From groundbreaking therapies to pioneering medical devices, the US boasts a world-leading ecosystem of innovative healthcare companies.  

US companies dominate drug development, accounting for almost half of the global pipeline for molecules developed by emerging biopharmaceutical companies.1 In the field of medical devices, they submitted 35% of global patent filings in the final three months of 2023 – almost double the share of Chinese groups.2 

The US healthcare start-up market is supported by rich doses of venture capital. Investment flows and venture capital deal activity in US life sciences totalled US$42bn in 2022.3 Many companies graduate to listing, adding to the breadth of long-term growth opportunities in the healthcare sector for investors focused on the US small-cap market.

We perceive opportunities for companies whose solutions help address major challenges facing the global healthcare sector, particularly that of the US, which spends almost twice as much of its GDP on healthcare than the OECD average.4 There are four that stand out. 

First, improving access to care: healthcare costs can be prohibitively high, and many patients live an unmanageable distance from providers. Second, meeting unmet patient needs: despite rapid innovation, many health and wellness issues still go unremedied. Third, improving the efficiency of healthcare delivery: inpatient hospital stays across the OECD average 7.3 days.5 Fourth, minimising negative externalities: many patients develop painkiller addictions following surgery. 

Innovative products and services are addressing these challenges by improving outcomes for patients, hospitals and insurers, carving out exciting niches for the companies behind them. 

US companies submitted 35% of global patent filings for medical devices in the final three months of 2023 – almost double the share of Chinese groups.

Source: Medical Device Network, 2024

Joint ventures: 3D-printed implants

As the global population grows older and more overweight, cases of osteoarthritis, a leading cause of chronic pain and immobility, have increased. In 2020, 7.6% of the global population had arthritis, up from 4.8% in 1990. Experts estimate that arthritis rates could double by 2050, increasingly impacting quality of life.6 Physicians and patients alike seek to minimise invasive surgery and hospital stays while addressing these serious health concerns. 

Solutions that replace invasive surgery can help deliver relief efficiently, reducing the length of hospital stays and use of pain medication, including opioids.  

California-based SI-Bone develops pioneering tools for diagnosing and treating patients with lower back issues, alongside a minimally invasive system for addressing joint dysfunction. Its spinal implant, ifuse, delivers better clinical outcomes than traditional screws by combining a proprietary shape with a 3D-printed surface that integrates better with native bone.7,8 On average, patients’ perceived pain after surgical treatment with iFuse was 37% lower than with traditional screws.9 By shortening the time between surgery and walking again for geriatric patients, iFuse could also reduce the chance of muscle mass loss and consequent osteoarthritic bone mass loss.10 Shorter hospital stays also translate into lower costs for both patient and provider.  

Pain points: opioid alternatives 

In the US alone, 28mn surgical procedures each year have historically required both long hospital stays and extensive pain management, often including opioid drugs. Yet studies show that up to one-third of people who take opioids for chronic pain misuse them and more than 10% become addicted over time.11  

Substitutes for opioids in pain management, like those developed by Florida-based Pacira Bioscience, can help reduce the potential for drug misuse by patients and shorten hospital stays. 

Since 2011, more than 8mn patients have been treated using Exparel, an anaesthetic that provides long-lasting pain relief following surgery. Studies have demonstrated reductions in opioid use and hospital stays using the treatment, with fewer complications and lower hospital costs, across different types of surgery.12

Sources: 1Batdorf, N.J., et al., 2015: Enhanced recovery after surgery in microvascular breast reconstruction. Journal of Plastic and Reconstructive Aesthetic Surgery. 2Keller, D.S., et al, 2017: Impact of long-acting local anesthesia on clinical and financial outcomes in laparoscopic colorectal surgery. American Journal of Surgery. 3Baker, B.W., et al., 2018: Transversus abdominis plane block with liposomal bupivacaine for pain control after cesarean delivery: a retrospective chart review. Journal of Pain Research. 4Kim, J., et al., 2016: The role of liposomal bupivacaine in reduction of postoperative pain after transforaminal lumbar interbody fusion: a clinical study. World Neurosurgery

Chart title: Cutting surgery’s impact
Chart subhead: Exparel reduces both length of stay and opioid drug use after major surgeries

Overview: The chart shows the reduction in length of hospital stay (days) and use of opioid drugs (%) with the use of Exparel for several common invasive surgeries

SurgeryLOS reduction (days)Opioid use reduction
Cesarean Section147%
Microvascular Breast Reconstruction1.671%
Laparoscopic Colorectal Surgery165%
Unilateral, Single-Level Transforaminal Lumbar Interbody Fusion1.234%

Alongside this clinical success, we believe legislative support for opioid alternatives should support the continued growth of therapies like Exparel. The NOPAIN Act of 2022, which looks to expand access to approved pain management treatments that substitute for addictive opioids, should see greater reimbursement introduced in 2025. 

