to building and maintaining growth. In Q2
the commercial model and pivot toward new ways alone, leading companies asserted the following:
of going to market that can unlock new benefits. For
• GE HealthCare noted the importance of product but
example, Edwards noted that the implementation of new
emphasized that the growth opportunity will also come
programs has been slower than anticipated due to the
from the strength of the commercial function: “We've
workload burden on health care providers. Yet, as the
talked about [the] team itself, the talent upgrades
company emphasized in its earnings call, through closer
that we put in place, the new sales disciplines and
engagement with providers, MedTechs can help providers
processes.”15
overcome these roadblocks. “There are certainly things
we can do to help. We can do a lot of imaging workups • Abbott emphasized the importance of its sales force
and take some of the load off the team. We can do device and manufacturing capacity to driving uptake of its
prep. We can come in with our benchmark program and TriClip franchise and stressed that “our opportunity
teach them efficiencies.”13 here is to continue to expand the sales force and go to
newer accounts,”16 while Medtronic also highlighted
Engagement should become an increasing strength for
its program of “recruiting the best sales reps” as a key
the industry in its interactions with providers, with digital
future growth driver.17
and omnichannel marketing tools helping companies
build more seamless and personalized communications • Intuitive Surgical stressed the personalized and targeted
strategies. Leveraging the reams of data they have nature of its commercial effort on the “measured
at their disposal, alongside customer relationship rollout” of its new da Vinci 5 robotic surgery system,
management (CRM) systems and analytics, MedTechs stating “we’ve really focused the sales force on looking
are increasingly well placed to expand and optimize their to place da Vinci 5 for incremental capacity for our
communications with providers to improve the process of customers vs. the trade-in cycle.”18
bringing products to market and to patients.
Though still ramping up its realigned sales force, Dexcom

emphasized during its Q2 earnings call that once the
business transition is complete as its sales force continues
to drive efficiency, the commercial function will be a
critical driver of future growth rather than an operational
obstacle to overcome: “We feel that our expanded US
sales force positions us very well to reignite our growth
opportunity now and well into the future.”14 Sales force
restructurings are often complicated tasks that require
careful planning and precision in execution.
13. “Investor Relations,” Edwards Lifesciences website, July 24, 2024, https://ir.edwards.com/overview/default.aspx.
14. “Investor Relations,” Dexcom website, July 25, 2024, https://investors.dexcom.com/overview/default.aspx.
15. “GE HealthCare Second Quarter 2024 Earnings Conference Call,” GE Healthcare website, July 31, 2024, https://investor.gehealthcare.com/events/event-details/ge-healthcare-second-quarter-2024-
earnings-conference-call.
16. “Q2 2024 Abbott Earnings Conference Call,” Abbott Laboratories website, July 18, 2024, https://www.abbottinvestor.com/events/event-details/q2-2024-abbott-earnings-conference-call.
17. “Q4 2024 Medtronic plc Earnings Conference Call 5/23/2024,” Medtronic website, May 23, 2024, https://medtronic.rev.vbrick.com/#/videos/cd0b5132-5d6c-4a41-bd75-3919073e84e4.
18. “Events & Presentations,” Intuitive Surgical website, July 18, 2024, https://isrg.intuitive.com/events-and-presentations.

EY PERSPECTIVE
In short, the MedTech industry recognizes that better These powered-up commercial models will give
commercial execution is going to be integral to building companies more scope to address future challenges,
(or rebuilding) the top line, securing successful launches including helping to shape future regulation around
and penetrating high-growth markets. The potential for new technologies. Regulatory compliance and risk
commercial innovation is increasing as new AI-powered management will also be key focus areas as MedTechs
tools allow MedTechs to build agile cross-functional teams pursue the consumer opportunity by bringing products
that can respond to fluctuations in supply and demand in directly to consumer, as Dexcom and Abbott are doing
near real time, while also tracking inventory levels. This with continuous glucose monitors (CGMs) for the first
new level of transparency into operations enables sales time in the US market in mid-2024. MedTechs will need
organizations to respond to customer needs more quickly to engage with regulators as they build sustainability
and with agility. Meanwhile, linking the commercial and social responsibility into their commercial strategies,
organization more closely to team members in other recognizing that these qualities can drive differentiation
areas of the business and R&D will allow companies and positive brand perception.
to shape their commercial structure to evolve more
As the MedTech industry continues to evolve, companies
organically.
that can effectively transform their commercial
operations to leverage these strategies will likely emerge
as the frontrunners in a competitive and rapidly changing
marketplace.

EY PERSPECTIVE
The rise of AI is shifting the

MedTech landscape and
where it’s going
The World Economic Forum, noting that “AI” was the top word
of 2023, attributed the huge uptick in interest across all sectors
to “the meteoric rise of generative AI software ChatGPT.”19 For
MedTech it was also a breakthrough year for AI.
19. “Guess the 2023 word of the year, according to Collins Dictionary,” World Economic Forum website, https://www.weforum.org/agenda/2023/11/ai-word-of-the-year/, November 13, 2023.

EY PERSPECTIVE
Figure 14
FDA approvals of AI-enabled medical devices, 2014–2024 YTD
Radiology (% of total approvals) Number of approvals

250 100
221
Radiology (% of total approvals)

200 80
Number of FDA approvals
155
150 60
129
111
107
100 40
80
64
50 20
26
18
6 6
0 0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Source: EY analysis, FDA data.

*2024 data complete to August 7, 2024.
The simplest measure of AI’s growing traction in the

Emerging applications
industry is the FDA’s published list of approved algorithms
and devices incorporating AI technologies. In 2023, the Radiology accounts for about 76% of all marketed
list swelled to record levels, with a 43% year-on-year AI models, according to the FDA’s analysis. In 2023,
increase in approvals.20 however, we saw these use cases expand to cover
new ground. The 2023 crop of FDA approvals saw the
The AI products reaching the MedTech market are not
agency approve AI devices and algorithms in a record
large language models like ChatGPT. Instead, they are
11 categories, with 45 approvals outside the radiology
relatively traditional AI applications. Back in 1995, the
segment (more than double the previous year).
FDA approved the first product it recognized as utilizing
AI. In the past decade, the number of approvals has grown The lists of approved algorithms for 2023–24
steadily.21 This rise has been driven primarily by the demonstrate the diverse range of analytics now reaching
widening uptake of AI in radiology, where algorithms have the market, including:
can interpret digital imaging data with high reliability.
• Momentum Health’s Momentum Spine, for quantifying
postural asymmetries,22 is the first product recognized by
the FDA recognizes as a “physical medicine” approval.
• CLEW Medical’s latest approval is for its algorithm that

predicts the risk of patient.23
20. “Artificial Intelligence and Machine Learning (AI/ML)-Enabled Medical Devices,” FDA website, August 7, 2024, https://www.fda.gov/medical-devices/software-medical-device-samd/artificial-intelligence-and-
machine-learning-aiml-enabled-medical-devices.
21. Ibid.
22. “Momentum Health receives FDA 510(k) Clearance for Momentum Spine Mobile App,” Momentum Health website, April 3, 2024, https://momentum.health/article/fda-clearance.
23. “CLEW Medical Secures FDA Clearance for Second-Generation AI Models,” Business Wire website, May 13, 2024, https://www.businesswire.com/news/home/20240513942084/en/CLEW-Medical-Secures-
FDA-Clearance-for-Second-Generation-AI-Models

