MassMEDIC Annual Meeting Sector and Massachusetts EvaluateMedTech Analysis Tom Sommer, President MassMedic
Celebrating 20 years Founded in 1996 350+ member companies Played a key role in the FDA Modernization Act Also involved in reimbursement reform, MDUFMA and proposed revisions to the FDA s 510(k)s Helped established Mass state tax credit for payment of medical device user fees to the FDA Focused on supporting early stage companies and helping established medical device companies thrive and grow
Massachusetts Medtech Economic Impacts Venture Financing MA HQ only 2011 2015 2015 241 rounds $2.9b 42 rounds $714m FDA Approvals MA Applicants 2011 2015 2015 1055 MA Filed 167 MA Filed MASS MEDTECH Based on: MA HQ = 432 cos. MA+ = 436 cos. IPOs 2011-2015 10 IPOs $509m+ raised $51m+ avg Revenues M&A 2011 2015 2015 $33.3b (MA HQ) $117b (MA+) 2015 2020 $17b (MA HQ) $83b (MA+) $2.0b (MA HQ) $54.6b (MA+) 2011-2015 Cumulative $81b (MA HQ) $414b (MA+) $25b (MA HQ) $103b (MA+)
Key Sector Trend: Fewer, Bigger Deals In 2015 the medtech industry saw the same pattern repeat itself across a number of metrics: fewer, bigger deals. The total expenditure on M&A soared to previously unimagined heights, but the deals dropped from ayear earlier. The total amount of venture capital raised by medtech groups remained level, but the number of deals declined. The explosion in IPOs that characterized 2014 slackened, but 2015 IPOs were larger on average. The US FDA approved more novel products (1 st PMA, HDE) in 2015 than in any year in the previous decade.
Key Trends in Massachusetts Medtech In 2015, Mass Venture Financing was at the highest level since 2012: fewer rounds, but bigger rounds. Mass headquartered companies received more Venture Financing on average then the rest of USA medtech companies. Mass is seeing a decline in the number of M&A deals from 2011 2015, with mega deals driving the overall value. 2015 was a 5 year low for the number of Mass FDA approvals. In the last 5 years, Mass headquartered IPOs raised an average of $51+M, significantly higher than the US average of $46M. Mass headquartered medtech companies revenues expected to have a CAGR of 7% reaching $25B by 2020.
Sector Venture Financing Is innovation at risk? Venture cash stays steady but more VC money going into larger rounds for established companies versus early stage companies.
Investment ($m) Massachusetts HQ Companies Venture Financing 2011 215 750 500 250 517 MA Venture Financing: Total Amount Invested 657 564 402 714 75 50 25 # of Rounds Total investment and average investment for MA headquartered companies at highest level since 2012. Fewer rounds, but bigger rounds in 2015. 0 2011 2012 2013 2014 2015 0 Total Invesment # Rounds # Rounds MA HQ Total Investment ($m) MA HQ Average Investment ($m) 2011 61 $517 $9 2012 57 $657 $12 2013 40 $564 $16 2014 41 $402 $11 2015 42 $714 $18
Massachusetts HQ vs. USA Companies Venture Financing 2011 2105 Average Invesment ($m) 20 15 10 5 0 Average Venture Financing Investment (USA vs. MA) 17.8 15.7 16.1 11.7 11.5 10.6 9.6 10.0 9.7 8.6 2011 2012 2013 2014 2015 MA headquartered companies received more Venture Financing on average then the rest of USA medtech companies in 2012, 2013, 2015. USA Average Investment MA Average Investment USA Total Investment ($m) USA Average Investment ($m) MA Total Investment ($m) MA Average Investment ($m) USA # Rounds MA # Rounds 2011 443 $4,067 $10 61 $517 $9 2012 383 $3,638 $10 57 $657 $12 2013 428 $3,876 $10 40 $564 $16 2014 392 $4,348 $12 41 $402 $11 2015 277 $4,344 $16 42 $714 $18
Sector View: M&A Sums spent on M&A in medtech were unprecedented in 2015. $127bn was reached despite 2015 seeing fewest deals since 2009. Excluding Covidien deal, average amount paid was $804m, highest ever on record.
Mass. HQ & Large MA Presence Cos. (MA+) Mergers and Acquisitions MA seeing a decline in the number of M&A deals 2011 2015, with mega deals driving overall deal value for the year when we include large MA presence companies. M&A Activity $b (MA) M&A Activity $b (MA+) 16 14.6 25 60 54.6 40 Deal Value ($B) 12 8 4 7.7 7.5 1.5 2.0 20 15 10 5 # of Deals Deal Value ($B) 40 20 12.1 29.4 2.9 18.0 30 20 10 # of Deals 2011 2012 2013 2014 2015 0 2011 2012 2013 2014 2015 0 Total Deal Value # of Deals Total Deal Value # of Deals Year Company Deal Type Company Acquired Deal Value ($m) HQ State 2015 Medtronic Company Acquisition Covidien 49,900 Minnesota 2015 Boston Scientific Business Unit Men's Health and Prostate Health businesses of American Medical Systems 1,650 Massachusetts
FDA Approvals FDA approved more novel products in 2015 (1 st PMA, HDE) than in any year in the previous decade, a 55% increase over 2014.
