Investment pulse
Despite uncertainty in global M&A, both investors and corporates maintain a positive outlook on healthcare and life sciences (HLS) as a prime sector for investment. Europe will become the new destination for patient-centric advancements.
The HLS sector’s continued ability to provide opportunities for growth despite challenging macro-economic factors, advancements in healthcare technology and high demand due to changing demographics are contributing to an increase in investor appetite.
Both European corporates and investors are most likely to say that Europe is attractive to their organisations when considering HLS investment opportunities, in part due to the level of safety provided by the European Union’s familiar regulatory frameworks.
Healthcare providers and social infrastructure are key areas of interest for investors, no doubt driven by the need to cater to rapidly ageing populations.
Both corporates and investors are being held back by regulatory challenges, especially foreign direct investment (FDI) policies. However, with expert guidance, investors can work around these rules to mitigate risk and even benefit from the regulations.
An optimistic outlook
The sector's resilience, demonstrated during the pandemic, along with technological advances and demographic shifts, presents growing opportunities for investment and development.t.
Barriers to investment
Limited lab space and infrastructure substantially hinder healthcare investments for both corporates and investors. Additionally, ESG considerations, along with crowded marketplaces, pose further challenges for corporates.
The European comfort zone
Local investments offer benefits like research and development grants and preferential government treatment, while familiar regulatory environments provide a sense of security.
Therapeutic areas of interest
Corporates, especially pharma companies, aim to discover cures for new or rare diseases to build reputation and secure funding, contrasting with investor strategies which are focused on broader, established health issues.
Investment priorities
Despite corporate beliefs, investors prefer investing in sectors like pharma and biotech, where higher margins are perceived, over healthcare payors.
Opportunity lurks within the regulatory jungle
Discover the latest trends and strategies driving growth in the industry.
Data-driven healthcare
AI, data, and innovation are making the healthcare and life sciences (HLS) industry an attractive market, but adoption and investment flows are hindered by unknowns. Investors must take the lead.
European corporates cite staying ahead of technological innovation as one of the main challenges they experience when making or attracting investments. This can sometimes cause corporates to exercise caution when it comes to the use of technology in healthcare.
Regulatory challenges including uncertainties surrounding the impact of Gen AI in healthcare are also slowing the pace of innovation.
While European investors have their own concerns relating to the use of technology, the findings indicate that they are no less enthusiastic as a result.
Various disconnects in corporate and investor opinions suggest that for healthcare technology to advance, eager investors will need to make the first move.
The impact of AI
Investors are leaning towards more advanced AI technology than corporates, highlighting the importance for corporates to deepen their technological understanding to secure impactful investments.
Technology pioneering progress
The fusion of healthcare, technology and data offers vast investment opportunities, yet corporates face challenges in keeping pace with technological advancements and navigating regulatory landscapes.
Differing technology priorities
Investment interests diverge as corporates focus on securing data storage, while investors target monetising data-generating apps or devices.
Monetising data
Investors and corporates value healthcare data differently for revenue, with investors favouring proprietary data for sustained earnings.
Opportunity lurks within the regulatory jungle
Discover the latest trends and strategies driving growth in the industry.
Investing in healthcare sustainability
The environmental aspect of environmental, social, and governance (ESG) is often framed as a risk. However, early compliance with new regulations can promote innovation and growth.
European corporates and investors within the healthcare and life sciences (HLS) sector are under increased pressure to address the environmental impact of their activities.
However, in the HLS sector the environmental pillar of ESG is often either overlooked or framed only in terms of the associated risks.
Of course, there are risks aplenty. Regulatory non-compliance, litigation and mitigation to name a few.
But by exhibiting a readiness to comply with maturing ESG regulations, corporates and investors will likely uncover new opportunities for innovation, cost reduction and growth.
Recognise the link between climate and health
Despite prioritising ESG-focused thematic healthcare investing and NGO collaborations, investment in HLS for sustainability, particularly towards UNSDG 3 on health and wellbeing, is still low, indicating a significant opportunity for growth.