EY PERSPECTIVE
• SigTuple’s AI100 with Shonit is a tool that allows • Delivering non-imaging diagnostic data through wearables
remote and semi-automated analysis of digital
• Augmenting therapeutic devices, including implants and
pathology imagery.24
insulin pumps
• Beacon Biosignals’ wearable headband interprets EEG
In each of these areas, AI can offer expanded data
brain data to measure sleep quality.25
capture and functionality, potentially helping MedTechs
• Ortoma’s OTS AI platform optimizes orthopedic surgical differentiate and enhance their product and service
planning, delivery and patient follow-up, one of a offerings and achieve and sustain stronger top-line
handful of new approvals in AI orthopedic solutions.26 growth. AI, including generative AI, can also deliver
operational efficiencies in supply chain visibility and
While the range of products winning approval is highly
predictability, acceleration or full automation of
eclectic, broad themes in marketed AI include:
regulatory and other governance processes, and multiple
• Established and incrementally expanding usage in other processes and functions where MedTechs are
radiology and imagery analysis currently experiencing cost and capacity pressures.
• Performing patient monitoring and assessment via Johnson & Johnson, for example, called out the potential
software in hospitals of AI to “improve the MedTech profitability profile” in a
2024 earnings call.27
• Assisting and supplementing all aspects of surgery and
the patient journey through surgery
Figure 15
Non-radiology FDA approvals of AI-enabled medical devices, 2014–2024 YTD
50
40
30
20
10
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Anesthesiology Cardiovascular Clinical chemistry Dental Ear, nose and throat

Gastroenterology-urology General and plastic surgery General hospital Hematology Immunology
Microbiology Neurology Obstetrics and Gynecology Ophthalmic Orthopedic
Pathology Physical medicine
Source: EY analysis, FDA data.

*2024 data complete to August 7, 2024.
24. “SigTuple’s AI100 with Shonit receives US FDA 510(k) clearance,” BioSpectrum website, October 3, 2023, https://www.biospectrumindia.com/news/91/23658/sigtuples-ai100-with-shonit-receives-us-fda-
510k-clearance.html.
25. “Beacon Biosignals Receives FDA Clearance for AI-Assisted Sleep Monitoring Device Dreem 3S,” Beacon Biosignals website, September 13, 2023, https://beacon.bio/press-releases/beacon-biosignals-
receives-fda-clearance-for-ai-assisted-sleep-monitoring-device-dreem-3-s/.
26. “Ortoma receives FDA 510 (k) clearance for OTS™ Hip in the US,” Ortoma website, March 13, 2024, https://ortoma.com/news/ortoma-receives-fda-510-k-clearance-for-ots-hip-in-the-us/.
27. “Johnson & Johnson Fourth Quarter 2023 Earnings Call and Webcast,” Johnson & Johnson website, January 23, 2024, https://www.investor.jnj.com/events-and-presentations/events/event-details/2024/
Johnson--Johnson-Fourth-Quarter-2023-Earnings-Call-and-Webcast/default.aspx.

EY PERSPECTIVE
Industry consolidation The regulatory challenge ahead

While AI in MedTech is a rapidly expanding field, it also As AI continues to advance, the need for robust and
remains a fairly fragmented area. Certain companies adaptive regulatory frameworks has become critical to
predominate among the FDA’s list of AI approvals, with fostering innovation while promoting patient safety and
radiology specialists Canon Medical Systems, Aidoc maintaining public trust. In June 2024, four US senators
Medical and Zebra Medical all boasting multiple approvals, flagged the need for standard reimbursement policies
while the imaging giants Siemens Healthineers, Philips for AI use in CMS,31 a move supported by AdvaMed.32
and GE HealthCare collectively have 141 approved The FDA has proposed a framework controlling how
products, over 16% of all AI FDA approvals.28 There has devices containing AI can be modified33 and intends to
been little consolidation in the sector, however, despite publish new documentation on AI governance by the
a series of minor deals, including Lunit’s US$194 million end of 2024. Meanwhile, the European Union’s AI Act
acquisition of Volpara in December 2023, Samsung has entered law,34 and in April 2024, the UK Medicines
Medison’s US$92 million takeout of AI fetal monitoring & Healthcare products Regulatory Agency (MHRA)
specialist Sonio and GE HealthCare’s US$40.5 million deal published a policy paper on future regulation of AI,35 with
for Intelligent Ultrasound’s AI arm in July 2024.29 each of these regulators also recognizing the need for
The acceleration of AI into the heart of the MedTech international standards.
business model may be further driven by the series of FDA Commissioner Robert Califf noted in January36 that
deals Nvidia struck with various MedTechs, including the FDA needs to assume a guiding role in the adoption of
collaborations with Medtronic, announced in 2023,30 AI, “when it involves patient safety, or there’s significant
and with Johnson & Johnson and GE HealthCare in risk.”37 But he also acknowledged the scale of the
2024. As of the latest estimates, the MedTech industry challenge as the field continues to accelerate, saying that
is expected to invest upward of $10 billion annually “we’d have to hire three or four times as many people
into AI technologies by 2025, reflecting the massive to take on what’s coming.” Short of deploying AI itself
commitment within the sector. to cover this human resource shortfall in AI regulatory
capacity, the industry and its stakeholders will need to
Figure 16 find better and more collaborative ways of working to
keep innovation moving. MedTechs seeking growth by
FDA approvals of AI-enabled medical devices
maximizing value from AI ultimately need a regulatory
by therapeutic focus, 2023
regime that can support and undergird innovation in the
sector while also driving safety and compliance.
28. “Artificial Intelligence and Machine Learning (AI/ML)-Enabled Medical Devices,” FDA website,
August 7, 2024, https://www.fda.gov/medical-devices/software-medical-device-samd/artificial-
intelligence-and-machine-learning-aiml-enabled-medical-devices.
29. “MedTech firm Intelligent Ultrasound in £40.5m deal to sell clinical AI arm to GE HealthCare,”
Business Live website, July 18, 2024, https://www.business-live.co.uk/technology/MedTech-firm-
intelligent-ultrasound-in405m-29567586.
30. “Medtronic and NVIDIA Collaborate to Build AI Platform for Medical Devices,” NVIDIA website,
March 21, 2023, https://nvidianews.nvidia.com/news/medtronic-and-nvidia-collaborate-to-build-ai-
platform-for-medical-devices.
31. “Letter to CMS on ABHS,” US Senate website, June 10, 2024, https://www.heinrich.senate.gov/
imo/media/doc/letter_to_cms_on_abhs.pdf.
32. “AdvaMed Applauds Bipartisan Senate Letter Urging CMS to Establish a Reimbursement
Pathway for AI-Enabled Medical Devices,” AdvaMed website, June 13, 2024, https://www.advamed.
org/industry-updates/news/advamed-applauds-bipartisan-senate-letter-urging-cms-to-establish-a-
reimbursement-pathway-for-ai-enabled-medical-devices/.
33. “Marketing Submission Recommendations for a Predetermined Change Control Plan for
Artificial Intelligence/Machine Learning (AI/ML)-Enabled Device Software Functions,” FDA website,
Radiology Cardiovascular Neurology Gastroenterology-urology April 2023, https://www.fda.gov/regulatory-information/search-fda-guidance-documents/marketing-
Clinical submission-recommendations-predetermined-change-control-plan-artificial.
Anesthesiology Orthopedic Ear, nose and throat
chemistry 34. “AI Act enters into force,” European Commission website, August 1, 2024, https://commission.
europa.eu/news/ai-act-enters-force-2024-08-01_en.
Hematology Microbiology Ophthalmic Physical medicine
35. “Impact of AI on the regulation of medical products,” UK Government website, April 30, 2024,
https://www.gov.uk/government/publications/impact-of-ai-on-the-regulation-of-medical-products.
Source: EY analysis, FDA data. 36. “Califf backs increased LDT oversight despite industry opposition,” MedTech Dive website,
February 1, 2024, https://www.MedTechdive.com/news/fda-califf-backs-ldt-proposed-rule/706286/.
37. “Alliance Webinar with FDA Commissioner Dr. Robert Califf.”

