Here's a breakdown of how to invest in medical devices and what’s in store for the sector.
What should investors know about the medical device market?
Before investing in medical device stocks, it helps to understand their goals. Medtech companies will often seek to show investors that their products are ready to enter the market and will be in demand right away — whether it be by serving a large demographic or by targeting a specific ailment in the population that has an unmet medical need.
Like firms pursuing drug approvals, medical device companies must conduct clinical trials to bring their products to market; they have to refine their technology and confirm efficacy and safety to get regulatory approvals.
Successfully completed clinical trials and product approvals are usually major catalysts for a company’s share price. A medical device stock can experience a large jump when announcing positive results from a recent trial or approval from a regulatory body such as Health Canada, the US Food and Drug Administration (FDA) or an equivalent agency in Europe or Asia. On the other hand, poor results can have a negative impact on the company's performance.
Patentability also plays a big role in a medical device company’s value. Once a product has been patented, the company controls its every move and can choose to license it or make other deals to expand device reach.
What is the outlook for the medical device market?
The medical device and in-vitro diagnostics market is expected to experience growth in global annual sales of 5.2 percent each year from 2023 to reach nearly US$758.9 billion by 2030, according to a 2024 forecast from KPMG focused on technological advances and AI in the healthcare industry.
"Rapid innovation in diabetic care, cardiology, robotic surgery, internet-connected wearables, and a whole host of Al-enabled devices is causing a great deal of excitement among not only providers and patients, but also investors," the firm states.
Significant drivers of the sector's growth include increased demand for wearables and services like health data. "Enabled by sensor technology, computing power, increased bandwidth and Al, devices are changing care delivery for wellness, chronic condition management, diagnostics, and surgical procedures," KPMG wrote.
AI advancements in healthcare were also the focus of multiple panels at the 2025 Web Summit Vancouver conference, with many experts sharing their insights on the possibilities and challenges of using AI in healthcare.
Another demand driver is increasing prevalence of diseases, particularly cancer and diabetes, plus cardiovascular, neurological, orthopedic and respiratory diseases, which are on the rise due to an aging population.
The United Nations has said that by the end of 2050, the ratio of deaths per year due to chronic diseases is expected to rise to around 86 percent of total deaths each year.
KPMG also highlighted the role that the sector can play in addressing health inequities with devices that help rural and underserved communities access basic healthcare. This also requires digital equity for these communities, and the firm believes both goals should be worked towards at the same time.
How to invest in medical device stocks
Large-cap medical device stocks
The sector is dominated by a handful of big medical device manufacturers, which means investors interested in large-cap companies will have no trouble finding what they’re looking for. Here are a few to get you started:
Abbott Laboratories (NYSE:ABT)
Abbott Laboratories creates a wide range of products, from diagnostics to medical devices to branded generic pharmaceuticals. Its medical devices focus on segments including vascular diseases, diabetes and optometry.
Intuitive Surgical (NASDAQ:ISRG)
Medical device manufacturer Intuitive Surgical developed the da Vinci surgical system, the first minimally invasive surgical system to receive clearance from the US FDA. The company’s goal is to provide assistance to doctors and hospitals with its robotics-assisted platforms, including the da Vinci system.
Medtronic (NYSE:MDT)
Medtronic’s devices provide solutions for relieving pain, restoring health and working to extend the lives of millions of people globally. Its primary areas of focus include cardiac and vascular care, minimally invasive therapies, restorative therapies and diabetes.
Danaher (NYSE:DHR)
Globally diversified conglomerate Danaher has a number of brands under its corporate umbrella grouped in three distinct divisions: healthcare, diagnostics and environmental and applied end markets. Through its brands, Danaher designs, manufactures and sells a number of medical device products and services.
Thermo Fisher Scientific (NYSE:TMO)
Thermo Fisher Scientific's family of global products and services represents a broad range of high-end analytical instruments, chemistry and consumable supplies, laboratory equipment and software. It has products in a variety of areas, including cellular analysis, synthetic biology and molecular biology.
Small-cap medical device stocks
Investors will also find smaller-cap medical device companies amid the heavyweights — it’s just a matter of risk tolerance. Below are five great examples.
AngioDynamics (NASDAQ:ANGO)
AngioDynamics is a global medical technology company that designs, manufacturers and sells high-quality, minimally invasive medical devices. Its devices target vascular access procedures and treatment of peripheral vascular and oncological diseases.
Aurora Spine (TSXV:ASG,OTCQB:ASAPF)
Aurora Spine is a Canadian medical device company focused on the spinal implant market. It has a portfolio of minimally invasive, regenerative spinal implant technologies designed to improve spinal surgery outcomes. Its FDA-approved products include the DEXA patient-matched implant technology and the ZIP series of implants for lumbar spinal stenosis.
Delcath Systems (NASDAQ:DCTH)
Delcath Systems is a pharmaceutical and medical device company focused on “interventional oncology,” specifically regarding the treatment of primary and metastatic liver cancers. The company's commercial products combine its Hepactic Delivery System with the chemotherapeutic drug melphalan for to help liver cancer patients undergo safer high-dose chemotherapy.
Senseonics (NYSEAMERICAN:SENS)
Senseonics is a commercial-stage medical technology company that develops and manufactures continuous glucose monitoring systems for people with diabetes. The company’s Eversense 365 and Eversense E3 systems are long-term, implantable devices that use sensor technology to transmit frequent glucose data updates via a smartphone app.
iRhythm Technologies (NASDAQ:IRTC)
iRhythm Technologies’ wearable biosensor device, the Zio ECG monitor, is used for the diagnosis of cardiac arrhythmias. The FDA-cleared device uses AI and a clinically proven deep-learned algorithm to enable accurate diagnoses.
How to invest in medical device ETFs
For those who prefer to mitigate risk, exchange-traded funds (ETFs) are a safer way to put money into the market, and there are two primary medical device ETFs for investors to choose from.
ETFs hold assets such as stocks, commodities and bonds, and trade close to their net asset value. With exposure to various companies, any potential decrease in one stock won’t significantly drive down overall ETF returns.
Typically ETFs track an index. In the medical device arena, there are two indexes that can be followed: the S&P Health Care Equipment Select Industry Index (INDEXSP:SPSIHE) and the Dow Jones US Select Medical Equipment Index (INDEXDJX:DJSMDQ). Below are the two biggest medical device ETFs:
iShares US Medical Devices ETF (ARCA:IHI)
The iShares US Medical Device ETF is the largest ETF in the medical device sector. Its focus is on US companies that manufacture and distribute medical devices. This passive ETF tracks the Dow Jones US Select Medical Equipment Index. Three of its top holdings are Abbott Laboratories, Intuitive Surgical and Boston Scientific (NYSE:BSX).
SPDR S&P Health Care Equipment ETF (ARCA:XHE)
The SPDR S&P Health Care Equipment ETF tracks the S&P Health Care Equipment Select Industry Index. Its top holdings include Staar Surgical (NASDAQ:STAA), ResMed (NYSE:RMD) and iRhythm Technologies.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
