How is COVID-19 affecting medtech deals?

Fewer medical device companies are securing their first big venture capital investments — or engaging in large mergers — amid the COVID-19 pandemic, according to recently released reports from Silicon Valley Bank and PwC.

The medical device industry saw 38 Series A investments worth $279 million during the first half of 2020, down from 45 deals worth $408 million during the same period a year ago, according to SVB’s new mid-year “Healthcare Investments and Exits” report.

Meanwhile, PwC reports that the volume and value of medical device M&A deals decreased during the first half of the year. There were 28 medtech M&A deals worth $1.9 billion during the first six months of 2020, versus 38 deals worth $15.4 billion during the previous six months.

The numbers are but another indication that the medical device industry is not immune to the effects of the pandemic and the resulting recession.

Even as the reports paint a picture of caution in the industry during the first half of the year, there were also bright spots:

• Non-invasive imaging and neurostimulation device companies continued to attract Series A funding, according to Silicon Valley Bank.
• SVB also reported that overall medical device venture capital deals were also slightly up from a year ago — 147 deals worth $2.2 billion during the first half of 2020, versus 124 deals worth $2.1 billion during the first half of 2019. “The concern that venture investment would be impacted by clinical trial delays and declining revenue caused by COVID-19 has not materialized, as deals and dollars are both up.”
• Imaging, non-invasive monitoring, and respiratory companies led fundraising related to COVID-19, according to SVB.
• PwC meanwhile predicted that there could be a “need for significant consolidation as companies work to remain competitive” amid the financial strains caused by the pandemic and the resulting temporary limits on elective surgeries. “Combined with continued pricing pressures and uncertainty related to the potential for a changing political environment after U.S. elections in November, industry participants will need to balance the need for swift action with the ability to remain agile in response to potential regulatory and political developments.”