Medtech mergers and acquisitions (M&A) and venture capital (VC) showed signs of life in 2024, contributing to an overall optimistic outlook for the sector this year despite lingering headwinds.
Strategic investments are expected to continue as medtech companies innovate, particularly in areas such as AI-driven diagnostics, wearables and remote monitoring devices, and advanced surgical technologies.
Private, venture-backed M&A activity for medical devices—which picked up in the second half of last year and started 2025 strong with two ten-digit acquisitions and two spin-offs by strategics—could continue rising amid a more deregulatory backdrop under the new presidential administration.
Still, challenges persist that could slow growth. Early-stage VC deals in the sector have faced difficulties, and private M&A exit timelines have increased. Uncertainty regarding the path of interest rates and the broader economy also muddy the outlook.
M&A Deal Volume Begins to Pick Up
The number of private, venture-backed M&A deals for medical devices climbed to 14 in 2024 — up from nine a year earlier and the highest annual tally since 2021 — according to the 2024 HSBC Venture Healthcare Report. The third quarter of 2024 saw a significant increase in dealmaking following a slow first half of the year.
Cardiovascular-focused companies ranked first in private M&A activity, with five deals last year.
In one concerning sign, the typical time to exit from first financing rose to 11.9 years last year, more than doubling from 2021, per HSBC. Exit timelines have lengthened significantly in recent years for both 510(k) and PMA-focused companies amid a challenging capital environment.
Still, medtech M&A activity overall appears to be on an upward trajectory. Separate figures from JP Morgan show that medtech companies announced 305 M&A transactions last year, the second highest count in the past decade, behind 2021. (JP Morgan's higher deal count in part reflects its broader definition of medtech, which includes medical devices, diagnostics, therapeutic digital health, and commercial research tools.)
Later-Stage Investments Drive VC Activity
Medical device venture investment ticked up to $7.5 billion in 2024 from $6.5 billion in 2023, HSBC's report showed. Later-stage financing led by new investors surged, helping offset weakness in early-stage investments tied to investors' concerns about Series B rounds.
A variety of investors — including traditional VC, growth, private equity, and crossover investors — were attracted to the lower risks and strong valuation opportunities of later-stage deals. However, investment was concentrated among a small number of deals: the top 10% of medical-device deals accounted for more than half of the sector's total capital invested, HSBC said.
There was a significant rise last year in venture investment rounds exceeding $50 million and $100 million, according to JP Morgan, reflecting a shift toward larger, more selective investments in companies with high growth potential.
Companies specializing in non-invasive monitoring (NIM), orthopedic, and vascular attracted more investment in 2024 than in 2023, while those focusing on cardiovascular and neurology remained stable. Investment in imaging — which has fluctuated in recent years — declined, HSBC noted.
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