Ever bought a fitness tracker to make sure you are getting your 10k steps daily? Or bought a blood pressure machine to monitor your blood pressure at home? Either way, this means you have invested in a piece of Healthtech.  

Welcome to the world of health technologies, also known as Healthtech.  

While it isn’t a new industry, its current growth is noteworthy for investors. The global digital health market was estimated at USD$240.9 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 21.9% from 2024 to 2030 ^[1]. 

With the Healthtech market ripe for investment and innovation, read more about the opportunities you can capitalise in across the healthcare and technology sectors. 

Key Points 

• Healthtech includes innovations in Biopharma, Digital Health, Health IT, Biotech, and Robotics and AI, all aimed at improving healthcare delivery, patient outcomes, and system efficiency. 
• Healthtech improves patient care, accessibility, and cost-efficiency, supports aging populations, and fosters treatment innovations. Technologies like telemedicine, wearables, AI diagnostics, and genomics enhance healthcare quality and reach. 
• The Healthtech market is rapidly growing, offering potentially high returns on investment. Its resilience, diverse opportunities, and potential for innovation make it attractive for investors, with strong growth projections. 

What Is Healthtech 

The World Health Organization (WHO) defines Healthtech as the “application of organised knowledge and skills in the form of devices, medicines, vaccines, procedures, and systems developed to solve a health problem and improve quality of lives” ^[2]. 

Healthtech plays a critical role in enhancing the efficiency and effectiveness of healthcare delivery, reducing costs, and improving patient outcomes. 

Healthtech encompasses a wide range of innovations aimed at improving various aspects of the healthcare system. Here are some key sectors within the industry: 

1. Biopharma 
   1. Biopharma integrates biology and technology to create innovative drugs and therapies. Technologies like high-throughput screening, computational drug design, and bioinformatics identify potential drug candidates more efficiently. 
   2. The importance of biopharma was evident during the Covid-19 pandemic with the rapid development and deployment of mRNA vaccines by companies like Pfizer-BioNTech and Moderna, which have revolutionised vaccine technology ^[3]. This advancement allows for faster development and easier adaptation to new variants.  
   3. In December 2022, the U.S. Food and Drug Administration (FDA) approved the first CRISPR-based therapy, Exa-cel, for treating sickle cell disease, marking a significant milestone in gene editing technology ^[4]. 
2. Digital Health 
   1. Digital health includes telemedicine, mobile health apps, wearables, and diagnostic tools. It leverages digital technologies to enhance the efficiency and effectiveness of healthcare delivery.
   2. Telemedicine allows remote diagnosis and treatment through video conferencing and digital communication, making healthcare more accessible, especially in rural or underserved areas.
   3. According to a McKinsey report, telehealth usage stabilised at levels 38 times higher than pre-pandemic levels, with 40% of surveyed consumers using telehealth in 2021 ^[5]. 
3. Health IT  
   1. Health Information Technology (Health IT) focuses on the use of information systems to manage healthcare data. This includes electronic health records (EHRs), digitising a patient’s paper chart to create a comprehensive health information overview with medical history, diagnoses, medications, treatment plans, and test results. 
      
      “By 2025, the world is expected to produce 15,000 exabytes of healthcare data annually, versus only 2000 in 2020.” 
      
      Arnaud Bauer, Partner at LEK Consulting 
   2. The global healthcare IT market is projected to grow from USD$321.9 billion in 2022 to USD$822.5 billion in 2027, at a CAGR of 20.2% from 2022 to 2027 ^[6]. This growth is bolstered by companies like Epic Systems, which partnered with Microsoft in 2023 to integrate AI tools into their EHR platform. The aim is to improve clinical decision support and streamline administrative tasks ^[7]. 
4. Biotech 
   1. Biotech uses biological processes for industrial and other purposes, particularly the genetic manipulation of microorganisms to produce antibiotics, hormones, etc. This enables precision medicine, where treatments are tailored to the genetic profiles of individuals or specific disease strains. 
   2. Companies like Illumina and 23andMe have made significant advances in genomic sequencing, making it more affordable and accessible. 
5. Robotics and AI 
   1. In the age of artificial intelligence, robots are transforming various aspects of healthcare, from surgery to diagnostics. 
   2. Machines like the da Vinci Surgical System has performed over 7 million minimally invasive procedures worldwide with high precision ^[8]. They provide surgeons with enhanced dexterity and control, leading to reduced recovery times and fewer complications.   
   3. Machine learning models can interpret medical images (like X-rays and MRIs), predict disease outbreaks, and identify patterns in large datasets that are beyond human capacity.  
   4. In another example, Google’s DeepMind developed an AI system that can predict acute kidney injury up to 48 hours before it occurs, providing valuable time for intervention ^[9]. 

Why is Healthtech Important? 

Healthtech is important for a multitude of reasons, especially as it intersects with various aspects of healthcare and society.  

1. Improving Quality of Care: Healthtech enhances the quality of care by enabling personalised treatment plans and improving hospital processes, making healthcare more patient-centric. 
2. Increasing Healthcare Access: It expands access to healthcare services, especially for those in remote areas or with mobility issues, through telehealth and mobile health applications. 
3. Reducing Cost: By streamlining workflows and reducing inefficiencies, Healthtech has the potential to lower healthcare costs significantly, making it more affordable for all. 
4. Supporting Aging Populations:  With an increasing number of elderly individuals, Healthtech provides solutions for remote monitoring and independent living, thus supporting the aging population in maintaining a good quality of life.
   
