340% more returns compared to S&P500.
Super Strong Entry Barriers.
Most of the MedTech successful companies are 50-100 years old or even more, they have become so well entrenched, that it is next to impossible to dislodge them from their positions because of very high entry barriers. The sector (ETF: IHF) has grown at an astonishing high rate, beating SP500 by over 340% gains in last 17 years.
Sector Returns vs S&P500 Returns
Entry of new competitors is extremely tough. High barriers to entry arise due to long development timelines and strict regulations which are necessary to safeguard the testing of new devices, as well as the need to navigate the patents and intellectual property rights space. At the production stage high barriers also arise from the need for highly specialised equipment to achieve a specified level of precision in manufacturing.
Most of the leading companies are in US and Europe.
MedTech, or medical technology, is every product and service used for preventing, diagnosing, monitoring, and treating disease.
Medical technology includes medical and surgical procedures, medications, equipment, and facilities, as well as the organizational and support systems that enable care delivery.
Articles, instruments, apparatuses, or machines used in the prevention, diagnosis, or treatment of illness or disease, or for detecting, measuring, restoring, correcting, or modifying the structure or function of the body for some health purpose, make up the medical technology industry (also known as medical devices).
MedTech has seen bigger tailwinds after COVID-19 epidemic, around the world. Medical devices (respirators), in-vitro diagnostic devices (e.g., PCR rapid testing kits), and related digital health devices are now common household names.
Medical device firms in the United States are known around the world for their inventive and high-tech products. R&D investment continues to account for a large portion of the medical device industry’s budget, accounting for around 7% of total revenue. Compared to other research-oriented industries like aviation, auto, or defence, this sector is more profitable even after high research expenditure.
There are multiple factors that are pushing the demand for MedTech in emerging markets –
- Rising disposable income
- Increased health awareness
- Health insurance
- Proliferation of hospitals and diagnostic centres
Remote Monitoring, Sensors, Wearables
A medical sensor is a device used to measure a patient’s biological or physical condition. Medical sensors can be used to measure heart rate, blood pressure, respiration, body temperature, and other vital signs. They can also be used to monitor blood sugar levels, brain activity, and muscle activity. Medical sensors are typically small, wearable devices that can be attached to the body or placed inside the body.
There are several key drivers that are fuelling the growth of the medical sensors market. One of the main drivers is the increasing demand for miniaturized and wearable sensors. This is due to the fact that these sensors offer a number of advantages, such as the ability to monitor a patient’s vital signs in real-time, which can be extremely beneficial in a number of different medical applications.
Wearable devices have the potential to help and support senior citizens’ improve their quality of life. Individuals can wear sensors to track various health matrices, aid in rehabilitation and treatment evaluation, identify potential illness, monitor safety concerns, such as falls, and serve as emergency alert systems. Fitness-tracking watches can also help encourage not just older adults but also young fitness enthusiasts to monitor their physical activity and sleep behavior
Remote patient monitoring is useful in managing chronic disease, providing post-acute care, monitoring the safety of the elderly population, and increasing older patients’ participation in managing their health. The technology ensures providers are continually looking at the current condition of their patient’s health, rather than depending on static snapshots of health data, which could be days, weeks, or even months old. It also slows the progression of chronic disease and ensures ongoing recovery after being discharged from an acute care facility.
5G and Remote Monitoring
5G is the next evolution in cellular technology, but the telecommunications industry is not the only beneficiary of this next generation of wireless connectivity. When combined with other emerging technologies (e.g., big data, edge computing, artificial intelligence, machine learning, the cloud, and radical interoperability) 5G acts as a significant force multiplier in health care. 5G is expected to offer not only faster speeds with quicker downloads, but also significantly tighter security, better reliability, higher data volume, and reduced latency. These attributes are important in a world where health care is increasingly reliant on data, both in the acute setting and as more patients get care delivered on-the-go and at home.