GUEST PERSPECTIVE
The role of AI in
MedTech’s future: a deep
dive with AdvaMed
Shaye Mandle
Executive Director
AdvaMed Digital Health Tech

GUEST PERSPECTIVE
Established in October 2023, the utilization and privacy. Our members have talked a lot
about data access and utilization agreements with their
AdvaMed Digital Health Tech division customers, specifically providers. There seems to be
has the task of educating policymakers, an absence of consistency and trust in the partnerships
between medical and digital health companies and
regulators, providers and health providers. Our third category is reimbursement, looking
consumers about the rapidly shifting at how we reimburse for digital health technologies, as
well as emerging technologies enabled by AI and machine
impact of data and digital medical learning (ML).
technologies in health care. The As we look toward our October 2024 board meeting,
authors of this report sat down with AdvaMed will be issuing some key principles related to
how we see AI developing and what we know will require
Shaye Mandle, the executive director of an evolution of the regulatory environment to fully take
the division, to discover how the digital advantage of these technologies for patients. I believe
these principles will serve as a precursor to conversations
health landscape has been evolving with FDA about the regulatory environment going forward.
since its inception.
EY US: As you look to the next board meeting,
EY US: Tell us about the rise of digital health what are some of the key messages that you
within the MedTech space and a bit about the believe resonate most with regulators, health
new Digital Health Tech division within AdvaMed. care providers and even patients?
What are your priorities, and how do you see Mandle: With regulators, especially the FDA, I think we’re
your group’s role in shaping the ecosystem? completely aligned on the idea that the current regulatory
Mandle: The Digital Health Tech division at AdvaMed framework is sufficient and actually works quite well for
has existed formally now for a little less than a year. the AI/ML technologies that are in the market today.
The plans for this division were created by the AdvaMed The FDA now has the authority to work with companies on
board several years ago after it assessed the landscape a predetermined change control plan (PCCP), which would
and recognized not only that digital health and related appear to give companies an opportunity to articulate
technologies were going to be driving their businesses, anticipated change in a predetermined manner. If we’re
but also that the players engaged in health care would going to get to a place where we have truly personalized
continue to shift. The board created the membership medicine and put AI in a position to really have an impact,
category and the division to enable companies that were we’re going to need to be thinking about what that
playing in the health tech space, but not necessarily regulatory framework looks like.
purely in the MedTech space, to be a part of the
conversation about how we prioritize things. Today, we We see companies that are hesitant to make big
have a board of 23 people. It includes members from both investments in areas such as generative AI (GenAI) or
tech companies and MedTech companies. frontier and foundation models, in part because there isn’t
a clear regulatory pathway for how we use them and there
We’ve organized our division around three key isn’t a clear reimbursement pathway. We continue to have
priorities. One is the evolution of artificial intelligence conversations both on the Hill and with CMS to advocate
(AI) technologies, looking at how they’re developed for a clear pathway for these emerging technologies.
and regulated. Second is a focus on data access, data

GUEST PERSPECTIVE
EY US: With all of that in mind, how do you see EY US: How does AdvaMed think about and
AI within MedTech evolving over the next five define responsible AI within the context of
years? Are we going to see more of a status quo MedTech? Are there different considerations for
until some of those pathways are determined, the pure-tech companies that are now in your
or have innovations such as GenAI changed the membership sphere?
trajectory? What do you expect going forward? Mandle: Obviously today, FDA regulations are helping to
Mandle: GenAI has changed the conversation define responsible AI based on capabilities and perceived
completely. Interest coming from the Hill and the Biden challenges and opportunities to improve patients’ lives.
administration’s executive order on AI is not just focused The FDA needs to have a risk-based platform around
on health care, and that interest cuts across the entire these technologies. Cybersecurity is always a component.
economy and every sector. Privacy is always a component. I would say the FDA’s
primary focus today around responsible AI tends to be
While we are the MedTech organization, it would be ideal
mitigation of unwanted bias.
if we could be the go-to for all answers relative to AI and
health care. It would improve our leadership position, but There are elements of transparency. MedTechs have been
it also would enable the MedTech industry to help drive very good at demonstrating to the FDA how AI models
the narrative and the conversation. have been built and how they are being utilized.
Companies that have approved AI/ML products are On the tech side, the company leaders who are engaged
continuing to invest heavily in improving them, enhancing with AdvaMed on the digital health tech board are leading
their diagnostics capabilities and improving outcomes. health for their respective organizations. For example,
We’ll continue to see better and better diagnostics, in while several large and established tech companies
particular in relation to breast cancer screenings and are not explicitly entering the medical devices market
other key areas. Those products will continue to improve, themselves, these organizations have teamed with
and they will save lives. partners and courted customers across the MedTech
ecosystem. Others have developed health consumer
I would never suggest that our companies are going to
products and see health from a very different perspective.
be static. Absolutely not. The question is, can we take
What I’ve learned in working with these notable tech
bigger leaps? It’s going to be a process. The FDA is going
companies is that it’s just as risky to put them into one
to have to get comfortable with how we’re collecting data,
category as it is to think of Medtronic, GE HealthCare,
whether data collection is happening in real time, what
Abbott and Boston Scientific as monolithic organizations.
the learning algorithms look like and what point in that
Their strategies can vary; their customer bases may
process would be appropriate for patients to interact
differ; their investment choices are not always aligned;
with a product.
and the extent to which their initiatives resemble those
I think that’s the big unanswered question. Everyone’s seen across the MedTech industry can also diverge.
thinking about it. FDA’s thinking about it.

GUEST PERSPECTIVE
I’m sure there was concern initially when this membership EY US: One of the items that your technology
was created. I believe that, at the time, people thought committee is working on is around being the
big tech was going to take over health care, and I think leader in MedTech messaging on AI digital
the MedTech industry was interested in seeing what the
health. What is the messaging for the future of
tech companies were thinking. The big tech companies
the MedTech industry?
wanted to learn more about how health care functions, in
particular devices. Mandle: So today, we look to articulate the benefits of
the current state of AI. We make sure that our AI and
I don’t see that dramatic conflict today. Eight years ago,
our current company products are not getting swept
they wanted to learn from each other, and today there is
up in new regulations that are unnecessary. A perfect
great collaboration. The other thing we’re seeing is that
example: we’re in every state dealing with legislative bills
individual leaders move among these sectors. There
that are focused on protecting consumer privacy, and the
are a few examples of this movement, including GE
targets include health care, but also financial services,
HealthCare’s chief technology officer, Taha Kass-Hout,
social media and other areas. We have very successfully
Medtronic’s chief innovation officer, Ken Washington,
articulated that the FDA regulatory process protects
and our board member from Verily was at Medtronic for
privacy and that the regulation of AI, in health care, works
15 years. So, there is an interesting camaraderie. Each
today to protect the privacy of patients.
of these companies’ teams increasingly include leaders
who have had experiences in both the big tech and Today, the messaging is, “We’re doing it right, and here’s
MedTech categories. how we’re doing it — here are the benefits to patients.”
And it’s not just AI; it’s digital health, remote patient
monitoring and telehealth during the pandemic. We can
point to all kinds of products and services that really are
improving patients’ lives. That’s our main messaging
focus today.
This guest perspective has been edited for length and clarity.

