The Growth & Future of the MedTech Industry


UK and Ireland ride wave of MedTech and Life Sciences growth
Craig Mounser, Practice Leader for MedTech and Life Sciences at Travelers Europe, explains the opportunities and risks in the sector – and shares how the Travelers team and appetite are adapting to meet evolving demands.
As populations live longer, demand is skyrocketing for innovative healthcare solutions, treatments and diagnostic tools that can help people extend their healthy years. The Medical Technology and Life Sciences sector is bigger than ever as a result, with nations around the world pouring investment into research that can help them meet the moment.
The UK is near the top of the pack, trailing behind only the US in budget allocation for health research and development as a percentage of gross domestic product. In 2022, the UK’s business enterprise sector performed £9 billion of pharmaceutical research and development, which represented 18% of all research and development performed by UK businesses that year.[1]
Innovation-friendly region is magnet for investment
The UK, as well as Ireland, have geographical hubs that focus on this sector. Both nations have leading universities and research institutions that partner with the sector to help drive innovation, develop new talent to fuel the workforce, and attract global life sciences companies looking to expand. Indeed, London, Oxford and Cambridge in the UK, as well as Dublin, Cork and Galway in Ireland, are already centres for biotech and medical device companies.
As a result, the MedTech and Life Sciences sector is driving significant investment in the region. In 2021, the sector contributed over £94 billion to the UK economy and employed 280,000 people. Ireland hosts nine of the top 10 global medical device companies and several leading biopharma firms. Twenty percent of employees working in Ireland’s Life Sciences sector are connected to foreign companies.[2]
Setting the stage for future growth
The UK and Ireland want to build on their momentum – and both government and the private sector are working to make that happen. In the UK, the government created Life Sci for Growth, a £650 million investment package aimed at solidifying the UK’s position as a science superpower. The investment will support clinical trials and research, improve the UK Biobank’s capabilities, fund mental health and addiction research, provide manufacturing support, and develop infrastructure. The UK private sector is expanding around needs in MedTech and Life Sciences too, with £2.9 billion in private equity invested in the sector last year.[3]
Ireland has been attractive to the sector too. Its government offers incentives such as a competitive corporate tax rate and a strong regulatory environment, which has made the country a hub for global pharmaceutical, MedTech and biotech companies. There has also been a steady increase in venture capital investment in European life science companies since 2016.[4]
A growing sector generates new risks to manage
It’s an exciting time for MedTech and Life Sciences – and artificial intelligence (AI) and economic growth are fuelling new opportunities. At the same time, these opportunities create risks that organisations must monitor and manage in order to make the most of their prospects.
At Travelers, we’ve been making changes to meet the growing needs of the sector. Our MedTech and Life Sciences appetite has expanded, for one – and we are adjusting and enhancing our offering as well. We’re investing in the growth and knowledge of our MedTech and Life Sciences underwriters so we can continue to be valued partners to clients as their needs change. We’ve also increased the size of our team and plan to expand it further to support the sector’s evolution.
Balancing opportunity and risk
AI will be a game changer in this sector – and it’s a prime example of the opportunity and risk we see. On the one hand, AI promises significant benefits. It can analyse medical images faster and more accurately than humans, which should lead to earlier diagnosis and detection of diseases, as well as more personalised treatment plans. It can help predict the likelihood of patients developing certain conditions based on genetic, environmental and lifestyle factors. This enables preventative care and early intervention, improving outcomes and reducing long-term healthcare costs.
The benefits of AI extend to other areas. Robotic surgical tools can perform highly precise, less invasive surgeries with quicker recovery times and fewer complications. In the background, AI can assist healthcare professionals in making more informed decisions by processing vast amounts of medical literature, research and patient data to recommend the best course of action.
But there are risks to anticipate and mitigate too. Medical AI processes vast amounts of patient data, which raises concerns about data privacy and security. Breaches in medical data could lead to identity theft, misuse and erosion of patient trust in the healthcare system. AI is only as good as the data it is trained on, so if AI algorithms are trained on biased or unrepresentative datasets, they can perpetuate inequalities in healthcare. For instance, AI models trained predominantly on data from certain demographics may not perform as well for underrepresented populations, leading to unequal access to healthcare.
Positioning clients to thrive
On balance, the positives that AI brings to medical technology likely outweigh the negatives. It is poised to support the growth of medical technology by improving diagnostics, treatment, efficiency and drug discovery. However, it will need to be carefully managed to address issues like data security, bias, and regulatory challenges. As populations age and people demand new forms of support to manage their health and quality of life, the careful analysis of benefits and risks in this fast-moving sector will be critical.
Our team at Travelers has been insuring this sector for 40 years and has a history of insuring AI companies. We’ve seen significant change in that time and will continue to follow the developments closely. We’re excited to help clients navigate their challenges so they can be in the strongest-possible position to benefit from their opportunities.
The information provided is for general informational purposes only. It does not, and it is not intended to, provide legal, technical, or other professional advice, nor does it amend, or otherwise affect, the provisions or coverages of any insurance policy issued by Travelers. Travelers does not warrant that adherence to, or compliance with, any recommendations, best practices, checklists, or guidelines will result in a particular outcome. Furthermore, laws, regulations, standards, guidance and codes may change from time to time, and you should always refer to the most current requirements and take specific advice when dealing with specific situations. In no event will Travelers be liable in tort, contract or otherwise to anyone who has access to or uses this information.
Travelers operates through several underwriting entities in the UK and Europe. Please consult your policy documentation or visit the websites below for full information.
Sources
1
https://www.gov.uk/government/publications/life-sciences-sector-data-2024/life-sciences-competitiveness-indicators-2024-summary
2
https://www.idaireland.com/latest-news/insights/ireland-a-global-center-for-life-sciences
3
https://www.gov.uk/government/organisations/office-for-life-sciences#:~:text=Chancellor%20reveals%20life%20sciences%20growth%20package%20to%20fire%20up%20economy&text=A%20%C2%A3650%20million%20war,Hunt%20today%2025%20May%202023.
4
https://www.jll.co.uk/content/dam/jll-com/documents/pdf/research/jll-emea-life-sciences-industry-and-perspective.pdf