Are You Starving Your Innovation?

Posted by Roz Lawson on October 26, 2016

 

A recent review of global medtech business reports that the sector’s total revenue fell in the past year for the first time since 2011, U.S. and European medtech financing dropped, and top management of established medtech companies appears to be focusing on short-term allocation of capital, turning $13 billion over to shareholders in 2015 rather than reinvesting it in their companies. Both large and small companies are limiting their investment in taking new technologies to market and expanding their customer base.

The risk-averse climate isn’t surprising. Historically, many companies have struggled to recognise the benefits of an acquisition due to a focus on short-term results. Take the example of a big company that has acquired a promising device from an innovative startup, integrated it into their less-than-agile decision-making structure, and then managed it with a one-year-return mentality to satisfy their shareholders. The result? Unsurprisingly, growth falters, and then investment is restricted, so growth stalls, and so on. A few years down the line, the big company is considering selling off its once-promising asset. I won’t name names, but I can think of many examples, and some big companies are serial offenders.


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