Israel's role in the future of health

Israel’s role in the future of health

The Israeli health technology market has come into its own. According to Crunchbase, over 1,400 health care companies call Israel their home. Many of these are companies that create products and solutions to address well-being and care delivery, from wearable digital devices to open, secure data and interoperable platforms.

Although Israel has long been known as an innovation hub, health tech has emerged as a hotspot in recent years. What’s behind this growth, and how does it tie back to the health tech market in the United States? Let’s find out.

A resilient sector

To some extent, Israel’s health tech sector is simply part of a global phenomenon. Grand View Research estimates that by 2030, digital health will be a $1.5 trillion market worldwide, with the largest share coming from North America.

That projection might seem optimistic at first, considering health tech venture funding in the US declined last year. But it was still higher than in 2020, as the following chart shows.

Source: Deloitte analysis of PitchBook Health Tech Funding Database

Note: Data for deals US$2 million and above

?Meanwhile, the median health tech deal fetched a valuation of more than $57 million in 2022, higher than the 2021 median of $33.9 million.

The upshot is that the sector continues to show strong signs of growth. It’s likely that 2021 was an outlier in terms of venture funding, coming off a significant shift to telehealth following the COVID-19 outbreak. Now many of the emerging growth companies landing large investments are what we’d characterize as platform ecosystems.

An innovation powerhouse

This brings us back to Israel, which is a key supplier of innovation to the health tech world. A strong economy, an educated workforce, and government support have contributed to Israel’s reputation as a nation of entrepreneurs. For their part, many of the US-based multinationals that have ventured into health tech—including technology and pharmaceutical companies—have research and development centers in Israel.

As in the US, platform ecosystems are a key trend on the Israeli health tech scene. These include software-as-a-service offerings to enable administrative simplification, wearables, smart devices to help with remote patient monitoring, engagement with electronic medical records, and more.

Matching innovators with investors

All of the aforementioned are late-stage funded companies aligned with platform-enabled?ecosystems. In the US, late-stage companies are seeing more funding than early-stage companies. But in Israel, later-stage investments have dipped , making it harder for companies with a proven value proposition to get the cash they need to scale.?

?That’s where Deloitte Launchpad comes in. Launchpad is an equity-free, seven-week program to help Israeli?innovators expand their operations in the US. That includes access to our network of venture capitalists and help from Deloitte professionals in preparing for due diligence. At the same time, our network gets to tap into the technologies that are coming out of Israel.

Applicants should have a venture-backed product with active traction in the market and an established customer base. We also look for annual recurring revenue of at least $500,000, positive year-on-year growth, and a plan to relocate and/or expand to the US within two years.

Participation in Launchpad is competitive because it focuses on Israeli companies that are in the best position to commercialize their innovation in the US. So far, 33 companies have completed the program, raising a total of $383 million.

Shaping the future of health

Health tech innovators are shaping the future of health. And a big part of that future is meeting consumers where they are. With consumers picking up an ever-larger part of the health care tab, technology to help them manage their own care can go a long way toward bending the cost curve.

There’s more about health tech platforms in an upcoming Deloitte Center for Health Solutions report, Trends in Health Tech: Investing in Platform-enabled Ecosystems. This upcoming publication will be based on data analysis of venture capital deals in the health tech space plus interviews with investors and innovators. If you’d like a copy, please let us know.

And if you’d like to continue the discussion about the Israeli health tech market, please let us hear from you—either directly or in the comments.

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