Originally Published MX November/December
2001
EDITOR'S PAGE
A Solid Foundation
The
tragic events of September 11 have left their mark throughout the world. Market
watchers have looked on with dismay as already-weak sectors have dwindled, while
analysts have begun the search for an industry with enough strength to lead
the world's economies back from the depths.
In such a climate one might expect that the medtech industry, with its heavy dependence on venture-backed entrepreneurial companies, would be suffering. While no one is making a bundle in today's market, some medtech companies are succeeding despite the challenges.
According to VentureOne (San Francisco), market support for initial public offerings (IPOs) has continued to decline throughout 2001. In the second quarter of the year there were only four IPOs, raising a total of $271 million; in the third quarter, the same number of IPOs raised only $245 million. What is more remarkable, however, is that three of the third-quarter IPOs involved companies in the healthcare sector, including bio-orthopedic manufacturer Wright Medical Group Inc. (Arlington, TN), which raised $94 million from its offering.
And the good news for medtech companies continued into the fourth quarter, with investors betting that the healthcare sector would be a safe place to ride out a weak economy and the war on terrorism. In early October, several medtech firms became the first companies to issue IPOs since August 7—the longest period without an offering since 1976. The big winner was TheraSense Inc. (Alameda, CA), a maker of blood-glucose monitors, whose stock rose by 32% on its first day.
The medtech pipeline is far from empty. According to a mid-October report by Reuters, 35 of the 55 companies then getting ready to go public were healthcare-related firms. On its own, the medtech industry doesn't have the power to boost flagging international markets. But perhaps the solidity now being shown by medtech companies will help to soothe the nerves of jittery investors—and thereby offer a solid foundation for an early recovery. That in itself would be a worthy accomplishment.
Copyright ©2001 MX
