OCTOBER - 20228Paul Conley, PhD, Managing Director, Paladin Capital GroupByMedical care expenditures as a percentage of GDP are on a historic rise around the globe, due to population aging dynamics and per capita GDP expansion in both developed and developing nations. Increasing demand for higher quality interventional care and the growth of new markets in preventative and value-based care has put increased pressure on medical device manufacturers to release core product updates and deliver novel therapies, methods and devices in ever expanding service offerings for treating new indications. These core product and new product offerings have expanded laterally at higher and lower price points for broader socioeconomic distribution, especially in the developing world and 3rd world countries. While `R&D as a percentage of revenues' has been a reliable leading indicator for pace of technological improvement in historic economic analyses, the current environment of internal R&D at large medical devices companies has struggled to keep pace with external R&D product innovation, largely funded by venture capital. As a result, inorganic M&A of new products coming from start-ups has dominated the revenue growth and margin expansion for large multinational corporations. Early-stage medical device entrepreneurs and venture capital investors have been emboldened by the many new and exciting product offerings acquired at various stages of commercialization by multinational strategic companies. These acquisitions INVESTING FOR MEDICAL DEVICE INNOVATION, A LONGER-TERM OUTLOOKPaul ConleyIn My Opinion
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