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When commercial meets medical: Why tech giants are interested in medtech

Industry 4.0 in the DACH Region

Amazon, Apple, Samsung and Philips are among the big brand tech giants making a splash in the medical arena – so why is healthcare such an attractive investment opportunity?

In this latest instalment of our Industry 4.0 in the DACH Region series, we look at what’s driving the boom in medtech, which accounted for 15 per cent of the sector’s M&A transactions in 2018.


Technology boom

Medtech is booming. Annual investment hit $6 billion in 2017 and, so far, is showing no sign of slowing down.

Amazon’s investment in PillPack saw the giant move towards creating a customer-focused online pharmacy, while Uber Health could soon see the ride-hailing company move into the $3 billion-a-year non-emergency hospital transportation industry.

Across the sector, medtech companies are using Industry 4.0 tools such as automation, data transfer and IoT to transform the traditionally conservative healthcare sector.


Disruptive influence

This medtech boom is being driven in large part by the challenges faced by healthcare systems the world over.

Older, larger populations are living with higher numbers of long-term health conditions, medicine costs are rising, and many parts of the world have acute staffing shortages.

As such, there is a real need to find efficiencies, and Industry 4.0 tech companies are both willing and able to step into the breach. This is especially the case in the US, where private hospital and healthcare organisations are constantly looking for ways to streamline and economise their processes and are well funded in their efforts to do so.

It makes for a large, untapped market and with so many health and logistics problems to solve, there are plenty of opportunities to go around.

Artificial Intelligence image screening tools and cloud-based patient management apps are freeing-up expensive clinician time and speeding-up care pathways.

At the same time, SaaS solutions are working behind the scenes to allow systems to run more efficiently.

All this means that healthcare providers can channel more time and resources into patient care, and businesses can put innovations to good work.


High Return on Investment

High ROI awaits those companies that can provide successful solutions to the challenges of twenty-first century healthcare, and the sector is more than aware of this.

At the start of last year, the pharmaceutical giant Roche acquired Flatiron Health, which provides cancer electronic health record software, for an eye-watering  $2.1 billion.

The deal, which was the largest venture-backed M&A or IPO in New York state since 2012, demonstrates that medtech is big business.

Many tech start-ups struggle to turn users into profit, but digital health comes with a ready-made market, with Americans alone spending $3.5 trillion a year on healthcare

Rather than focus on building up large numbers of individual consumers, Industry 4.0 medtech stands ready to deal with insurers, hospitals and governments – and to reap the rewards.


Contributing to society

Helping healthcare systems adapt to a changing world offers more than high returns: it can make a difference.

AI software for the analysis of complex single-cell data is set to accelerate everything we know about medical science by enhancing biomedical research, boosting pharmaceutical discovery and offering more precise diagnostics.

Innovations that make surgical procedures less invasive drive down operation recovery times, and specialist software can help clinicians make hospitals safer places to be.

The by-product of better efficiency is improved patient care. And bringing better health to the world, especially in poorer areas where access to quality services is limited, is motivating for many companies.


DACH region investment

As highlighted in our market report on Industry 4.0 M&A in the DACH region, there is a definitive trend towards problem-solving in healthcare.

In September 2018, EMH Partners acquired a minority shareholding in Brainlab. The German company develops software and hardware for information-guided surgery, radiosurgery and precision radiotherapy that is used in around 5,000 hospitals around the world.

Another German innovator, GWA Hygiene, received a boost of €2.5 million from a group of investors in August 2018. Its IoT system allows health facilities to monitor, gather and analyse hygiene data to reduce hospital infection rates.

Caresyntax offers yet another example of IoT being pressed into use to improve healthcare. The company’s software automates information flow and provides analytical tools that can be used to increase workflow efficiency and reduce variability in surgical outcomes. 

Its potential is so impressive that Norgine Ventures invested €10 million in the data analytics platform provider in August 2017.


The future of healthcare

It’s fair to say the future of healthcare is technological. Healthcare systems have no choice but to innovate if they are to find the efficiencies they so desperately need to keep their populations healthy.

To do so, they are turning to the Industry 4.0 movers and shakers who have the skills, the knowledge – and the profit motive – to rise to that challenge.


'The drive to displace slower moving legacy players, has led to a sharp increase in start-ups with truly innovative Industry 4.0 solutions. However, this is just the beginning.'

Dr. Peter Baumgartner , Sector Principal


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Sector Principal

Dr. Peter Baumgartner

Dr. Peter Baumgartner is a Sector Principal at Hampleton Partners where he heads our Industry 4.0 and High-tech Industrials practice. Peter brings operational expertise in industries with strong engineering content and has extensive experience of M&A in the sector. He was a partner and managing director at era AG, building the business from a €25 million vendor of electromechanical components into a global enterprise with over €100 million revenues serving the automobile, railway, white goods and smart home industries before selling it to Pulse Inc.

Peter continued his career in industry as the president of the supervisory board of a large German engineering group, and is now on the board of a diversified group holding multiple manufacturing companies. Peter began his career in consumer products supply as a process engineer at Procter & Gamble. Peter holds a degree in mechanical engineering from the Technical University of Munich and a PhD from the Technical University of Karlsruhe. He is fluent in French, as well as English and his mother tongue, German.  Peter is an avid hiker and bicyclist, and enjoys travelling the world.