The Rise of Startups in the European Digital Health Ecosystem: Opportunities and Challenges

September 5, 2019
Digital Health Ecosystem

Europe is booming as a startup hub in all things digital. According to Atomico’s State of European Tech report, total investment in European startups reached $23 billion in 2018 – compared to $5 billion in 2013. The figures show that startups are a significant driver of growth, jobs and in particular, better healthcare.

From mHealth to digital therapeutics and AI applications for precision treatment, the digital health startup ecosystem is expanding thanks to startups’ innovative solutions disrupting traditional health systems. Digital health is increasingly becoming part of the mainstream in healthcare. This, in return, is encouraging pharmaceutical companies, research institutions, healthcare professionals and other stakeholders to cooperate with startups.

Startups in digital health and, in particular, digital therapeutics are also reshaping the industry perspective on healthcare by shifting the focus to the patient’s experience. This disruption is also a result of a demand from patients and healthcare providers for more empowerment through technological innovation. According to the 2019 Global Health Care Outlook report by Deloitte, global health care expenditures are expected to continue to rise as spending is projected to increase from USD $7.7 trillion in 2017 to USD $10.06 trillion in 2022. Allowing patients to self-manage the diagnosis and treatment of certain conditions and better doctor-patient coordination is the future of healthcare and startups are key to this change.

Recent examples such as London-based Babylon Health raising $550 million in a Series C funding show that the digital health startup ecosystem in Europe is thriving. Yet many startups struggle in the highly specialised and regulated healthcare sector. Startups need to go through complex clinical and regulatory processes even before entering the market, and many scientific, regulatory and financial hurdles come up in the process of bringing solutions to the intended users – healthcare providers and patients. Recruiting and retaining the right talent, keeping up with regulatory regimes, and difficulty in accessing partnerships or funding can prevent startups from reaching full potential or can push them to look for markets outside Europe.

These challenges are unfortunately not unique to startups in the digital health landscape. There is clear evidence of a desire to build bridges between the tech and policy spheres in Europe. According to the same report by Atomico, the majority of founders, investors and policymakers in Europe agree that European regulation makes it harder to start and scale a tech business and that there should be stronger ties between European tech startups/scaleups and governments.

Startups move and speak differently to traditional providers and this has to be reflected in the approach of governments to regulating digital health. They can do much by themselves with the right team and product in place. Once that is the case, an easier start for startups, safe spaces for innovation – such as regulatory sandboxes – and an increased emphasis on assisting startups when it comes to implementing policies can remove the barriers to digital innovation, particularly in healthcare. More and closer collaboration with partners from health management, industry and research are also essential.

Navigating the policy environment can be complicated and, due to lacking resources, is not always a priority for entrepreneurs. In order to build laws that empower them, startups in the digital health ecosystem in Europe need to have a strong, unified voice vis-à-vis policy and regulation.

Organisations like Allied for Startups DTx can bundle the ambitions and concerns of entrepreneurs. If everyone gives a little push, together there can be a big shove towards a regulatory framework that is flexible enough for startups to inject the innovation that can bring healthcare improvements to millions.

This article was originally written for Frontiers Health 2019 and was published on their webpage