In good health
Clearwater International Director Hemavli Bali looks at latest trends in the healthcare TMT market in the UK.
Tell us about the UK market for healthcare IT?
The market tends to split into two distinct camps, namely those companies supplying pharma and biotech, and those supplying the NHS and public sector. The former have deep pockets so if you are a business offering something innovative in addressing key imperatives, or which can increase efficiencies, then you are in a good space. Likewise, those businesses supplying the NHS which have established a strong foothold focusing on improving patient outcomes are also in a good position.
What challenges do companies in this market face?
For those operating in the public sector a major issue, beyond availability of funding, can be the longer lead-in times on projects. Even if you have ground-breaking technology it can be a challenge to gain traction. A common challenge across both the pharma and public health sectors is also the sheer number of businesses that now badge themselves as technology companies.
Because of the maturity of the market it can be difficult to integrate new, niche solutions into technology stacks that already exist, so the challenge for newcomers is how they stand out from the crowd and integrate their offering into existing systems.
What trends are you seeing?
The challenge for newcomers is how they stand out from the crowd.
As patient power increases, a particularly strong trend within the NHS is demand for technology which improves health outcomes across an individual’s entire healthcare pathway. This is something that is established in the US and we are now starting to see the trend emerge across the UK. However the big difference in the UK is that patients are used to healthcare being free at the point of care, so the willingness to privately pay for technology options is less pronounced.
You hear a lot about the use of technology to monitor patients remotely. Is this on the rise?
It should be. The UK government has put technology very much at the centre of its healthcare agenda and promises support for emerging technologies which can deliver efficiencies and ultimately the best outcomes for patients. There is an emphasis on wanting to encourage technology and we expect to see a streamlined procurement process and higher growth for companies selling mission-critical technology to the NHS.
What is the M&A market like?
Private equity remains very interested in the healthcare IT market and we have seen a number of secondary and tertiary buy-outs in recent times with equity investors matching bids from corporates.
One driver for private equity, and something that is particularly attractive, is that more and more UK healthcare businesses are exporting their solutions to the likes of the US so there can be strong international growth opportunities.
Private equity likes technology businesses which can deliver scalability and growth, and which have an exciting roadmap for new markets.
What have been some notable public sector focused deals over the past year?
A standout transaction was software provider Advanced acquiring Docman, an electronic document management, workflow and information sharing platform provider. Advanced has been a recognised supplier to the NHS for more than 20 years and has been developing products in partnership with NHS England, such as the virtual health assistant app Ask NHS. Another notable public sector deal saw the Irish group Clanwilliam acquire clinical speech services and software specialist Dictate IT. In terms of private equity interest, a notable deal saw TA Associates investing in Datix, a specialty healthcare patient safety software provider.
And some notable pharma deals?
Syneos Health, Inc. a biopharmaceutical solutions organisation, acquired Kinapse, an advisory and operational solutions provider to the global life sciences industry. And ProPharma Group acquired Xendo, a Netherlands-based provider of compliance consulting, engineering and technical support to the biopharmaceutical, medical device and healthcare industries.
What are the prospects for M&A in the year ahead?
They are very strong and this remains an exciting sector to be in. A lot of players are growing fast and are now reaching a size where they are coming onto the radar of mid-market corporate finance boutiques and private equity houses.
Finally, what other trends might we see?
The big tech companies are increasingly entering the healthcare space and this is something to keep an eye on. It will be really important for big tech to fully understand the market and the issues they are trying to address. Often the most intuitive and easily assimilated tech solutions come from people working on the ground in the healthcare environment, so if you are coming at this lacking an operational perspective it might not always work.
Understanding how to get the best solutions into the NHS takes a lot of knowledge and experience of the sector. You have to be able to speak the language.