Nimble HealthTech firms can disrupt multi-nationals
As life expectancy continues to climb, with the number of people aged over 65 globally exceeding 668 million (or 12 per cent of the total population), it is not surprising to see investment in the healthcare sector significantly increasing, too.
According to Deloitte’s 2019 Global Health Care Outlook, healthcare spending is set to reach $10 trillion by 2022. $280 billion of this will be invested into the med tech market to pioneer new innovations and introduce the latest technology to improve existing processes and solutions.
As investments and spending increases, there are some notable trends starting to emerge in the med tech market. We’re currently observing an increase in de facto outsourcing of innovative R&D into smaller healthcare companies, which are ultimately being acquired by bigger players. While this may lead to a considerable rise in the price paid for launched products, the larger competitors are buying into certainty of product development.
There is a significant opportunity for more small, nimble and innovative healthcare companies to raise investment and go on to make disruptive moves in market to rival these big multi-national organisations. There is no doubt that a well-funded ambitious company can move much more quickly than these larger corporations and therefore bring products to market quicker, ultimately stealing market share and driving significant stakeholder value.
It is important for smaller healthcare companies, especially those in untapped sectors, to consider the different kind of investment available, and the ones that are right for their business. Investors like Impel Healthcare Catalysts, for example, are more likely to fund companies with limited innovation in markets which are largely dominated by a small number of very large players. Why? Because in a market where a small number of players have a dominant market share, these are the segments which are ripe for small, innovative healthcare companies. More high-risk healthcare companies, such as binary bio tech, are more likely to gain investment from more traditional venture capitalists.
Turning to commercialisation, innovation not only lies within R&D in the med tech market, but also in sales and marketing. It is all well and good pioneering a world-first product or solution that will impact the lives of millions, but it needs to be marketed to the right audience, in the right way for the investment to turn into monetary success. This may well include adapting best in class marketing techniques from different industries.
For investors, it’s about both pounds and people. There is currently an open opportunity for investors and the healthcare companies they fund to work more closely with universities to seek and foster best in class scientists to invest in the future of innovation. If we start to see these relationships tighten, I have no doubt that these investors, companies and the wider healthcare sector – including the consumers who rely on it day in, day out - will reap the benefits.
What is clear is that, despite the overall unstable economic outlook and the current high levels of uncertainty, healthcare remains and will continue to be a very exciting and important investment opportunity due to positive demographics and the margins available in the med tech market.