Summary of the UK medical technology industry

The operating environment for the medical technology industry has broadly continued to strengthen since 2001/02.

Venture capital investment in the sector (as measured by data from the members of the British Private Equity and Venture Capital Association (BVCA)) trebled from 2005 to £96mn in 2006, while turnover and profits of UK manufactures (particularly medical and surgical equipment) have also increased steadily.

The R&D investment in the medical technology sector (as measured by the BERR/DIUS R&D scoreboard for 2007 which looked at published figures for the top 850 UK and top 1250 international companies in all sectors) is higher (at around 7%) than in many comparable industry sectors (e.g. chemicals), but less than half of the investment in the Pharmaceutical sector. Overall R&D spend has continued to increase, but at a slow pace. As a percentage of sales, global R&D spend has now risen back to the levels it was in 2003/04.

The number of companies listed in the London Stock Exchange Alternative Investment market grew until mid-2006, but appears to have stabilised since.

Market capitalisation of listed UK medical technology companies has fallen since mid-2005 as a result of number of mergers and company reorganisations, which could indicate that conditions in the sector have become tighter, and needs to be seen in the wider context of industry globalisation.

While employment in the sector has remained relatively stable in recent years, there has been a moderate fall in the number of companies manufacturing medical and surgical equipment. There has also been a moderate fall in graduates with degrees relevant to the medical technology sector in recent years.

Although the turnover and profits of UK medical technology manufacturers have continued to grow, a number of structural and environmental pressures may be on the horizon.