Analyse that: data analytics

The vast US healthcare system wastes close to US$1tn each year.13 Administrative complexity accounts for more than a quarter of these unnecessary costs.

Technology solutions, combined with specialist insights, can help healthcare providers better manage and interpret data, improving operational efficiency and driving better care and patient outcomes.   

Utah-based Health Catalyst is a healthcare-focused technology company that uses data, analytics and domain expertise to help hospitals lower their costs. Cloud-based data abstractors create regulatory reports, pulling from multiple locations, in a fraction of the time that it takes to prepare them manually. This allows hospitals to streamline staff and operations.  

Health Catalyst’s products are also driving clinical improvements. For example, its analysis has delivered better patient outcomes from surgeries that open coronary arteries. Leveraging deep dives into patient and performance data, Health Catalyst’s team made the case for using a radial approach (through the arm) more often than a femoral approach (through the thigh). This led to a 58% reduction in bleeding complications over three years, which enabled an 18% relative reduction in hospital stay durations over 24 months. In turn, this led to a US$1.8mn cost saving for its health network customer.14 Many patients travel long distances for their surgeries, so fewer complications reduce the financial and geographical burden of treatment and follow-up.15  

Though they be but little 

The companies behind products and services like these are successfully disrupting corners of the multi-trillion dollar global healthcare sector and carving out slices of a growing pie. For example, the value of the global post-operative pain market has been estimated at approximately US$38bn in 2023 and is projected to reach US$64bn by 2033.16 Not all innovators in healthcare succeed, but medical breakthroughs can disrupt high-value markets – and create new ones – and so unlock explosive growth.

Technological, societal and regulatory changes are driving secular trends that support solutions improving access to care, meeting unmet patient needs, driving efficiencies and reducing societal harm. We believe the market can underestimate these trends, providing opportunities for active investors in the small-cap space to take advantage of less researched parts of the US stock market.

It is our conviction that the most innovative and successful smaller healthcare companies in the dynamic US market can propel the transition to a healthier and more sustainable global society.


References to specific securities are for illustrative purposes only and should not be considered as a recommendation to buy or sell. Nothing presented herein is intended to constitute investment advice and no investment decision should be made solely based on this information. Nothing presented should be construed as a recommendation to purchase or sell a particular type of security or follow any investment technique or strategy. Information presented herein reflects Impax Asset Management’s views at a particular time. Such views are subject to change at any point and Impax Asset Management shall not be obligated to provide any notice. Any forward-looking statements or forecasts are based on assumptions and actual results are expected to vary. While Impax Asset Management has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third-party information presented herein. No guarantee of investment performance is being provided and no inference to the contrary should be made.


1 IQVIA Institute, 2023: Global Trends in R&D 2023 

2 Medical Device Network, January 2024 

3 IQVIA Institute, 2023: Global Trends in R&D 2023 

4 Commonwealth Fund, 2023: U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes 

5 Commonwealth Fund, ibid 

6 The Lancet, September 2023: Global, regional, and national burden of osteoarthritis, 1990–2020 and projections to 2050: a systematic analysis for the Global Burden of Disease Study 2021

7 SI-Bone,  SI-BONE Technical Study

8 MacBarb, R. et al, 2017: Fortifying the Bone-Implant Interface Part 2: An In Vivo Evaluation of 3D-Printed and TPS-Coated Triangular Implants, International Journal of Spine Surgery 

9 Tran Z.V. et al, 2019: Sacroiliac Joint Fusion Methodology—Minimally Invasive Compared to Screw-Type Surgeries: A Systematic Review and Meta-Analysis, Pain Physician.  

10 Lebert, L. et al, 2023: Evaluation of a New Treatment Strategy for Geriatric Fragility Fractures of the Posterior Pelvic Ring Using Sensor-Supported Insoles: A Proof-of-Concept Study, Journal of Clinical Medicine 

11 Mayo Clinic, May 2018: How to tell if a loved one is abusing opioids 

12 Future Market Insights, 2023: Postoperative Pain Market Outlook (2023 to 2033) 

13 Pacira Bioscience, 2024 

14 Shrank, W., MD MSHS, et al, October 2019: Waste in the US Health Care System – Estimated Costs and Potential for Savings, JAMA 

15 Health Catalyst, 2023 

16 “Nearly 1 in 10 individuals in the US live more than 30 miles away from a hospital performing high-volume surgical procedures.” Diaz, A., et al, October 2018: Access to Surgical Services across the US: How Far Do You Need to Go for High-Volume Care?, Journal of the American College of Surgeons  

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