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Switzerland and the U.S.: Two Nations With a Shared Investment in Med-Tech
Mark McCarty, Washington Editor, Medical Device Daily
The nations of Switzerland and the United States
have much in common despite that the two have no
common official language. One of the most
obvious common characteristics is that both
nations have invested large sums in medical
technology, but the economic ties between the two
nations are also of great importance. The U.S.
Department of Commerce recently reported that
Switzerland was the largest foreign direct investor
in the U.S. last year at more than $42 billion, while
the U.S. was the largest direct investor in
Switzerland as well, with more than $148 billion
invested in the Swiss economy in 2010.
One of the more noteworthy differences between
the two nations is found in the respective
educational systems. In U.S. public school
systems, the content of instruction varies little
through grade 12, whereas many cantons in
Switzerland offer students differentiated schooling
after grade 5 or 6. Obviously, vocational education
is emphasized in Switzerland more than in the
U.S., which explains why Switzerland has a larger
pool of skilled technical labor as a percentage of
the population than the U.S.
A fact of life in the med-tech industry common to
both nations is that industry is populated
principally by small companies. According to the
latest edition of the Swiss Medtech Report by
Medtech Switzerland, approximately 1,400
companies in Switzerland are involved in medtech
manufacturing, but 75% of those companies have
fewer than 50 employees.
The situation in the U.S. is very similar. According
to testimony by Stephen Ubl, President/CEO of the
Advanced Medical Technology Association
(AdvaMed), approximately 7,000 firms in the U.S.
were making medical devices and diagnostics in
2007, but 62% of those companies had 20 or fewer
employees. It may also be true that in both nations,
small companies are the source of the vast majority
of innovative medtech products.
In terms of investors, the primary source of
medical technology innovation in the U.S. is
venture capital (VC), which fell by more than 30%
between 2008 and the end of 2010. However, a
recent report indicates that VC has moved back
into American life sciences, including medtech.
According to a report published by
PricewaterhouseCooper (PwC; New York) in
August, investment in U.S. medtech in the second
quarter of 2011 was up 9% over the same quarter
in 2010, as VC firms invested $841 million to
close 90 transactions, a sum the PwC report states
was “the highest level of funding” for medtech
since the third quarter of 2008, and which ranks as
the seventh highest total in the past 16 years.
For Switzerland, venture capital has expressed a
strong preference for life science investment in
recent years. According to the 2011 venture capital
report filed by the Swiss Private Equity &
Corporate Finance Association (Basel,
Switzerland) more than 80% of Swiss venture
capital went to life science investments in 2009,
with computers and other consumer electronics
coming in a distant second at 10%. However, the
report does not break the numbers down for
medtech and pharmaceuticals and biotech.
Both Switzerland and the U.S. have a large number
of citizens approaching retirement. According to
the Swiss Federal Statistics Office, one of three
adults in Switzerland will retire by 2050. The U.S.
“baby boom” will retire slightly earlier. By the
mid-2030s, one in four Americans will reach
retirement age. In both cases, this presents an
outstanding opportunity for device makers in terms
of demand.
The problem presented by so many elderly citizens
is that healthcare spending is increasing rapidly.
This may be a more significant economic and
political issue in the U.S. than in Switzerland, but
neither nation can take the subject lightly.
According to the Organization for Economic
Cooperation and Development, per capita
healthcare spending in the U.S. rose from $4,700
in 1998 to more than $7,500 in 2008. In
Switzerland, the figure in 1998 was slightly more
than $3,200 per person, and reached more than
$4,600 in 2008. These increases cannot be
sustained for long, and political leaders in both
nations must find ways to provide health insurance
for their citizens without damaging their native
sources of medical technology.
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