COMPAMED SUPPLIERS FORUM: Innovations and investments

Interview with Uwe Steinbacher, SHS Gesellschaft für Beteiligungsmanagement mbH

11/14/2016

Many companies are looking for investors to bring their products to market, and they do so not just by walking right into the Dragons’ Den: trade fairs like MEDICA and COMPAMED are also an ideal marketplace to bring ideas and resources together. But note that in medical technology, there is more behind innovations than just money.

Image: Uwe Steinbacher during his lecture at COMPAMED SUPPLIERS FORUM; Copyright: beta-web/Roth

Uwe Steinbacher during his lecture at COMPAMED SUPPLIERS FORUM; ©beta-web/Roth

On Monday, trade fair visitors were able to attend a lecture titled “Catching a breath – the way medtech investors enable innovation“ at the COMPAMED SUPPLIERS FORUM. In this interview with COMPAMED-tradefair.com, speaker Uwe Steinbacher talks about investments in the medical technology industry.

Mr. Steinbacher, how do investors support innovation in the medical technology industry?

Uwe Steinbacher: We primarily support innovations through financial commitment because medical technology is a very capital intensive industry. By the time the first prototype has been completed, companies already spent a large amount of money on construction and production. Unlike in many other industries, this is followed by a very complex and lengthy approval process – things actually have only just begun with the first prototype. The approval requirements to receive a CE marking have been considerably tightened in recent years. Devices of the regulatory classifications II and III must undergo biocompatibility studies, animal testing and clinical trials, among other things. Large investments are required during this stage.

In addition to our financial commitment, we also support portfolio companies with our network: our partners help to plan, design and manufacture products. They also consult in approval issues. Moreover, we collaborate with health insurance providers to settle the issue of reimbursement in the health care system. This is especially important here in Germany because the reimbursement scheme of the German statutory health insurance companies covers 90 percent of all insured persons. Thirdly, we collaborate with leading health professionals from various medical specialties – "key opinion leaders", whom we want to keep informed about innovations in medical technology.

You have mentioned the approval process. Do you see an innovation backlog in the medical technology industry in this regard?

Steinbacher: I would not call it a backlog, especially since small and medium-sized enterprises come up with innovations in huge numbers. Yet the approval processes simply take longer now than they used to, causing the products to come on the market much later. This is why the planning process of how to expertly get into clinical trials and implement them quickly are becoming increasingly important.

Where do you see medical technology areas with high development potential that are worth investing in?

Steinbacher: There is hardly any field in medical technology that is not driven by innovation. Let us take TNI medical for example, with whom we jointly presented at the COMPAMED SUPPLIERS FORUM. The company specializes in caring for patients with COPD, that being chronic obstructive pulmonary disease. There is no cure for this disease and the development of equipment and methods to treat and diagnose patients is still in the early stages, despite it being one of the most leading causes of death worldwide. TNI’s products help with breathing using Nasal High Flow therapy and have the potential to become the new treatment standard for patients suffering from COPD.

There are also a number of innovations in cardiology and neurology, as well as in the field of implants if you think about custom-made implants using 3D printing for example. We are also active in this area. We still see significant innovation potential in virtually all areas of medical technology, which companies can tap into with the help of a financial investor.

What do you look for in medical technology companies as an investor?

Steinbacher: Before we make an investment, we check whether a new product has a chance of being approved and determine the potential benefit for the patient and the overall health care system.

When it comes to technology-based companies, one important aspect is whether the company holds patents and applies proprietary processes. With other companies that do not apply proprietary technology, we examine whether the business model can also be implemented and scaled on a larger scale. We recently acquired Medigroba, a so-called home care provider from Baden-Württemberg, whose business model is well suited for additional acquisitions and regional expansion throughout Germany.

Thirdly, we look at companies on a very individual basis and consider how the management team is set up and where the strengths and weaknesses are. When it comes to more mature companies, we might address issues like growth or succession, where we make capital available, while we also facilitate the process. These are very multilayered and complex topics we are involved in.

Photo: Timo Roth; Copyright: B. Frommann

© B. Frommann

The interview was conducted by Timo Roth and translated from German by Elena O'Meara.
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