Scale
Digital health leaders know they can’t ride the current wave of growth forever. They are looking to new markets and partnerships to scale up. However, determining long-term vision is a challenge – what success looks like and when to exit.
Room to grow
We are still a long way from peak innovation in digital health. Benefiting from a dynamic and growing market, leaders are confident about their growth prospects.
of innovators are confident about their growth prospects.
of innovators say they are benefiting from a growing market for existing products.
Room to grow
We are still a long way from peak innovation in digital health. Benefiting from a dynamic and growing market, leaders are confident about their growth prospects.
of innovators are confident about their growth prospects.
of innovators say they are benefiting from a growing market for existing products.
Bold plays
But as competition intensifies, innovators recognise the need for bigger, bolder plays in order to scale. Entering new markets, forming strategic partnerships and landing new buyers are key levers of growth.
Top growth strategies of digital health companies
Targeting new international markets
Entering strategic partnerships and joint ventures
Targeting new buyers
New markets
Digital health companies have ambitious plans to expand internationally in the coming three years. While there is broad consolidation around top digital health innovation hubs – the US, UK and Germany – other destinations are emerging as key priorities.
Markets with mature healthcare systems and reimbursement models such as Australia, France and Sweden are popular choices, and Latin American countries with large patient populations are proving to be compelling scale up destinations. The efforts of the Netherlands and Singapore to position as digital health epicentres in Europe and Asia Pacific also appear to have paid off.
US companies may see the digitisation of the NHS as an opportunity. The UK has always been at the forefront of personalised medicine. But selling NHS data is a political hot potato, so US companies are also looking at other markets in Europe and closer to home. Ireland and the Netherlands are often seen as attractive markets for a ‘land and expand’ European strategy.
Ross McNaughton
Where are digital health businesses looking to expand in the next three years?
United Kingdom
US, Germany, Brazil, Australia, Mexico, Sweden, Netherlands
United States
UK, Australia, Germany, Mexico, Brazil, France, Netherlands, Sweden
Germany
UK, US, Brazil, Australia, Mexico, France
The majority of digital health founders told us that IP is the core differentiator of their business – its ‘superpower’. But 32% are struggling to protect it, particularly at critical milestones such as international expansion and capital raising. Against a backdrop of fierce competition, falling valuations and investor uncertainty, digital health founders can’t afford to sleep on their competitive advantage.
Mark Owen, Partner
End game
Despite plans to scale in the coming few years, leaders are less clear about what they’re working towards over the long-term. The overwhelming majority of digital health leaders say they have no plans to exit. But they haven’t been lacking in offers. Companies are being approached by potential buyers, yet deals are not progressing.
Unlike biotech and medtech, which almost exclusively work towards buyout, in digital health it is possible to generate revenue relatively quickly that is also very scalable. This changes the exit calculus. Add to that the challenge of valuing nascent digital health solutions and the fact that few digital health businesses have reached their full potential, and it’s clear that companies are deprioritising exit plans in order to meet more immediate milestones and maximise value creation
Ross McNaughton, Partner
End game
Despite plans to scale in the coming few years, leaders are less clear about what they’re working towards over the long-term. The overwhelming majority of digital health leaders say they have no plans to exit. But they haven’t been lacking in offers. Companies are being approached by potential buyers, yet deals are not progressing.
Unlike biotech and medtech, which almost exclusively work towards buyout, in digital health it is possible to generate revenue relatively quickly that is also very scalable. This changes the exit calculus. Add to that the challenge of valuing nascent digital health solutions and the fact that few digital health businesses have reached their full potential, and it’s clear that companies are deprioritising exit plans in order to meet more immediate milestones and maximise value creation
Ross McNaughton, Partner
of innovators have no plans to exit.
say they have chosen not to progress with acquisition deals as it was too early in the company lifecycle.
say their biggest challenge in relation to exit is deciding when to go in order to maximise pay out.
of innovators have no plans to exit.
say they have chosen not to progress with acquisition deals as it was too early in the company lifecycle.
say their biggest challenge in relation to exit is deciding when to go in order to maximise pay out.
Reader poll
Do you have an exit plan for your business?
Reader poll
Do you have an exit plan?
