Technology that allows us to model the human body’s reactions to medical devices and implants such as heart valves has been vital to their development. For decades, this technology has been relatively expensive and mostly used by big companies that have dominated the industry.

However, advances in electronics, cheaper computing power and the availability of much more data and better analytics have helped smaller businesses to compete.

Medical devices are, by necessity, tightly regulated. The need to prove safety and efficacy in clinical trials, for example, means many small start-ups go far beyond proofs of concept and develop full products, even before they have built a customer base or revenues. Faced with these challenges, some of the new entrants to the sector, lacking the financial cushion available to bigger manufacturers, have found the going can be difficult.

Concepta

Bedfordshire-based Concepta was founded in 2013 by a group of people including two former employees of Unilever who had helped develop pregnancy tests there in the 1990s.

Frustrated by the “qualitative” approach of pregnancy tests that measure hormone levels to generate a positive or negative result, Concepta’s executive chairman Matthew Walls said the company set out to create a “quantitative” test that would monitor in more detail how hormones change.

For the past six years the company has been developing a device to do this, but “the developments had taken way longer than they should have”, he said. Finally, in the past six months, the company has found its first users: around 150 women who are using its ovulation and pregnancy tests to measure their hormone levels. The device feeds the results to a smartphone app so users can monitor their hormonal cycles.

The long-term goal is to identify each woman’s regular hormonal cycle and alert her if it varies. “In a year or so, when we’ve filled out data banks, we will have really powerful data,” Mr Walls said. “That goes beyond what you learn at school [about how] the normal [menstrual] cycle is 28 days and you ovulate at day 14.”

Concepta’s share price has fallen 42 per cent to 4p over the past year as investors wait for the product to come to market.

Mercia Technologies

Unlike most UK venture capital firms, Mercia Technologies is a listed investment group that uses its own balance sheet to make deals, as well as managing venture funds backed by outside capital.

Its fund management business was originally set up by chief executive Mark Payton to manage a portfolio focused on providing seed capital for projects coming out of the University of Birmingham and the University of Warwick.

Digital health is one area of focus because “healthcare needs significant transformation”, said Peter Dines, chief operating officer and head of life sciences and biosciences at Mercia. “Consumers now expect a more instant approach to their health with the ability to have choice.”

Mercia Technologies has invested in businesses including Concepta and biotech company Oxford Genetics.

Mercia’s shares have fallen 2.6 per cent to 38p over the past year. It had revenues of £5.3m in the six months to September 30, up 8.7 per cent on the previous year.

Headquartered near Birmingham, the business has focused on investing outside London and south-east England. Businesses that do not have to pay London rents are more capital efficient, according to Ashish Patel, head of research and investment manager at Mercia Technologies.

AorTech International

More than a year has passed since Surrey-based AorTech International drew a line under some difficult history by settling a legal battle over intellectual property with its former boss.

Now the company, which has been listed in London since 1997 and been through more than three rounds of clinical failures, is preparing to return to market with a new product that will use its synthetic polymers in grafts and patches.

The company’s “Elast-Eon” polymer, which is used in cardiovascular devices, has formed the basis of its business so far, generating licence and royalty fees. However, it now plans to sell the material for use in other medical products that rely at the moment on tissue from cows and pigs — “abattoir-sourced animal by-products” — that are more costly and risky, according to its most recent annual report.

Robert Sanders, a director at the company’s broker Stockdale Securities, said clinical trials should succeed this time because more sophisticated analysis tools will enable AorTech to predict how the body will react.

The company’s share price has risen 89 per cent to 73p over the past year. Its revenues were $538,000 in the year to March 31, 2018.

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