Switzerland’s life sciences sector attracts more venture capital than any other industry in the country. In 2023, health-focused startups raised CHF 1.3 billion. This made “Health” the top sector for Swiss venture capital [1]. This money goes to companies that create medical devices, digital health tools, diagnostic tests, and new medical treatments.
Investors in cities like Zurich, Geneva, and Basel can gain exposure to Swiss research quality and global healthcare trends. However, evaluating these opportunities means understanding complex rules that do not exist in software or fintech [4]. This complexity means careful work is needed.
Many startups come from top universities. For example, 25% of EPFL’s active startups are in medtech [2]. ETH Zurich created 11 healthcare spin-offs in 2023 [3]. These companies grow out of research institutions ranked as some of Europe’s best [4]. They work on problems from spinal cord injury to liver disease diagnosis. The technical quality of their work is often very high.
But technical quality alone does not guarantee success in healthcare. Approval by regulators, systems for insurance payment (reimbursement), and proof that the treatment works (clinical validation) are big problems. These problems can take years and millions of francs to overcome.
This article gives investors a plan to judge Swiss healthtech and medtech startups. It explains the rules, lists important questions for checking a company (due diligence), and points out risks specific to healthcare investing. Founders can also learn what investors look for when they review healthcare ventures.
The Swiss HealthTech and MedTech Environment
Switzerland is home to over 1’400 medical technology companies [5]. This sector is focused in three main areas, each with its own advantages.
- Basel: This area leads with over 700 life sciences companies [6]. The headquarters of Roche and Novartis create a large talent pool of experts in drug development and regulatory rules. Startup founders can hire experienced scientists. Being close to “Big Pharma” also creates chances for partnerships and sales of the company later.
- Lausanne: This area benefits from the strengths of EPFL and the Biopôle campus. Biopôle hosts more than 150 companies and research groups [7]. It is next to CHUV, one of Switzerland’s top university hospitals. This location helps startups find clinical partners for early tests.
- Zurich: The city uses ETH’s research quality in many fields. The large ecosystem supports digital health and medical device ventures. University Hospital Zurich offers clinical partnerships, like CHUV in Lausanne.
The sector has four main areas. Each one has different risks and timeframes for investors:
- Digital Health: This area includes health apps, remote monitoring, and telemedicine. These companies often reach the market faster than hardware companies. For example, Oviva, a Swiss digital health platform, raised USD 80 million in a 2022 funding round [8]. This company gives app-based nutritional therapy. This platform is already active and paid for by insurance in many countries. However, digital health still faces payment issues. Insurers must decide if they will pay for app-based care.
- Medical Devices: These products range from low-risk items like bandages to high-risk implants like pacemakers. Onward Medical, an EPFL spin-off, works on spinal cord stimulation to bring back movement after injury [9]. This company raised over USD 100 million in a 2021 stock offering and is in its main trial stage. Medical devices need a lot of testing and regulatory approval. But successful devices can bring strong returns through licensing or being sold to a bigger company.
- Diagnostics: This area focuses on tools that find diseases or measure health markers. This includes blood tests, imaging systems, and devices for quick testing. Diagnostics often have a clearer path to being used than treatments because they support existing treatment decisions, instead of replacing them.
- Therapeutics (Drug Development): This area has the longest timelines and highest need for capital. A new drug can take 10 to 15 years to get market approval. Clinical trials cost tens of millions of francs. Most drug candidates fail in testing. But successful therapeutics can generate billions in revenue.
Understanding Swiss Approval Rules
Swissmedic is Switzerland’s authority for therapeutic products. This authority oversees drug and medical device approval. The Swiss system is very similar to the European Union’s but has Swiss-specific needs.
Medical Device Classification
Medical devices are put into four risk-based classes. The class determines how complex, costly, and long the approval process will be.
- Class I devices carry low risk. Makers can self-declare that the device meets the rules. This process takes weeks.
- Class IIa and IIb devices carry medium risk. They need an audit by a “Notified Body.” This independent group checks that the device follows safety standards. Class IIa approval takes 6–12 months. Class IIb approval takes 12–18 months.
- Class III devices carry high risk, as they are implanted or sustain life. They need a lot of clinical data showing the product is safe and works. The approval process can take several years.
Most devices also need CE marking. This marking shows the product meets EU requirements. Swiss companies often get CE marking first, then register with Swissmedic. This dual path allows sales in both Swiss and European markets.
Clinical Trials and Costs
High-risk devices and all new treatments need clinical trials. These studies test products in people to prove they are safe and effective.
Trials go through these stages:
- Pre-clinical testing happens in labs and animals. This stage carries high risk. Most products fail before human testing.
- Phase I tests a small group of people for basic safety.
- Phase II and III involve larger patient groups. They prove the product works better than existing treatments. These trials are the most expensive phase. Costs range from CHF 5 million to over CHF 20 million for devices. Drug trials can be over CHF 100 million. Most products fail at this stage [10].
The Reimbursement Challenge
Getting regulatory approval does not mean a company will get paid. To be widely used, Swiss health insurance must pay for the products.
- SwissDRG applies to hospital inpatient care. A new technology must fit an existing payment code or prove its value to create a new code. This is hard to do.
- The MiGeL list covers outpatient medical devices. A device must be added to this list to be paid for by insurance. This review can take one to two years after approval. Many approved devices never make the list.
This reimbursement barrier creates what experts call the “valley of death.” A company can have a product that is proven and approved but still fail because insurers will not pay for it.
