Table of contents
The healthcare IT market comprises businesses that engage in the development, distribution and integration of different types of software and IT systems for the healthcare sector. We segmented the European market into: (i) healthcare information systems, (ii) communication systems, (iii) business intelligence, (iv) business processes, (v) medical analysis and (vi) multidisciplinary.
The European market is fragmented, with most incumbents acting on a regional level. This is primarily driven by differences in regulatory requirements between European countries. Executives interviewed by Gain.pro expect market consolidation to continue into the foreseeable future. There are two main drivers: (i) a consolidating customer landscape is demanding larger one-stop-shop IT partners and (ii) M&A is an important growth strategy given the often already significant local market shares and organic internationalisation being a less viable option given high entry barriers.
Sponsor-led interest has been high, mainly driven by the market’s favourable macroeconomic drivers, resilience and recurring sales nature, as well as players’ high bottom-line margins, cash generative capacity and customer switching costs. Where public healthcare IT providers trade at an average LTM EV/EBITDA multiple of ~22.2x (mid-2021), add-ons are typically valued at ~8-10x EBITDA (interview by Gain.pro).
ESG topics primarily relate to potential social and governance issues. As data breaches are becoming more prevalent, healthcare IT providers need to invest heavily in cybersecurity to adequately address potential breaches. From a social perspective, healthcare IT systems are mission-critical for patient health and are improving efficiency in the healthcare system. As such, system uptime is of the utmost importance.
EU countries spent on average ~9.9% of GDP on healthcare in 2019 (Eurostat, December 2021), amounting to a total of ~ €1.4tn (The World Bank, May 2022)
Gartner (January 2021) estimates global healthcare IT spending at ~$131.1bn in 2020 and expects it to reach ~$140.0bn by 2021 (+6.8% YoY)
A CEO interviewed by Gain.pro foresees the overall European healthcare IT market growing at ~10-15% YoY in the medium term, while two Benelux executives (interviews by Gain.pro) expect the Benelux and Dutch healthcare IT markets to grow by ~5-10% and ~10-15% YoY respectively, over the next five years
Growing need for healthcare efficiency to be able to serve future demand spikes from increases in longevity and an ageing European population (interviews by Gain.pro; Eurostat, July 2020)
Ever-increasing healthcare spending is outpacing GDP growth in most European countries (World Health Organization, 2021), with IT spending specifically becoming a bigger piece of the healthcare spending pie (interview by Gain.pro)
Lagging digitisation of the healthcare sector (BCG, May 2022) combined with an industry-wide scarcity of medical personnel (European Data Journalism Network, November 2018) will boost digitisation in the medium term (interviews by Gain.pro)
Tightening regulatory requirements to prevent data breaches (e.g. GDPR; Fortune, October 2021) will raise the cost base and complexity of sharing patient information without any revenue upside for incumbents (interviews by Gain.pro)
Poor system interoperability of new IT systems with legacy systems could hamper market growth (interview by Gain.pro), with ~20% of industry insiders reporting they were incapacitated (Deloitte, June 2019)
Widespread shortage of skilled IT personnel in Europe (European Labour Authority, November 2021) will further curb mid-term growth opportunities (interview by Gain.pro)
Read the full report on Gain.pro
Request a 7-day free trial to gain in-depth knowledge on the Healthcare IT industry.
With the full report, you have access to…
Detailed assessments of the market outlook
Insights from c-suite industry executives
A clear overview of all active investors in the industry
An in-depth look into 114 private companies, incl. financials, ownership details and more.
A view on all 564 deals in the industry
ESG assessments with highlighted ESG outperformers
And much more!