The medical technology sector has long been characterized as the constant and reliable driver of the world of life sciences.
A sector that offers steady growth, without the wild volatility and boom-or-bust narratives of biotech or the frothy hype of digital health, 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, “pooled” investment capital, exemplified by deals like the recently reported $18 billion privatization of Hologic by private equity giants Blackstone and TPG.
However, this influx of capital is not being distributed evenly around the world. Instead, a geographic disparity is emerging, with the United States acting as a powerful magnet for this “more unequal” investment, while the United Kingdom and Europe struggle to keep pace.
This transatlantic investment gap is not an accident, but the logical result of a US ecosystem structurally optimized for scaling high-growth companies, while the European and British systems, despite world-class science, remain fragmented and risk-averse.
The scale of the US capital markets, the depth of its private equity funds and an investment mindset geared towards ambitious scaling create fertile ground for these types of transactions. By contrast, the UK and European financial ecosystems simply cannot keep up.
The US venture capital fund is almost twice the size of its European counterpart, and a recent analysis shows eight times more capital available for growth-stage companies in the United States.
This initial disadvantage worsens over time. A 2025 analysis highlighted that US venture capital funds achieved twice the returns of those in the UK.
This performance gap creates a self-reinforcing cycle: higher returns attract more capital, allowing for bigger bets, which in turn generate larger 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 could successfully raise early-stage funding with seed and Series A rounds. However, when it comes to the capital-intensive scale-up phase (conducting large-scale clinical trials, building commercial teams, and expanding into global markets), the local funding environment often falls short.
As a result, successful startups are forced to seek capital in the United States for their later stages. This often requires a “Delaware pivot” – restructuring the company as a US entity – to attract US 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, in which key operations and leadership move to the United States, draining the local ecosystem of its most promising assets.
Private equity firms Blackstone and TPG’s recent acquisition of medical diagnostics firm Hologic for $18.3 billion, including debt—the largest medical device transaction in nearly two decades—exemplifies the current trend among U.S. venture capitalists to take mature, publicly traded companies private, streamline their operations away from the quarterly scrutiny of public markets, and reap stable long-term returns.
In Europe, while the EP is active, the size and audacity of such deals are rare. The European PE landscape is focused more on bolt-on investments from smaller platforms than on transformative, multi-billion dollar acquisitions of established champions.
Historically, the CE marking process in Europe was often considered a faster and easier route to market compared to the US Food and Drug Administration (FDA). This was a key advantage for European innovators. However, this dynamic has changed.
The implementation of the European Union’s Medical Device Regulation (MDR) was a response to high-profile device failures. While its execution was well-intentioned, it has been widely criticized for creating a complex, costly and time-consuming approval path.
A 2022 survey found that only 22% of medtech executives considered the EU approval process predictable, compared to 62% for the FDA.
The MDR has created a bottleneck, with notified bodies overwhelmed and many legacy devices requiring recertification. For a startup operating on a tight budget, this regulatory uncertainty and rising costs can be fatal.
At the same time, the FDA has undertaken important reforms to become more innovation-friendly.
Initiatives like the Innovative Devices Program provide a clearer, more collaborative, and often faster path for novel technologies that address unmet medical needs.
The FDA is now often 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 United States now offers that, while Europe presents a labyrinth.
Brexit presented the UK with the opportunity to create an agile, world-leading 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 chilling effect on investment. The Voluntary Scheme for Pricing and Access to Branded Medicines (VPAS), with its high and unpredictable recovery rates for pharmaceutical revenues, has undermined investor confidence in the UK life sciences sector as a whole.
One example is Merck’s high-profile decision in September to scrap a planned £1bn expansion in the UK, citing the uncertain investment environment. While this takes direct aim at the pharmaceutical industry, the signal it sends to the broader life sciences investment community, including medtech, is deeply negative. It suggests a market that does not consistently value or 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, just outside Edinburgh. It is a timely reminder that the UK should be a world leader in genomics and advanced therapies such as cell and gene therapy. In 2023, UK cell and gene therapy companies attracted around £200 million in venture capital, a testament to the quality of the underlying science.
The United States is winning this race not by 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 “wild” investing.
The robust and defensive nature of the medtech sector makes it a critical asset for any advanced economy, promising high-skilled jobs and healthcare resilience.
For the UK and Europe to remain more than just a source of early-stage innovation for American giants to acquire and grow, they must go 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 your medical technology industries depends on it.
“The transatlantic medtech investment gap: why does it exist and can it be closed?” was originally created and published by Medical Device Network, a brand owned by GlobalData.
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