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FemTech - the next disruptive force in healthcare transformation?

Cath Everett Profile picture for user catheverett March 30, 2022
Summary:
FemTech is perceived to be a new market with great potential, but it also has a number of hurdles to jump before it can really take off. So can it make it?

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While FemTech may be the new kid on the block in terms of digital investment categories, it experienced a “breakout” year in 2021, with global venture capital investment surpassing $1 billion for the first time, according to PitchBook .

The sector, which is a subcategory of HealthTech, currently consists of around 821 companies. While it generated sales of more than $820 million in 2019, the private capital markets data and research firm expects this figure to hit $3 billion by the end of 2030.

A report by McKinsey & Co called ‘The Dawn of the FemTech revolution”  is equally upbeat. Although FemTech still accounts for only a tiny share of total funding for the wider digital health market at 3%, the management consultancy believes the opportunities it presents “are becoming increasingly evident”.

The sector has to date (according to PitchBook) focused on developing products in four areas: general health and wellness; healthcare and diagnostics; reproductive health, and pregnancy and family care. But as Professor Nora Colton, Director of UCL’s Global Business School for Health, points out:

FemTech is mostly used for matters related to menstrual cycles, fertility, and pregnancy – reproductive health is where the market is currently, particularly in high-income countries. These areas will continue to grow particularly as healthcare expands in low- and middle-income countries. There will also be opportunities in places like Europe to see an expansion of FemTech products that serve needs around menopause and other age-related female health needs.

Such opportunities are coming about now, Colton explains, because FemTech has been “riding on two waves” over the last couple of years:

One is that digital health solutions and innovation have increased exponentially since the start of the COVID-19 pandemic, and all the signs are there it will keep expanding to help meet access, and unmet population, needs for healthcare. Consumers are also much more aware of their health, especially in terms of preventing poor outcomes, so more people are looking for consumer devices to help self-manage it. Secondly, there’s an increased awareness that women’s healthcare has been excluded from much of the research and development in the health space, and this historical error needs correcting.

The importance of labels

What truly kick-started the market initially, however, was giving the technology its own label - even if it is deemed to be somewhat lacking in terms of inclusiveness. As Colton explains:

Although the FemTech sector has a range of apps and tech products that cater to female biological needs, there’s also an argument to be made that as we move to a non-binary world view to address the healthcare needs of everyone within society, the idea that FemTech is for females may not represent all those who might want to use and/or benefit from it.

But whether people like the term or not, it was not until Ida Tin, who founded menstruation tracking app provider Clue, coined it in 2016 that things really started happening. Karina Vazirova, co-founder of accelerator FemTech Lab, explains the rationale:

The term offers something for people to rally around, which makes it easier to get investment from venture capitalists (VCs) etc because it gives the concept power and weight. The VC space kicked off when FemTech was coined and all the attention and buzz was due to that.

And according to McKinsey’s report, we really ain’t seen nothing yet, not least because the sector is a nascent one, which to date consists mainly of start-ups. As the study says:

This is clearly and promisingly, only the beginning of what FemTech can address. There are still significant white spaces.

A sector with potential

In fact, the management consultancy believes the market has the potential to significantly disrupt women’s healthcare in a number of areas, with some initial breakthroughs already being witnessed.

As examples, it cites virtual clinics (Tia) and direct-to-consumer prescription delivery services (The Pill Club), which are enabling women to “access care in a more convenient, consumer-centric manner”. Wearable trackers (Bloomlife) and at-home diagnostics (Modern Fertility) are likewise helping them to take more control of their health and related data.

But the report also indicates that the sector is showing its first signs of maturity:

The categories in which FemTech is having an impact are increasing – and also in some cases, starting to evolve, overlap and redefine themselves as FemTech companies begin to scale up and seek new ways to expand…Looking forward, early movers can stake out opportunities in prominent white spaces, including by leveraging technology to address women’s health issues beyond reproduction, and by helping to meet the needs of underserved populations, such as low-income and minority communities. FemTech also presents significant partnership opportunities for legacy players in traditional sectors.

