Medtech innovation is shifting: Who will drive the next wave of device growth?

Innovation in the medtech sector is undergoing a notable shift, reflected in changing patterns of research and development investment, clinical trial activity and device approvals. While large-cap and mid‑cap companies continue to increase R&D spending, capital access and regulatory complexity are reshaping where and how innovation occurs.

These trends suggest a future in which private and mid‑cap companies play a growing role in bringing new devices to market, altering the traditional pathways of medtech innovation. Below we take a closer look at what’s ahead for the sector and how companies can position themselves to address these shifts.

R&D levels vary for public medtech companies

Overall, R&D levels have been rising for public medtech companies over the past 10 years. Significant capital influx into the sector during 2020 and 2021 resulted in a steep increase in R&D spend, which continues to increase for both mid- and large-cap public companies.

However, after seeing an almost 50% increase in R&D spend between 2016 and 2023, small-cap companies have experienced a decline over the past two years. A lack of access to capital has limited R&D spend, further affecting clinical trials and device approvals for these companies. 

Who’s conducting clinical trials?

The past 15 years have seen a significant shift in the size and type of companies conducting clinical trials. In 2010, 40% of company-sponsored trials were sponsored by large medtech companies. In 2025, that figure fell significantly, to only 25%.  At the same time, private medtech companies saw an overall increase in clinical trials. While large medtech companies have historically dominated innovation and clinical trials, their presence has waned over the past 15 years—and future device approvals will instead likely be driven by private companies. 

The portfolio of companies seeking device approval has changed

Device approvals are a strong indicator of the health of the medtech sector. The number of devices approved each year has been dropping since 2017, which saw a high of almost 6,000. In 2025, only 4,005 premarket approvals (PMAs) and 510(k) clearances were granted, for reasons that included:

• Funding challenges in the medtech sector over the previous several years
• The rise of more complex (and costlier) artificial intelligence-enabled devices
• Staffing limitations at the Center for Devices and Radiological Health, one of six product centers of the U.S. Food and Drug Administration

The Minnesota Star Tribune reported that while there were more applications for higher-risk devices pending on Dec. 31, 2024, than at the end of the prior year, fewer devices were approved in the first three months of 2025 than in the equivalent periods in 2024 and 2023. 

Globally, there has been a slight uptick in the percentage of 510(k) clearances and PMA approvals associated with companies based in Europe. When the European Union Medical Device Regulation (MDR) and In Vitro Medical Devices Regulation (IVDR) were first announced in 2017, many global companies considered turning to the U.S. markets for initial product launches instead of the EU.

The MDR and IVDR went into effect in 2021 and 2022, respectively, and over the past few years, a larger portion of medical device applications in the U.S. has come from European companies. However, on average, American companies receive PMA approval about a month faster than their European counterparts. 

Mid-cap and private medtech companies have made up a greater percentage of approvals in recent years, while large-cap companies have seen a steady drop-off in their PMA approvals and 510(k) clearances. This could be due to segmentation in the market, where large-cap companies are focused on leveraging technology and adapting to changing health care needs, resulting in fewer but perhaps more innovative devices.

However, as we have seen through R&D and clinical trial data, private and mid-cap companies are increasingly focusing on innovation and may be well positioned to capitalize on shifting market needs.

Medtech next-generation innovation will differ

Trends in R&D spend levels, clinical trials and device approvals point to a drastically changing innovation landscape. While large medtech companies are still increasing their R&D spend levels, their clinical trials and device approvals have declined over the past decade. Private and mid-cap device companies continue to innovate, bringing clinical trials and new devices to the market, while smaller public medtech companies have struggled with R&D levels over the past few years.

As medtech innovation evolves, it’s essential for medtech leaders to understand the challenges and opportunities that arise throughout the precommercial lifecycle, especially in a time of changing global regulations, AI-enabled technology and new investment activities.