Venture capital investment in medical device companies appears to be falling this year to $2.14 billion, or a 40 percent drop since 2007, reports the Wall Street Journal. The paper notes that investment in the biotech sector also dropped in that timeframe by 28 percent, though software startups have seen a 75 percent increase.
"As a result, the industry responsible for making prosthetic hips and other devices is having to get creative," the Journal says. The venture capital field, it says, contracted with the 2008 financial crisis, which coincided with increased pressures on the device industry.
It adds that startups are now approaching companies that may be interested in acquiring them earlier on. Boston Scientific's Charlie Attlan tells the Journal that his company is working with early-stage startups. "We might have an earlier-stage collaboration, and they give up the hope of a home run if and when we acquire them," he adds.
Another option, WSJ adds, is an alternative funding approach with corporate backers. For example, it notes that St. Jude Medical recently acquired Nanostim for up to $188.5 million in cash under a 2011 agreement. Funds from St. Jude helped the company finance European approval of its minimally invasive pacemaker.
"Is that the best deal in the world? No," Allan May, a former Nanostim chairman and a managing director at Emergent Medical Partners. "You're trading away some potential upside for certainty."