Growth of the MedTech and Digital Health Market Despite Increased Regulation
The European MedTech and digital health market continues to thrive and expand despite an increase in European regulatory requirements. In 2023, the European MedTech market was valued at approximately €160 billion, with an average annual growth rate of 5.4% per year from 2013-2023. Revenue in the digital health sector in Europe is also expected to show a high annual growth rate of 9.30% in the coming five years resulting in a projected market volume of €53.59 billion by 2029, driven partially by increasing adoption of digital treatment and care. In recent years, several key regulations have passed in the European market that impact the digital health and AI market - including the Medical Devices and In Vitro Diagnostics Regulations, the AI Act and the European Health Data Space Regulation - but none yet appear to have discouraged or chilled growth in this segment.
Potential investors and buyers expect sophisticated cyber risk management and mitigation strategies from digital health and artificial intelligence companies. To succeed in this space, it is imperative for digital health innovators to closely monitor developments in the fast-changing field of cybersecurity as it relates to healthcare technology, as there is no "one size fits all" way to think about these constantly evolving risks. We are now seeing companies start to think creatively about how best to scale safeguards in the startup space, as well as manage potential external and internal threats to minimize business disruption and protect customers.
Many European countries are providing attractive market access pathways for digital health applications, increasing access for patients and creating more obvious investment opportunities. For example:
These developments underscore a commitment to fostering an environment that provides broader access to various forms of digital healthcare.
The FemTech and women's health market, seen as a US$1 trillion economic opportunity by 2040, is gaining attention; women are responsible for 80% of household spending decisions and spend 30% more per capita on healthcare than men. Currently, only 3% of digital health investment goes to FemTech, leaving a significant potential for growth in this market. Recent investments have flowed into FemTech areas like HPV vaccines and pulmonary arterial hypertension, with a focus also on cardiovascular and immunology research addressing gender differences. We expect these trends to continue to rise, providing ample opportunities for developers and investors in the FemTech space.
Concurrently, the utilization of data in personalized medicine is gaining traction among investors who are particularly interested in the IP rights and data usage rights that can be secured by potential collaborators, as well as in the quality of the data which they collect and analyze. Investors are aware that such data offer increasing opportunities for personalized treatment plans, especially when combined with advanced analytics and AI. Industry awareness of the challenges posed by data standardization, quality and interoperability, data usage rights,and data protection and privacy is leading to increasing interest in the burgeoning national data spaces. The European Health Data Space (EHDS)Regulation, which will likely soon become law, aims to create a common framework across the EU to facilitate the secure and standardized exchange of health data. This initiative is expected to enhance the ability of healthcare providers and researchers to access and utilize high-quality data for personalized medicine. Over the next few years, we expect to see the strategies developed to connect such data spaces, with the EHDS likely playing a pivotal role in driving standardization and interoperability across Europe.
Governments across Europe are actively supporting and funding MedTech startups through dedicated hubs. These government-backed initiatives, such as the UK's National Institute for Health and Care Research, provide substantial research infrastructure. Spain's Ministry of Health has developed a Spain Digital Health Strategy, which includes the creation of innovation hubs in various regions to support the development and integration of digital health solutions into the national healthcare system. These hubs offer resources such as funding, mentorship, and access to clinical trial networks.