Why now is the time to invest in Healthcare Digitalization

Blogpost by Jean-Marc Patouillaud, Co-Managing Partner at Partech

Check out our report on SlideShare: The Future of Healthcare is Now!

Partech is pleased to be one of the first global VC firms to have identified the winning investment opportunities that healthcare technology now offers.

As outlined in a recent McKinsey & Company analysis, PE investors have traditionally shied away from this sector, primarily due to the complexity and unpredictability of the industry with its fragmented landscape and fluctuating markets. This has resulted in very few healthcare tech deals taking place outside of the US, where the vast majority (an estimated 83%) of all global healthcare tech deals occurred between 2015–18.

However, there’s been a recent, rapid shift in the role of digital technology within healthcare, its role no longer confined to driving marginal efficiency. Instead, digital technology is now at the centre of large-scale innovation and disruption, causing sweeping transformations within healthcare (and indeed, throughout most major industries). The same previously referenced McKinsey report highlights how PE can tap into a “forgotten” midtier opportunity across the healthcare tech landscape, bolstered by some interesting statistics, including that healthcare tech multiples surpass those of most other healthcare subcategories. Additionally, they found that companies with a strong technology component are valued, on average, at 17.1x earnings, compared with 14.9x average across the industry, while well-managed healthcare companies have performed even better in recent years, with some exits at 23 to 25x EBITDA.

And in a report by CBINSIGHTS, released ahead of the Future Of Health conference in New York, H1'19 saw a first half record in both deals and dollars for the amount invested in healthcare companies globally, while digital health funding is on the rise for the second straight quarter, at $3.5bn, up 23% versus Q1'19, and with 371 digital health deals compared to 354 in the first quarter.

Within the burgeoning field of healthcare technology, exciting new investment opportunities are opening up for those of us willing and able to embrace and adapt to this new paradigm. Ongoing deregulation throughout the global healthcare industry is further facilitating the widespread adoption of new technologies, including cloud storage, data privacy and security, apps and connected devices, Analytics and AI. In turn, this is enabling the huge, multi-stranded healthcare ecosystem to fully flourish, with IT benefiting all parties involved, from caregivers, patients and pharma firms, to stakeholders and investors.

And with this trend looking set to continue — healthcare digitalization is projected to grow 14% per year through 2023 according to an April 2019 Global Market Insights report — Partech is especially proud to be ahead of the herd, with a range of cutting edge health-related companies already in our portfolio. These include: Alan, the first digital health insurance company in Europe; Ambler, the first smart network for medical transportation; AMBOSS, an innovative provider of digital medical knowledge in Germany and the US. ; Happytal, which provides a platform of services for patients, health institutions and hospital employees; Lifen, a medical communications platform allowing healthcare establishments and private practitioners to securely exchange medical data; Privitar, a privacy engineering software company enabling the safe and ethical use of valuable data; Push Doctor, an innovative app and Europe’s largest online family doctor marketplace; and Zeel, the first mobile Massage On Demand company, with a network of more than 10,000 therapists throughout the US.

Check out our report on SlideShare: The Future of Healthcare is Now!