THE UK’s healthcare technology companies are producing some the world’s most innovative devices, turning profits and making the world a healthier place. However, the UK’s healthcare system does them a disservice, restricting them from punching even further above their weight.
With a market capitalisation of $5.1bn (£3.22bn), Smith and Nephew stands head and shoulders above its UK competitors. Its nearest challengers are Abcam and Axis-Shield, which are respectively £300m and £236m in size. But there are some very exciting young companies that could challenge in the future.
Julian Hickman of Juno Capital likes a couple of UK companies he thinks “are poised to be highly disruptive for their markets.” The first is Sky Medical. It has launched a new product for the prevention of deep vein thrombosis and Hickman thinks this “product is far more effective than other current devices.” The second company is Biotronics3D, which is the first company to be able to provide advanced medical imaging purely in the cloud. He says “this enables real time collaboration between different doctors in different locations using just a browser and the internet.”
Andrew Elder of Albion Ventures, who practiced as a neurosurgeon for six years and is now a venture capitalist, likes Dysis Medical – which is in the business of imaging systems for the detection of cancerous and pre-cancerous lesions – he is invested in it and believes it could reach a market capitalisation of £300m. He also likes the look of Touch Bionics, a Scottish-based global leader in advanced upper limb prosthetics, and Aircraft Medical, which produces video laryngoscopes that look like iPods. Polar Capital’s Daniel Mahony picks out Optos, another Scottish-based company.
A NATIONAL DISSERVICE
It is common knowledge that world demographics point to an opportunity from rising demand in healthcare. This predicted rising tide should buoy up the ship of UK healthcare technology. The emerging markets of Brazil, Russia, India and China could open up consumers and profits in the billions. David Pinniger of the International Biotechnology Trust says the West is aging, while people in emerging markets are increasingly willing and able to pay for healthcare. He also points out that China’s one child policy will mean that its population will age rapidly. Hickman says: “People are living longer and many are carrying chronic illnesses for longer.”
Dominic Carter of Mastek adds that “the huge cost of today’s ever more sedentary lifestyle is leading to conditions such as Type 2 diabetes and other long term conditions.” Carter says: “there is a time bomb waiting to explode.”
However, increasing demand for a good doesn’t necessarily translate into its increasing supply. The monopolistic NHS and constant regime and regulatory uncertainty are not the ideal structures for health technology to flourish. Elder says “the problem is that the NHS is the last adopter of technology” because of its conservative – with a small c – nature. Mahony points to areas of healthcare dominated by discretionary spending – dentistry, laser eye surgery and cosmetic surgery – where innovative technology dominates. These offer a glimpse of the potential benefits for UK healthcare technology companies – as well as the UK population’s health – of radical supply side reforms.