EY PERSPECTIVE
Seizing the moment:

MedTech’s opportunity to
enter consumer health
The landscape of medical technology is undergoing a transformative
shift, one that is being driven by the vast amounts of data being
constantly produced and consumers’ interest in having greater control
over their health outcomes through that data.

EY PERSPECTIVE
A new brand of consumer driven MedTech is evolving. Untapped potential

This burgeoning domain is being propelled forward by the
twin engines of personalization and self-care, which are While wearables have been around for the better part of
rapidly reshaping how individuals engage with their health a decade and have been integrated into many consumers’
and wellness. lives, our ravenous appetite for data about our health
has driven some consumers to go beyond the typical
The concept of personalization in health care is not new,
consumer products category and seek out devices that
but its implementation has reached unprecedented levels,
were not designed for direct-to-consumer consumption.
thanks to the proliferation of consumer health devices.
From wearable fitness trackers to sophisticated health For instance, there is a growing market — driven by hyper-
monitoring systems, the array of devices available to the conscious health care consumers — for continuous glucose
average consumer is vast and growing. These powerful monitors (CGMs) and similar devices. These consumers
tools enable individuals to take charge of their health, are not diabetic and are not seeking these tools at the
often in real time. This consumerization brings with it a advice of a health care provider. Instead, some are
focus on user-friendly interfaces, personalized feedback athletes or “gym rats” looking for greater insight into how
and seamless integration into daily life. their diet impacts performance, while others are looking
to be proactive about their health and avoid diseases like
For MedTech companies, which have typically sold to doctors
diabetes before they become a problem.
and hospital systems, direct-to-consumer offerings hold
the promise of a new revenue stream, but they also come According to the 14th edition of the EY Future Consumer
with a host of new challenges that are outside the scope Index, conducted in April 2024, 37% of consumers are
of traditional medical device companies. This intersection willing to pay extra for products that promote health
of consumer goods and medical devices requires MedTech and wellness. Meanwhile, 24% said they are willing to
manufacturers to explore consumer behaviors and develop share their private data to receive personalized health
an understanding of new sales channels. recommendations.
“Consumer products need to meet and exceed people’s

needs and wants — And that’s why Abbott’s Libre makes
sense as a consumer product because we designed it to
meet the needs of people with diabetes — simple, easy,
affordable – from the very beginning. To keep developing
According to the 14th edition of this market, we have to keep listening to their needs. We
know people want a small, discreet sensor, so we built the
the EY Future Consumer Index,
world’s smallest sensor. We know people want longer wear
conducted in April 2024, 37% time, so we increased the wear time to 15 days. We know
of consumers are willing to pay people want to communicate directly with us, so we built
systems to answer their questions directly online and in
extra for products that promote
social. All of these are critical as we continue to build out
health and wellness. the consumer diabetes space,” said Chris Scoggins, senior
vice president, commercial operations and marketing
for Abbott’s diabetes care business, which makes CGM
devices like the Freestyle Libre.

EY PERSPECTIVE
These hyper-conscious health care consumers are often Medical device companies have an opportunity to work
going through third-party providers to gain access to with (or acquire) third-party app developers to make the
traditional medical devices. While CGMs are over-the- data received from their CGMs and other devices into
counter products in some parts of the world, they require actionable, easy-to-interpret insights for consumers. The
a prescription in the US. Third-party app developers are market is particularly ripe for apps and devices that help
linking up with telehealth providers to get the devices in with weight management — as evidenced by the success
the hands of healthy consumers. These consumers then of GLP-1 drugs that help patients reduce weight. Medical
pay for the device out-of-pocket, bypassing insurance device manufacturers could capitalize on the popularity
involvement. Beyond the ease of device acquisition, the of pharmaceutical weight reduction solutions by
third-party developers offer user-friendly, insights-based offering devices and apps that help patients with weight
interfaces to deliver the data and typically offer the management and food choices in conjunction with
convenience of syncing seamlessly with other technology GLP-1 drugs.
or wearables, allowing consumers the convenience of
MedTechs will have to take a page out of the
getting their health data all in one place.
consumer sector handbook and think about consumer
These developers are attracting the attention of investors segmentation, as well as how to reach the luxury
as well. In April 2022, one such company, Levels, raised consumer that can afford medical devices out-of-pocket.
$38 million in its Series A.38 The company, founded This will likely mean entering the new realm of consumer
in 2019, reported bringing in $1.7 million in monthly advertising, which has a different tone and regulatory
revenue in July 2023, and was valued at $300 million at requirements than outreach to physicians.
the time of its Series A.39 Another company, Ultrahuman,
The potential for growth in this sector is immense, as
secured $35 million in a Series B round in the first quarter
evidenced by the willingness of consumers to invest in
of 2024.40
health and wellness products and the success of companies
that have already tapped into this demand. MedTech
How can traditional MedTechs capture companies that can successfully navigate this new terrain
this value will not only benefit from a new revenue stream but also
contribute to a healthier, more informed society.
For medical device manufacturers, the direct-to-consumer
As we look to the future, it is clear that the integration
route is going to require a new set of commercial skills.
of consumer goods and medical devices will continue
Organizations will need to think about what appeals to
to evolve, driven by technology, innovation, and the
the healthy consumer and how it can engage with these
ever-growing desire of individuals to take control of
consumers (who won’t be in the traditional hospital
their health outcomes. MedTech companies that are
setting or even at other points of care).
agile and consumer-centric will lead the charge in this
transformative era, improving lives and shaping the future
of health care.
38. “Levels $38M Series A driven by member and community alignment to solve metabolic health crisis,” Levels website, https://www.levels.com/blog/levels-38m-series-a-driven-by-member-and-community-
alignment-to-solve-metabolic-health-crisis, September 10, 2023.
39. “Levels Investor Update - July 2023 Recap,” Notion website, https://levelshealth.notion.site/August-2023-Levels-Investor-Update-July-2023-Recap-291daca2145a46b6a0cb074076c4700b, August 2023.
40. “Smart ring maker Ultrahuman has its eye on Oura’s crown,” TechCrunch website, https://techcrunch.com/2024/03/20/ultrahuman-series-b/, March 20, 2024.

Databook

Financial performance
Figure 1
US and European MedTech public company revenues, 2013–23

US commercial leaders EU commercial leaders Other US public companies Other EU public companies
Number of commercial leaders
700 80
600
75
Number of commercial leaders

500
Revenue (US$b)
70
400
300
65
200
60
100
0 55
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
EY analysis, Capital IQ and company financial statement data.

