Insights

By Brice Thiberville, Partner, Beaumont France

Healthcare in the European Union (EU) has always been a cornerstone of its social and economic framework, ensuring access to quality care for its citizens. However, as we step into 2025, the sector is at a crossroads, with increasingly difficult challenges that demand innovative solutions and robust investment. From digital transformation to aging populations, strategic investments will play a pivotal role in reshaping healthcare in the EU.

At Beaumont Group this past year we have kept a close on eye on the trends in the healthcare industry across the EU, as well as how private investment might impact productivity and innovation in the year ahead.

We had the great honour recently to discuss the outlook for public and private investment in the healthcare industry in Europe with Professor Marc Kitten, Co-Founder of Candesic, a strategic consultancy and visiting Professor of Finance at Imperial College Business School.

Our brief observations on what 2025 holds as well as opportunities for investment in the industry is shared here with commentary from Professor Kitten. In future instalments on the subject, we will dive a bit deeper into specific areas of interest, such as the role of private investment and leadership opportunities in the sector.

The Current Landscape of EU Healthcare

Healthcare systems across the globe are under immense pressure. Aging populations, rising costs of care, and increasing demand for services have led to mounting public deficits. This is particularly evident in the EU, where fiscal constraints are pushing governments to reassess their healthcare investments and spending. In this context, private investment in productivity and innovation is emerging as a vital strategy to alleviate these pressures and ensure the sustainability of healthcare systems for the long term.

With over a quarter of the EU’s population projected to be aged 65 or older by 2030, healthcare systems are seeing an unprecedented rise in chronic illnesses, long-term care needs, and demand for medical services. Adding to these demographic challenges are inflationary pressures and high energy costs that further strain public budgets and investments.

Technological advancements, such as innovations in AI, telemedicine, and biotechnology are reshaping care delivery but require significant funding to scale and integrate. While regulatory changes put increasing pressure on the industry.

Addressing these issues requires both public and private investments to enhance infrastructure, foster innovation, and ensure long-term sustainability. Yet, between 2022 and 2024 there was a noted decrease in public and private investment across the region because of the above pressures on the industry.

In our discussion with Professor Kitten, he shared the challenge faced by private equity and venture capital firms in the market over the last several years. “Private Equity does not like uncertainty. To get beyond this uncertainty we must absorb the changes the EU is experiencing across the healthcare industry and wait until the uncertainty decreases.”

However, the outlook for 2025 and beyond suggests that there is ample opportunity for investment ahead. As Professor Kitten continued, “Those who have not yet invested, there should be plenty of opportunities, but sellers are not ready to pursue transactions just yet.”

The Role of Private Investment

Amid these pressures, private investment emerges as a powerful tool to drive innovation and productivity. Private investors, including venture capital firms, private equity funds, and corporate innovators, are uniquely positioned to drive advancements in healthcare productivity and innovation.

Opportunities include investing in such areas as digital health technologies, like telemedicine, AI-driven diagnostics, and electronic health records. Together, each will streamline and reduce costs. AI can optimize diagnostic processes, reducing the burden on medical professionals. While Telemedicine platforms can improve access to care while lowering overhead costs for healthcare providers.

While private investment in biotech startups is fueling breakthroughs in personalized medicine, gene therapies, and novel drug development.

Investments in Infrastructure modernization and workforce optimization will be critically important in the years ahead, successful outcomes for the healthcare systems themselves as well as patients. Investments in such areas as automation within hospitals and smart clinics, can enhance operational efficiency. Private capital can support the construction and management of these facilities, allowing for scalability and resilience. Additionally, while the workforce in the industry experiences significant shortages of talent, private investment in workforce management tools and training programs can improve scheduling and resource allocation as well as training and upskilling workers to meet the demands of new technologies and treatment protocols.

Balancing Public and Private Roles
Public-Private Partnerships (PPPs) are playing an increasingly important role in addressing the challenges faced by healthcare systems in the European Union (EU). These collaborative agreements between public institutions and private entities leverage the strengths of both sectors to deliver high-quality healthcare services, modernize infrastructure, and promote innovation.

