Venture capital money is much sought after in the medical device arena. Orthopedic- and spine-focused companies were once good bets, but now investors are pouring more money into eye and ear companies, according to a report from the Wall Street Journal.
Here are eight trends on why venture capitalists are investing in specific medtech markets.
1. The eye and ear companies are attractive because treatments for conditions causing blindness and hearing loss impact the aging population, which is increasing as the Baby Boomer generation comes of age. Eye-related start-ups drew $848.9 million last year.
2. There is a huge demand for better treatment for eye conditions, and technological advances make that possible.
3. The medical device investors in cardiology from the mid-2000s changed strategy or weren’t able to raise new investment capital as the FDA regulatory process became more difficult.
4. Some investors are now favoring more established companies that already have FDA approval over start-ups because of the strenuous clearance process.
5. Orthopedic and skeletal-focused product investment reached $1.14 billion in 2006 but only $476.5 million in 2013.
6. VC companies are investing less in traditional blockbusters — heart and orthopedic — because there are difficulties bringing those devices to the market.
7. Strong orthopedic and spine companies are still launching new products, but weaker ones aren’t and companies that aren’t able to bring new products through the regulatory process are unattractive to venture capitalists.
8. Successful eye startups are now developing additional treatment options with drugs, such as Iconic Therapeutics which developed a therapy to improve vision in macular degeneration patients.
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