x

European Health & Biotech

2021 half-year update

1 July 2021
 Today’s data will
be available on
health.dealroom.co
Table of contents.

1 Healthcare shifting gears

2 Investment in European Health & Biotech

3 Investor landscape
1 Healthcare shifting gears
Healthcare is one of the largest spending categories for households. But almost all
spending is indirect (insurance & tax). Consumer influence is limited, but growing.

(1)
Monthly household expenditure in Europe
$300

> 80% Gov’t & insurers

Consumers:
<20% out-of-pocket payments and
$50 $83 $83 $100 $200 $283 voluntary insurance (growing!)

Media Holidays Energy Fashion Groceries Mobility Health

Page / 5 1. Dealroom analysis of Eurostat and OECD data. Chart Inspired by LocalGlobe presentation.
 In healthcare, it’s the insurers and governments (“payers”) that hold the power.
They want to control costs and improve outcomes — an opportunity for tech.

Spending Funding
$8 trillion $8 trillion
Biopharma wants to find
treatments for big markets and
bring down cost of discovering
Biopharma
new drugs. Payers want to control costs
and improve outcomes. In
order to achieve this they need
Payers data transparency to follow the
(insurers, governments) patient journey, have
Providers want to align Reimbursement predictability and be able to
themselves more closely with measure the ROI of
payers. Providers interventions.
(health professionals,
Professionals want to increase hospitals)
their productivity and reduce
burnout due to admin (1).
Consumers want better
healthcare and expect it to be
Consumers more like other consumer
products.

Source: Dealroom analysis of data from OECD, Eurostat, CMS, WHO.

Page / 6
1. According to Medscape, administration is the main cause of physician burnout.
In Europe, government and insurers have the power. In the USA, employers play an
important role and they can adopt innovation much more easily.

▉ Consumers (out-of-pocket) and other

s
nd
▉ Compulsory insurance

y
la

en
an
▉ Government schemes

er
ce

ed
n
m
th
an

ai
A

Sw

UK
Ne
US

Ge

Sp
Fr
$3.9T $0.3T $0.1T $0.4T $0.1T $0.1T $0.3T

10% 17% 16% 16%

19%
USA 21% Europe
29%
78% 78%
In the US, employers play a big role 75% In Europe, governments, private
in private insurance. Those 34% insurers and regulators have the
employers want to control their 4% power together. They want to control
healthcare premiums. This means costs, but coordination is required to
startups can go to market by striking 16.9
get things done. This means
deals with corporates; even with a Private insurers significant time between when a
product that does not yet have (for profit, State provided technology is accepted by regulators,
regulated) healthcare
clinical evidence. An example is 56% when it is adapted in the healthcare
Medicare,
Livongo. medicaid,
other
system and when innovators are able
to generate revenue.
5% 6% 6% 67% 84% 79%

Page / 7 Source: Dealroom analysis of data from OECD, Eurostat, CMS, WHO.
 More state influence Less state influence
Governments and regulators are
increasingly putting incentives in place to
improve outcomes and reduce costs - State is provider of
healthcare
Private for-profit
providers
Private for-profit
providers
Regulated, private
for profit insurance
a huge opportunity for tech companies. State financed Compulsory
and providers
insurance

Germany Sweden

Digital Healthcare Act adopted in 2019 to Integrated electronic health record

support digital health innovation
€500 incentive for startup video
consultations
First country to cover prescribed apps:
Kalmeda (tinnitus), Velibra (anxiety)
solutions (EHRs) and e-prescriptions in
Sweden’s 21 regions since 2018
Teleconsultation reimbursed since
2016, enabling startups (KRY, Min
Doktor, Doktor.se)

UK France

NHSX Innovation Accelerator and Online diagnosis & treatment since

$330M AI in health investment pledged 2018

Central digital records locator and Cross-border treatment: EU doctors

booking app teleconsulting patients in France

Video consultation available through KRY (Livi) and Doctolib market leaders
every doctor’s surgery in French telemedicine

Page / 8 Source: Dealroom.co. Classification according to Boehm model. Adapted by Dealroom.

