FierceMedicalDevices' 2015 Fierce 15

The new strategic med tech mania sets the stage for this year's winners
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The mega M&A activity may have waned and venture capital investment has never been that hearty, but what med tech innovation does have going for it is a slew of new strategic players that are promising to transform the segment entirely with their energetic dealmaking and investments.

This new med tech strategic interest is coming from everywhere at once--information technology, industrial conglomerates, and even biopharma companies--as they all jump to mark their med tech territory and work to bring initiatives to fruition.

The most prominent, and easily the most ambitious, is obviously Google ($GOOG), which has slated its first company separated out under its new parent, Alphabet, to be Google Life Sciences (GLS). The new Alphabet configuration is designed to make Google's R&D investments more transparent to investors and to offer a separate identity for the non-search engine businesses, of which Life Sciences is the most mature.

That means once the new structure is a done deal, the parent company will be reporting separately on the activities in GLS. So, expect many more details in the coming quarter on its R&D expenditures and activities.

But even before it's detailed on the books, GLS has been incredibly active in med tech in the past year or two as it has lined up partners and launched major research initiatives. The one that's likely to bear fruit first is a partnership with Novartis ($NVS) to create smart contact lenses for people with diabetes and potentially transform blood glucose monitoring, which despite various advances still relies heavily on finger sticks. No longer a mythical moonshot, it's slated to be in the clinic next year.

Google has also partnered with DexCom ($DXCM) to make a bandage-sized, connected blood glucose monitor; Sanofi on diabetes monitoring, treatment and analytics and Johnson & Johnson ($JNJ) on surgical robotics. In addition, Google has its own internal initiatives on nano-diagnostics, a wrist-worn cardiac and activity monitor and new biomarkers.

Google is not alone, although these 7 projects are a major commitment to the med tech sector and define the core of the soon-to-be GLS. Apple, with its watch and accompanying ResearchKit, and mobile electronics maker Qualcomm are two other information technology companies that are now hugely committed to making med tech advances.

Med tech mainstay Medtronic ($MDT) is also pulling its weight with at least 8 startup acquisitions announced so far this year, which is on par with the roughly 7 it announced in 2014 but hardly sufficient to stimulate innovation in the sector or even to make up for the looming absence of Covidien. 

On the biopharma side, Novartis is not the only company increasing its med tech presence. Biogen ($BIIB) recently announced that it's looking to get into the development of wearables and ingestibles, just as the first compliance-tracking pill made its way to the FDA. Abbott ($ABT) has also been aggressively making deals in med tech, which looks to be its only business that is targeting major revenue growth. And Teva just bought its own respiratory medication tracking device startup, while Otsuka and Proteus have submitted the first pill to include medication adherence technology to the FDA.

In addition, major industrial conglomerates such as GE, Siemens and Philips ($PHG) are working hard to get a handle on healthcare in the expectation that it will be a top-performing business. In fact, Philips has restructured its entire business in the past year or so to focus entirely on healthcare and consumer technology. Hopes are higher than ever for the widespread adoption of major med tech innovation as the sector is in the process of transforming healthcare for any number of indications including stroke, diabetes, obesity and even cancer.

This year's Fierce 15 companies are all working on big ideas such as cutting-edge patient monitoring, smartphone-based imaging, biodegradable valves and vessels, more accurate knee implants, intestinal ablation to treat diabetes, energy-delivering angioplasty balloons, an implantable cell-based pancreas replacement, and connected asthma inhalers as well as the consumerization of health devices and diagnostics. These and other innovative startups will likely get a boost as all sorts of major new players work to find their way in med tech and continue the search for partnerships, acquisitions and talent. 

-- Stacy Lawrence (email | Twitter)