It is clearly serious about investing in innovative medical products to secure a reputation as a major medtech player. The company has reinvented itself to become totally focused on healthcare, selling off units such as audio-visual and lighting piecemeal over the past few years. The biggest proportional spender on research last year was Philips, which ploughed nearly 14% of its medical device sales into developing new technologies. Spending on acquisitions varies much more widely, with some groups spending more than a quarter of their cumulative revenues over the past decade on M&A. The below analyses show that as big medtech’s total spend on R&D has risen slightly over the past decade – from $9.5bn in 2010 to just under $10bn last year – investment as a percentage of medtech sales has also edged higher, to around 9%.
How much of a group’s revenue should be reinvested into research and development, and how much into buying in promising young companies? Decisions on how to allocate cash to ensure a steady stream of new medical technologies are the bread and butter of device companies’ management teams.
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