Dealroom, Inkep Capital and MTIP have released a report powered by a database dedicated to mapping and tracking the health innovation ecosystem.
The report looks at 76,275 startups, 38,907 funding rounds, and 8,821 exits of companies addressing aspects of the healthcare value chain and patient journey.
WHY IT MATTERS
The report predicts that over the next two years, the industry will see new regulations becoming permanent, increased focus on value-based and virtual care, and significant investment in health tech.
Last year was a record year for the sector in Europe and the trend continues this year as global healthcare expenditure is now around $8 trillion, of which $2 trillion in Europe and $3.5 trillion in the US.
The report also highlights that patients are increasingly receiving lesser outcomes, at higher direct (out-of-pocket, insurance) and indirect (tax, co-payments) costs. It also states that an ageing population, chronic diseases, obesity, and rising costs of drugs, met by a complex market that has been slow to adopt technology, means there are significant savings to be made in the largest consumer category.
The report findings show:
- The combined value of European health tech companies has grown from 2016 to 2021 from - from $8bn to $41bn. This has been brought on by telemedicine, operation software and insurtechs.
- Venture capital investment activity has moved beyond telehealth, to remote monitoring, AI-first products, digital therapeutics and more.
- Although the European market is worth $41bn, the US and Asia are still ahead as regulation remains the biggest barrier for emerging health tech.
- More health tech platforms are seeking to integrate and create one-stop-shop solutions, driving more M&A activity.
- The UK is leading in research: European health tech companies that are supported by the continent's leading Universities and Research institutions are predominantly based in the UK.
- The following subsectors will thrive: continuous monitoring services, combining diagnostics with treatments, destigmatising areas within femtech, remote care and at-home testing.
THE LARGER CONTEXT
Also mentioned in the report as a big player is French "super app" Alan, which recently become a unicorn investment after closing a €185 million funding round led by global investor Coatue.
ON THE RECORD
The report states: "So far some of the world’s most successful startups have emerged in markets where consumers direct relatively low amounts of their spending. Healthcare by comparison is one of the largest consumer categories, yet remains largely undigitized at almost every level of the value chain and patient journey.
"Europe is already starting to see big health tech companies emerge in telehealth (Babylon, Kry), operations software (Doctolib, Docplanner) and insurance (wefox). And any market in the trillions could certainly support a European multi-decacorn.
"Of course the pandemic has had a drastic effect on healthcare and health tech, in particular accelerating the adoption, demand and trust for telehealth and other patient-interface level solutions. But there are broader industry digitisation shifts that will have bigger impact still on our collective healthcare."