Covid-19 accelerated telehealth across the continent.

Page / 9
Covid-19 was merely a catalyst for underlying trends that were already long
underway. The more meaningful shift will occur in the next two years and beyond.

Healthtech
impact Industry-wide
shifts

Some new regulations made permanent

Covid-19 and its Providers need to align with payers more than
second-order effects ever: more focus on value-based care

Regulations around virtual care loosened Consumers expecting increased virtual care

Leading up to 2020 Trust in virtual care increased Large amounts of late-stage venture capital

Payers pushing for value-based care The US finalized new rules around data
interoperability
Growing number of connected devices/IoHT
Tech’s been proven in battle (e.g. mRNA)
Accelerations in AI, NLP, DNA sequencing,
editing, digital therapeutics

Digitally native population

Time

Page / 10 Source: Dealroom.co

 Healthcare is only a 10-20% contributing factor to quality and length
of life. Tech can play a supporting role across all four factors.
40%+

30%+
10-20%

10%+

Social economic Behavior Healthcare Environment

Education Smoking Access to care Air & water quality
Tech Employment Diet & exercise Quality of care Housing & transit
Income Alcohol & drugs
Family & social support Sexual activity
Community safety

Source: County Health Rankings. Ranges added by Dealroom to reflect other studies.
Page / 11
 The holy grail for healthcare = prevention and early detection. This
paradigm shift has been long in the making, now accelerated by tech.

█ Prevention & well-being 18%

61%

█ Care and treatment

83%
Deloitte
39% estimate

2019 2040E

Page / 12 Source: Deloitte.

2 European Health & Biotech investment
 Investment in European healthtech grew 2.6x, hitting €4.9B in the first
half of 2021.
VC investment in European healthtech startups » view online Top rounds in 2021
€4.9B
€5.0B

2.6x ▊ Megarounds plus €250M+

€4.0B
$600M Series D $525M Series D $312M Series D

▊ Megarounds €100–€250m
€3.0B

€2.0B £195M Series H $245M Series D €185M Series D

€2.0B €1.9B ▊ Series C €40–€100m
€1.7B
€1.5B
€1.4B
€1.2B
€0.9B ▊ Series B €15M-€40M
€1.0B €0.8B €0.8B €0.8B
$130M Series C $115M Series C $104M Series E
▊ Series A €4M-€15M
▊ Seed €1M-€4M
▊ Pre-seed €0M-€1M
H1 H1 H1 H1 H1 H1
2016 2017 2018 2019 2020 2021

Page / 14 Source: Dealroom.co.

European Healthtech companies are now worth €50 billion.

Combined enterprise value of European healthtech startups Most valuable European healthtech companies

€49.7B
€50.0B

Nanopore DNA
Drug discovery with AI Drug discovery with AI
sequencer
€40.0B
▊ Unicorn
€800M+
€29.9B
€30.0B
€25.3B
Digital care Digital care Health insurance
▊ Future Unicorn
€20.0B €17.4B €200M-€800M
€12.7B
€10.0B
€9.4B
▊ €0M-€200M
Psilocybin therapy Health insurance Digital care

2016 2017 2018 2019 2020 Today

Source: Dealroom.co and Google Finance.

Page / 15
Note: Sum of the valuations of all startups founded after 2000. Using estimated valuations based on most recent VC rounds, public markets and publicly disclosed valuations as of June 30th, 2021.
 Investment in European biotech is also on a record level.
VC investment in European biotech startups » view online Top rounds in 2021

€3.0B €2.9B
1.4x
€2.6B
▊ Megarounds plus €250M+

▊ Megarounds €100–€250m
$250M Series A €160M Series A $168M Series B
€2.1B
€2.0B
€2.0B

€1.6B

€1.4B
€1.3B ▊ Series C €40–€100m $157M Series D $148M Series C €127M Series B
€1.2B

€1.0B
€0.9B
€0.8B
€0.7B

▊ Series B €15M-€40M $125M Series B $110M Series C $92M Series C

▊ Series A €4M-€15M
▊ Seed €1M-€4M
▊ Pre-seed €0M-€1M
H1 H1 H1 H1 H1 H1
2016 2017 2018 2019 2020 2021

Page / 16 Source: Dealroom.co.

