The Grey Lady is running a business article on how medical devices represent an attractive investment opportunity compared to other typical investments…
In the first quarter of this year, seed investors put $1.1 billion into such businesses, a quarterly record for the medical-device industry, and a 60 percent increase over the same period in 2006, according to the National Venture Capital Association, a trade group.
“The venture-capital-backed boom in medical devices has delivered extraordinary new technologies,” said David Cassak, an editor at In Vivo, a monthly publication for the medical-device field. “There’s virtually no sector of medical devices that hasn’t been given a tremendous boost.”
Medical investments are by nature high risk, and devices take time and millions of dollars to develop. They must also be tested for safety and usefulness and then receive regulatory approval. It is a business that generates sales of $15 billion to $20 billion a year, and the venture capitalists are betting on its expanding into new niches.
Part of the lure, analysts and executives said, is that medical devices feel like a smarter gamble than investing in computer technology, which has fallen out of favor with public-market investors. Interest by these investors is critical for venture capitalists who want to profit by selling shares of their start-ups on Nasdaq.
At the same time, venture capitalists and entrepreneurs who are attracted to life sciences are wary of investing in pharmaceuticals, which can typically take 10 years and cost several hundred million dollars to come to market. Devices typically can be developed in half the time and for much less.
For this Medgadgeteer, the cool thing about medical devices is the relatively linear path from recognizing a need to implementing technology to fix it. Consumer electronics have devolved into a melee of convenience features and silly trends. Pharma’s development cycles are too expensive and risky…not to mention the work is tremendously boring.
More from Matt Richtel’s New York Times Article…