By Ivor Campbell, Chief Executive, Snedden Campbell
LinkedIn: Ivor Campbell
LinkedIn: Snedden Campbell Ltd
The medical technology sector has long been characterized as the steady, reliable engine of the life sciences world. A sector offering consistent growth, without the wild volatility and boom-or-bust narratives of biotech or the frothy hype of digital health, it may be seen by some as “vanilla”, but it also has the benefit of being robust.
In a turbulent global economy caused by Trump’s tariffs, the war in Ukraine and friction between the west and China, medtech is now driving a transformative trend: the concentration of massive, “lumpy” investment capital, exemplified by deals like the recently reported $18billion privatization of Hologic by the private equity giants Blackstone and TPG. However, this influx of capital is not being distributed evenly across the globe. Instead, a geographic disparity is emerging, with the United States acting as a powerful magnet for this “lumpier” investment, while the United Kingdom and Europe struggle to keep pace. This transatlantic investment gap is not an accident, but the logical outcome of a US ecosystem that is structurally optimized for scaling high-growth companies, while the European and UK systems, despite world-class science, remain fragmented and risk-averse. The scale of the US capital markets, the depth of its private equity pools, and an investor mindset geared towards ambitious scaling create a fertile ground for such transactions. In contrast, the UK and European financial ecosystems are simply failing to keep pace.
A structural funding deficit
The US venture capital fund is nearly twice the size of its European counterpart, with a recent analysis showing eight times more capital available for growth-stage companies in the US. This initial disadvantage compounds over time. A 2025 analysis highlighted that US VC funds achieved double the returns of those in the UK. This performance gap creates a self-reinforcing cycle – higher returns attract more capital, which enables bigger bets, which in turn generates more outsized returns. European investors, often facing more risk-averse mandates and a less unified market, have historically struggled to achieve the same speed and scale of returns.
A promising UK or European medtech startup might successfully navigate early-stage funding with seed and Series A rounds. However, when it comes to the capital-intensive phase of scaling – conducting large-scale clinical trials, building out commercial teams, and expanding into global markets – the local funding environment often falls short. As a result, successful startups are forced to seek later-stage capital from the US. This frequently necessitates a “Delaware flip”, restructuring the company as a US entity, to appeal to American investors who are more familiar and comfortable with their own corporate and legal structures. In many cases, this financial migration is followed by a physical one, with key operations and leadership moving stateside, draining the local ecosystem of its most promising assets.
The private equity mismatch
The recently reported acquisition by private equity firms Blackstone and TPG of medical diagnostics firm Hologic for $18.3billion, including debt – the largest medical devices deal in almost two decades – exemplifies the current trend among US VCs of making mature, publicly-listed companies private, optimizing their operations away from the quarterly scrutiny of public markets, and reaping long-term, stable returns.
In Europe, while PE is active, the sheer size and audacity of such deals are rare. The European PE landscape is more focused on smaller, platform add-on investments rather than transformative, multi-billion dollar take-privates of established champions. Historically, Europe’s CE marking process was often seen as a faster, more straightforward route to market compared with the US Food and Drug Administration (FDA). This was a key advantage for European innovators. However, this dynamic has flipped. The implementation of the European Union’s Medical Device Regulation (MDR) was a response to high-profile device failures. While well-intentioned, its execution has been widely criticized for creating a complex, costly, and slow approval pathway.
A 2022 survey found that only 22% of medtech executives found the EU approval process predictable, compared with 62% for the FDA. The MDR has created a bottleneck, with notified bodies overwhelmed and many legacy devices requiring re-certification. For a startup operating on a tight budget, this regulatory uncertainty and increased cost can be fatal. At the same time, the FDA has undertaken significant reforms to make itself more innovation friendly.
Initiatives like the Breakthrough Devices Programme provide a clearer, more collaborative, and often faster pathway for novel technologies that address unmet medical needs. The FDA is now frequently perceived as a more predictable and pragmatic partner than its European counterparts. For an investor betting hundreds of millions of dollars, regulatory predictability is non-negotiable. The US now offers that, while Europe presents a maze.
The UK’s post-Brexit paralysis
Brexit presented the UK with an opportunity to create world-leading, agile regulatory framework for medtech, but the current state of the sector is one of uncertainty. While the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) has proposed ambitious reforms, the pace of implementation has been slow. The UK’s specific challenges in market access are also having a dampening effect on investment. The Voluntary Scheme for Branded Medicines Pricing and Access (VPAS), with its high and unpredictable “clawback” rates on pharmaceutical revenues, has undermined investor confidence in the UK life sciences sector overall.
The high-profile decision by Merck in September to scrap a planned £1billion UK expansion, citing the uncertain investment environment, is an example. While this directly targets pharma, the signal it sends to the wider life sciences investment community, including medtech, is profoundly negative. It suggests a market that does not consistently value and reward innovation.
Next year marks the 25th anniversary of the creation of Dolly the Sheep – the world’s first cloned animal – at the Roslin Institute, outside Edinburgh. It is a timely reminder that the UK should be a global leader in genomics and advanced therapies like cell and gene therapy. In 2023, UK cell and gene therapy companies attracted around £200million in venture capital, a testament to the quality of the underlying science.
The US is winning this race not through luck, but by design. Its ecosystem – a vast, unified market, deep and liquid capital pools, a reformed and predictable regulator, and a culture that celebrates scaling –is perfectly calibrated for the era of “lumpy” investment. The medtech sector’s robust, defensive nature makes it a critical asset for any advanced economy, promising high-skilled jobs and health resilience.
For the UK and Europe to remain more than just a source of early-stage innovation for US giants to acquire and scale, they must move beyond diagnosing the problem and begin the hard work of rebuilding their ecosystems to compete in the new world of “lumpy” capital. The future of their medtech industries depends on it.