Medtech guide: these high-tech health stocks have the machines that go ‘ping’
Global spending on medical technology — or medtech — will grow from $US400 billion today to $US522 billion by 2022 as the health industry goes increasingly high-tech.
There are more than 50 ASX-listed stocks that are going after a slice of the medtech market — which includes machines that simplify the prevention, diagnosis and treatment of illnesses.
That includes imaging instruments, dialysis devices, wearables and what Monty Python famously called “machines that go ping”.
Another $US1 billion will be spent on cloud-based patient management software, databases and technology that connects medical devices, reports researcher Frost & Sullivan.
Globally, hospital and health staff will “lower their dependence on manual monitoring” in the coming five years, say the analysts, resulting in new opportunities for Artificial Intelligence-based or automated medical tech.
>> Scroll down for a list of ASX medtechs and their 12-month performance
On the local bourse, medtech companies generally come in four varieties: wearables and apps, surgical and medical tools, in-body technology – including 3D printed parts and bioscaffolds – and imaging and diagnostic technology.
Despite the ever-growing health market and a trend to high-tech “precision medicine” many of the ASX medtech stocks have lost ground over the past 12 months, however.
Of the 53 medtech stocks we’ve listed below, only 20 have increased over the past year.
Among these, diagnostic tools and wearables have seen some standout performances.
For example, asthma tech business Respiri (ASX:RSH) is up 180 per cent for the year with its alternative to the “peak-flow” monitor, while pain monitor app Painchek (ASX:PCK) is up 85 per cent.
Even bionic ear juggernaut Cochlear (ASX:COH) is up about 30 per cent for the year.
There are a few key questions investors should ask when considering any device or technology-focused health stock, says Canary Capital analyst Martin Duriska.
These include the time to market for the product, whether it has relevant approvals such as TGA clearance, how the product will be sold and whether management has a track record of building businesses and signing up customers.
“Is the distribution in ‘lesser’ countries, or have they got a distribution channel in the EU or USA?,” Mr Duriska asks.
“Has management had any success in the past, be it in similar devices, or similar health conditions?
“Having a ‘veteran’ of the industry on board is a huge plus as it may open big doors.”
Biotech Daily editor David Langsam highlights sales credentials as an important part of medtech success.
He suggests reviewing whether companies are doing their own marketing or using a third party to sell their goods to clinicians and hospitals.
More than 25 of the businesses in the Biotech Daily BD-40 index of top biotechs are in the device or diagnostics game. Mr Langsam says overall, the space can offer faster wins than drug developers – but at smaller scale.
“The thing about devices and diagnostics is that they are easier to get approved,” Mr Langsam says. “So there is often a smaller return, because there’s a lower risk-reward factor.
“You don’t get the 50-100 per cent return to can get on the drugs.”
The top medtechs over 12 months
Some of the brightest sparks in the ASX medtech space this year have hit well above the 100 per cent gains mark. Here are a few of the businesses at the top of the class over the past year:
• Polynovo (ASX:PNV) — up 141 per cent, share price 49.5c
Polynovo’s product suite includes novel wound dressing as well as in-development orthopaedics and hernia repair treatments.
In April, it also announced a development program for a breast reconstruction device. In the first half of 2018, revenue was up 30 per cent to $2.7 million. But so was were the losses, which came in at $3.2 million – 64% higher than the previous year.
• Respiri (ASX:RSH) — up 180 per cent, share price 11c
Respiri’s devices measure wheezes, and aim to replace the old and tricky-to-use “peak flow” meter for asthma tracking. In May, it told investors it was advancing protocols for real world studies of its technology.
The business generated $2000 in customer receipts in the nine months to March, and had $879,00 in cash at the end of March.
• Painchek (ASX:PCK) — up 100 per cent, share price 5.2c
The Painchek app — which measures pain by facial expressions — is now being tested to manage patients with early stage dementia. In mid-June the business confirmed it was extending a pilot testing program nationally in partnership with Dementia Support Australia. As of the March quarter it was not generating revenue, but burned $664,000 for the quarter.
• Volpara (ASX:VHT) — up 55 per cent, share price 76c
Volpara is a breast cancer diagnostics play, with enterprise software and density tests added on after mammograms have taken place for quicker and more accurate cancer detection.
Its 2018 annual report put 2018 revenue at $2.8 million, up 53 per cent from last year’s $1.8 million.
• Oncosil (ASX:OSL) UP 129 per cent, share price 22c
Oncosil is developing an implant device to be used in the treatment of pancreatic tumours. It raised $12.7 million from an institutional placement earlier this year. It’s currently conducting two patient studies for its implantable radiotherapy device.
This table shows the 12-month price change of ASX-listed companies in the medtech space:
Swipe or scroll to reveal the full table. Click headings to sort