Hassan Chaudhury’s international expectations in health tech 2024
How would you describe the UK health tech market in 2023?
It’s undoubtedly been a tougher year, and through conversations with companies who are succeeding it appears as though the traditional methods of accessing the market are changing. With so much noise in the market and companies all claiming to do the same thing there are challenges in differentiation, creating a focus on relationship-building and deeply understanding the needs of decision-makers and end users to shorten sales cycles.
The days of casual encounters at trade shows leading to instant wins feel like they really have gone. It’s getting more difficult for NHS staff to get to conferences, making it even more difficult for suppliers to reach key decision makers. More buyers than ever, including CIOs are asking suppliers to help them write their business cases for them as they just don’t have the time.. Partnering has also become the de facto way of getting innovation into the system, everyone is doubling down on partnerships.
Why did we see a flurry of health tech companies targeting the US market in 2023?
The focus on the US market for UK companies in 2023 can in part be attributed to venture capitalists encouraging expansion into other markets and not relying solely on the NHS, rather than there being a booming market elsewhere. However, many unprepared companies find themselves drowning in the US due to the enormous and unclear investment required. Social media hype by companies has contributed to a perception of an easy market. Companies like Current Health are an example of an exemplar UK company that made it work but they were clever; they had the Mayo Clinic both as a customer and an investor – those are big success signals and they’re rare. Another is Pelago Health – a virtual clinic for substance use. They’ve done brilliantly following their time on Y Combinator with some big hires. I’m increasingly of the opinion that the only real safe harbour for most UK firms is through partnering or through an accelerator like TMCx.
Will we see fewer UK health tech companies eyeing the US in 2024?
I think so. The UK is a reference market for many regions, and winning here is often less about making money and more about proving you can do it anywhere. That said, it’s actually not a strong reference market in the US, not least because the US market is so different. It’s often a state-by-state approach to conquer the US and the investment needed can be absolutely enormous in terms of staffing costs and access costs. Many of the companies who are out there now trying to win have strong foundations because of their successes in the UK; its just becoming harder for newer, younger firms to develop those foundations.
Do you think the approach to health tech communications differs for the US?
From a communications perspective, the value proposition is completely inverted. In the UK we build a story to get to a punch line, in the US they want the punch line immediately. Everything is shorter and quicker. Terminology like ‘efficiency savings’ isn’t always a good thing because ultimately it means someone, somewhere is missing out on revenue in the system. Even the way funding works from VCs is different – many UK companies have raised on terms that makes them wholly unsuitable now even before a Delaware flip. For example, £2m is a very good seed round in the UK but in the US it’s more like an Angel round so the funding alignment is different.
If the focus on the US will be less, where’s the action for 2024?
France and Germany are investing big, Germany is relatively digitally immature which presents opportunity but it’s still difficult to access, and prominent companies have been incumbent in market for years, making it trickier for start-ups. France is much more innovative but is going a little unnoticed. Outside of Europe, the Middle East has been an important market in 2023 and there has been huge opportunity in Saudi, which is likely to continue. However, the UAE is increasingly difficult and noisy unless you have solid relationships there.
There are also emerging parts of the world for digital health like South East Asia. ASEAN nations like Malaysia and Indonesia are best for high volume, low margin play. Singapore is also a reference site for the rest of ASEAN, which is growing in maturity.
Is the UK health tech market still worth it for suppliers?
Absolutely, it’s still a fantastic market but one challenge is the number of other players – over 5,000 health tech companies. There’s definitely appetite, time, money and effort around but it’s harder than before and the approach needs to be different as it’s a healthcare opportunity not a technology opportunity
I firmly believe that success in digital health requires a deep focus on human factors and on our workflows. We need a healthcare-oriented approach rather than a purely technological one. Putting technology into a healthcare system creates adaptive challenges that requires us to learn and adapt to navigate the complexities of integrating digital solutions into health and care.
How do we keep innovation in the NHS rather than losing it to overseas markets?
Losing companies typically means that they’ve been acquired by the Americans and they leave the UK, but I think we lose innovation here when we can’t offer clear paths to market. Prof Tony Young set up the Clinical Entrepreneurs’ Programme to develop and keep great ideas and talent here but we must do more for those entrepreneurs after graduation. It’s tough to get a pilot, tough to conduct evidence generation, and no easy next steps. The HINs (formerly AHSNs) do a great job but they simply will never have the scale to manage all the firms out there. Initiatives like Innovate UK, SBRI UK and UKRI play a crucial role in providing avenues for innovators to secure pilots, generate evidence, and contribute to the healthcare ecosystem.
What does it mean to be a strong company in the UK right now?
Aside from having a product that is scalable, that solves a real problem, it’s vital to have a strong and differentiated value proposition and a message that is very clear about what you do. Why you? Why not others? Companies also need ‘soft’ and ‘hard’ proof points; so third-party validation and testimonials as well as academic evaluations and clinical trials. These are what makes a company thrive. Decision makers need to see that an innovation is being used successfully and fruitfully elsewhere to derisk their decisions.
And then you need to have the amplification of those things, which is where PR comes in.You need to be in places where you can build relationships – at all the conferences like Rewired, the techUK dinners and the informal social events. You need to be visible and informed and all of those things are about you owning your space. If you’re not careful, someone else will claim the space your innovation drives at and then eat your lunch.