   “The population above sixty years old is expected to almost double by 2050.” 
   Arnaud Bauer, Partner at LEK Consulting 
5. Innovation in Treatments: Healthtech fosters innovation in drug development and medical procedures, leading to better health outcomes. 
6. Data Management: The use of IT systems and algorithms in Healthtech helps in managing vast amounts of health data, which can be used to improve treatment protocols, predict health trends, and enhance the overall healthcare system’s efficiency. 

Why Invest in Healthtech ^[10][11][12] 

Investing in Healthtech is appealing for several reasons: 

Rapid Market Growth

The Healthtech market is rapidly growing. With increasing demand for advanced healthcare solutions and continuous technological innovations, the market is expected to expand significantly in the coming years. 

Deloitte’s Health Forward Blog highlights that the COVID-19 pandemic has created enormous opportunities for innovators and investors in Healthtech. In 2020, investments reached record levels, with $21.6 billion poured into digital health companies, more than double the investments made in the prior year. 

Resilience and Growth

Healthtech has shown resilience, particularly during the COVID-19 pandemic. The necessity for remote healthcare solutions and digital health tools has proven the sector’s robustness and adaptability. 

The Silicon Valley Bank’s Future of Healthtech 2023 Report notes that despite a challenging investment environment, the performance of Healthtech publics started to demonstrate resiliency this year, representing the first positive trends in over a year. 

Diverse Investment Opportunities

Healthtech offers a wide range of investment opportunities, from established companies to emerging startups, covering various subsectors like biopharma, digital health, and AI in healthcare. 

McKinsey & Company’s insights into Healthtech investor excitement mention that as of 2019, digital health represented a global market of approximately $350 billion with opportunities to compete across multiple subcategories. 

Investing in Healthtech also offers diversification into different sectors. Unlike sectors like consumer goods, technology, or financials, Healthtech is driven by unique factors such as healthcare demand, regulatory changes, and medical advancements. This helps spread risk and provides stability and growth even when other sectors underperform.  

Potential Returns

Historical data indicates strong performance in the Healthtech sector, with several companies and technologies delivering substantial returns on investment. The ongoing innovation and growing market demand suggest continued high potential for future gains. 

The same McKinsey article indicates that the markets for technologies in every value pool are expected to grow by at least 8%per annum, suggesting encouraging potential returns for investments in the Healthtech sector. 

Ways to Invest in Healthtech 

Now that you have a better understanding of the industry, how can you invest in it? 

Stocks in Healthtech

Investors can buy stocks of companies directly involved in Healthtech. These can be broadly categorised into: 

• Major Healthtech Companies 
  These are established players with a significant market presence. They offer stability and are often involved in multiple areas of Healthtech. For example, Medtronic is known for its medical devices, and Oracle specialises in healthcare IT solutions. 
  
  Read more about Healthtech firms you can invest in in 2024 here. 
• Emerging Startups 
  These companies are at the cutting edge of Healthtech innovation. They may offer higher growth potential but come with increased risk. Investors should look for startups with strong intellectual property, strategic partnerships, and a clear path to profitability.  
  
  If the startups are not listed yet, retail investors can invest in their shares through venture capital funds, crowdfunding platforms, or private equity opportunities. You can read more about these options below. 

Exchange-Traded Funds (ETFs) 

ETFs provide a way to invest in a basket of Healthtech stocks, offering diversification and reducing the risk associated with individual stocks. Examples include: 

• iShares U.S. Healthcare Providers ETF (IHF): This ETF tracks a broad range of health care providers and services, including Healthtech companies. 
• ARK Genomic Revolution ETF (ARKG): ARKG focuses on companies likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments. 

Mutual Funds

Mutual funds offer another diversified investment option, managed by professional fund managers. Healthtech-oriented mutual funds invest in a mix of established companies and high-growth potential startups. The Fidelity Select Health Care Portfolio (FSPHX) is an example that includes Healthtech investments. 

Venture Capital

Venture capital (VC) allows investors to participate in the early stages of a Healthtech company’s growth. While this can be highly lucrative, it also carries significant risk. Some Healthtech-focused VC firms include Rock Health and Kleiner Perkins.  

Crowdfunding

Crowdfunding platforms allow individual investors to contribute to Healthtech startups for equity or rewards. Platforms like StartEngine and WeFunder enable investors to find and invest in early-stage Healthtech companies. 

Direct Investment in Companies

For those looking to make substantial investments, direct investment in private Healthtech companies or partnerships can be an option. Here are some examples of companies you can invest in^[13]:  

• Tempus 
• Walgreens 
• Included Health 
• Maven Clinic 
• GRAIL 
• Headway 
• Medely 
• Modivcare 
• Pearl Health 
• Strata Decision Technology 

Learn more about gaining exposure in the Healthtech industry in our article here.  

Conclusion 

Healthtech is revolutionising the healthcare industry, offering unparalleled opportunities for innovation, improved patient care, and significant cost reductions. As the market continues to grow rapidly, the potential for high returns makes it an attractive area for investment. 

Ready to take the next step and invest in the future of healthcare?  

Open an account with Vantage Markets today and start exploring the exciting opportunities in Healthtech. Join the movement towards a healthier, more technologically advanced world. 

Read more about the Healthtech industry on The Vantage View website or stay updated with the Vantage Markets Podcast on Spotify. 

References

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