Commercial leaders are companies with revenues at or above US$500 million.
Other companies include figures for conglomerates.
• The number of commercial leaders in MedTech rose • The commercial leader group was also joined by
to 80 in 2024, with these companies accounting for a Orthofix, Inspire, Medacta and Guardant, all of which
record 64% of industry revenues. Commercial leader passed the US$500 million mark in 2023 revenues.
revenue climbed 13%, while aggregate revenues for all Shockwave reached the same milestone but was
other MedTechs fell by 10% as smaller companies and acquired outright by Johnson & Johnson in 2024, and
conglomerates alike struggled for growth. the conglomerate Jenoptik also reached the half-billion
revenue point this year. Dropping out of the list were
• The biggest growth came in the EU commercial
Maravai, affected by waning post-COVID demand for
leaders, boosted by the emergence of the biggest new
Nucleic Acid Production offerings; Nuvasive acquired
commercial leaders, iVision Tech of Italy and SCHOTT
by Globus Medical during the year; Invacare, which
Pharma. The EU commercial leader increased its
completed financial restructuring and divested its
revenues by 15%, compared to 11% for US commercial
assets in 2023; and Invitae, which also hit financial
leaders. In part, the strong performance from the EU
difficulties and Labcorp acquired its assets in
segment is a remnant of iVision’s US$11.4 billion in
August 2024.
2023 revenues being incorporated into the EU total
after the private Italian ophthalmology company listed
itself on Euronext Growth Milan, a division of the pan-
European Euronext stock exchange that focuses on
small and medium-sized enterprises, in August 2023.

Figure 2
US and European revenue growth by product group: pure-plays

Percentage change in revenue Percentage change in number of companies
60% 100%
Percentage change in number of companies

90%
50%
Percentage change in revenue
80%
40% 70%
60%
30%
50%
20% 40%
30%
10%
20%
0%
10%
-10% 0%
Imaging Non-imaging diagnostics Research and other equipment Therapeutic devices (total)

Data from public pure-play MedTechs only.
• The imaging segment led industry growth, with the • The non-imaging diagnostics segment and the research
three leaders, Siemens, Philips and GE HealthCare, and other equipment segment were both hit by post-
all among the top 10 companies in terms of absolute COVID-19 headwinds, with the latter particularly
revenue growth in 2023. Strong demand, high hard-hit. The segment’s leading players, Thermo Fisher
technological differentiation with the increasing Scientific and Danaher, both reported significant
incorporation of AI and other digital tools, and widening pandemic-related headwinds as the segment contracted
access to mobile imaging devices were all cited 5%; the non-imaging diagnostics segment was near-
among the reasons for the segment’s robust 2023 static, recording 1% overall growth.
performance.
• The therapeutic device segment saw a 12% increase

in pure-play revenue. This growth was led by strong
performances from Stryker, Boston, Essilor and
Fresenius, all of which added over US$1 billion in
year-on-year revenue growth.

Figure 3
US and European MedTech market capitalization relative to leading indexes

EY MedTech commercial leaders EY MedTech emerging leaders Rock Health Digital Health Public Company Index
Nasdaq Biotech Index Composite broader indexes*
200%
150%
100%
50%
0%
-50%
0
4
0
4
0
1
0
4
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
-2
an
an
an
an
an
ct
ct
pr
pr
pr
pr
pr
ul
ul
ul
ul
ul
-O
-O
-J
-J
-J
-J
-J
-A
-A
-A
-A
-A
-J
-J
-J
-J
-J
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
Source: EY analysis and Capital IQ.
Chart includes companies that were active on 30 December 2022.
*Composite broader indexes refers to the daily average of leading US and European indexes: Russell 3000, Dow Jones Industrial Average, NYSE, S&P 500, CAC-40, DAX and FTSE 100.
• Total market capitalization for the pure-play industry grew 9% in 2023 after seeing valuations dramatically correct
downwards in 2022, with 28% wiped off aggregate market cap. However, MedTech commercial leaders have continued
to underperform the broader composite indexes since summer 2024, with emerging leader valuations also sinking in
mid-2024, amid disappointing Q2 reporting for some of MedTech’s high-profile companies, as noted in the Year
in Review section.

Financing
Figure 4
Capital raised in the US and Europe by year (US$m)
Jul 2012 - Jul 2013 - Jul 2014 - Jul 2015 - Jul 2016 - Jul 2017 - Jul 2018 - Jul 2019 - Jul 2020 - Jul 2021 - Jul 2022 - Jul 2023 -
Type Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 Jun 2024
Venture $4,369 $4,989 $5,804 $6,548 $8,479 $8,623 $8,482 $6,733 $9,155 $8,563 $6,723 $7,031
IPO $226 $1,465 $2,298 $684 $2,560 $6,513 $5,161 $3,193 $7,322 $4,443 $40 $1,057
Follow-on and other $4,267 $2,024 $2,476 $2,720 $8,796 $6,059 $4,419 $11,717 $15,154 $5,899 $7,029 $6,008
Debt $25,024 $22,311 $41,984 $12,375 $25,367 $16,087 $10,018 $35,313 $11,199 $11,144 $19,006 $13,432
TOTAL $33,885 $30,789 $52,562 $22,326 $45,203 $37,282 $28,081 $56,957 $42,830 $30,048 $32,798 $27,528
Numbers may appear to be inconsistent because of rounding. Private investments in public equity (PIPEs) included in “follow-on and other.”
• MedTech’s financing total for the period from July 2023 to June 2024 fell 16% compared with the previous 12-month
period and reached a total of under half the financing MedTech generated in its peak year in the 2019–20 period,
when the industry raised US$57 billion.
• The IPO market enjoyed a resurgence, albeit from an extremely low baseline, and venture investment increased by
5%. However, follow-on financing fell 15% and was down 32% compared to the five-year average. Debt financing
dropped 29% compared to the previous year and 23% compared to the five-year average.
• With 49% of this fundraising coming from debt offerings, the amount of capital investment going to smaller
innovative companies was relatively low, a factor that will add to the pressure on MedTech’s innovation ecosystem as
discussed in the Year in Review section.

Financing
Figure 5
Innovation capital raised in the US and Europe by year

Innovation capital Commercial leaders
60
50
40
US$b
30
20
10
0
July 2015– July 2016– July 2017– July 2018– July 2019– July 2020– July 2021– July 2022– July 2023–
June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 June 2022 June 203 June 2024
Source: EY analysis, BMO Capital Markets, Dow Jones VentureSource, Capital IQ.
Innovation capital is capital raised by companies with revenues of less than US$500 million.
• The challenge to innovation funding is highlighted by a decrease in innovation capital, or the amount of investment
going to MedTechs that are not in the commercial leader group, dropping 6% to a nine-year low of US$12.0 billion.
• In all, innovation capital only represented 44% of the financing raised by MedTech over the 12-month period. At the
height of investor interest in MedTech during the COVID-19 crisis, innovation capital represented 67% of MedTech
financing, hitting US$28.5 billion in the 12 months between July 2020 and June 2021; the total for 2024 is only 42%
of this figure.
• Commercial leaders, which have captured an average of 47% of MedTech financing over the previous five years, took
56% of the total fundraising investment in the 2023–24 period, further evidence that the environment is becoming
more challenging for smaller companies.

Financing
Figure 6
US and European early-stage VC rounds above US$5m

Early-stage VC investment (US$b) Number of early-stage VC rounds
10 900
9 800
8
Early-stage VC investment (US$b)
Number of early-stage VC rounds

700
7
600
6
500
5
400
4
300
3
200
2
1 100
0 0
July 2014– July 2015– July 2016– July 2017– July 2018– July 2019– July 2020– July 2021– July 2022– July 2023–
June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 June 2022 June 2023 June 2024
Source: EY analysis, Dow Jones VentureSource, Capital IQ.