Marc highlighted in our discussion the critical role that informed investment and strategic partnerships can play in advancing and generating innovation plays in the EU healthcare sector.  “In partnering with individual regional governments, private investors play a significant role in the constitution of pan-European operators and healthcare IT providers. Granted, listed groups do that too. Together they contribute to some convergence and efficiencies in the European healthcare landscape.”

As we move into 2025, the alignment between public and private investment in key areas of the healthcare sector will play a critical role in advancing innovation and improving healthcare outcomes across the EU. Opportunities abound. The aging population across the EU presents significant challenges. Key areas of focus include geriatric care, assisted living facilities, home healthcare technologies, and preventative care platforms aimed at managing chronic diseases. These areas address the growing need for innovative solutions to improve the quality of life for an aging demographic.

Additionally, investment in pharmaceutical research and development remains vital for maintaining the EU’s leadership in global drug development. High-priority areas include personalized medicine, advancements in gene and cell therapies, and the development of cutting-edge immunotherapies. These investments are expected to drive innovation and create successful outcomes across the industry.

Digital transformation has become an essential aspect of advancing the EU healthcare industry, with digital tools playing a pivotal role in improving care delivery. Investments in telemedicine, artificial intelligence-based diagnostics, and electronic health records are enabling faster, more efficient, and accessible healthcare solutions.

The health-tech startup ecosystem across the EU is thriving, with digital therapeutics and wearable devices emerging as some of the fastest-growing segments. These areas are expected to attract significant attention and funding from both public sources and private equity and venture capital firms, further accelerating innovation and adoption in the healthcare sector.

Sustainable healthcare infrastructure is increasingly becoming a priority for both healthcare systems and life sciences companies. Investments are being directed toward eco-friendly hospitals, green manufacturing processes, and sustainable supply chains. These initiatives align with the EU Green Deal, which is driving policies to promote sustainability across the industry.

In parallel, healthcare systems are grappling with a growing shortage of skilled professionals. Addressing this challenge requires significant investment in education, training, and technology to support healthcare workers. Innovations such as robotic-assisted surgeries and AI-driven decision-support tools are critical in alleviating workforce burdens while enhancing efficiency and outcomes in care delivery.

As the future of PPPs expands in scaling EU healthcare, we must ask how will all these changes play out in the long term? Where will the public and private funding sources collaborate in the most effective manner to achieve critical objectives? We will touch upon these issues in future instalments in Beaumont Healthcare articles.

Remaining Relevant: The Race to Critical Size

Of course, the EU is not a single homogeneous market. Differences in healthcare systems, reimbursement mechanisms, and patient needs require significant resources and scale to navigate effectively. Global competitors, particularly from the U.S. and Asia, often operate on a significantly larger scale than many of EU-based players. Additionally, advancements in health technologies require significant investment and expertise, making achieving critical size essential for adopting and scaling these innovations.

Faced with American giants in the health field, and potentially future ones from other regions of the world, European players must, for their survival, reach the critical size that will allow them the means to deploy services and solutions internationally. This will be necessary to maintain growth. Of course, we have our champions such as in the pharmaceutical industry — Sanofi, Bayer, Novo Nordisk. Medical imaging is also a mature industry for the EU — Philips, Siemens — as well as the medical device players, but few of them have their roots in Europe.

In short, critical size in the EU healthcare industry is about achieving the necessary scale to operate efficiently, compete effectively with global players, and innovate while delivering high-quality healthcare solutions across our diverse and complex market. And this will require leadership with a new set of skills and ability to guide firms, large and small, into this rapidly evolving paradigm.

The healthcare sector in the EU offers vast opportunities for both public and private investors in 2025 and beyond. Strategic investments in digital health, life sciences, and sustainable infrastructure will not only address current challenges but also pave the way for a resilient and innovative healthcare ecosystem across the European Union.

As the EU navigates these transformative years, the collaboration between governments, investors, and healthcare providers will be key to ensuring that European citizens continue to receive world-class care.

In the next instalment in this series on Healthcare in the European Union we will look more detailed at both scaling and achieving critical size as well as leadership requirements necessary to succeed across the sector.