The latest ANDHealth Industry Sentiment Survey finds a sector ready to scale if Australia can create the commercial conditions to support it
Australia’s digital and connected health industry is growing rapidly, but limited capital and complex routes to market are preventing promising companies from reaching patients. The country has an expanding pipeline of businesses developing technologies for clinical decision support, remote monitoring and healthcare administration. Innovation is accelerating, but the pathways into health services have struggled to keep pace.
ANDHealth’s Industry Sentiment Survey FY2026, based on 100 responses, presents a sector that is more commercially focused and globally ambitious than it was three years ago. Companies are prioritising revenue and making targeted hires, while AI is moving from experimentation into business and clinical applications.
The report also identifies a widening gap between Australia’s capacity to create digital health innovation and its ability to commercialise it. Investment is the problem, while procurement and the absence of a dedicated reimbursement framework also limit adoption. Unless the barriers are addressed together, promising technologies may have to move overseas to find a market.
Scale and ambition
The number of active digital and connected health companies in ANDHealth’s national pipeline reached 1,375 by March 2026, almost twice the 698 recorded in FY2023. The proportion reaching proof of concept or a later stage has risen from 27 per cent in 2020 to 46 per cent in 2026.
Nevertheless, 89 per cent of companies in the wider pipeline remain at the pre-launch stage. Nearly three-quarters of those surveyed have ten or fewer full-time employees. Moving them into clinical use will require validation, regulatory expertise and long-term investment.
Revenue growth has remained the leading objective since 2022. Half of respondents placed it among their five principal priorities for the next six to 12 months, with 31 per cent ranking it first. Revenue now extends financial runway as well as demonstrating that a product can attract customers.
Investment pressure
Fifty-one per cent identified access to investment as their greatest commercialisation barrier, while 86 per cent placed it among their five biggest challenges. Two-thirds said economic conditions had damaged their ability to raise capital, compared with 51 per cent in FY2023.
Australian health technology start-ups raised A$271 million in 2025, more than double the 2024 figure. However, the global recovery favoured established companies with proven revenue. Larger sums were concentrated in fewer deals, offering limited reassurance to early-stage businesses.
Companies are adapting: 80 per cent support dedicated digital health funds and 73 per cent want easier access to international investors.
Digital health requires more than capital. Companies must generate clinical evidence and integrate with healthcare systems. Investors therefore need sector knowledge.
Routes to market
Companies are encouraged to demonstrate revenue, but the public healthcare system remains difficult to enter. Public procurement represents close to one-third of Australia’s A$270 billion annual healthcare expenditure, yet smaller businesses encounter lengthy purchasing systems designed around established suppliers. Nearly three-quarters of respondents strongly agreed that prioritising locally owned and developed innovation would accelerate growth.
The report supports an ‘if not, why not’ approach, requiring government purchasers to consider Australian innovation and explain an overseas choice. Local preference would not mean lower clinical standards. It would create clearer routes for technologies whose value may lie in preventing admissions or reducing workforce pressure rather than providing an immediate saving to the purchasing department.
Regulatory approval and clinical value are still not enough. Australia lacks a dedicated assessment and reimbursement framework for digital and connected health products, although 66 per cent of respondents believe one is needed. Companies want mechanisms that fund products directly instead of requiring providers to absorb the cost or pass it to patients.
No single reimbursement model will suit every technology. The appropriate route depends on whether a company offers software or an ongoing clinical service. Transparent criteria also influence which international markets companies choose.
AI and national value
Ninety-two per cent expect AI to have a mostly or extremely positive effect on their businesses. Clinical decision support was the area most likely to grow, selected by 75 per cent, followed by remote monitoring at 59 per cent. Early gains are likely to come from using data to support clinicians and automate repetitive work.
Regulatory compliance remains the leading barrier to AI adoption, alongside concerns about data quality and cybersecurity. Companies want clearer rules aligned with international requirements and defined accountability for safe deployment.
Australia has the expertise and export potential to build a mature digital health industry. Dedicated investment could provide capital, while procurement reform could create a domestic market. Reimbursement could then turn clinical value into sustainable revenue.
Australian companies are seeking customers, controlling costs and looking beyond their domestic market. They now need conditions in which successful health innovation can scale without leaving Australia.
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