An Investment Evaluation Framework
Healthcare investing requires different checking than software or fintech. Five key areas need attention:
- Clinical Validation Stage
Action: Understand where the company is in its development. Pre-clinical companies are years from revenue and have the most risk. Risk decreases as companies move forward, but so does the potential profit.
Question: “What is your current clinical validation stage, and what are the next two major goals?” - Regulatory Strategy
Action: Ask about the device class and the specific path to approval. Companies should have clear timelines and experienced staff. Green flags include realistic timelines and a clear plan for CE marking. Red flags include underestimating the approval complexity.
Question: “What is your device class, which Notified Body are you working with, and what is your timeline to CE marking?” - Reimbursement Pathway
Action: Ask how the company will get paid, not just how they will get approved. Green flags include early work with health economists and data showing the product saves money. Red flags include not having a clear payment plan.
Question: “What is your reimbursement strategy? Are you aiming for an existing payment code (DRG) or applying for the MiGeL list?” - Team Composition
Action: Healthcare startups need balanced teams. Pure science teams often struggle with sales. Green flags include doctors or scientists, engineers who built the product, and business experts who know how to sell and navigate rules.
Question: “Who on your team has successfully brought a medical product to market before?” - Key Opinion Leader Engagement
Action: Key opinion leaders (KOLs) are respected doctors who influence treatment. Early work with KOLs confirms the clinical need and helps design good trials.
Question: “Which KOLs are on your Scientific Advisory Board, and how involved are they in your work?”
What Non-Expert Investors Can Check
Non-professional investors cannot judge the core science. You cannot easily judge a new drug or device. But you can use other signs:
- University affiliation signals quality. EPFL and ETH Zurich are top universities [4]. Spin-offs from these schools have gone through technical checks before launch.
- Peer-reviewed publications show the science has been checked by experts. Ask if the core technology has been published in respected journals.
- Competitive grant funding from Innosuisse gives outside proof. HepaVue, an EPFL spin-off, received a CHF 100,000 Innogrant in 2023 [11]. This grant signals that Innosuisse experts saw merit in the technology.
- Scientific Advisory Board quality matters more than its size. Two respected, active professors are better than ten famous names who do nothing.
These signs do not guarantee success. But they help filter opportunities when you lack the expertise to judge the basic science.
Specific Risks in HealthTech and MedTech
This sector has distinct risks that do not apply to software companies:
- Regulatory risk can ruin a company quickly. Swissmedic can deny approval or demand expensive extra studies. A negative decision can make a company worthless.
- Reimbursement risk creates the “valley of death.” Approved products without payment from insurers rarely succeed commercially.
- Clinical trial costs and failure show a binary risk. Trial costs are very high. Most trials fail. When a trial fails, the investor’s money is usually lost.
- Long timelines need patient capital. Medical devices take 3–7 years to reach the market. Therapeutics take 10–15 years.
- Binary outcomes mean the company’s entire value often depends on one event: trial results or regulatory approval. A software company can change its plan. A medtech company with a failed trial has limited choices.
Competition from established players is intense. Startups compete against giants like Roche, Novartis, and Johnson & Johnson.
Why Switzerland is Good for HealthTech and MedTech
Despite the challenges, Switzerland offers distinct advantages:
- Academic and research excellence creates a steady flow of new ideas. ETH Zurich and EPFL rank 7th and 26th globally [4].
- The Basel pharma cluster offers unique benefits. The 700+ life sciences companies create a talent pool that understands clinical development and drug sales [6].
- Specialized infrastructure supports development. Biopôle in Lausanne provides labs linked to EPFL [7].
- Government support through Innosuisse provides funding and coaching. This funding acts as a signal of validation for investors.
- The Swiss healthcare system offers a sophisticated local market for pilot studies. High healthcare spending creates a willingness to pay for innovations [12].
Making Investment Decisions in Healthcare
For individual investors, healthcare investing means you must know your limits. You likely cannot judge the technical quality of new devices. But you can evaluate:
- Team quality and balance
- Regulatory strategy realism
- Reimbursement pathway clarity
- Clinical validation progress
- University and KOL backing
These factors do not guarantee success. They help find founders who understand their problems and have planned solutions.
Healthcare startups fit investors with specific traits:
- Patient capital is necessary. Expect 7–10 year holding periods minimum. Many investments will be total losses.
- Risk tolerance must be high. Never put too much money into a single healthcare startup. Spreading investments across many companies and stages helps manage the risk.
- Impact alignment can justify the risk. Healthcare innovations can improve or save lives.
CapiWell is a platform designed to help Swiss investors support the diversification that healthcare investing needs. CapiWell’s multi-asset approach allows investors to balance high-risk healthcare bets with more stable alternative investments.
References
[1] Swiss Venture Capital Report 2024, Startupticker.ch and SECA (January 2024)
[2] EPFL Innovation Report 2024 (February 2024)
[3] ETH Zurich, “30 new spin-offs founded in 2023” (January 18, 2024)
[4] QS World University Rankings 2025 (June 2024)
[5] Swiss Medtech industry association, “The Swiss Medical Technology Industry (SMTI) 2022” report
[6] Basel Area Business & Innovation, “Life Sciences in the Basel Area” factsheet (2024)
[7] Biopôle Lausanne SA, official website “About” page
[8] Oviva funding announcement, Series C round (2022)
[9] Onward Medical IPO announcement (2021)
[10] BIO, “Clinical Development Success Rates and Contributing Factors 2011–2020” report
[11] EPFL Innogrant recipient announcement (2023)
[12] OECD Health Statistics 2023