Early-stage rounds are seed-, first- and second-round VC investments.
• Another concerning metric for the industry’s innovators is the decline in the number of venture capital (VC) investment
rounds. The number of rounds has fallen year on year from a high of 833 in the period from July 2020 to June 2021
to 440 rounds in the 12 months ending June 30, 2024, a 34% drop compared to the previous year.
• Despite this huge drop in the number of completed VC rounds, the total amount raised actually increased compared
to the previous year, hitting US$7.0 billion. Further, it is only 11% lower than the 10-year annual average total for VC
raised. By comparison, the previous 10-year average annual number of venture funding rounds was 741, with the tally
for 2023–24 down by 41% compared to that average.
• The data shows a slight uptick in the number of early-stage venture rounds, with early-stage companies capturing 27%
of all funding rounds (compared to a 10-year average of 17%). However, in context of the low overall numbers of VC
rounds, this statistic may be misleading.

Financing
Figure 7
US and European IPO

Amount of US IPO (US$b) Amount of European IPO (US$b) Number of US IPO Number of European IPO
8 35
7
30
6
25
Amount of IPO (US$b)
Number of IPO
5
20
15
3
10
2
5
1
0 0
July 2012– July 2013– July 2014– July 2015– July 2016– July 2017– July 2018– July 2019– July 2020– July 2021– July 2022– July 2023–
June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 June 2022 June 2023 June 2024
Source: EY analysis, Dow Jones VentureSource, Capital IQ.
• The recovery of the IPO market in the 12 months to June 2024 was largely driven by a single strong quarter (Q3
2023). SCHOTT Pharma recorded by far the biggest IPO in the US and European MedTech markets, with the subsidiary
of the German supplier SCHOTT AG and manufacturer of drug delivery systems raising US$856 million when it listed
on the Frankfurt-based SDAX index in December 2023.
• America’s biggest MedTech IPO of the July 2023 to June 2024 period was Allurion, which went public in August 2023
via a merger with special purpose acquisition company (SPAC) Compute Health Acquisition Corp. The deal, which
raised US$100 million, is notable not only for marking the return of SPAC deals to the MedTech space, but also for
highlighting the company’s focus on consumer-friendly weight loss, combining its AI-powered Allurion Virtual Care
Suite with an ingestible, procedure-free Allurion Balloon gastric inflatable weight loss solution.
• California-based AOTI also took an unconventional path to going public, by choosing to list on the London-based
Alternative Investment Market (AIM). The company is focused on wound care, with its lead product delivering topical
oxygen to diabetic foot ulcers. The US$45 million AOTI raised via IPO, while modest on the scale of MedTech IPOs in
past years, was nonetheless the largest new listing on the London AIM since 2022 and far larger than any MedTech
IPO executed in the previous 12-month period.

Financing
Figure 8
Top US venture rounds, July 2023–June 2024

Rank Company Region Product type (disease) Gross raised Quarter Round Announcement
(US$m) type Date
1 Neuralink Corp. Northern California Therapeutic devices (Neurology) 323 Q3 2023 Late stage 8/1/23
2 Medical Microinstruments, Inc. Florida Therapeutic devices (Non-disease-specific) 110 Q1 2024 Late stage 2/21/24
3 RefleXion Medical, Inc. Southern California Therapeutic devices (Oncology) 105 Q4 2023 Late stage 11/15/23
4 Beta Bionics, Inc. Southern California Other 100 Q3 2023 Late stage 8/24/23
5 Axon Therapies Inc. Southern California Therapeutic devices (Cardiovascular/vascular) 100 Q4 2023 Early stage 10/25/23
6 Karius, Inc. Northern California Non-imaging 100 Q2 2024 Late stage 5/2/24
7 Nectero Medical Arizona TD - Cardiovascular/vascular 96 Q2 2024 Late stage 4/4/24
8 Lumicell Inc. Massachusetts Therapeutic devices (Oncology) 93 Q3 2023 Early stage 7/14/23
9 SpyGlassPharma, Inc. Southern California Therapeutic devices (Ophthalmic) 90 Q3 2023 Late stage 7/10/23
10 Cortex Northern California Therapeutic devices (Cardiovascular/vascular) 90 Q4 2023 Early stage 12/7/23
11 Endogenex, Inc. Minneapolis Other 88 Q2 2024 Late stage 6/25/24
12 R3 Vascular Inc. Northern California Therapeutic devices (Cardiovascular/vascular) 87 Q2 2024 Early stage 5/9/24
Figure 9
Top European venture rounds, July 2023–June 2024

Rank Company Region Product type (disease) Gross raised Quarter Round Announcement
(US$m) type Date
1 CMR Surgical Limited UK Therapeutic devices (Non-disease-specific) 165 Q3 2023 Late stage 9/20/23
2 Insightec Ltd. Israel Imaging diagnostics 150 Q2 2024 Late stage 6/18/24
3 Impulse Dynamics plc Ireland Therapeutic devices (Cardiovascular/vascular) 136 Q1 2024 Late stage 2/14/24
4 Mainstay Medical Holdings Israel Therapeutic devices (Neurology) 125 Q1 2024 Late stage 2/23/24
5 Amber Therapeutics UK Therapeutic devices (Neurology) 100 Q2 2024 Early stage 6/10/24
6 Universal Diagnostics, S.L. Spain Non-imaging diagnostics 70 Q4 2023 Early stage 10/25/23
7 TytoCare Ltd. Israel Non-imaging diagnostics 49 Q3 2023 Late stage 8/3/23
8 UroMems SAS France Therapeutic devices (Urology/Pelvic) 47 Q2 2024 Late stage 6/27/24
9 DiaSys Diagnostic Systems GmbH Germany Non-imaging diagnostics 45 Q3 2023 Early stage 7/29/23
10 Phagenesis Limited UK Other 42 Q1 2024 Late stage 3/4/24
11 Theryq France Therapeutic devices (Oncology) 40 Q1 2024 Early stage 2/5/24
12 OrganOx Limited UK Other 32 Q3 2023 Late stage 7/20/23
• Neuralink has dominated both headlines and fundraising, with the Elon Musk startup focused on implantable brain chips,
raising over US$300 million in two financing rounds ahead of its first-in-human clinical trial. The company is reportedly
valued at over US$5 billion and has backing from Peter Thiel’s Founders Fund, an investment vehicle established by the
Silicon Valley billionaire.
• Other major rounds went to Cambridge, UK-based CMR Surgical, developer of The Versius Surgical Robotic System, a
2019-approved specialized platform for minimally invasive surgeries. This deal raised US$165 million, emphasizing the
robust health of the robotic surgery market. In addition, Impulse Dynamics, a New Jersey-based company seeking to
integrate CCM and ICD cardiovascular therapy into a single device, The Optimizer Integra CCM-D system, won a US$101
million financing round to bolster its commercial rollout efforts, and Mainstay Medical Holdings, focused on treating
chronic back pain through a neurostimulation system, attracted US$125 million in equity funding in February 2024.41
41. “Mainstay Medical Announces US$125 Million Equity Financing Transaction,” Mainstay Medical website, https://mainstaymedical.com/mainstay-medical-announces-us125-million-equity-financing-
transaction/, February 26, 2024.

