NZ Healthtech Grows Despite Challenges

AUCKLAND, 15 AUGUST 2024 – Technology Investment Network with partners Medtech-iQ Aotearoa have today released the third edition of the New Zealand Healthtech Report, quantifying the sector and its key markets, investment, and business spending.

The report, launched at the University of Auckland’s Faculty of Engineering yesterday, includes information on 233 New Zealand healthtech companies and is based on data from TIN’s 2023 national survey of the technology sector.

New Zealand’s healthtech export sector is shown to have more than doubled in the past decade, from $1.27B to $2.62B, and is the country’s second-largest tech vertical behind fintech. Total revenue grew 2.4% or $61m in 2023, below the sector’s five-year CAGR of 7.8%, reflecting a natural adjustment from COVID-level highs.

“After a period of rapid growth, New Zealand healthtech firms are adjusting to a more stable demand environment,” said report author and TIN Head of Research Alex Dickson.

“The pandemic created a high tide of healthtech enthusiasm, fuelling investment, development, and uptake. That tide has now subsided, leaving a tougher landscape of catch-up regulation, integration challenges, and scarcer investment capital.”

“Our healthtech sector is responding from a place of strength. Although total employment and overall profit took a hit in 2023, research and development spending was steady at 12% of total revenue. This hints at a play for longer-term, more sustainable growth.”

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“Globally, healthcare is under immense stress. Established Kiwi firms like Orion Health, Aroa Biosurgery, and AFT Pharmaceuticals, among others, are building a broad spectrum of success, beyond the niche solutions and markets they started in. These senior firms are creating significant reputational and economic benefits for New Zealand.”

“A pain point is the level of investment reaching early-stage companies, which is peanuts compared to the likes of Ireland, Denmark, and the Netherlands. Commercialisation of health products is incredibly capital- and time-intensive, even for the big guys, and $67m for an ecosystem of 200-odd companies is not sustainable.”

Dr Diana Siew, Strategic Partnership Lead, Auckland Bioengineering Institute and Chair, Medtech-iQ Aotearoa Stewardship Group, added:

“Whether founders start in academia or not, they will find that the NZ healthtech ecosystem is really collaborative and connected. Everyone wants to support each other's growth. What these companies really need is more funding and investment: getting healthtech innovations off the ground requires a lot of money and a lot of patience.”

“However, there are some amazing success stories already. New healthtech solutions are emerging from digital twins, physics-based AI, wearable sesnsors, and biomaterials for regenerative medicine. Formus Labs raised significant amounts for their AI surgery planning tool, as did Kitea Health for their brain-implanted pressure sensor. Kitea's technology is a world first: the smallest ever brain implant.”

“Another emerging area is co-designing technologies with communities. There's a global interest in community-led care that prioritises access and equity. Our Māori and Pacific partners can be leaders in the worldwide indigi-healthtech sector.”

Key insights from the Report include:

• The NZ healthtech sector had global revenue of $2.62B in 2023, up 2.4% or $61m on the year prior. Growth in 2023 was below the sector’s five-year compound annual growth rate (CAGR) of 7.8% but reflects a natural adjustment from COVID highs.
• 89% ($2.35B) of sector revenue came from offshore. Exporters continued to find value in North America and Australia, with total earnings of $993m (up 9%) and $205m (up 15%), respectively. This was balanced by negative growth across Europe (down 6%), Asia (down 9%) and New Zealand (down 2%).
• Research and development expenditure was $306m, up $2m and steady at 12% of total revenue, despite total profits falling 16% to $506m overall.
• Total employment stalled in 2022 and reversed in 2023, down 5%. Collectively, companies shed 543 workers, mainly offshore, for a reduced total of 10,134 global staff. Total spending on wages simultaneously rose, up 7% to $1.01B, lifting the average healthtech salary to $99,380.
• Between 2021 and 2023, total investment was $220m from a reported 82 deals. By vertical, Biotech Therapeutic companies were in the lead, securing $56m from 17 deals, followed by Digital Health companies ($50m, 15 deals), and Medical Device companies ($49m, 21 deals). A total of $67m was raised in 2023.

Copies of the 2024 New Zealand Healthtech Report, which is sponsored by Tataki Auckland Unlimited, Callaghan Innovation, Fisher & Paykel Healthcare, Aroa Biosurgery, Enterprise Dunedin, Te Papa Hauora and ChristchurchNZ, will be available for free download at tin100.com.

About Technology Investment Network

Technology Investment Network (TIN) has provided definitive data, insightful analysis, and powerful connections to the New Zealand tech sector since 1999.

About Medtech-iQ

Medtech-iQ Aotearoa is New Zealand's national innovation hub for medical devices and digital health technologies. Spanning the country with four interconnected regional hubs, we connect, engage, advocate and offer insights for MedTech players in the ecosystem.

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