Highlights
- Demographics and stretched budgets are forcing change, with digital health, prevention and self-care shifting from nice-to-haves to necessities.
- Patients are turning into consumers, with younger people raised on wearables and data-sharing taking a more active role in managing their own health – pulling delivery in a more consumer-driven direction.
- Innovation is increasingly coming from private mid-cap health companies addressing unmet need rather than government action.
Powerful demographic trends are increasing demand for healthcare just as innovation, changing consumer behaviour and new technology are transforming delivery. This creates long-term opportunities for those able to adapt.
Healthcare has rarely been straightforward for investors. Regulation is complex, public finances are stretched and the sector has faced real disruption in recent years. The investment environment has changed too, with today’s market placing a much higher premium on selecting the right businesses and building sustainable growth.
Even so, speakers at Inflexion’s inaugural Healthcare Symposium argued the long-term case for healthcare has never been stronger.
Akansha Arya, Partner at Bain & Company and a member of its Private Equity and Healthcare and Life Sciences practices, takes the long view. “We see growth in healthcare as pivotal to the growth that will come over the next 10 to 20 years.”
But picking the right business, and then helping it grow, is crucial.
“We are in a sector with real structural demand, growing expectations and powerful demographic trends,” says keynote speaker Ed Jones, CEO and co-founder of healthcare and life sciences consultancy Newmarket Strategy.
The figures back him up: across the EU, the number of people aged 65 and over is set to climb from around 99 million today to roughly 130 million by 2050, an increase of about 30%. Meanwhile, Europe’s healthcare workforce is already stretched – around 1.2 million doctors, nurses and midwives were lacking in 2022.
Bigger budgets alone won’t fix things. Ed points to Norway, where a report on future healthcare provision concluded the system would “run out of people long before they run out of money”.
Change is necessary, and soon. Digital health, prevention, self-care and new consumer-led models will shift over the next decade from useful add-ons to system-level necessities, according to Ed. Investors will increasingly step in to back these shifts that are often beyond the reach of financially constrained governments.
People are evolving from passive patients to healthcare consumers – and this is promising. GLP-1 weight-loss drugs are a good example: more than a fifth of US households now include a GLP-1 user. Independent estimates suggest up to 4.7 million people in the UK have already accessed weight-loss drugs, almost exclusively through private consumer channels – remarkable in a country used to thinking of healthcare as state-run and free.
“This is incredibly disruptive,” Ed says, suggesting it’s a marked shift from customers in Britain viewing healthcare as a purely state domain.
That shift could extend beyond obesity treatment as younger consumers, who’ve grown up with wearables and data-sharing, become more active managers of their own health rather than passive patients.
That willingness to share data could feed back into clinical decisions and sharpen the evidence for what treatments actually work. Meanwhile, the arrival of oral GLP-1s could accelerate the move towards medicines that are easier for consumers to access and manage themselves – even more so once generics become available.
And the evidence for this drug class is still developing, with early promise in conditions ranging from neurodegenerative and liver diseases to sleep apnoea, COPD and arthritis.
AI could help on a different front – easing pressure on systems that are short on both staff and money, with uses spanning drug discovery, clinical decision support, diagnostics and the dissemination of medical knowledge.
AI therefore has the potential to change not only how healthcare businesses operate, but how care itself is accessed and delivered. “AI readiness varies across healthcare; foundations built now will determine who captures value,” points out Justas Grigalauskas, Partner at Bain & Company.
Innovation alone won’t be enough, though. Governments, regulators and professional bodies still control healthcare access and have historically slowed how quickly innovations are commercialised and reach patients.
Ed is optimistic. He does not expect decades of regulation to disappear, or pricing or market-access pressures to ease, but he is hopeful that institutions will become less restrictive and more flexible as healthcare’s structural challenges mount. He points to the UK’s rapid growth in weight-loss drugs, diagnostics and cataract surgery – all driven by private-sector innovation meeting unmet need, rather than by government intervention.
“The grip of those institutions that have, for generations, arguably played a role at times in slowing the growth of a more consumer-orientated market is definitely dwindling,” Ed says.
Winners will be providers with scale, deep market knowledge and a clear focus on improving outcomes – but they have their work cut out. They will need to navigate regulation, prove genuine patient benefit and commercialise innovation carefully.
It is clear progress is possible, with innovations already improving lives: around half of people diagnosed with cancer now survive for at least 10 years, compared with around a quarter in the 1970s. “The arc of history, especially over the last 20 or 30 years, has been incredibly positive,” Ed says.
Consumers seem to agree – 44% expect healthcare to improve over the next decade, more optimism than for almost any other part of the economy.
For patients and investors alike, the coming decade should usher in positive change.
Structural demand is already baked into everyone’s price. The scarcity is in the business that can convert that demand into repeatable delivery, whether that be evidence that the outcome is better or a route to market that ensures commercial success regardless of policy construct. That is the narrow set of companies we spend our time on.
Ambitious businesses can grow faster with the right capital and expertise, with Inflexion’s flexible funding offering minority or majority capital and access to a sizeable team to accelerate growth. The Inflexion team has significant experience in supporting the growth of a number of healthcare companies of different sizes, including CNX Therapeutics, Ensera, GlobalData Healthcare, Primed, Proteros, Rosemont and Upperton Pharma. All have access to Inflexion’s value acceleration strategies of M&A, digital enhancement, international expansion, talent management, commercial effectiveness, and sustainability.