Will Gibbs, Principal of venture capital fund Octopus Ventures, believes that this “second wave of innovation”, which will lead to both partnerships and strategic acquisitions by larger players, is currently between four and five years out.

Key hurdles to jump

But before the sector can hope to move into the mainstream, there are various hurdles it will need to jump. Firstly, there is the thorny issue of investment. On the one hand, says Katia Lang, FemTech Lab’s second co-founder, the current immaturity of the sector means there “aren’t many amazing success stories”, which makes it “quite hard to get old-school investors interested”. On the other, says her colleague Vazirova:

There’s a lot talked about the bias of male investors [who still dominate the VC market] when they hear about products for the female body, and there’s some basis for that. But there’s also the issue of the traditional founder profile being male, which can be problematic as we hear that men and women pitch differently. When combined with FemTech being a sector that isn’t as mature as it could be, it means objectively it doesn’t always appear that attractive. Another thing we hear is that a lot of investors want to see more ‘deep tech’ and products that stick and capture users for a longer period of time. But in FemTech, a lot of it is about providing information and content so that women can learn more about their conditions. There are fewer founders with product expertise so it’s a bit of an inhibitor as investors don’t always feel they’re competent or will add value.

A second challenge is the lack of research in key areas of women’s health - something that is vital for entrepreneurs if they are to build relevant products and business models in the first place. Lang explains:

Women make up more than half of the world population, but until 1993 were excluded from clinical trials and they’re still not properly represented in medical research. If you look at a lot of the health advice on the internet, chances are it doesn’t include female anatomy. But women’s bodies are different to men’s and their hormones affect their life and cycles so much more. For example, women have much more active immune systems, which means they’re significantly more likely to have autoimmune conditions, such as multiple sclerosis. But while treatment should be linked to hormone cycles, there’s no research.

Things are starting to change though, she points out, as subjects that were previously considered “taboo”, such as menstruation and menopause, are now considered “exciting market opportunities”.

This, claims Gibbs, is down to the work of early FemTech companies, such as Elvie, the electric breast pump provider in which he invested, that have worked hard to educate the wider market:

Most effective businesses in FemTech are very marketing-savvy. They’re often working in categories that haven’t existed before, so founders have to have heightened levels of endurance and motivation to be successful. They have to have a drive and hunger to make change, so most successful founders are very mission-driven individuals that aren’t interested in selling to Amazon but in repositioning this important area of women’s health where innovation has stagnated.

FemTech as a disruptive force?

But the real decider as to whether FemTech will become the disruptive force that McKinsey predicts or not will depend on whether “it can move beyond consumer health products and make a difference in the medical device space beyond reproductive health and pregnancy”, argues Colton:

If FemTech is to become a major part of the healthcare market, it - as well as HealthTech - will need to have more of a focus on, and breakthroughs in, addressing diseases through prevention and diagnostics, not just offering wellbeing, reproductive and consumer health devices to the market.

This is important, she explains, because:

The value proposition [of many consumer health devices] is currently not significant nor in many cases are products necessarily life-changing. Medical devices are intended for medical purposes. They can be more complicated as they go beyond just monitoring physiological data or recording information. A medical device may be sending the data to a clinic or doctor for clinical decisions, analysis using AI, etc.  The data may be used for making therapy decisions, prescribing drugs and other medicine or treatment related decisions.  These devices can have a significant impact on enabling female patients to have better health outcomes as well as manage their health better. Consumer health devices don’t undergo the same regulation, so the accuracy and use of the data generated often is limited or not trusted for clinical decision-making.

My take

The FemTech market has huge potential to make a significant difference to the lives of women around the world, and not just those in high-income countries, such as the US and UK, either. But many of the key barriers to success appear to be rooted in age-old gender prejudices and fears - and no amount of tech can magic them away.

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