MEDICAL TECHNOLOGY
The reports recommend launching an NHS Priority & Clinical Register, which would publish NHS unmet needs and procurement intentions.
manufacturing and process infrastructure. This centre would also act as a hub for engagement opportunities across priority areas such as innovative materials.
Barriers to investment in the UK The report, Understanding investment barriers in the UK MedTech ecosystem, was developed through a comprehensive market engagement with approximately 150 SMEs, 40 investors, and other ecosystem stakeholders, to understand the challenges hindering investment in the UK. Between 2015 and 2025, levels of early UK MedTech investment have broadly declined. The ability of SMEs to secure capital has been influenced by a variety of factors:
Risk aversion: Investors are increasingly risk-averse, particularly towards early-stage MedTech companies and higher-class medical devices (Class III). To ensure that return targets can be met, they expressed a preference for companies closer to commercialisation and those with proven market validation or revenue generation. This also mirrors the approach taken by large corporations, that investors say are typically waiting longer to acquire MedTech businesses. Equity stakes: Participants reported that high equity stakes taken by universities during the spinout process acted as a deterrent to future investors and disincentivise founders. Following the recommendations outlined after the government sponsored independent review of the sector in 2023 (DSIT, Independent review of university spin- out companies, 2023), many universities moved to address this.
According to the Royal Academy of Engineering and Beauhurst (RAE and Beauhurst, Spotlight on Spinouts, 2024) the average stake taken by universities decreased to 16.1% in 2024. However, the SMEs and investors interviewed had encountered much higher figures and suggested that policies vary considerably between different universities. Investor education: There is a need for beter investor education regarding the unique challenges and timelines associated with MedTech development. Concurrently, greater transparency regarding the success rate and criteria for private capital investment decisions would help SMEs estimate their likely chances of success for securing venture capital funding versus exploring alternative funding options. Procurement: SMEs need more support to navigate NHS procurement processes and ensure that product- market fit is aligned with the needs of the NHS to ensure the maximum chance of success.
Greater speed and efficiency A potential solution is to allow NHS trusts to purchase pre-approved MedTech products off-catalogue from NHS Supply Chain. This would facilitate one approval process for relevant products, and commercial orders could be placed via a centralised system, thereby increasing speed and efficiency. This would allow MedTech SMEs to sell into multiple trusts. Regulatory complexity: Both the investors and SMEs interviewed perceived that the UK regulatory landscape is uncertain and difficult to navigate, which decreases investor
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confidence in the sector. Comparison with other jurisdictions: The US regulatory system, with its pre-submission feedback and clearer pathways, is viewed more favourably. There is a suggestion to adopt international recognition of medical devices with comparable regulator countries such as the US. Early-Stage and series B+ funding: There are significant funding gaps for early-stage companies, particularly around go to market and manufacturing scale up, as well as for Class III medical devices and for those seeking Series B+ funding. Grant funding: This is crucial but increasingly competitive. The application process is seen as complex and often requires professional grant writers, which is cost-prohibitive for many SMEs. Fragmented ecosystem: The MedTech ecosystem is seen as fragmented, with a need for beter collaboration and a more joined-up approach among ecosystem players. Focus on US market: Many SMEs reported that they have been advised by investors to focus on the US market due to its larger size and more favourable investment climate. However, there is a desire to anchor these companies in the UK, while still benefiting from international expansion. Global market access: More support is needed to help MedTech SMEs access global markets from an early stage through international accelerator style programmes, which connect SMEs with large corporates as potential customers and acquirers.
Feedback highlights Some of the feedback from UK MedTech companies included: “The NHS is hard work and its cash strapped. We don’t make great margins in the NHS, but it is an important market to be in, and it has given us an evidence base and credibility. But despite having a product that we’ve proven saves money and improves patient outcomes (it costs a pound per patient per year to implement), the NHS says we don’t have any ring-fenced budget for this sort of innovation.” Another commented: “Investors want
evidence which can’t be generated until the technology is commercialised and we need money for commercialisation… we are in this chicken and egg situation.” The report highlights the need to: bolster the financial mechanisms which support UK MedTech SMEs. increase grant funding or re-orient public funding around existing gaps to
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