The changing face of healthcare investment

14th September 2021

Opinion editorial by Dawn Bell, EIT Health Gold Track Expert Council Member. 

While the COVID-19 pandemic brought many challenges for healthcare and healthcare businesses, it accelerated bio and health tech investments and healthcare technology adoption significantly. The unprecedented global collaborative effort to find treatments and vaccines for COVID-19 pumped generous amounts of capital into the ecosystem, and highlighted the importance of bio and health tech to the global economy. The economic impact of lockdowns on most other industries coupled with the longest bull market in biotech history prior to the pandemic, sent growth seeking generalist investors flocking to bio and health tech in record numbers. And for the most part, they are still here.

Perhaps this is because the pandemic put into stark reality how pivotal healthcare is to society, focusing the minds of governments and investors alike on the need for science in returning us all to normalcy. Or perhaps the pandemic merely highlighted the accelerating progress already underway in the biotech industry due to better tools, more access to data and increased computing power. And no doubt, the pandemic’s direct reliance on health technology during COVID-19 accelerated investment in that sector. Whatever the reasons, biopharma companies raised $7.1B in the first quarter of 2021, eclipsing the previous three month record by $3B.1 Chief investment officers everywhere are being encouraged to invest in healthcare and biotech, with pension funds even doing direct investments. We have also seen biotech venture capital firms raise record-setting funds, some more than $1B.2,3

While drug development is still plagued by Eroom’s law 4 new modalities like gene therapy, cell therapy, gene editing and the like hold the promise of curing diseases that were once untreatable. The “hacking biology” movement is here, applying an “engineering-like” mindset to biology, drug and device development. Even prior to the pandemic, there was increasing interest in engineering approaches to drug discovery with more and more traditional technology investors entering the biotech sphere. Often these investors gravitate towards drug discovery companies with a strong computational or in-silico focus, companies founded on a strong computational core that use machine learning and artificial intelligence to identify promising new targets, design molecules or predict protein binding prior to doing physical experiments. The promise of in-silico based drug discovery methods is that these machine-based tools will not only decrease the time it takes to find new molecules, but that the algorithms can better predict which molecules will be safe and effective in humans. Although several in-silico firms now have compounds in the clinic, the promise of in-silico discovered molecules is still unproven.  While pre-clinical timelines can be shortened, it is still not known if these methods will result in a higher probability of clinical success. Considering the cost of bringing a successful medicine to market is in excess of $2B5 when the cost of failure is factored in, the potential benefit of improved prediction is massive. Only time will tell if these methods will bear fruit, but investors seem to be more and more bullish on these technologies.

Just prior to the start of the pandemic, Schrodinger, a physics-based computational chemistry company, went public at a $1.1B valuation and is trading now at a valuation of just over $4B. 6 Biotech VC backed Relay (Third Rock Ventures) and TechBio VC backed Recursion (Lux Capital and DCVC), went public during the pandemic both with unicorn+ valuations.7,8  We’ve seen massive private raises as well including Daphne Kholer’s InSitro (>$600M)9 and UK-based Exscientia (up to $525M).10

The pandemic also launched the new modality of mRNA into the limelight and Moderna and BioNTech into the rarified heights of the 100+ billion dollar market cap companies.11  Investment in myriad RNA technologies is now flooding into the ecosystem as mRNA showed its value in infectious disease vaccine development. While mRNA also has the promise to deliver therapeutics beyond COVID, such as cancer and autoimmune diseases, we are seeing numerous investments in other RNA-based technologies as well including siRNA, microRNA, and RNA editing.

Investment in health tech accelerated due to increasing adoption of telehealth and other digital solutions in response to the COVID-19 pandemic. In 2020, investors poured $21.6B into health tech companies, nearly 4-fold the investment made in 2016.12  In just the first half of 2021, investors sunk $15B into 372 health tech deals—more deals than were done in the entirety of 2020. Telehealth alone accounted for $5B in investment in the second quarter of 2021, double the amount raised during the same time period last year,13 with six telehealth companies now reaching unicorn status. The pandemic also created a regulatory environment conducive to the use of digital tools in both healthcare delivery and clinical trials. Decentralised clinical trials and other innovations in the clinical trial landscape have become mainstream, with firms such as THREAD and Medable raising large Series C rounds ($50M 14 and $170M15, and Science 37 going public via SPAC to become the next health tech unicorn.16

The tragedy of the COVID-19 pandemic was a wake-up call for society of the importance of bio and health tech to the health and prosperity of the world. Rather than slowing down investments in the sector as we saw in other industries, the pandemic has accelerated investment in an already frothy biotech ecosystem and turbo charged health tech market investing as well. While initial enthusiasm has waned somewhat, the NASDAQ biotech index continues to trade at near record level highs with no signs or major slowing.

  1. Evaluate. 2021. Biotech venture financing starts the year with a bang. [online] Available at: [Accessed 10 September 2021].

  2. Tech Crunch. 2020. Flagship Pioneering raises $1.1 billion to spend on sustainability and health-focused biotech [online] Available at: [Accessed 10 September 2021].

  3. Biz Journals. 2021. VC funding update: Boston startups and tech firms raised $3.5B in January. [online] Available at: [Accessed 10 September 2021].

  4. Nature Reviews Drug Discovery. 2020. Breaking Eroom’s Law. [online] Available at: [Accessed 10 September 2021].

  5. Science Direct. 2016. Innovation in the pharmaceutical industry: New estimates of R&D costs [online] Available at: [Accessed 10 September 2021].

  6. Companies Market.2021. Cap Market capitalization of Schrödinger (SDGR) [online] Available at: [Accessed 10 September 2021].

  7. Relay Therapeutics 2021. Relay Therapeutics Announces Closing of Initial Public Offering and Full Exercise of Underwriters’ Option to Purchase Additional Shares [online] Available at:  [Accessed 10 September 2021].

  8. Recursion. 2021. Recursion Pharmaceuticals Announces Closing of Initial Public Offering [online] Available at:, [Accessed 10 September 2021].

  9. Business Wire. 2020 Insitro Announces $143 Million Raised in Series B Financing. 2020.  [online] Available at:  [Accessed 10 September 2021].

  10. Business Wire. 2021. Exscientia Announces Investment of up to $525M. [online] Available at: [Accessed 10 September 2021].

  11. Nadaq. 2021 Moderna, Inc. Common Stock [online] Available at: and [Accessed 10 September 2021].

  12. Deloitte 2021 insurance. 2021. M&A outlook [online] Available at: [Accessed 10 September 2021].

  13. Alliance for Connected Care. 2021. State Of Telehealth Q2’21 Report: Investment & Sector Trends To Watch [online] Available at: [Accessed 10 September 2021].

  14. Cision. 2020. THREAD Accelerates Expansion to Advance Global Decentralized Clinical Trials. [online] Available at: [Accessed 10 September 2021].

  15. Crunchbase. 2021. Medable Secures $78M Series C Extension To Scale Digital Clinical Trials Program [online] Available at: [Accessed 10 September 2021].

  16. Science37. 2021. Science 37® to Become Publicly Listed via Merger with LifeSci Acquisition II Corp., Powering the Clinical Trial Operating System of the Future [online] Available at:;-sup-to-Become-Publicly-Listed-via-Merger-with-LifeSci-Acquisition-II-Corp-,-P [Accessed 10 September 2021].