Germany: Healthtech & Fintech markets

Today’s article delves into the markets of healthtech and fintech in Germany, as well as opportunities, initiatives, and challenges.

Germany is solidifying its position as a leading hub for startup innovation and investment, not only within Europe but on a global scale. With Europe's largest economy and the combined German-speaking market of DACH boasting over 100 million affluent consumers, it presents an immensely attractive market situated at the core of the European Union. Particularly noteworthy is the emergence of Germany's healthtech industry as a dominant force. Ranking third globally after the United States and Japan, Germany hosts over 270 healthtech companies. Moreover, Germany has spearheaded digital healthcare innovation by implementing the world's first combined regulatory and reimbursement process for digital e-health applications.

The adoption of digital technologies is rapidly increasing, delivering significant benefits to both patients and healthcare providers through innovative apps and tools. Services like unified electronic health records, E-prescriptions, AI-powered virtual assistants for clinicians, teleconsultation, E-triage, and RFID tracking are estimated to generate savings of up to €30 billion. Germany has long been at the forefront of deep tech innovation in Europe. Munich, for instance, serves as the Quantum Valley, fostering collaboration between researchers, industry experts, investors, and the public. Additionally, as the fourth largest fintech market globally, Germany is witnessing substantial investments in this sector, with notable portfolio companies including Unstoppable Finance, Receeve, Afilio, and Upvest.

Notably, Berlin-based Soonicorn Billie recently secured a €100 million Series C funding round. This funding aims to empower small businesses by providing access to working capital through invoice financing, highlighting Germany's commitment to fostering entrepreneurship and economic growth.

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Opportunities:

November 2019 – Digital Care Act (DVG)

In November of the same year, Germany passed the Act to Enhance Healthcare Delivery through Digitalization and Innovation (Digitale-Versorgung-Gesetz – DVG), enabling physicians to prescribe digital health applications (DiGas) that are later eligible for reimbursement by health insurance providers. With over 318,000 health-related mobile apps available and around 200 apps launching daily, the healthtech market presents a lucrative opportunity for developers.

October 2020 – Hospital Future Act (KHZG)

Through the Hospital Future Act, German public hospitals are allocated €4.3 billion for digital health innovation. These funds can be utilized by hospitals to invest in digitization and automation initiatives like patient portals, digital medication management systems, robotics, and advanced medical equipment.

June 2021 – Digital Healthcare and Nursing Care Modernization Act (DVPMG)

DVPMG aims to integrate digital health applications to enhance the quality and accessibility of nursing care, promoting patient autonomy and streamlining processes like telemedicine and electronic documentation. Similar to DiGas, digital nursing services are eligible for reimbursement by health insurance providers. Examples of digital nursing care applications include technology aiding medication adherence, cognitive training apps, and fall risk alarm systems.

Challenges:

Numerous new government-led initiatives and legislation have been introduced to streamline and expedite the advancement of Germany's digital healthcare infrastructure. Nonetheless, several challenges persist. One significant hurdle is the stringent emphasis on personal privacy and data protection among Germans. This presents a direct clash with the fundamental requirements of healthcare apps, which rely on continuous input of personal data to deliver essential functionalities.

Moreover, significant variances in digital literacy levels across various socioeconomic groups create notable obstacles in ensuring equitable access to healthtech throughout the country. Vulnerable populations, such as the economically disadvantaged and elderly, face heightened risks of exclusion despite their greater need for such services. For startups seeking entry into the German market, it is advisable to prioritize enlisting the support of local healthcare experts or investors early on. This approach can provide invaluable access to their expertise and networks, facilitating smoother entry into the German healthcare technology sector.

As we delve into the landscape of healthtech and fintech markets in Germany in 2024, it's evident that both sectors are experiencing rapid growth and evolution. With Germany solidifying its position as a hub for innovation and investment, opportunities abound for startups and investors alike. The implementation of key legislation, such as the Digital Care Act and the Hospital Future Act, underscores the government's commitment to fostering digitalization and innovation within healthcare and finance. However, challenges remain, including navigating strict data privacy regulations and addressing disparities in digital literacy. Nevertheless, with strategic partnerships and a focus on local expertise, startups can unlock the vast potential of these dynamic markets, contributing to Germany's continued advancement in the realms of healthtech and fintech.

References

Scaler8. (2022, January 19). Healthtech in Germany: Progress, Opportunities and Challenges. Retrieved from Scaler8: https://scaler8.com/insights/healthtech-in-germany-progress-opportunities-and-challenges/

Speedinvest. (2024, January 18). German Tech Startups | A Look at Speedinvest's Portfolio in Germany. Retrieved from Speedinvest: https://www.speedinvest.com/blog/german-tech-startups

Yaskevich, V. (2023, May 23). op Healthtech Software Trends To Watch In Germany In 2023-2025. Retrieved from Elinext: https://www.elinext.com/industries/healthcare/trends/healthtech-software-trends-in-germany-2023-2025/