Harris Williams professionals regularly attend industry conferences and events. On the flight home, they share three key takeaways to help shape your strategy.
Event: 13th annual AdvaMed MedTech Conference
Report by: Turner Bredrup, managing director, Tyler Bradshaw, vice president, and Taylor Will, vice president, all of the Harris Williams Healthcare & Life Sciences Group
Event Overview: The MedTech conference annually gathers leaders in the medical technology industry for networking, education, and business development opportunities.
Why is this an important event for professionals active in this industry?
Bradshaw: “It’s an event that attracts all the big players in the industry, including the c-suite of large OEMs. The conference gives attendees a really good understanding of the main issues affecting the industry broadly. It’s also very interactive, enabling attendees to ask questions of the leaders of the industry’s major suppliers.”
Which trends, companies, or business models were top-of-mind at the event?
Will: “A big topic was the current political environment and its impact on the U.S. healthcare system. People were very interested in the likelihood that the upcoming election would result in more changes to the healthcare landscape, and how those changes would directly affect the medical device sector. They’re concerned that if there are big changes, the medical device sector may end up facing the same challenges that ‘big pharma’ has in recent years—particularly in terms of pricing pressure and the balance between affordability and innovation that changes people’s lives.”
Bradshaw: “From an M&A perspective, there’s a lot of investment activity, and valuations are reaching all-time highs. There's considerable capital out there, both from a strategic buyer and private equity perspective, and buyers are paying up for acquisitions that fit within their strategies. We also expect to see a number of new buyers at the table going forward. Traditional healthcare services investors are viewing med tech as an opportunity to expand their healthcare exposure. Outsourced services models such as contract manufacturing as well as distribution models will be the first stepping stones to a broader med tech play. These businesses are most similar to models elsewhere in the healthcare value chain, and as a result require less subject matter expertise in devices. There’s also Amazon, Apple, and Facebook potentially becoming active buyers in the industry as well, providing more competition for highly strategic assets.”
Will: “Technology in general was also a big focus, especially robotics and artificial intelligence. These technologies hold massive promise to make med tech devices more intelligent and automated, which will transform how healthcare is delivered. They’re the next big wave in the med tech industry.”
What opportunities are these dynamics creating for strategic buyers and private equity investors?
Bredrup: “It really comes down to the age-old mantra: build a better mousetrap. At the end of the day, buyers need to look for products that are better than competing solutions in some key way that, at least for the time being, can’t be replicated. Is it a better-quality product? Does it meet a critical unmet need? Does it work better and reduce costs? The industry is so advanced in terms of products and therapies that buyers need to be able to define why the existing patient population needs a particular product.”
Bradshaw: “As part of that, investors should prioritize companies that have clearly articulated what they want to be known for among a specific population of patients and their needs—for example, the leading provider of products for cardiac care. Having real clarity around who the target patient population is for your device company, and using that to define your business, is really important.”
Published October 2019