The artificial intelligence boom has reshaped capital flows, diverting funds from long-term growth sectors such as medtech and into semiconductor and technology equities. Marcel Fritsch of Bellevue Asset Management’s Medtech & Services team said the shift has weighed on the sector’s performance, though he emphasized that fundamental drivers remain robust.
The annualized 10-year return for medtech fell to 6.2% by mid-2024 from 13.2% previously, according to Bellevue’s analysis. The firm attributes the decline primarily to capital reallocation toward AI beneficiaries rather than a structural breakdown in medtech’s growth narrative. Since July, the sector has outperformed the Nasdaq 100 by approximately 10 percentage points, with year-to-date performance improving from minus 22% in May to minus 11% in August.
Fritsch noted that some gains in AI-driven stocks have been realized and partially redirected into medtech, signaling a potential normalization in sector rotation. The asset manager’s outlook hinges on operational fundamentals, with global medtech revenue expected to grow organically by 6-7% annually through 2030. Key drivers include innovation, expanding reimbursement for medical treatments, and demographic trends.
Bellevue identifies emerging blockbuster markets poised to outpace overall sector growth. Established high-growth areas include continuous glucose monitoring, robotic surgery, treatments for heart rhythm disorders, and minimally invasive structural heart interventions. Future blockbuster segments may include renal denervation for hypertension, continuous potassium sensors, new Type-2 diabetes therapies, and advanced radiotracers for PET imaging.
The renal denervation market, which uses catheter-based procedures to lower blood pressure, is projected to expand from roughly $40 million in 2025 to nearly $1.2 billion by 2030, driven by anticipated insurance coverage increases from 55% currently to over 80% in the U.S. Another high-potential segment is continuous potassium monitoring, with Bellevue estimating a long-term revenue opportunity of up to $14 billion—comparable to the existing continuous glucose monitoring market.
Demographic shifts are also supporting demand. As the first wave of Baby Boomers reaches 80 in 2026, healthcare spending and procedural volumes are expected to rise, reinforcing medtech’s growth trajectory. Expanding reimbursement policies are seen as critical for broader adoption of new technologies.
Valuations remain historically low, with the sector trading at an 11% discount to the S&P 500, compared with a historical premium of 15-20%. The forward price-to-earnings ratio stands at 19, below the long-term average of 23.9 and pre-pandemic levels near 27. Bellevue notes increased merger and acquisition activity, including Curium’s $8 billion acquisition of Lantheus and KKR’s $5.7 billion purchase of Integer Holdings, as evidence of strategic interest in the sector.