Financing
• California-based RefleXion Medical raised US$105 million to accelerate commercialization of its novel radiotherapy
platform, which combines injected radiotracers with external-beam radiotherapy to treat solid tumors at all stages of
progression, while California-based Beta Bionics captured US$100 million to support its iLet Bionic Pancreas system,
aimed at improving user experience for diabetes patients by automating the dosage and administration of insulin
and glucagon via adaptive algorithms. The biggest financing round for a diagnostics company went to Karius, which
seeks to identify over 1,000 pathogens from a single blood sample using genomics and AI and is looking to extend its
diagnostic range beyond infectious diseases.
Figure 10
Capital raised by leading US and European geographies excluding debt,

July 2023–June 2024
2200
France
2000
Southern California
1800
1600 Northern California

Total equity capital raised (US$m)
1400
Massachusetts
1200
1000
800
Ireland
600
Texas
Florida
400 UK
200 Switzerland
Israel
0
0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400
Venture capital raised (US$m)
Size of bubbles shows relative number of financings per geography.
• The regional distribution of financing raised within the sector has a familiar look, with California and Massachusetts
dominating in terms of VC and overall capital raised. While Europe, the UK, Israel and France dominate VC, these
geographies do not approach the investment levels seen in the three big US regions. The unusually high financing
levels seen in France derive from Research & Laboratory Equipment player Sartorius Stedim Biotech, a bioprocessing
instrument-maker that executed a US$1.2 billion sale of shares to institutional investors (and its own parent company,
Sartorius AG of Germany) to cut debt in February 2024.

M&A
Figure 11
M&A in the US and Europe (US$m)

Jul 2012 - Jul 2013 - Jul 2014 - Jul 2015 - Jul 2017 - Jul 2018 - Jul 2019 - Jul 2020 - Jul 2021 - Jul 2022 - Jul 2023 -
Type Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 Jun 2024
Number of M&As 122 128 125 176 101 146 165 288 256 170 99
Total value of M&As $36,527 $93,661 $77,410 $68,516 $44,704 $67,631 $27,543 $62,270 $79,504 $48,780 $57,696
Average deal size $299 $732 $619 $389 $443 $463 $167 $216 $311 $287 $583
Number of M&As
4 9 17 11 13 12 5 11 19 6 7
greater than US$1b

Average deal size calculated using deals with announced values.
• The US$57.7 billion raised in M&A spending in the • The Shockwave, Silk Road and Edwards’ Critical Care
2023–24 period is relatively respectable considering deals all focus primarily on cardiovascular patients and
that the number of actual M&A deals completed was technologies. Another therapeutic device company
historically low for the sector. As noted in the Year in looking for expansion in the cardiovascular space is
Review section, the discrepancy arises because of a Cordis, which paid US$1.1 billion to add M.A. Med
small number of large deals, many completed by the Alliance’s drug-eluting balloon technologies to its
bigger MedTech players. Johnson & Johnson’s US$13.1 cardiovascular and endovascular portfolio in October
billion acquisition of Shockwave was not only the 2023. Just outside the time period captured in this
biggest MedTech M&A move since Johnson & Johnson report, Edwards Lifesciences announced it would pay
itself acquired Abiomed in the last quarter of 2022, but US$300 million to acquire Innovalve Bio Medical,
also the seventh-biggest deal from a therapeutic device an Israeli MedTech developing transcatheter mitral
manufacturer in the last decade. valve replacement platforms, for around US$300
million; Edwards is also paying just over US$16 million
• Other leading MedTechs have also made a cautious
to acquire a stake in France’s Affluent Medical, the
return to dealmaking. Becton Dickinson’s US$4.2 billion
company announced in July 2024.
deal for Edwards Lifesciences’ Critical Care business
unit was the third-biggest deal of the year, and Boston
Scientific made two more US$1 billion-plus deals
between July 2023 and June 2024, acquiring
urology-focused Axonics for US$3.7 billion, SilkRoad
Medical, a cardiovascular company, for US$1.16 billion,
and Relievant for US$850 million in the third quarter
of 2023.

M&A
Figure 12
Selected US and European M&A, July 2023–June 2024

Acquiring company Location Acquired company Location Value (US$m) Buyer’s deal driver
Johnson & Johnson US Shockwave Medical, Inc. US 13,100 Build scale (TD-Cardiovascular/vascular)
Danaher Corporation US Abcam plc UK 5,700 Build scale (Research supplies)
Becton, Dickinson and Company US Edwards Critical Care US 4,200 Portfolio expansion (Smart connected care solutions)
Boston Scientific Corporation US Axonics, Inc. US 3,700 Portfolio expansion (TD-urology)
Exor NV Netherlands Koninklijke Philips NV Netherlands 2,800 Build scale (Non-disease specific)
Thomas H. Lee Partners, L.P. US Agiliti Health US 2,500 Build scale (Non-disease specific)
Ingersoll Rand US ILC Dover US 2,325 Portfolio expansion (Life science applications)
Ametek, Inc. US Paragon Medical, Inc. US 1,900 Build scale (Non-disease specific)
Coloplast A/S Denmark Kerecis LLC US 1,300 Portfolio expansion (TD-Wound care)
Thermo Fisher Scientific Inc. US Olink Holding AB Sweden 1,300 Portfolio expansion (Proteomics Capabilities)
Boston Scientific Corporation US Silk Road Medical, Inc US 1,160 Portfolio expansion (TD-Cardiovascular/vascular)
Cordis Corporation US M.A. Med Alliance SA Switzerland 1,135 Build scale (TD-Cardiovascular/vascular)
Carl Zeiss Meditec AG Germany Dutch Ophthalmic Research Center Netherlands 1,075 Build scale (TD-Ophthalmology)
Medline Industries, Inc. US Ecolab Inc. US 950 Portfolio expansion (Surgical solutions business)
Bruker Corporation US ELITech Group SAS France 933 Build scale (Molecular diagnostics)
Thermo Fisher Scientific Inc. US CorEvitas, LLC US 913 Build scale (Real-world Evidence)
Sources: EY analysis, Capital IQ and Thomson ONE

Average deal size calculated using deals with announced values.
• Research and laboratory equipment players are • Other large deals that included financial buyers:
prominent among the biggest spenders in MedTech,
• In August 2023, holding company Exor bought a 15%
with Danaher paying US$5.7 billion for Abcam, a
shareholding in its fellow Netherlands-based company,
UK specialist in antibodies and other reagents and
the imaging giant Philips, for US$2.8 billion.
consumables. Meanwhile, Thermo Fisher Scientific paid
US$1.3 billion for proteomics leader Olink and US$913 • PE firm Thomas H. Lee Partners acquired Agiliti
million for CorEvitas, a provider of real-world evidence Health, a medical equipment and services provider,
on patient health outcomes in routine clinical care. for US$2.5 billion in February 2024.
• Thermo Fisher also bought CorEvitas from Audax, • Medline, acquired by a PE consortium in 2021,
a private equity firm that acquired the company in expanded its surgical solutions business by acquiring
December 2019. This transaction was one of several Ecolab for US$950 million.
involving private financial sellers: • Other therapeutic device manufacturers making
• Paris-based investment firm Eurazeo sold its holdings acquisitions included Coloplast, which paid US$1.3
in the Dutch Ophthalmic Research Center to Carl billion in July 2023 to acquire Kerecis, a wound care
Zeiss Meditech for US$1.1 billion. specialist that has developed a biological wound
repair platform based on intact fish skin. Reflecting
• Investment firm New Mountain Capital sold ILC Dover,
the slowdown in the diagnostics segment, there were
a manufacturer of biopharmaceutical solutions and
few major acquisitions in this area, though Bruker
materials, to industrial firm Ingersoll Rand for US$2.3
Corporation paid US$933 million to acquire EliTech
billion in March 2024, with Ingersoll seeking to
and strengthen its portfolio in molecular diagnostics,
expand into life sciences applications.
specialty in vitro diagnostics and microbiology.
• Seeking a similar strategic expansion into the
electronic instrument market, Amatek bought
Paragon, a maker of components in devices ranging
from orthopedics to drug delivery and surgical
systems, for US$1.9 billion in October 2023.

