The market for healthcare investment and medical technology

Did you know that the first dental treatment was carried out more than 14,000 years ago in a rock cave two hours’ drive north of Bolzano? It was a masterpiece that was performed there with a pointed stone blade. If you like, a very early testimony to medical technology. The first amalgam tooth fillings were made in China as early as the 7th century. That, too, is a milestone in medicine and medical technology. Today, companies like the Swiss TRI Dental Implants are writing medical technology history in the dental field: with the introduction of a completely new type of dental implant system matrix®.

In its readable text “History and Trends in Medical Technology”, the industry association BVMed assumes that the first medical products included leaves and pieces of tree bark, which were used by our ancestors to stop bleeding and treat wounds. Medical technology and medical devices have long played a major role in healthcare, alongside medical skills. Let us think, for example, of the physician Sir Joseph Lister (1827 – 1912), who in 1867 published a procedure for disinfecting the entire operating theatre environment and is today considered the father of antisepsis. Other products from the medical technology sector that we are all familiar with are, for example: syringes, scalpels, hip and knee implants, pacemakers and stents or, most recently, healthcare apps such as the app from Selfapy, which can help patients with depression. In the equipment sector, we are all familiar with ultrasound devices or highly sensitive endoscopes, such as those produced by the Blazejewski company in 2D and 3D versions for the world market.

Medium-sized, innovative, agile

With its medical technology, healthcare, life science and pharmaceutical sectors, the health industry in Germany (but also in Europe) is one of the most important economic sectors. With 364.5 billion euros (forecast 2020 by the Federal Ministry of Health), this versatile and extremely innovative sector generates 12.1 percent of the gross domestic product.

The importance of the entire healthcare sector with all its sub-sectors is demonstrated not least by the Corona pandemic. A stable medtech and healthcare sector has an important role to play in coping with this enormous medical challenge. Politicians and the population have recognised this.

In addition to a health care system that is one of the best in the world, the industrial sector of the health economy, i.e. the medtech and healthcare industry, plays a major role. According to the Federal Ministry of Health, the industrial health economy (iGW) accounts for 20.6 percent of the total health economy. This market includes such diverse areas as medical devices, hospital technology, imaging and other diagnostics, biotech/life science, medical informatics, retail and wholesale services and – increasingly important – e-health products and digital applications.

The sector is not very cyclical, is highly innovative and is also a job engine for the entire German economy. Around 1.0 million people are currently employed in the iGW in Germany, which is around 100,000 more than in 2011. The industry association BVMed names the following as the central key sectors of the industrial health economy: pharmaceuticals, medtech, R&D and e-health, which generated a total of 81.2 billion euros in 2019.

Medical technology

The German medtech industry alone, in which SHS has been operating successfully as a specialised sector investor since 1993, employs 235,000 people in Germany. The majority of companies in medical technology are SMEs. 93 percent of medtech companies employ fewer than 250 people. The SME sector is “the” employer in this industry. And it is also the SMEs that drive this sector with their innovations. Medtech companies invest about 9 percent of their turnover in research and development. One third of all products are less than three years old, another sign of the industry’s innovative strength. Incidentally, medical technology is also the leader in Europe in terms of patent applications: 14,295 patents were approved by the European Patent Office (EPO) in Munich in 2020, which means that the sector has once again taken the top position. The leaders in patents are the US companies, but Germany is in an excellent second place with 1,210 patent applications in 2020, followed by Japan, the Netherlands, France and Switzerland.1

Even though the market for medical technology is a stable economic factor, there are of course also challenges here that the mostly medium-sized medtech companies have to face. For example, due to the Corona pandemic, there are problems with the global supply chains on whose functioning all industrial nations depend. In addition, since the outbreak of the pandemic, elective operations have been postponed from time to time, which has led to a drop in demand for some companies. Two really big challenges, however, are the increasing approval requirements for medical devices in the EU through the Medical Device Regulation (MDR for short), but also in China. The export-oriented medtech industry is facing considerable time and financial costs here. Industry investors like SHS are also noticing this and are supporting their portfolio companies with capital and know-how. Another major challenge is the digitalisation of the entire healthcare system, which of course also affects the medtech and healthcare industry, as SHS partner Dr André Zimmermann points out in his regular column on the industry portal medtech zwo. Other keywords here are: Big Data, Artificial Intelligence (AI) and robotics in medicine.

