Orthopedic Industry Exhibits Steady Transactional Activity and Value, Despite Maturity

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Investors and entrepreneurs in recent years have gravitated away from orthopedics and medtech in general, toward splashier, hyper-growth subsectors of the life sciences, such as biotech and digital health. Outcome Capital argues that the industry—and ortho in particular—remains highly attractive, as it offers investors and entrepreneurs stability, healthy multiples, and opportunities for innovation.

In recent years, many investors have pigeon-holed orthopedics as a lackluster, mature sector dominated by a handful of large companies that are under relentless pricing pressures, with little to show for product differentiation.

As the biotech and tech sectors have boomed, that assessment seemed to hold merit, at least judging from stock price trends. Outcome Capital LLC, an investment bank specializing in the life sciences sector, compiled stock indexes comparing different life sciences sectors based on a range of small, mid-sized, and large public companies. The indexes show that over the last 12 months (LTM) the biopharma index rose 12.1% and the diagnostics subsector index rose 10.6%, whereas life sciences services were up only 0.5% and medtech, including ortho, rose only 0.4%.


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