10 Reasons to be optimistic about Medtech IPOs in 2015

In 2014: Medical Device IPO Revitalized!  Predicting: 2015-2018 as Medtech IPO wave
 

Revitalized medical technology IPO market has captured the imagination of many new issuers and venture backed med-tech sector. The there were as many completed medtech IPOs in the last six months

as in the prior five year.

As we approach the beginning of 2015, the medical technology IPO market is showing signs of life following a six-year coma. This long-anticipated development is a result of the following:

1.     FDA has approvals  more medical devices in the last year. Medtech sector has a more predictable regulatory path than biotech and pharma.

2.     Increased demand of US made medical devices in the emerging markets.

3.     International investors are understanding the business of life sciences and it value in the IPO market place.

4.     Unrealistic valuations of IT sector. 

5.     Medical Device IPOs are more value as they can generate more milestone fairly quickly. Outside US market for medical devices is growing.

6.     IPO market of 2010 to 2014 has been so heavily weighted toward biopharma. In the last six years, biopharma IPOs have outnumbered medtech IPOs by a factor of 10 to 1. Institutional investors have expressed an interest in rebalancing their portfolios with new medtech companies targeting variety of diseases. Obesity, Diabetes, Metabolic Syndrome, Cardio-vascular, ENT, Women’s health, Spine and Orthopedics.

7.     With many existing public companies coming off of spikes in their stock price and looking richly valued at higher-than-normal trading multiples, investors are pleasantly surprised by the return potential of this new wave of medical device IPOs.

8.     Many top-notch, emerging-medtech IPO candidates have overemphasized M&A as “Plan A,” believing that the acquisition valuations and back-end earn out structures would be far more attractive than the corresponding public values. Besides, it takes a certain conviction to be the guinea pig who lines up first to go public. That hurdle has been overcome.

9.     The return of the medtech IPO market arguably could have been started in 2012. Many believe that the public markets were ready and willing to invest in medtech IPOs for quite a while. However, as often is the case, it is difficult for private companies to control their M&A destiny and a subset of these companies are now embarking on “Plan B,” the IPO.

10.  The there were as many completed medtech IPOs in the last six months as in the prior five years.The medical device valuations are strong and realistic.