Health Tech M&A poised for consolidation in 2025 – Healthcare Investors
The sector of health tech in the UK is predominantly composed of multiple small entities. However, with the mounting pressures faced by hospitals and clinics, such as workforce shortages and increasing patient demand, and the inflow of NHS spending post-pandemic, the current structure of the market is expected to undergo significant transformation. According to Tom Whicher, CEO of the UK-based patient engagement platform DrDoctor, the NHS requires fewer, larger organizations that can deliver substantial value as opposed to a fragmented ecosystem.
Following the Covid-19 pandemic, NHS buyers are now prioritizing solutions that address specific issues rather than being swayed by trendy technology. This shift signifies the end of the hype cycle, where standalone products often struggle to expand. The October budget announced by the Labour Government, which allocated over £2 billion for NHS technology and digital enhancements to enhance productivity and save staff time, has reignited investor interest, especially in software companies with strong profit margins that exhibit resilience and growth.
DrDoctor, supported by Ananda Impact Ventures, 24Haymarket, and YFM Equity Partners, is dedicated to establishing a platform that revolutionizes healthcare accessibility and delivery. The company received investments of £3 million in a Series A round in 2020 and £10 million in a Series B round in 2023, showcasing its potential in the industry.
In a recent interview with IIH, Tom Whicher discussed the changing landscape of health tech, the likelihood of consolidation, the direction of investment in 2025, and the role DrDoctor will play in the sector’s advancement. When asked about the ripe market for consolidation, Whicher emphasized the significant maturation of the market, with a consolidation phase underway where prominent winners are emerging. Many companies have proven the effectiveness of their technology, but scaling within the NHS poses unique challenges. NHS entities are increasingly leaning towards unified platforms with broad functionality over fragmented solutions, opening up opportunities for collaborations to develop more comprehensive offerings.
Whicher highlighted admin automation as a key area for M&A activity, as integrating multiple functionalities makes sense for both efficiency and user experience. While Electronic Patient Record (EPR) vendors historically led NHS digitization, a new wave of patient-facing applications has surfaced. The current focus is on integrating these technologies across various care settings, including mental health, which is expected to drive a considerable portion of consolidation activity in the future.
