Healthcare investment spend by Venture Capital, Private Equity, Hedge Funds, and other institutional investors is often seen as an indicator of where current needs and future trends are in the expansive healthcare industry. These needs and trends are driven by many factors, including patient needs, technological advances, and global health concerns. COVID-19 was undoubtedly a catalyst for unprecedented investment in this sector that drove major innovation in a short period in several sub-sectors such as Healthcare Services, Behavioral Health, Pharmaceutical, Telehealth, Virtual Fitness, and Supply Chain Logistics.
According to Silicon Valley Bank, total healthcare sector investment dollars in 1H2021 neared $47B, more than double 2020’s pace. Investment in venture-backed healthcare companies in the U.S. and Europe set new records in 2021. The massive investments were led by interest in biopharma which garnered about half of total investment dollars last year. The sector is attracting investors with more capital raised during the first half of 2021 than in all of 2020.
Venture investors are not the only investors benefitting from the increased investment activity and potential returns experienced in this sector. Hedge Funds, Private Equity firms, and Independent Sponsors are offering investors unique investment opportunities through funds and one-off deals.
Healthcare Investment Outlook for 2022
Healthcare industry investment in 2022 was the topic de jour at the 40th annual J.P. Morgan Healthcare Conference earlier this month. Conference speakers highlighted a number of trends pointing to healthcare being a sector of innovation and growth, including:
Aging population and the baby boomers
People with chronic diseases are living longer
Obesity and diabetes epidemics
Lawrence Doyle, Partner of Tower Capital shared, “The integration of technology, the advancements in genomics, and the world’s aging population will provide a powerful tailwind for investment opportunities in the health care sector for many years to come.”
The consensus on where investments will be made in healthcare in 2022 centered around three main areas:
Due to the impact of COVID, 30% of all visits during the pandemic were provided by telemedicine. What’s driving investor interest in this sub-sector? Telemedicine can improve efficiency and cost while also expanding access to care and reduced patient demand on facilities.
Consumerization of Digital Health
As in other industries, healthcare consumers demand three key things: access, price and outcomes. To provide the experience patients seek, there needs to be seamlessly integrated data between electronic medical records and technology platforms.
Digital health companies are beginning to address previously unmet needs of underserved populations. A focus in this area is expected to lead to community-based start-ups looking to provide underserved areas access to healthcare innovation.
Given the enormous investment of public and private dollars, innovation, and patient demand for better, hybrid-care, healthcare will be a sector investors will want to invest in the coming years. Continued economic recovery and structural changes to US and European healthcare systems will further boost the sector and benefit investors long-term.