The Diagnostics Industry Post-COVID: A Revival or Return to Baseline?

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The COVID-19 crisis has shifted unprecedented public attention and resources to the diagnostics industry and presented a substantial growth opportunity for diagnostic test manufacturers. Outcome Capital’s analysis of 2020 deals data reflects the uniqueness of the moment. By MedTech Strategist’s Wendy Diller and Outcome Capital’s Oded Ben-Joseph, PhD, Craig Steger, and Thomas Joyce.

The urgent need for COVID testing, coupled with excitement about technological innovation, resulted in an unprecedented capital flow into diagnostics companies in 2020; $5.3 billion compared with $2.3 billion in 2019, with about 30% of investments related, in some way, to COVID-19. The influx of non-traditional investors into the segment further buoyed diagnostics financings. Nevertheless, diagnostics as an investment proposition remains problematic for all but a mature tier of companies with close ties to leading academic researchers. 


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