Norwegian health industry exports rise, but access to venture capital remains limited

Menon Economics has produced analyses for the healthcare industry for several years. This year, we commissioned the report as part of our healthcare export initiative, together with a consortium of stakeholders from across the healthcare industry.

This year's report on the state of Norway's health industry focuses particularly on the companies with the highest exports. It highlights high productivity, but lower profitability than in previous years. The figures are from 2023.

The analyses in the report paint a mixed picture of Norway's health industry. Activity continues to grow, driven by higher turnover, employment and exports. At the same time, exports are becoming increasingly concentrated, and the industry's profitability has declined in recent years. There has also been no significant growth in investment.

In 2023, the health industry generated NOK 76 billion in revenue, created NOK 22 billion in value and employed 13,300 people. Over the past ten years, the industry has grown continuously, with revenue and employment increasing every year since 2014.

From 2014 to 2023, turnover grew by an average of 7 per cent annually, while employment grew at an average rate of 3 per cent.

Although revenue has increased, the companies' profitability has declined since 2020.

Exports from the health industry have also increased in recent years, reaching NOK 27 billion in 2023. Some of this increase can be attributed to the weak Norwegian krone. At the same time, the industry is vulnerable because a very large share of its exports is concentrated among very few companies. The eight largest companies accounted for 88% of health industry exports in 2023.

'We need to strengthen our national team, but we also need more companies to export,' says Tone Varslot Stave, who leads our healthcare industry export initiative.

'The fact that several of the companies are foreign-owned increases our vulnerability. This creates an even greater risk that sustainable production will move from Norway to countries with more favourable operating conditions,' says Stave.

We are pleased to see an increase in the number of early-stage companies. However, the report also shows that many of these are J-curve companies. This means they are at the bottom of a J-shaped profitability curve. They have the potential to become profitable but face challenges in commercialising and scaling their products and services.

'The high proportion of J-curve companies suggests there is not enough venture capital to help them progress. We have many good ideas, but few investment communities investing in health technology. Healthcare companies compete successfully for general funding schemes, but they need a government investment fund similar to Nysnø,' says Stave.

We also highlight the report's finding that fewer companies in the health industry manufacture in Norway.

'Lower levels of production suggest that there are not enough incentives to manufacture in Norway. If we fail to turn R&D investments into production, we will miss out on valuable expertise, highly productive jobs and potentially significant export revenues,' says Stave.