Market report

Why institutional real estate investors are turning to medtech

Real estate investors like having medtech companies as tenants.
Ziehm Imaging in Nuremberg
Ziehm Imaging in Nuremberg
Table of Contents
In: Market report

Some of the biggest real estate fund managers in the world invest in buildings occupied by medtech companies. What is the attraction?

What is medtech?

Medtech stands for “medical technology”, a sprawling sector that includes all of the technologies, devices, services, products, and solutions that use medical technology for patient care and the treatment, diagnosis, monitoring, and improvement of people’s health.

The term medtech can be broken into three broad categories: medical devices, in vitro diagnostics and digital health.

Medical devices are instruments, machines, implants, or software used for diagnosing, preventing, or treating diseases and medical conditions. These devices range from simple tools like thermometers to complex machinery like MRI scanners. A pacemaker, a small device implanted in the chest to help control abnormal heart rhythms, is an example of a medical device.

In vitro diagnostics are non-invasive tests used on biological samples (for example, blood, urine or tissues) to determine the status of a person’s health. An example of a diagnostic test is a blood glucose test, which measures the amount of sugar in a person’s blood to diagnose diabetes.

Digital health refers to the use of digital technologies to improve healthcare delivery and patient outcomes. This includes mobile health apps, wearable devices, telemedicine, and electronic health records (EHRs). A fitness tracker that monitors heart rate, steps, and sleep patterns is an example of a digital health tool, providing users and healthcare providers with valuable health data.

The range is vast, from everyday objects such as syringes, surgical masks, and COVID-19 tests to total body scanners, gene mutation tests, and replacement joints for knees and hips. Devices are categorised as:

  • Class I (low risk) such as bandages and wheelchairs
  • Class IIa (medium risk) such as external hearing aids
  • Class IIb (medium to high risk) such as lung ventilators
  • Class III (high risk) such as pacemakers.

Revenue and employment statistics for the sector

In Europe, an average of approximately 11 per cent of gross domestic product (GDP) is spent on healthcare. Of this figure, around 7.6 per cent is attributed to medical technologies, bringing the spend on medtech to slightly less than 1 per cent of GDP. Expenditure on medical technology per capita in Europe is €312 (£265) which brings the total market value to €160 billion (£136 billion).

The European medical technology industry employs directly more than 850,000 people. Germany has the highest absolute number of people employed in the medical technology sector, while the number of medical technology employees per capita is highest in Ireland and Switzerland. The jobs created by the industry account for around 0.3 per cent of total employment in Europe.

Number of medtech employees in selected countries. Source: MedTech Europe
Source: MedTech Europe

SMEs are dominant, unlike in pharma

There are approximately 35,000 medtech companies operating in Europe. This sector is characterised by a high proportion of small and medium-sized enterprises (SMEs), with about 92 per cent of these companies falling into this category.

For comparison, there are approximately 2,250 pharmaceutical companies operating in Europe. Some of the largest pharmaceutical companies, such as Roche, Novartis, and Sanofi, have their headquarters in Europe; others are multinationals.

Types of premises needed for medtech

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