‘While nontraditional venture investors have pulled back investment activity in the past … incumbents and their corporate venture capital (CVC) units have remained committed.—PitchBook 2022 Emerging Technology Outlook
In its 2022 Emerging Technology Outlook, PitchBook made three major predictions for healthcare technology investment, spanning enterprise tech, insurtech, and retail health tech. While venture capital (VC) firms are still the primary funders of the healthcare startups, the company notes that healthtech VC deal activity “has spiked” and is expected to grow to $1.3 trillion by 2025—due in part to payer- and other healthcare stakeholder-led investments in the areas noted below. Within PitchBook’s predictions are important caveats discussed at this article’s end, the cautionary tales that inevitably and necessarily shadow innovation headlines.
Top three healthcare predictions
1. Precision and personalized medicine to receive record funding.
The right mix and maturity of supporting technologies, market drivers, and opportunities may make 2022 a significant year for precision and personalized medicine. The intersection of the two is but one example of enterprise heath tech, which PitchBook defines as B2B services that focus on improving care quality while decreasing cost of care. Enterprise health tech is divided into five categories:
- Prescription tech
- Customer acquisition tools
- Clinical trial tech
- Insurance tech (insurtech)
- Operations and care management
While noting that “precision medicine has been a talking point for several years” and that “it may yet take several years to become fully commercialized,” PitchBook’s Outlook adds that “we expect VC interest to ramp up.”
Payer-driven VC companies are among the investors in health tech. UPMC Enterprises for example, the venture capital arm of payer-provider UPMC, was a co-lead investor in a $20 million funding round for Smile CDR, a data and platform company focused on increasing interoperability for payers and providers.
This is increasingly possible, adds PitchBook, through a “confluence of technologies” that range from sensors and remote monitoring to EHRs and genetic databases. The caveat, however, that the very capabilities that fuel growth are enmeshed with the “medicolegal” issues that may slow its growth, including ongoing issues related to data privacy and security.
2. Insurtech to see more M&A, driven by established players.
PitchBook expects established payers to continue acquiring startup insurtech competitors, many of whom are advanced tech native from inception and offer incumbents the opportunity to buy the innovations they lack in-house. Insurtech companies have disrupted the market, offering plan comparison and enrollment platforms in addition to new coverage options. Devoted Health and Clever Care Health Plan are examples of the latter, attracting two of …….