On the face of it, the UK’s digital health economy is in robust health. The industry and media buzzword for the industry – health tech – refers to the incorporation of technology in facilitating the delivery, payment and development of healthcare services. Healthtech is now the second biggest sub-set of the UK tech sector after Fintech and there are more than 100 health tech companies that are on track to become $1bn businesses. According to TechNation, the UK health tech sector has attracted $7.7bn (£6.2bn) from global venture capital investors over the past five years. The companies in the sector have a combined turnover of £24 billion and employ more than 127,300 people across 3,860 businesses.
Meanwhile, the Covid-19 pandemic has super-charged digital transformation and innovation across the healthcare sector. The NHS has been forced to adopt new ways of working and digital technologies on a scale never seen before and at a pace never imagined. Matthew Gould, chief executive of NHSX, reflecting at a recent summit on the pandemic and its impact said, “The shift on remote consultations was extraordinary. At the start of the year, we reckon about three per cent of GP surgeries had the capability to do online consultations, we think it’s close to 99 per cent now.”
This accelerated digital transformation marks a clear opportunity for the sector and for those companies which are well-placed to supply innovative tools and solutions. Lyndon Johnson, co-founder of 8foldGovernance says, “SMEs and start-ups provide so much value compared to the big multinationals. Everyone from IBM to Cerner should be disrupted.” Julia Hawkins, partner at LocalGlobe told Tech Nation:
“For a long time, we have been talking about the potential for better use of data and AI in healthcare and digital delivery of care and tools to support front-line clinicians. Now we are getting the chance to use these for real on a mass scale. The crisis is giving health tech companies the chance to show what they can do and the response from the many companies who have got involved demonstrates that we do have the talent and skills here to build globally significant healthcare companies.”
According to Beauhurst – a market research company which tracks the UK’s high growth companies – “Over the last few months, there’s been a global surge in demand for remote healthcare solutions in order to treat and prevent the spread of coronavirus. There has also been a great demand for more remote treatment and monitoring of existing illnesses, in order to comply with social distancing measures. This demand has prompted a rise in investment for UK health tech startups – the first rise in deal numbers since H2 2017. With the consequences of COVID-19 set to last for some time, this trend in increasing health tech investment may continue well into 2021 and beyond.”
Success stories abound. Unicorn start-up Babylon – which uses AI diagnostic software to provide a range of easily accessible healthcare services – has raised £517.7m in funds since launch in September 2014, according to Beauhurst’s data; significantly more than any other UK health tech. The closest competitor is Cera which provides pensioners with at-home carers. Cera’s most recent fundraising of £53m took place in February 2020.
Agility is a huge strength of the health tech sector and a key competitive strength. Many start-ups and SMEs were able to adapt swiftly to the crisis. Hospify is a GDPR-compliant messaging platform intended to replace WhatsApp messaging among medical professionals. The app had been going for five years before it was admitted to the NHS Apps library at the end of February 2020, a week before the pandemic hit. Co-founder James Flint told the FT, “It poured petrol on the fire. We are adding thousands of users a day at the moment. We have beaten all of our targets for the year in the last week. We have set up an online call centre in a week. We have doubled our development side. I’m hiring people I’m not even meeting.”
This kind of growth coupled with government stimulus and support packages such as a £500m investment fund for high-growth companies suggests the sector is in very good health; a “ballooning industry”, in the words of 8foldGovernance’s Lyndon Johnson.
This Blog is an excerpt from the 8foldGovernance White Paper written by Sussex Innovation. The full whitepaper can be downloaded from our newsletter upon sign up