How COVID has Changed the Health Tech Space

Following the global COVID 19 Pandemic, the global health tech space has seen an unpreceded level of attention, investment, and excitement. Investment in global health tech exploded in 2020 with over $100 Million in health tech investment and exits. Early signs show that the global health tech market may even outperform 2020 this year. In fact, when you look at VC investment, the average deal size in 2021 grew to $45.9 Million up from $31.7 million in 2020.  

There is no question that global health tech is on quite a roll. However, the spotlight can be fickle and ‘hot tech sectors’ can cool down when the next big thing comes up. Will interest (and investment) dry up when COVID (hopefully) stops being front page news? 

The truth is that COVID exposed weaknesses in our health systems. Digitalization of health was a trend before COVID but it was a slow process. The need to adopt a ‘remote-first’ approach during the pandemic, and streamline digitalization projects. Much like the global shift to remote work, the shift to digital medicine is here to stay. But that doesn’t answer the bigger question about the future of global health tech. 

Global Shortage of Developers Impacts Health Tech 

I’ve discussed before the global shortage of talent that is plaguing the tech sector. Because of the interest in health tech and the need for global health tech companies to meet new aggressive goals after investment, this shortage of talent is a major problem. 

Hidden Regulation Could Derail Growth 

The global health tech space is dominated by regulation. The challenge here is that many domestic rules have global impact. As an example, GDPR, the European Data Protection law applies to data collected in Europe by any company.  So, if the American customer of a health tech goes to Europe and the health tech gets data (even just location data to shut off the service) then they are in violation. Likewise, HIPAA, the US patient data protection law applies to companies that collect and store data on US citizens (even if those citizens don’t live in the US). These hidden regulations not only present a threat of huge fines, but they are well known to VCs who look for compliance/non-compliance during their audits. 

The rise of full-service health tech services companies offers help

The health tech space isn’t the first to encounter this problem. The Banking and Fintech sectors, who face a regulatory burden almost as great as in global health tech, have long relied on trusted external partners who are experts both in compliance and in development. This same paradigm is quickly becoming the norm in the global health tech space as well. It’s too slow and expensive to hire and train developers when they may only be needed for ‘surge capacity’ or they might just leave 3 months later. Health tech services companies partner with global health tech companies to help them deploy and scale compliant technology across the globe. 

In conclusion, the global health tech space shows no sign of slowing down but there are some potential warning signs that companies need to look out for in terms of shortages of talent and hidden compliance risks.