Welcome to Health Valley — Why Swiss Medtech Is Attracting Global VC Investment

Thomas Zehnder
Sep 4, 2018 · 5 min read

In March of this year, medical device maker, Medartis raised US$142 million on the Swiss Stock exchange in an initial public offering (IPO) that valued the business at more than US$ 630 million. Wind back the clock to April 2017 and heart valve replacement company Symetis cancelled its own flotation plans, choosing instead to accept a US$ 435 million offer from Boston Scientific.

Just two deals, representing only a small part of Switzerland’s increasingly high-profile Medtech and life sciences industry, but both, in their own ways, serve to illustrate why investors are taking such a strong interest in startups and early stage companies working in the sector. Either via trade sales or IPOs, pioneering companies are finding markets, building value and achieving successful exits.

The appeal of the Medtech sector to VCs is evidenced by the 2018 Swiss Venture Capital Report, published jointly by Startupticker.ch and the Swiss Venture Capital and Private Equity Association. According to the research, VCs invested 938 million Swiss francs into 175 startups in 2017. Out of that total, the biotech and Medtech sectors attracted the lion’s share — 595 million francs, to be precise.

So why has Medtech become such important constituent of Switzerland’s wider technology startup scene?


Cluster Power

Well, the strength of the sector, in some respects, provides a textbook example of the way that industrial clusters develop, building on existing resources and the proximity of customers. For instance, London has become a dominant player in the financial technology market because the resources are there (or can be attracted) in the form of digital talent and the financial expertise provided by the City of London. Equally important, London’s preeminence as a financial center means local fintech companies are in a strong position to achieve sales and build partner relationships.

It’s a similar story in Switzerland, albeit with a different set of circumstances. The presence of two well-established industry sectors in particular — watchmaking and pharmaceutical — has meant that the key skills necessary for the development of Medtech are present in the economy. And the presence of ‘big pharma’ offers opportunities to win sales, establish partnerships and share research.

It’s important to stress, however, that Switzerland’s formidable skills base is augmented by engineers, technicians and business leaders from many other nations. The Swiss enjoy good salaries, a high standard of living and proximity to some of the world’s most spectacular landscapes. As such it is a hugely attractive destination for the brightest and the best from around the world.


The Ecosystem

Equally crucial, Medtech companies operating in Switzerland benefit from a broader ecosystem. For instance, there is a huge amount of cutting-edge research taking place in universities, notably ETH Zurich and EPFL Lausanne. Those universities not only feed into a burgeoning startup culture, they actively contribute to it by encouraging professors and students to develop intellectual property with commercial potential. Much of the ground-breaking work carried out in academia is being spun out into the private sector.


International Competitiveness

Switzerland is a small country with a population of just 8.4 million people, but it is punching above its weight in the Medtech marketplace. According to Switzerland Global Enterprise, it ranks third behind Germany and the Netherlands but a higher percentage of its population (1.1% compared to 0.3% in Germany) are employed in the Medtech sector. Switzerland’s strength in the market reflects its position at the top of the Global Innovation Index 2018 rankings. Medtech is, after all, an innovation driven industry.

At present, there are more than 1’350 Medtech companies with a base in the country. The top ten includes well known global names such as Medtronic, Roche, Johnson & Johnson, Straumann, Sonova and Ypsomed, but there is also a long tail of SMEs and micro businesses.

The pace of innovation is intense. Figures published by Swiss Global Enterprise indicate that companies in Switzerland file over 540 patents for medical inventions each year. And when Medtech is compared to other industries, patent applications are three times higher than the global average.

One of the greatest strengths of the Medtech sector is its diversity. Medtech is a catch all term for a broad range of technologies, including robotics, diagnostics and implants and there are very many specialist niches. For instance, the implants sector includes orthopedics, cardiovascular and ophthalmic. The latter is particularly exciting at the moment. In the field of diagnostics, point of care solutions, big data and analytics technologies are increasingly being deployed to improve performance. The more data, the more accurate the readings. Those companies that amass data are, thus, in a very strong and defensible market position. Again this is a hugely exciting field.


The Opportunity

The medical technology sector is thriving, in part because it is addressing the requirements of over-stretched medical and care systems at a time when increased longevity is creating new health problems. The European Medtech market alone is estimated to be worth 110 billion euro, according to industry body Medtech Europe.

The Swiss industry currently generates annual sales of 14.1 billion Swiss francs and exports of 10 billion, according to Swiss-Medtech.ch. Those figures are set to grow as demand rises outside Europe and North America, with the emerging economies of Latin America, Asia and Africa providing new markets. The Swiss market is small, but the country is both an innovation hub and a test bed with a well-established regulatory and certifications system.

The opportunity for VC investment is clear. Swiss Medtech companies are providing innovative solutions for big problems and for early stage investors there are clear routes to exit. The Swiss Stock Exchange and the Euronext are among the most important in the world for Medtech IPOs. Companies have been listed on the Nasdaq.

Until now, investment opportunities in Swiss Medtech have been largely limited to those with the resources to invest via VC funds. BlueOcean Ventures is providing a means to invest in Swiss Medtech through a blockchain-driven tokenized fund that is opening VC Investment to a wider community.


BlueOcean Ventures is providing an opportunity to invest in Swiss and European medtech through a blockchain-driven tokenized fund that is opening VC Investment to a wider community.

To find out more, please visit the ICO website: www.blueocean.swiss

BlueOcean

Thomas Zehnder

Written by

Medtech | Life Science Entrepreneur and Investor

BlueOcean

BlueOcean

Medtech's First Tokenized Fund. Invest in Europe's Best Ventures

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