Equity capital plays big role in innovative German medical technology
A study by the University of Tübingen and the SHS Gesellschaft für Beteiligungsmanagement shows that on average, German medical technology companies tend to rely on their own capital to finance the development of innovative new technologies. They attribute this to the importance of innovation and development of new products within the medical technology industry in general.
The practice has led to success for the sector, which is valued at EUR 28 billion and exports 64 percent of what it produces. Industry statistics indicate that Germany's medtech firms continue to bring in a third of their turnovers with products that are less than three years old.
When it comes to innovation says the study, medical technology companies tend to have a 54 percent equity share in the costs of developing new products, a ratio far higher than other sectors. By comparison, the chemical and pharmaceutical industry has a 42 percent ratio for R&D.
An expert on financing at the University of Tübingen, Professor Christian Koziol explains, "The development of new products sometimes requires patience and poses certain risks. Medical technology companies do not want their innovations to fail due to risk averse suppliers of outside capital."