The medtech sector stands out as a reliable engine in the life sciences world, offering steady growth and stability. This sector is now witnessing a trend of concentrated investment capital, exemplified by the recent $18bn privatisation of Hologic by Blackstone and TPG.

However, this influx of capital is not evenly distributed globally, with the US attracting the majority of these investments. The US ecosystem is optimized for scaling high-growth companies, while Europe and the UK struggle to keep pace due to fragmented systems and risk-averse approaches.

The US venture capital fund is significantly larger than its European counterpart, leading to higher returns and a self-reinforcing cycle of attracting more capital. European investors often face challenges in achieving the speed and scale of returns seen in the US market.

European medtech startups often face funding challenges in the later stages of scaling, leading them to seek capital from the US. This may result in restructuring the company as a US entity and relocating operations, draining the local ecosystem of talent.

The recent acquisition of Hologic by Blackstone and TPG for $18.3bn showcases the trend of US VCs privatizing mature companies for long-term stable returns. In Europe, such transformative deals are rare, with a focus on smaller investments rather than large-scale acquisitions.

The European Union’s Medical Device Regulation has created a complex and slow approval pathway, leading to regulatory uncertainty and increased costs for startups. In contrast, the FDA has undertaken reforms to make itself more innovation-friendly, offering a clearer pathway for novel technologies.

Brexit has presented the UK with an opportunity to create a leading regulatory framework for medtech, but slow implementation and market access challenges are hindering progress. Uncertainty in the sector, such as high “clawback” rates, is impacting investor confidence and innovation in the UK.

The US’s ecosystem is well-designed for attracting “lumpy” investments, with deep capital pools and a predictable regulator. To compete in this new era, the UK and Europe must rebuild their ecosystems to plug the transatlantic medtech investment gap and remain competitive in the industry.

Read more at Yahoo Finance: why does it exist and can it be plugged?