Code red: The future of venture-capital investment in med-tech start-ups is bleak, says a new report from the National Venture Capital Association.

The survey of 156 firmsabout half of whom have 10 to 29 active healthcare portfolio companiesfound that 39 percent of VCs plan to decrease the amount they invest in biotechnology and medical device companies over the next three years. Another 39 percent said they already had reduced investment in those sectors.

The big culprit: The expensive, time-consuming process of getting the U.S. Food and Drug Administration's approval. By far the largest percentage of those surveyed (61 percent) cited regulatory concerns as the reason they planned to shy away from these types of investments. Thirty-eight percent named reimbursement concerns, and 35 percent fingered the financial markets. (Respondents could choose more than one reason.)

More than a third of VCs (36 percent) said because of the struggle with the FDA they would invest more in European start-ups, and 44 percent expect to put more money into Asia and the Pacific.

For a suggestion of what the NVCA thinks the impact of this is, one need look no further than the report's title: "Vital Signs: The Threat to Investment in the U.S. Medical Innovation and the Imperative of FDA Reform."

"For decades the US has been the leader in delivering medical innovations to our citizens due to the thousands of startup healthcare companies that have been brought to life with venture capital funding," said Dr. Beth Seidenberg, the chairwoman of the Arlington, Virginia-based association's Medical Innovation and Competitiveness Coalition and a partner with VC firm Kleiner Perkins Caufield & Byers. Now investment is shifting away from "lifesaving and life sustaining products," she said.

The report estimates that the half a billion dollars over the next three years that will go overseas for research and development will cost America jobs "at a time when we desperately need employment growth." It concludes that many promising medical therapies and technologies will not be funded and therefore will not reach the patients that need themand that those that are funded may not be brought to market in the U.S. at all.

Other findings from the report: VCs plan to cut back on how much cash they pour into treatments for cardiovascular disease, with 60 percent expecting to lower their investment. More than half (54 percent) said their funding of diabetes treatments would take a hit, and 53 percent said obesity would.

One bright spot: More than half (54 percent) of firms surveyed said they would increase their investments in healthcare IT. Forty-two percent said they'd put more money into healthcare services. Neither of these areas are regulated by the FDA.

The survey respondents account for 92 percent of all National Venture Capital Association's invested capital from 2008 to 2010, and $10 billion of VC investment in healthcare companies invested capital during that time period.

On Wednesday, the day before the report was released, FDA Commissioner Margaret Hamburg announced a plan to provide an "expedited drug development path" for those meds targeting serious unmet medical needs. A new deputy FDA commissioner will be charged with overseeing the regulatory process for drugs and cell-based treatments.

Said Kathleen Sebelius, the secretary of health and human services, in a statement: "The Obama Administration is committed to encouraging the entrepreneurs and businesses that are modernizing and strengthening our health care system. The innovation blueprint is another part of our effort to help businesses grow and keep Americans healthy."