Silicon Valley cognoscenti guesstimate that around $80bn has been invested so far in 29,000 health tech companies across AI, consumer wellness and digital health.
We hear that the four leading health tech companies are worth maybe $20bn, with the next 27 valued at over $10bn. That leaves a long tail of 28,969 companies.
We think that all this new money is likely to distort the market, as start ups with burn rates buy revenue. For example, a leading player in the B2C diagnostic test market in Europe is said to have had sales of €3m in 2017 and losses of €3m.
People in healthcare services say that a similar wave of capital is already distorting the genetics market. One source at a major European lab told us that it was”very difficult” to make money in an environment in which people are desperate to buy sales.
And what remains plain weird is how separate the health tech world remains from the traditional world of health care services. You can go to health tech conferences with thousands of people and never meet a traditional service provider. This separation and siloing reminds of 1999-2000 and the gulf between traditional IT service groups and the hyped world of internet start ups. Will there be a similar reckoning?We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.