Europe’s Healthtech & Biotech companies are now worth €231 billion.

€231B
Combined enterprise value of European
healthtech & biotech startups created
€166B
since 2000

€181B
▊ Biotech = 78%
€115B €136B

€93B
€68B €90B

€51B €75B

€42B
€55B
€50B ▊ Digital health = 22%
€30B
€17B €25B
€9.4B €13B
2016 2017 2018 2019 2020 Today

Source: Dealroom.co and Google Finance.

Page / 17
Note: Sum of the valuations of all startups founded after 2000. Using estimated valuations based on most recent VC rounds, public markets and publicly disclosed valuations as of June 24th, 2021.
The top 10 most valuable European Biotech companies represent 65% of
the value.

€46B Top 10 European Biotech companies founded after 2000

€22B

€13B
€10B
€7.8B €7.3B €7.0B
€4.3B
€2.6B €2.0B

mRNA mRNA Autoimmune Gene editing Endocrinology Drug discovery Hematology Nanomedicine Cell therapies Psychedelic drugs
applications applications diseases diseases medicines

Source: Dealroom.co and Google Finance.

Page / 18
Note: Sum of the valuations of all startups founded after 2000. Using estimated valuations based on most recent VC rounds, public markets and publicly disclosed valuations as of May 3rd, 2021.
Most global VC investment activity and value creation has been in the engagement
layer: building new user experiences.
Combined enterprise value
of companies founded since
2000 by segment and
innovation layer R&D layer Intelligence layer Infrastructure layer Engagement layer

$90B
Digital care incl telemedicine

Professionals
$5B
Practice management

<$10B $25B
Providers Surgical robots Continuous remote monitoring

<$10B <$10B
AI decision support $15B Home tests
Hospital operations
$90B Digital pharmacies
$45B
Biopharma AI-first drug discovery $10B
Digital therapeutics
$10B
Software for clinical trials

$40B
Payers Digital health insurance

Page / 19 Source for valuations: Dealroom.co analysis of private and public valuations.
 B2C has been scaling faster. B2B takes longer to unlock, but is at least as big an
opportunity.
Enterprise value
$4.0B

$3.5B

$3.0B
Patient-facing
$2.5B
Monetized via deals
with payers and/or
$2.0B
reimbursement
systems.
$1.5B

$1.0B

$0.5B

Provider-facing

2005 2010 2015 2020

Page / 20 Source: Dealroom.co.

3 Investor landscape
European Healthtech & Biotech investors.
European funds U.S. / Asian European funds European funds
Sector agnostic with dedicated funds active in with dedicated that do biotech
European funds Healthtech focus Europe Biotech focus and healthtech

Series B+

Series A

Seed

Page / 22 Source: Dealroom.co. Not exhaustive. Funds selected based on number of investments in Healthtech and (future) unicorns.
 US investors account for nearly half of investment in European health & biotech
startups.

Investment in European healthtech startups by source of capital Investment in European biotech startups by source of capital

3% 2% 6% 5% Unknown HQ 2% 7% Unknown HQ
3% 4% 4%
10% 2% 2% RoW 9% 5% 1% RoW
15% 10%
11% 8% 21% 5%
12% Asia 18%
11% Asia
25%
9% 16% 12% 26%
36%
29% 27%
19% USA 42% USA
27%
19% 36%
28%
45%
32% 24%

21% European
24%
cross-border European
23% 15%
cross-border
56% 54% 51% 15%
43% 44%
42%
32% 38%
Domestic 31% Domestic
27% 30%
18%

2016 2017 2018 2019 2020 2021YTD 2016 2017 2018 2019 2020 2021YTD

Page / 23 Source: Dealroom.co.

 VCs are the main contributors in funding for European healthtech and biotech
startups.

Investment in European healthtech startups by source of capital Investment in European biotech startups by source of capital

3% 6%
9% 12% 9%
19% 15% 16%
20% 22% Other 22% 22% Other
7% 8%
3% 10% 30% 22%
8% 7%
6%
18%
3% 6% 15% 11% 11% Corporate
14% Corporate 13%
7%
2% 5% 5% Corporate VC
5% Corporate VC 6%
6%

81%
77%
72% 70%
64% 67% 66%
60% 62% 62%
60% 58% Venture Capital
Venture Capital

2016 2017 2018 2019 2020 2021YTD 2016 2017 2018 2019 2020 2021YTD

Page / 24 Source: Dealroom.co.

 Exciting things are happening at the intersection of Health & Biotech.

Healthtech Biopharma
Software Biochemical formulas
Accelerating clinical trials. Establishing efficacy
Digital therapeutics: software is the
earlier (e.g. in phase II with 100-200 patients vs.
treatment, requiring clinical
validation in trial and demonstrating Phase III with 1,000 patients)
cost effectiveness in studies

General AI which solved a major

protein folding challenge (AlphaFold) Better insights in patients beyond the
potentially enabling a step change in clinical trial phases, improving
drug discovery transparency towards payers

Acceleration of drug discovery

Improving patient selection, thereby reducing the
using AI identifying new
targets, mutations, etc need for large patient cohorts
✔ Better alignment between biopharma, providers, payers
✔ Faster development of treatments
✔ Better data on (cost) effectiveness

Page / 25 Source: Dealroom.co.

Graduation rates of Biotech startups are higher initially, and then fall in line with
Healthtech and the broader market.
Graduation rates between rounds
▊ Biotech ▊ Deeptech ▊ Healthtech ▊ Other startups
36%
32%

28%
24%

15% 15%
12% 12%

6% 5% 6%
4%

Seed round 2nd round 3rd round 4th round

Page / 26 Source: Dealroom.co.

It takes (a bit) more time and capital to build a healthtech and biotech startup.

Time between rounds and amounts raised

▊ Deep tech ▊ Tech startups ▊ Biotech ▊ Healthtech

45 Round 2 means the round after 5 Deep tech

seed round (considered first) 4
40 5 Healthtech
For tech startups, the first 5 Tech
Round size in $M (median)

35
follow-on round over $4M 4
happens 1.5 years after seed
30 round but for biotech and
healthtech, 2.2 and 2.6 years, 5 Biotech
25 respectively. 3

20 4
3 4

15
3 3
10
2 2
2
5 2

2 3 4 5 6 7 8
years years
Years since Seed round (median)
Page / 27 Source: Dealroom.
Convergence of Bio & Healthtech bodes well for hubs that are strong in both.

Biotech clusters
(startups, investors, academia)

Basel, Leiden, Cambridge, Oxford,

Lausanne, Dublin London, Munich

Paris, Stockholm,
Berlin, Barcelona,
Zurich
Healthtech
Clusters (startups,
investors, academia)

Page / 28 Source: Dealroom.co.

European healthtech: 13 unicorns and 40 future unicorns (57% in UK+France).

European Healthtech unicorns and future unicorns

Unicorns Future Unicorns

United Kingdom 7 13 20
France 3 7 10
Germany 1 5 6

Switzerland 1 4 5
Belgium 3 3
Sweden 1 1 2

Ireland 2 2

Netherlands 1 1
Poland 1 1

Russia 1 1
Spain 1 1

Finland 1 1

Page / 29 Source: Dealroom.co.

European biotech: 31 unicorns and 51 future unicorns (40% UK+France).

European Biotech unicorns and future unicorns

Unicorns Future Unicorns

United Kingdom 8 16 24
France 1 9 10
Germany 4 5 9

Switzerland 5 4 9
Denmark 3 5 8

Netherlands 4 3 7

Belgium 3 4 7

Ireland 3 3
Sweden 2 2

Spain 1 1

Italy 1 1

Iceland 1 1

Page / 30 Source: Dealroom.co.

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