Why the UK is on track to become the leading healthtech investment hub
In this opinion article, Santosh Sahu, the Founder and CEO of Charac, explains why he believes the UK is on track to become the leading healthtech investment hub.
Healthtech investment in the UK has soared in recent years, with annual investment nine times higher in 2021 than it was in 2016, reaching $3.8 billion in 2021, the third highest of any country in the world. Investment in healthtech in the UK is second only to fintech, and the UK is by far the leading hub for healthtech in Europe.
With the UK a bustling nucleus of innovation in healthtech, the sector is well placed to aid one of the great cornerstones of Britain. The advanced and transformative technologies that are being developed have the power to reinvent not just historic healthcare systems that are in crisis, but one of the richest niches for opportunity in pharmacies, to offer modern, cutting-edge services: Health Secretary Steve Barclay has dubbed pharmacies the “first port of call” and highlighted the “valuable role” they play alongside the NHS.
Challenges drive tech adoption
The Covid-19 pandemic was a key impetus in encouraging healthtech development. The pandemic exposed many of the failures in healthcare systems – and not just the crisis faced by the NHS. An overreliance on supply chains, the drive to develop new vaccines, and the struggle to adapt to digital offerings, such as telemedicine and remote patient monitoring, all contributed to the urgent need for innovation in healthcare.
Since, the Government has improved support for the growth of the healthtech sector, including digital health and social care reforms through the NHS, as well as increased funding to both universities and SMEs alike into research and development.
SMEs are a crucial part of the UK’s healthtech industry, making up 81% of healthtech companies, as well as 20% of the sector’s turnover. In fact, the ‘Golden Triangle’ of London, Oxford and Cambridge is home to an impressive 508 healthtech startups, and seven of the UK’s 47 unicorns are healthtech companies. The industry is ripe with opportunity, and investors are seizing this. With backing from the venture capital and private equity market, Britain’s most innovative startups stand to thrive and develop groundbreaking technologies.
Furthermore, despite workforce issues, particularly throughout the pandemic, the UK still has one of the strongest talent pools worldwide. 58.5% of the UK workforce is educated to at least a degree level, and the UK sees over 538,000 international students a year – making the country a fantastic magnet for skilled labour. That’s not to mention London being ranked the most ‘magnetic’ city in the world in attracting people, capital and enterprises for the ninth year running.
The growing demand to prevent a public health crisis on the scale of the pandemic is not the only driver of change in the healthtech sector. The UK’s ageing population, which is older than ever before, and vulnerability to diseases is generating a market for healthcare innovations and is threatening a further burden on public and private healthcare providers alike. Staffing issues and rising costs are additional pressures, making digital innovation more necessary than ever.
With investment in cloud, digital and cyber technologies within the NHS continuing to grow by nearly 50% year-on-year, healthtech investors are recognising the opportunity to profit from the demand in healthcare.
Demand and confidence in healthcare as a whole is expected to continue trending across the decade. While equities struggled in 2022, healthcare stocks saw consistency. As a defensive stock, healthcare is less sensitive to changes in the broader economy and tends to perform well during periods of economic uncertainty. The UK’s ageing population and the growth of a global middle class means that high demand will remain in the coming years, and make it a sector filled with opportunity for the future.
As healthtech firms look at ways they can modernise the UK’s primary care system, the new Health Secretary Steve Barclay has pushed on progressing a ‘pharmacy first’ policy in England.
Pharmacy First is an initiative that has been run in other UK nations, allowing patients to access treatment and advice for a range of common illnesses and conditions from their local pharmacy, instead of their GP or going to A&E. By doing so, pharmacies then can relieve pressure on primary care services, while giving patients an accessible alternative to be treated quickly and efficiently.
However, pharmacies are currently facing severe struggles due to a lack of funding and digitisation. Pharmacies are seeing an annual shortfall of £67,500, with over 400 pharmacies permanently closing in the last year.
Investment in innovative healthtech startups can build the foundation for change in the sector. Where investors can capitalise on early-stage innovation and drive the development of healthcare services, businesses can look at solutions for streamlining and simplifying processes.
With the pharmacy industry struggling with outdated computer systems and unorganised record keeping, digitising these processes can help modernise the sector. Healthtech companies can play a vital role in assisting pharmacies to adapt to a digital climate, and use technologies to improve their revenue.
Charac’s platform is an example of a technology that aims to upgrade the online presence of pharmacies and boost their income. By digitising processes such as consultations and prescriptions, it frees pharmacists to conduct revenue-boosting work, such as providing the New Medicine Service (NMS) – a service that incentivises pharmacists to conduct follow-up reviews with patients when using certain new medications, with pharmacies then paid once the reviews are documented.
With tech startups looking at how they can revolutionise healthcare, the opportunity is there for the healthtech sector to take over the UK in 2023 and beyond, and for innovative startups to lead a wave of change in healthcare as the UK becomes a global hub for healthtech.