Medical Technology M&A Gains Momentum as the Broader Market Shows Signs of Recovery
Summary
The rebound of the M&A market will especially benefit dealmakers in the medical technology sector because the industry “has massive incumbents that have the capital to buy or build their way to innovation,” the PitchBook report said. “M&A has historically been, and will remain, a core strategy of the largest medtech companies,” Aaron DeGagne, emerging technology analyst at PitchBook, wrote in the report. “Incumbents often acquire new technologies that can be scaled through their existing distribution networks beyond what the startups could accomplish themselves.” DeGagne added that from an investment perspective, “medtech also benefits from favorable long-term dynamics related to higher rates of coverage by government payers, aging populations demanding increasingly complex care, and the industry’s strong pricing power.” The report said that within the medtech sector, there are abundant dealmaking opportunities in genomic health, portable and wearable treatment, precision medicine, connected implants, and medical imaging software powered by artificial intelligence. The medical imaging industry, on the other hand, “has been supported by the buzz around artificial intelligence” and has recently attracted a lot of VC funding, he told II in an interview. According to the report, investors across different sectors are still grappling with a deteriorating macro environment, which has kept the initial public offering market frozen due to uncertainty over inflation and interest rates.