Massachusetts Filed FDA Approvals 2011 2016 First PMA, HDE, 510(k) and 510(k) De Novo Number of Approvals 250 200 150 100 50 0 233 Number of Approvals Filed in MA 210 213 2011 2012 2013 2014 2015 2016 Number of Approvals filed in MA in 2015 HDE Approval 1 PMA First Approval 1 510(k) Clearance (De Novo) 3 510(k) Clearance 162 232 167 32 2015 was a 5 year low for number of approvals filed in Massachusetts. # of Approvals # of PMAs and HDEs Filed in MA 4 2 0 3 2 0 2 2 2011 2012 2013 2014 2015
In Depth: Mass Filed FDA Approvals Year and Approval Type Number of Approvals 2011 318 510(k) Clearance 230 PMA First Approval 3 PMA Supplementary Approval 85 2012 291 510(k) Clearance 208 PMA First Approval 2 PMA Supplementary Approval 81 2013 258 510(k) Clearance 213 PMA Supplementary Approval 45 2014 328 510(k) Clearance 226 510(k) Clearance (De Novo) 4 PMA First Approval 2 PMA Supplementary Approval 96 2015 236 510(k) Clearance 162 510(k) Clearance (De Novo) 3 HDE Approval 1 PMA First Approval 1 PMA Supplementary Approval 69 2016 53 510(k) Clearance 36 510(k) Clearance (De Novo) 1 PMA Supplementary Approval 16 Grand Total 1484
IPOs on Western Exchanges 2013 2015 Steady decrease in IPO activity across the sector in 2015 Shareholders, like VCs, are interested in revenue stage companies.
Massachusetts IPOs According to 2011 2015 data, about 2 MA headquartered companies go public each year. In the last 5 years, MA headquartered companies did better than the national average for IPO amount raised. IPO Date Company Sector Segment Amount Raised ($m) 2011 BG Medicine Biotechnology; In Vitro Diagnostics 40 MedTech 2011 GI Dynamics MedTech Gastroenterology 85 2011 Pathfinder Cell Therapy Biotechnology; MedTech Ear, Nose & Throat (ENT); General & Plastic Surgery; In Vitro Diagnostics 2012 OvaScience MedTech Obstetrics & Gynecology (OB/GYN) 2012 Arch Therapeutics MedTech Blood; General & 0.02 Plastic Surgery 2013 Foundation Medicine MedTech In Vitro Diagnostics 122 2014 Ocular Therapeutix Specialty (Pharma); Ophthalmics 65 MedTech 2014 T2 Biosystems MedTech In Vitro Diagnostics 57 2015 ConforMIS MedTech Orthopedics 135 2015 Viatar CTC Solutions MedTech In Vitro Diagnostics 5 $51m+ (MA) $46m (USA)
Revenues and Forecasts Mass HQ Cos. and MA+ Worldwide MedTech Revenues (MA HQ) Sales ($B) $30B $20B $10B 15.2 15.7 16.2 16.9 17.4 18.6 20.1 21.7 23.2 24.9 10% 5% 0% 5% Growth per Year (%) Revenues 2015 2020 $17b (MA HQ) $83b (MA+) 2011-2015 Cumulative $81b (MA HQ) $414b (MA+) $25b (MA HQ) $103b (MA+) $0B 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10% Sales ($) Growth per Year (%) Worldwide MedTech Revenues (MA+) CAGR of 7% reaching $25B by 2020 for MA HQ companies Sales ($B) $120B $80B $40B 79.1 82.4 84.8 85.0 83.4 85.9 89.9 94.3 98.6 103.0 10% 5% 0% 5% Growth per Year (%) $0B 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10% Sales ($) Growth per Year (%)
Massachusetts MedTech Innovation Engine Continue to encourage support of emerging company innovation in Massachusetts Angel investing Crowdfunding platforms Larger companies buying early stage firms Newly merged, up and coming large medtech buying early stage firms Assisting emerging companies through mentoring, advisory programs Emerging companies using R&D resources wisely Increased exposure to investors
A life science market analytics and intelligence company, known for its consensus sales forecasts to 2022 became a gold-standard benchmark London (HQ), Boston, San Francisco, Tokyo --- www.evaluate.com alan.raider@evaluate.com Complimentary Reports: Annual Medtech World Preview report launches yearly in October at AdvaMed Annual Meeting. www.evaluategroup.com/medtechwp2015 www.evaluate.com/medtech2015review