Key Drivers Fueling the Clinical Trial and Life Sciences Technology Sector

New technologies and patient-centered approaches are changing how life sciences companies handle clinical development and product launches. Recently, members of the JM Search Healthcare & Life Sciences practice spent several days interfacing with executives, investors, and advisors from the clinical trial and digital health ecosystem of the 2024 SCOPE Summit. With over 4,000 attendees from 850 different organizations and 27 countries, this annual event presents an opportunity to speak to operators, investors, and industry stakeholders about how they are navigating the current market climate, as well as trends they are seeing and solutions they are deploying in 2024 and beyond.

The clear message is that a patient-centric approach, combined with successful technology application, is driving innovation across the sector. These changes are expected to accelerate product development and improve patient outcomes and there is palpable optimism that these market dynamics will lead to increased private equity deal flow and investment opportunities.

After four stimulating days of in-depth discussion and networking, we’re sharing the top three key themes that are front of mind across the industry:

Person-centered care is driving future tech advancements & innovation  

A notable shift is underway towards a patient-centered paradigm. Companies are increasingly embracing a more holistic approach that places the patient at the center of innovation and aims to improve outcomes and enhance quality of life. This means leveraging technologies like artificial intelligence, wearables, and other innovative tech to empower individuals to actively participate in their care.

However, the rollout of these technologies and associated programs has been a challenge for many companies. The biggest players in the space tend to rely on outdated technology platforms (e.g., cumbersome trial notification systems that hinder patient recruitment), have significant technical debt, and are likely to be displaced by new market entrants. While technological advancements hold promise for enhancing patient care and outcomes, overcoming these challenges is essential for companies to achieve their growth goals.

Adopting new technology is central to the future of clinical research

In the realm of clinical research, real-world evidence (RWE) and artificial intelligence (AI) have emerged as powerful tools to address challenges and transform this field. From streamlining processes to enhancing data analysis, technology is revolutionizing every stage of the research and development process.

When optimized, the technology significantly improves the efficiency and accuracy of clinical trials. From automated medical record review to virtual clinical trial platforms, digital solutions enable remote monitoring, real-time data collection, and improve patient engagement while expediting the research process and reducing costs and logistical burdens. As these AI-based and tech-enabled tools continue to evolve and expand their capabilities, they are poised to shape the future of healthcare and accelerate scientific discovery.

Quality deals at attractive prices continue to be scarce

A prevailing challenge looms in the private equity landscape of life sciences technology: the scarcity of quality deals at attractive prices. Many investors are chasing a limited number of good companies, thus driving up valuations for the most desirable assets. While the demand for innovative healthcare solutions continues, there is limited availability of deals with valuations that meet the demands of both the buyer and seller. This market dynamic resulted in continued light deal flow throughout 2023.

On the positive side, given the large and fragmented nature of the market, PE investors are showing strong interest in multi-specialty site management organizations. These organizations stand out by offering unique platforms, expanding nationally, and forming creative partnerships with independent provider practices. Overall, the prevailing theme has been a reasonable flow of add on acquisitions and secondary transactions, but fewer new platform deals compared to historic trends.

“In the competitive landscape of PE, quality deals are akin to rare gems.  Especially in today’s market, investors must navigate scarcity, chasing after a limited pool of attractive opportunities. Amidst this challenge and given the shortage of qualified clinical trial investigators, multi-specialty site management organizations emerge as bright spots, offering unique platforms and forming innovative partnerships in an ever-evolving market.” – Rick Riegel, Chairman, ActiGraph, Deerfield Agency and Beaconcure

Given the market excitement and growing pressure to transact, we predict an increase in platform transactions occurring in 2024, however it is difficult to tell when this will happen. Good companies are still getting funded at high valuations, so for private equity investors willing to navigate the complexities of the market, the attraction of participating in life sciences technology investing remains high.

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