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Freshfields MedTech Update Q3

Digitisation is transforming MedTech as increasingly vast amounts of data are processed using AI/machine learning to add value across the healthcare ecosystem. MedTech innovators are rapidly adapting to developments in novel healthcare technology and heightened demand for integrated tech-enabled care, as well as engaging with regulatory authorities as they navigate an evolving patchwork of laws.

Our latest MedTech insights delve further into digital tuck-in acquisitions in MedTech M&A, recent regulatory and political developments in the digital health sector, and the WHO European Region countries’ adoption of its first-ever digital health action plan.

Increased focus on digital tuck-in acquisitions in MedTech M&A

M&A continues to provide growth opportunities for buyers seeking to gain or expand their MedTech capabilities. Much of 2022 has witnessed  tuck-in acquisitions of smaller companies which can be easily integrated into buyers’ existing infrastructure, rather than significantly sized takeovers and mergers.

MedTech acquirors have been particularly focused on: (1) developing digital tools able to generate data and new insights; and (2) investing in digital solutions to connect existing product offerings. We expect the pace of MedTech acquisitions to rise through the end of this year, with increasing consolidation in certain markets, such as digital behavioural health and health IT solutions, as the demand for long-term care continues beyond the COVID-19 pandemic and healthcare data becomes an increasingly valuable asset to key stakeholders across the MedTech industry.

Regulatory and political developments in digital health

As rapid developments in healthcare technology fuel digital health-related innovation, government responses are becoming increasingly important. For example, in the US, federal authorities have launched multiple investigations into telehealth companies prescribing or facilitating the prescription of certain controlled substances, including stimulants.

Despite increased regulatory scrutiny, a recent survey found that many digital health companies selling products targeting the prevention, diagnosis or treatment phases of the care continuum lacked a comprehensive understanding of clinical robustness.

We anticipate greater investment in clinical validation efforts for digital health tools in coming years to increase the likelihood of reimbursement. We also expect to see increased collaboration between digital health companies and regulatory authorities to facilitate the creation of regulatory frameworks better tailored to digital health technologies.

The US Supreme Court’s decision to overturn Roe v. Wade is another change that could impact the digital health sector. Stakeholders across the healthcare system, including digital health innovators, now face an uncertain landscape of evolving and fragmented laws and approaches to women’s health issues.  As 2022 continues, we expect to see broader innovation and conversations around the provision of equitable women’s health, including with respect to maternal mortality and reproductive health, through digital means. 

Adoption of WHO European Region digital health action plan

The WHO European Region’s 53 member states recently adopted a digital health action plan that aims to leverage digital transformation in Europe and central Asia for the promotion of health and well-being across the region.

The plan encourages countries to prioritise advancing digital health literacy to help achieve national health goals, improve health system performance and guide future digital health investments and transformation.

Countries are encouraged to accomplish these goals by increasing health sector salaries, developing future healthcare leaders, improving data gathering and making better use of digital tools. MedTech companies doing business in Europe should evaluate the plan’s impact on their data use and sharing practices, and whether additional funding may become available for business lines aligned with the stated goals. Additionally, innovators may want to consider how the newly adopted action plan aligns with the European Union’s proposed legislation for a European Health Data Space.

We expect MedTech companies to continue to work collaboratively, both with regulatory authorities and with each other. We also anticipate MedTech companies will establish clear digital health governance mechanisms to safeguard data privacy and security, as well as standardised digital health tools and technologies across the region.