Healthtech innovation driven by digital convergence, report suggests

Innovation in the healthtech sector is being driven by a convergence of digital technologies, societal changes and the entrance of tech giants, according to a new report by mergers and acquisitions advisors, Hampleton Partners.

The report highlights that a new wave of deals totalled around $9.5 billion in the first half of 2017, a 140% increase from the previous year.

Hampleton references deals such as Express Scripts’ $3.6 billion acquisition of eviCore healthcare which topped the table as the largest healthtech deal in the second half of 2017.

North America led the way for mergers and acquisitions, with 77 out of 100 deals taking place within the US, in an attempt to meet domestic demand and compete in the private healthcare market.

Hampleton expects the healthtech market to be disrupted by companies such as Amazon, Apple and Google. These companies have access to consumers, devices, data and resources to potentially drive change in a highly-regulated market.

Other sizeable deals include Internet Brands’ purchase of the health website WebMD for $2.8 billion which brought a range of similar sites under one umbrella.

The report also notes that Royal Philips managed to amass seven acquisitions over 30 months, and that investment in India increased when the country's government introduced a new National Health Policy aimed at raising public health spending.

Some of the top trends within healthtech currently include deals being driven by the ongoing digitisation of healthcare; an increased focus on data analytics and technology enabling primary care, according to the report.

Jonathan Simnett, director, Hampleton Partners, said: “Advanced healthcare systems around the world are struggling to deal with the perfect storm of spiralling costs allied to rising patient expectations, more expensive treatments, and the consequences of dealing with ageing populations and chronic lifestyle diseases.

“This vast healthtech sector where patient care systems have remained largely unchanged for decades is experiencing a seismic shift in funding and technology innovation. The customer care and logistics expertise that comes with Amazon’s market-moving plan to offer healthcare services is an indication of just how big this shift is going to be.”