Intensifying focus on ESG
The increasing regulatory demands for transparency and ESG compliance are putting corporates and investors under intense pressure to demonstrate their commitment to ESG, leading to higher standards and greater scrutiny from stakeholders.
Reframing environmental responsibility
Corporations and investors in the HLS sector have traditionally focused on the social aspects of ESG, emphasising healthcare access and social equity. However, environmental initiatives can unlock opportunities for innovation, efficiency, and cost reduction.
Early adoption of ESG best practice
Early adoption of ESG best practices, such as the TNFD framework for nature-related financial disclosures, offers a significant opportunity for businesses to prepare for future environmental regulations and capitalise on nature's role in healthcare.
Opportunity lurks within the regulatory jungle
Discover the latest trends and strategies driving growth in the industry.
Unlocking investment transactions
Regulatory frameworks are stifling innovation and investment in healthcare and life sciences (HLS), but a proactive approach to regulation can prove rewarding.
Regulation is undoubtedly viewed by European corporates and investors as a barrier to making and attracting investments.
The findings indicate that in the case of investors, gaps in their understanding of future regulatory change may be putting them at risk.
It’s vital that both businesses and investors work closely with their legal teams to ensure they have the right support and advice in place to navigate regulatory changes and fulfil their obligations.
A complex regulatory landscape
The European HLS sector's robust regulatory framework is a key factor that makes investing in this field both safe and attractive for investors. However, the challenge of complying with these demanding and rapidly changing regulations is often seen as a barrier to progress for both corporates and investors.
Navigating regulatory challenges
Navigating the HLS sector's regulatory challenges demands strategic investment in regulatory intelligence and legal expertise, turning compliance into opportunities for influencing legislation and uncovering unique investment prospects in a complex market.
Understanding future regulation
Investors and corporates view future regulations differently, with corporates emphasising the impact of the EU pharmaceutical package — a concern not shared by investors. However, both agree on the importance of ESG regulations and the European Health Data Space Regulation.
Opportunity lurks within the regulatory jungle
Discover the latest trends and strategies driving growth in the industry.
Beyond Europe
While Europe and North America understandably head the league table of attractiveness for both corporates and investors, we drill into the Middle East and Asia Pacific regions where economic growth in several of their constituent countries is widely expected to be similar to or even exceed that of Europe and North America.
Opportunities to invest in technological innovation are abundant in the Middle East and Asia Pacific. Maturing regulations will attract more corporates and investors to the region.
Both the Middle East and Asia Pacific represent major growth areas within the healthcare and life sciences (HLS) sector.
However, fear of the unknown when it comes to the regulatory landscape in these markets can often mean European corporates and investors miss out on significant HLS investment opportunities within the regions.
In some cases, bold investors can profit from this uncertainty and current freedoms around technological innovation.
Meanwhile, more cautious businesses and investors will be pleased to know that regulatory frameworks are maturing and beginning to offer more clarity on investments.
Rivals to Europe?
While European markets tend to take centre stage when considering HLS investments, numerous prospects for innovation and growth exist outside of the European Union (EU).
Two regions growing in popularity among adventurous businesses and investors are the Middle East and Asia Pacific.
The Middle East presents a significant HLS investment opportunity, driven by a growing population with increasing healthcare needs, high disposable incomes, and a demand for advanced healthcare services, alongside ambitious digitalisation plans supported by government budgets. Evolving regulations and government initiatives attract global companies with innovation-friendly policies, despite fragmented healthcare infrastructure, varying regulatory frameworks.
Uncertainties lead to missed opportunities in the APAC market
Uncertainties surrounding regulatory policies, corporate governance issues, and geopolitical tensions in the APAC region are causing corporates and investors to overlook opportunities, particularly in innovative drug development and med tech sectors. Despite these challenges, there is a trend towards international collaboration and value exchange in the region.