Corporations and their investment arms — including Johnson & Johnson, Kaiser Permanente, and Medtronic — have been participating in major deals to medical device startups.
These include large late-stage deals into CVRx, Acutus Medical, and Transmedics. On the back of this activity, corporate-backed deal activity into medical device startups is on track to surge this year.
We used CB Insights data to examine funding trends involving corporates, their activity by deal stage, and the most active players in the investment space.
Annual financing history
Year-to-date as of 8/8/16, there have been over 50 deals with corporate involvement to private medical device companies with corporate backing, with $833M flowing to those companies from the deals.
Since jumping from 46 deals in 2012 to 60 in 2013, deal volume has hovered at around 60 per year for the 2013 to 2015 period. However, deal pace is on track to jump to 80 or so this year, which would be a roughly 30% year-over-year increase.
Large deals involving corporates include the $93M Series C raise by CVRx from investors including Johnson & Johnson, TransMedics‘ $52.1M growth equity round from investors including the lung research and development company Lung Biotechnology, as well as Acutus Medical’s $75M Series C from investors including GE Ventures.
Quarterly financing history
Broken down by quarter, both funding and deal flow from corporate-backed deals fell between Q3’15 and Q4’15, but both metrics have been steadily recovering. Q2’16 ended with 20 deals. Q1’16 marked a four-year deal peak of 22 deals, as well as over $336M in funding from corporate-backed deals.
Outside of GE and Lung Biotechnology, Q2’16 saw participations from Pfizer ($46M Series B in ReleXion Medical), Boehringer Ingelheim ($28.5M Series C in STAT-Diagnostica), and Fresenius Medical Care ($15.3M Series B in ExThera Medical).
Deal activity by stage
Corporate-backed deals to the medical device sector are not concentrated in the seed/angel and Series A stage. In 2016, more than a third of deals went to mid-stage companies, with the larger share going to Series B rounds. Compare this to equity deals in digital health, where 58% of deals went to seed/angel stage startups in 2016.
Two of the 9 Series A deals completed in Q2’16 include a round to Millin Enterprises which was funded by Lilly Asia Ventures, itself backed by Eli Lilly & Co., and Precision Ocular, funded by investors including Consort Medical, a large drug development and manufacturing organization.
Most active corporates investing in medical devices
Topping the list of corporates investing in the medical device sector is Johnson & Johnson Innovation, an investment arm of J&J. Two of the arm’s more recent investments include a $5M Series D round in Powervision and a $25M Series E in Torax Medical. Powervision is developing an intraocular lens implant to treat age-related presbyopia and Torax develops devices used to treat defective sphincter muscles.
In second is Boston Scientific Corporation, a global medical device manufacturer, which recently invested in the $40M Series D round to NxThera and $15M Series C to TVA Medical.
Medtronic, the world’s largest medical device company and third on our list, participated in the 2012 $143M Series D round in Mitralign, a developer of catheter based technology for the treatment of mitral regurgitation.
| Rank | Investor | |||
|---|---|---|---|---|
| 1 | Johnson & Johnson Innovation | |||
| 2 | Boston Scientific Corporation | |||
| 3 | Medtronic | |||
| 4 | Kaiser Permanente Ventures | |||
| 4 | Ascension Ventures | |||
| 5 | Novartis Venture Funds |
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