Why MedTech Investors are Turning to Alternative Data
The medical technology sector is continuously evolving, but without the right information, it can be tough to navigate the trends. Investors are increasingly turning to alternative data to gain insights into market trends and company performance to bolster their investing in this field.
Understanding Alternative Data in MedTech
Alternative data encompasses information that goes beyond conventional financial metrics, such as quarterly earnings reports and balance sheets. In the MedTech sector, this often includes granular details like hospital purchase order data, which is critical for assessing both market trends and company performance. This type of data provides insights into actual product purchases from companies like Stryker, Intuitive Surgical, and many others, offering a clear window into demand and usage patterns that traditional data sources simply cannot provide.
Understanding the Accuracy of Alternative Data
While the benefits to MedTech investors are substantial, ensuring accuracy is not without its challenges. It is crucial to understand potential biases in the data, such as skew towards larger institutions or atypical seasonality, which could distort analysis. Addressing these biases involves sophisticated data processing techniques to ensure that the insights derived are both accurate and representative of the broader market.
The Importance of Purchase Order Data
Purchase order data is invaluable because it represents real transactions. For example, understanding the procurement patterns of hospitals and surgical centers for specific medical devices offers direct insight into market demand and pricing. This level of detail enables investors to gauge the performance of MedTech products in the market with a high degree of accuracy and timeliness.
Types of Alternative Data Delivery
There are two types of alternative data products available on the market, data feeds and research reports.
Research Reports
In alternative data B2C Technology investors have come to rely on research estimates that come from an outsourced data team that spend weeks diving into each company, cleaning the data and making it as accurate as possible before putting out an estimate and context to the narrative. This offering is new to MedTech and only offered by YipitData Research.
Data Feeds
For funds who have a data team and can ingest millions of rows of raw data there are a few options on the market with varying delivery speeds and accuracy. When time is of the essence, understanding the speed of delivery, granularity, and lag of a data feed is crucial to obtaining real-time insights for informed decision-making. YipitData Granular Data Feed is built to provide daily data that is fully settled within 2 weeks of the end of the month, allowing you to make real-time decisions.
Advantages of Real-Time Data
One of the most significant advantages of alternative data is its timeliness. The ability to access and analyze data almost instantaneously allows for agile decision-making. In the fast-paced world of medical technology, where market dynamics and investor sentiment can shift rapidly, having up-to-date information can make a substantial difference in the success of an investment.
For instance, when a company launches a new product, traditional data sources might take months to reflect its market reception. With alternative data, investors can observe how the product performs and its impact on competitors in real-time and adjust their investment strategies accordingly.
The Future of Alternative Data in Med Tech
Looking ahead, the use of daily data will become increasingly commonplace in the MedTech sector. As this practice grows, the focus will likely shift towards deeper data sets that not only tell us what is happening but also why it is happening. This deeper narrative will provide even richer insights into market dynamics, potentially revolutionizing how investments are made in the sector.
Moreover, as the use of alternative data expands globally, we can expect to see more comprehensive international data coverage, which will further enhance savvy investors’ ability to make informed investment decisions.
The incorporation of alternative data into MedTech investment strategies offers a significant advancement over traditional methods, providing a more dynamic, precise, and timely picture of market conditions. As we continue to harness the power of this data, the potential for investors to make better informed, and more successful investment decisions should only increase, paving the way for more strategic and profitable outcomes investing in the medical technology industry.
