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Medtech – A hotter investment sector than ever, shows new analysis

medtech

The communications consultancy company Paues Åberg has analyzed the investment interest of the Swedish life science sector and found that investments in the field of medtech has increased by 235% during the last two years.

“A good approach to understand the latest trends within investor relations is to analyze raised capital in different industries and sectors by looking into how much money has been raised in rights issues for Swedish pharmaceutical and medtech companies. We used the website nyemissioner.se to compile rights issues completed on Nasdaq Stockholm and First North between January 2017 and December 2020,” describes Carolin Wiken, partner at Paues Åberg.

“We also examined Vantage’s report ‘Pharma, Biotech and Medtech in review HY2020’ to understand global raised capital from private investors in the form of venture capital looked like.”

Carolin Wiken and her colleagues limited their analysis to companies that were categorized as pharmaceutical/medicine companies on nyemissioner.se, that had operations that were clearly defined as pharmaceutical or medical technology and that had their headquarters in Sweden. “We also examined Vantage’s report ‘Pharma, Biotech and Medtech in review HY2020’ to understand global raised capital from private investors in the form of venture capital looked like,” says Wiken.

Key findings

The analysis showed that investments in pharmaceutical companies in the form of right issues increased by 11 percent between 2018 and 2019 (about 7 billion SEK invested) and 49 percent between 2019 and 2020 (about 10.5 billion SEK invested).

“In other words, there was a 235 percent increase between 2018 and 2020, 1.94 billion SEK was invested in December 2018 and 6.5 billion SEK in December 2020.”

For medtech companies, the difference was significantly higher percentage-wise: up 62 percent between 2018 and 2019 (corresponding to 3.1 billion SEK invested) and an impressive increase of 109 percent between 2019 and 2020 (corresponding to about 6.6 billion SEK). In other words, there was a 235 percent increase between 2018 and 2020 (1.94 billion SEK was invested in December 2018 and 6.5 billion SEK in December 2020).

A promising sign for Swedish medtech

According to Vantage’s report, global venture capital raising for the pharmaceutical industry has been a roller coaster. However, numerous experts regarded 2018 as an exceptional year where all funding was record-high.

For medtech, there has been a gradual decrease of global venture capital raising. This is likely due to venture capitalists’ preference that companies be more well-established before they are willing to invest, says Wiken. “A promising sign for Swedish medtech’s future investment potential is that digital health and biotech/life science are ranked as the second and fourth most interesting sectors, respectively, for European angel investors, according to a report from the venture capital firm Atomico.”

“A larger number of investments and a growing interest for medtech in light of the COVID-19 pandemic indicate that the industry is gaining importance and becoming a hotter sector in the eyes of investors.”

All in all, there is a strong willingness to invest in Swedish pharmaceutical and medtech companies, summarizes Carolin Wiken. “A larger number of investments and a growing interest for medtech in light of the COVID-19 pandemic indicate that the industry is gaining importance and becoming a hotter sector in the eyes of investors. Of particular interest are the medtech companies that are well-established and have built confidence among market actors.”

How does willingness to invest affect a public company’s communication?

“A willingness to invest starts with an interest, which will only continue to grow with good communication. Decreasing levels of interest can quickly lead to major consequences for a company’s share price. It is important to have an equity story – a comprehensive narrative describing how a company’s innovation solves current health care challenges. It also answers the question of why the market should request and continue to invest in these innovations,” says Carolin Wiken.

Read more: Paues Åberg’s summary in Swedish.

Photo: iStock