Data exhibit index
5 Figure 1: MedTech financial performance 2023, overview
6 Figure 2: MedTech stock valuations vs. S&P 500, 2024 year to date (YTD)
6 Figure 3: Biggest therapeutic device market cap growth stories, 30 June 2019–30 June 2024
7 Figure 4: Pure-play MedTech SG&A and revenue annual growth rates (AGRs) and net income, 2019–23
8 Figure 5: Number of pure-play public MedTech companies and employees AGR (%), 2019–23
9 Figure 6: Number of FDA PMA and 510(k) approvals, 2013–24 YTD
10 Figure 7: Capital raised in the US and Europe by year, July 2012–June 2024
11 Figure 8: EY MedTech Survival Index, 2019–23 (excludes commercial leaders)
11 Figure 9: MedTech M&A, July 2006–June 2024
12 Figure 10: M&A activity by quarter, Q1 2023–Q2 2024
15 Figure 11: Growth in pure-play MedTech revenues and R&D growth rate, 2000–23
16 Figure 12: Pure-play MedTech capital allocation, 2014-2023

22 Figure 13: Change in US and European therapeutic device companies’ revenue and net income by disease
category: pure-plays
32 Figure 14: FDA approvals of AI-enabled medical devices, 2014-2024 YTD
33 Figure 15: Non-radiology FDA approvals of AI-enabled medical devices, 2014-2024 YTD
34 Figure 16: FDA approvals of AI-enabled medical devices by therapeutic focus, 2023
Databook
43 Figure 1: US and European MedTech public company revenues, 2013–23
44 Figure 2: US and European revenue growth by product group: pure-plays
45 Figure 3: US and European MedTech market capitalization relative to leading indexes
46 Figure 4: Capital raised in the US and Europe by year (US$m)
47 Figure 5: Innovation capital raised in the US and Europe by year
48 Figure 6: US and European early-stage VC rounds above US$5m
49 Figure 7: US and European IPO
50 Figure 8: Top US venture rounds, July 2023–June 2024
50 Figure 9: Top European venture rounds, July 2023–June 2024
51 Figure 10: Capital raised by leading US and European regions excluding debt, July 2023–June 2024
52 Figure 11: M&A in the US and Europe (US$m)
53 Figure 12: Selected US and European M&A, July 2023–June 2024

Ernst & Young LLP
Acknowledgments
Project leadership
Jim Welch, EY Global Medical Technology Leader, provided the strategic vision for the Pulse report
and brought a wealth of industry knowledge and experience to drive our analysis of industry trends.
Lisa LaMotta, EY Insights Global Senior Life Sciences Analyst, and James Evans, EY Insights
Global Lead Life Sciences Analyst, were the lead authors on the report. They assisted with the
development of the overall storyline and wrote the year in review article, datebook and EY and guest
perspectives.
Stephanie Sawyer, EY US Health & Life Sciences Marketing Manager, was the report’s project
co-manager and marketing lead. Her leadership and dedication were instrumental in guiding the
project from inception to completion.
Kathy Beckman, EY US Health & Life Sciences Marketing Contractor, was the report’s project co-
manager. She played a pivotal role in the execution of the report, coordinating daily deliverables
against the release date with exceptional diligence.
Additional contributions
We would like also to recognize the contributions of the following EY professionals:
Editorial content leaders, John Babitt, Arda Ural, Mark Ginestro and Ambar Boodhoo.
Data analyst Arpit Jain oversaw the collection, research and analysis of the report’s data, and
Ulrike Kappe provided quality control support. Their analytical rigor is reflected in the report’s
key data points.
Blythe Randolph, EY US Senior Editor–Writer, was the report’s copy editor. Her patience, hard
work and attention to detail were unparalleled.
Patrick Walker, was our EY US Senior Proofreader. His flexibility and unwavering commitment to
quality enhanced the clarity and impact of our report.
Design lead Soon Ham brought a creative vision that shaped the aesthetic of this publication. His
contributions were vital in giving the report its distinctive appearance.
Carol Piering led our public relations efforts for the report. Her strategic planning and execution
have been key to amplifying our message.

Our MedTech consulting team
Jim Welch John Babitt Arda Ural, PhD

EY Global MedTech Leader EY Americas MedTech Transactions Leader EY Americas Life Sciences Sector Leader
Ernst & Young LLP Ernst & Young LLP Ernst & Young LLP
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In an unceasingly

The year in review

Merger and acquisition (M&A) 52

Data exhibit index 54

Pulse of the MedTech Industry Report 2024 02

general and administrative (SG&A) expenses. The net

Pulse of the MedTech Industry Report 2024 03

Pulse of the MedTech Industry Report 2024 04

MedTech financial performance 2023, overview

Public data company

Conglomerates $215.3 $192.3 $87.4 -$23.0 -10.7%

Pure-play companies $350.7 $395.3 $203.6 $44.6 12.7%

Commercial leaders $327.7 $374.4 $194.0 $46.7 14.3%

Emerging leaders $23.0 $20.9 $9.6 -$2.1 -9.1%

R&D expense $33.2 $34.4 $16.6 $1.1 3.4%

SG&A expense $112.7 $127.2 $65.5 $14.5 12.8%

Net income $12.5 $25.8 $7.5 $13.3 106.1%

Market capitalization $1,572.8 $1,716.2 $1,746.7 $143.4 9.1%

Number of employees 1,206,987 1,241,347 - $34,359.2 2.8%

Number of public companies 455 433 418 -22 -4.8%

Source: EY analysis, Capital IQ and company financial statement data.

Pulse of the MedTech Industry Report 2024 05

01-Jan-24 01-Feb-24 01-Mar-24 01-Apr-24 01-May-24 01-Jun-24 01-Jul-24

EY US commercial leaders EY EU commercial leaders EY US emerging leaders

Source: EY analysis, Capital IQ and company financial statement data.

This list included companies such as Dexcom and Edwards Lifesciences,

Market cap as of Market cap as of

Source: EY analysis, Capital IQ and company financial statement data.

Pulse of the MedTech Industry Report 2024 06

The broader implication for MedTech is that a challenging operating

Source: EY analysis, Capital IQ and company financial statement data.

Pulse of the MedTech Industry Report 2024 07

Number of pure-play public MedTech companies and

Number of public companies

Source: EY analysis, Capital IQ and company financial statement data.

Pulse of the MedTech Industry Report 2024 08

Number of FDA PMA and 510(k) approvals, 2013–24 YTD

Source: FDA website.

MedTech is a research and development (R&D)-driven industry, and the

In short, MedTech cannot be complacent about a return to growth and

Pulse of the MedTech Industry Report 2024 09

Capital raised in the US and Europe by year, July 2012–June 2024

Venture IPO Follow-on and other Debt

Pulse of the MedTech Industry Report 2024 10

an exit via acquisition. Yet, the emerging leaders confront

most recent previous 12-month period in which MedTech

MedTech M&A, July 2006–June 2024

Sources: EY analysis, Capital IQ and Thomson One.

Pulse of the MedTech Industry Report 2024 11

M&A activity by quarter, Q1 2023–Q2 2024

Other M&A Megadeals (>US$10) Number of deals

Sources: EY analysis, Capital IQ and Thomson One.

Pulse of the MedTech Industry Report 2024 12

Pulse of the MedTech Industry Report 2024 13

Taking on the top-line

Pulse of the MedTech Industry Report 2024 14

Growth in pure-play MedTech revenues and R&D growth rate, 2000–23

R&D growth rate (%)

Source: EY analysis, Capital IQ and company financial statement data.