Life Science

The life science sector combines various research and industrial areas in an interdisciplinary way. The specialist portal writes about this:

“In English and international scientific linguistic usage, life sciences or lifesciences are understood to be scientific research fields with a strong interdisciplinary orientation that are predominantly concerned with the application of scientific findings from modern biology, chemistry and medicine as well as related fields, and which also work with a targeted market economy orientation.”2

Life sciences, according to Wikipedia, include fields such as: “medicine, biomedicine, pharmacy, biochemistry, chemistry, molecular biology, biophysics, bioinformatics, human biology, as well as agricultural technology, nutritional sciences and food research, through to scientific processing of biogenic natural resources and biodiversity research. ”

Incidentally, the German life science industry is not only very versatile, it has also proven its efficiency and innovative strength, especially in connection with SARS-CoV-2. In 2020, the industry grew more strongly than it has in years, reports the German Biotechnology Industry Organisation (Verband Biotechnologie-Industrie-Organisation Deutschland e.V. Turnover increased by 36 per cent, R&D expenditure by 37 per cent. Companies from SHS’s portfolio of holdings are also successful in this field: for example, the Leipzig-based company c-LEcta supports some manufacturers of corona vaccines with the enzyme DENARASE ®. The SHS holding AMW GmbH is also a leader in its field when it comes to the development and production of biodegradable slow-release formulations and first-to-market generics.

It is actually hardly understandable when German life science companies, and especially start-ups, have problems raising capital. The trade association also complains that companies in this sector often lack the necessary support in the form of equity capital and funding opportunities. There are good opportunities here for experienced sector investors.


Life science research (LSR) and in vitro diagnostics (IVD) are the two areas that the diagnostics industry deals with. And this segment of the industrial health economy was and is also affected by the Corona pandemic. Whether PCR tests or rapid antigen tests or testing devices: in the fight against the Corona virus, LSR and IVD perform excellent teamwork.

“Acute diagnostics using RT-PCR (reverse transcriptase-polymerase chain reaction) is currently the gold standard in the fight against the Corona virus. It is an example of bridging the gap between the in vitro diagnostics and life science research (LSR) industries, as both industries, with their tests and test kits (IVD) and the RT-PCR process (LSR), form a system based on each other that can be used to test people nationwide and in large numbers in laboratories not only nationwide, but all over the globe.”3

With AXINON®, the SHS portfolio company numares Health offers the first modular software-based system for clinical diagnostics for a wide range of applications. AXINON ®IVD tests are used in these areas, among others: cardiovascular, nephrology, transplantation, oncology and neurology. Artificial intelligence also contributes to a large extent to the performance of numares products.

Diagnostic imaging

Another large area in diagnostics is made up of diagnostic imaging procedures. Here, too, artificial intelligence is playing an increasingly important role. Powerful AI systems in combination with state-of-the-art radiology or laboratory technology can lead to more precise and faster analysis results here. In this context, Dr André Zimmermann speaks of AI as a game changer with regard to the diagnosis and treatment of tumour diseases with AI.

Experts assume that digitalisation in combination with AI will give diagnostics an enormous boost: for the benefit of patients, whose diseases can be detected more quickly and thus also treated more quickly.

Digital Health

Digitalisation, as the last 24 months have shown, is one of the major megatrends that will determine the healthcare industry in the coming years. However, Germany still has a lot of catching up to do when it comes to the digitisation of healthcare. The healthcare industry has long since recognised this trend and in the BVMed survey sees business intelligence, data analysis, medical apps according to DiGA, big data and AI as dominant topics. Digitisation runs through the entire “patient journey”.

This starts with the area of mHealth with monitoring, telemedicine and wearables. For example, the Finnish manufacturer Neuro Event Labs has an AI-based diagnostic system for monitoring epilepsy patients.4

In the area of medical practices, the smart practice will also come our way and with it so-called eHealth such as the electronic patient record (ePA), tele referral, telemonitoring or the e-prescription. From the smart practice we move on to the smart hospital, where big data, AI and robotics have already become an integral part of everyday hospital life. Personalised medicine is also inconceivable without digital health. Neither is eReha and aftercare.

All in all, it can be said “that digitalisation in the healthcare sector affects all areas, from preventive care to diagnosis, therapy, rehabilitation, science and research” according to Dr. André Zimmermann.

Healthcare: Growth market, also for investors

Experts agree that the medical technology and healthcare industry is a growth market with a future. On the one hand, demographic change is contributing to this: increasing life expectancy in the industrialised countries and rising prosperity in the emerging countries. Added to this is the technological progress in this sector: digitalisation, artificial intelligence, robotics in medicine. Not to forget medical progress, which is only made possible by technical innovations, keyword: personalised medicine. In addition, Covid-19 has shown that the importance of a functioning healthcare system and a highly innovative healthcare industry cannot be overestimated. And: Nobody knows what medical challenge will come to Corona.

Hubertus Leonhardt, SHS partner and managing director, emphasises the excellent prospects of the health care market in an interview with Dr Hanno Kühn, Chief Investment Officer (CIO) and head of apoBank’s institutional investment business. His clear advice: “Especially for institutional investors from the area of pension and benefit management, I would recommend to look more intensively at the dynamic and resilient healthcare sector. ” Leonhardt believes that healthcare companies that embrace the challenges (digitalisation, AI, MDR, etc.) have very good prospects for the future, whether medium-sized or growth companies. SHS will support these companies with capital from its funds and thus contribute to ensuring that the medtech/healthcare sector remains one of the leading sectors of the economy. Great opportunities for private equity investors and investing in funds.


1 Ärztezeitung:
3 Verband der Diagnostika-Industrie:
4 medtech zwo: