International Markets Attracting NHS Start-ups: The Rationale Behind the Expansion

In the rapidly evolving world of start-ups, the traditional approach of gradual growth in a single market before considering expansion is becoming a thing of the past. Instead, start-ups are now adopting a more personalized approach to growth, with a growing number of UK-based companies looking beyond their own shores earlier in their corporate journey.

This shift towards internationalization is reflected in the value of inward life sciences foreign direct investment (FDI) in the UK. In 2021, the estimated value stood at 1.9 billion GBP, placing the UK second only to the USA in this regard.

One partner leading this charge is Yogan Patel, a Partner at MHA, a UK member of Baker Tilly International. MHA, with its extensive network spanning 146 countries, provides valuable market insights that are crucial for navigating the complex regulatory frameworks, intellectual property protection, cultural barriers, and financial and accounting rules that come with internationalization.

The UK's strong health clustering in regions like Cambridge, Leeds, and London has been a significant factor in the success of many start-ups. However, it has also created challenges in other parts of the country, particularly in relation to accessing the NHS.

Start-ups are not only adapting to these challenges but are also evolving from research-led entities to more commercially focused ones. This shift is driven by the demands of internationalization and the need to get innovation into the market as quickly as possible.

The UK's MedTech and Life Sciences industries are reacting to the 2024 Autumn Budget, with start-ups increasingly seeking international funding to fuel their growth. Major sources of this international capital include venture capital firms such as MedTech Impact Partners, Seroba, and TCP Health Ventures, which focus on early-stage investments and have substantial assets under management.

Corporate VC arms like Bayer G4A, P&G Ventures, and Roche Ventures, along with health-focused funds like the Wellcome Trust and NIH Office of Women's Health, also provide significant funding, particularly in related sectors like FemTech and diagnostics.

The NHS, a global brand synonymous with high standards, best-class training, innovation, and more, plays a crucial role in the UK's leadership in medical technology. Many start-ups take an NHS-first approach to growth, leveraging the NHS's reputation and vast patient base to quickly internationalize.

However, the NHS-first strategy is changing, with start-ups and industry leaders recognizing it as a slower route to growth over the last decade. Instead, start-ups are building teams with the necessary experience, expertise, knowledge, and capabilities to adapt to the challenges they face.

Where start-ups lack the necessary experience, they are adopting a strategic approach and seeking expert advice from industry associations and professional services firms. There is also ongoing discussion about ending the trade-off between patient safety and sustainability in the medical field.

An exciting development in this area is an AI diagnostics breakthrough set to transform NHS lung care, demonstrating the potential for innovation and growth in the UK's MedTech and Life Sciences sectors. As start-ups continue to embrace internationalization, the UK's position as a global leader in medical technology is set to strengthen further.