For medtech manufacturers, 5G will make it possible to miniaturize devices, prolong battery life, and operate devices with lower power requirements. The latest generation of cellular connectivity also makes it possible for medical devices to transmit more data and to conduct faster “on the edge” computing. This negates the need to send most device-generated data over long distances. With edge computing, most computing can happen on or near the device, enabling applications such as immersive therapeutics or R&D (via AR/VR) or remote surgical procedures.
5G will enable advanced healthcare in remote areas. Medical professionals can don smart glasses to see the patient as if standing in the operating room—even if the patient is in another facility miles away. This could be particularly useful for rural hospitals and patients, as it allows local surgeons to work “side-by-side” with specialty surgeons in real time.
The higher download speeds offered by 5G are also supporting surgical planning. For example, one company is turning medical images into holographic content that providers can then view using smart glasses. The technology displays MRI and CT scans, ultrasound, microscope and/or endoscopy images as 3D hologram images that make the anatomical structures more visible, assisting in surgical planning and diagnoses.
Many bone replacement parts would not be possible without additive manufacturing. Metal powder bed 3D-printing is now able to create porous structures that closely mimic human bone, implants made with this technology are much more “osseo-friendly,” providing far greater staying power than their conventional counterparts. When coupled with CT scanning, physicians can image worn or broken bones and then manufacture patient-specific replacements. They can also scan the skull of an accident victim, for example, and 3D-print a titanium or PEKK (polyetherketoneketone) part that fits the damaged area perfectly. Taking that concept one step further, researchers have printed the first skin and cartilage replacements; many experts predict that organs and other complex body components are just a few years away.
The rising deployment of robotics in medical surgery and the integration of AI are two significant factors driving market expansion. Furthermore, in the medical industry, companies’ reliance on information technology and real-time data has increased in recent years.
Medical robotics include assistive walking devices that help in facilitating mobility, maneuverability, and independence. These devices are enhanced with information and communication technology that can detect falls with the use of alarm systems. Medical exoskeletons are also gaining approval for home use to rehabilitate those recovering from accidents or strokes. Medical exoskeletons and prosthetics can enhance mobility and independence, allowing seniors to improve their quality of life. Advances in technology have enabled the development of robots that are closely adjusted to the needs of the elderly. In a care environment, this can improve organizational efficiency, quality of care, and resident wellbeing.
Remote-controlled surgical robots are not only more precise than the human hand, they also have a greater range of motion and can fit into smaller areas. Because of this, robotic-assisted medical procedures are on the rise. So is “extended reality,” which includes augmented, virtual and mixed reality systems. Here again, the use of this technology is climbing—Goldman Sachs predicts 3.4 million physicians and emergency medical technicians will be training on VR/AR systems or using them to treat patients by 2025.
Software tools used to enhance performance in mechanical systems are now being applied to biological ones.
After studying decades of implant use and applying finite element analysis (FEA) to what some would call “overdesigned” orthopedic components, researchers have found that bones react better when subjected to appropriate amounts of stress and strain during the osseointegration stage, when the surrounding bone and tissues grow into the implant. One company has developed truss implant technology that “may stimulate an osteogenic response to facilitate fusion.” Similar work is being done with dental implants, where surfaces of titanium screws are chemically modified to increase stability and improve patient outcomes. The takeaway? The software tools used to enhance performance in mechanical systems are now being applied to biological ones.
Growing Geriatric Population
Home care monitoring gadgets will become more popular as the world’s population ages and as life becomes more convenient. Additionally, greater government funding and an increase in the number of insurance carriers will have a beneficial impact on market growth. For example, in 2010, the US government passed the Patient Protection and Affordable Care Act, which gave previously uninsured people access to healthcare. Furthermore, countries such as India, Singapore, China, and South Korea are well-known for providing cost-effective medical gadgets to address increased demand for treatment, new healthcare system cost limits, and rising healthcare spending management.
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