Unlocking Investment for Women’s Health
Understanding the continuum of capital from government funding to venture capital—a white paper from Digitalis Research & Capitol Street.
Executive Summary
To download this paper as a PDF, please click here.
In this paper we 1) identify several barriers that investors face when making capital allocation decisions for women’s health investment opportunities, and 2) identify existing impactful policies that if re-focused on women’s health could promote investment.
For innovation to reach women in medicine, diagnostics, and health care overall, different pools of capital are required to successfully navigate new products through discovery, development, and commercialization.
Today, there is a “push” of capital to women’s health from the government and early seed funding, and a “pull” to acquire and invest in new commercial products from corporations and late-stage investors. However, there is a lack of capital that typically funds promising technology to commercialization.
We make the following recommendations to investors, government, industry, and advocacy groups on how we can work together to increase the flow of capital to innovation in women’s health.
Recommendations for Investors:
- Become more educated about women’s health
- Bring together investors, acquirers and government to encourage collaboration and co-investment
- Invest in emerging fund managers focused on women’s health
- Raise $1B+ venture fund dedicated to women’s health
Recommendations for Government:
- Understand the role private investment plays in innovation, health and medicine to reach patients
- Evaluate current initiatives that, if directed with a lens to women’s health, could reduce barriers for private investors
- Food and Drug Administration (FDA): apply existing policies to women’s health products that help reduce risk of investment in expensive clinical trials
- National Institutes of Health (NIH): fund basic research in women’s health so that we have the biology to develop effective and safe medicines for women
- Centers for Medicaid and Medicare Services (CMS): provide proactive clarity on reimbursement process and timing
Recommendations for Industry and Advocacy Groups:
- Work with leaders in women’s health to educate government about how private capital is essential for innovation to reach patients and how government can help unlock private investment
- Collect and analyze data to support policy changes and continue to solicit recommendations from the investment community
- Help educate investors, government and communities about women’s health via talking to doctors, industry, and educators to make women’s health a topic that is important to address today
I. Problem & Opportunity
Today there is a tremendous opportunity to improve women’s health. It’s an opportunity to invest capital, spur innovation, and enable the nearly four billion mothers, daughters, sisters, and wives across the United States and around the world to live better, healthier lives.
For the purposes of this paper we focus on regulated categories, such as therapeutics, medical devices and diagnostics, and over-the-counter (OTC) products, and we are defining women’s health as conditions that affect:
- Women exclusively
- Women disproportionately to men
- Women differently than men
The goals of this paper are to:
- Build understanding about the flow of capital to women’s health
- Remove barriers keeping capital from permeating this critical space
- Encourage sustained investment for the benefit of society at large
II. Background
Women experience a myriad of conditions men simply do not, as well as ailments that affect them differently from men or show up more often than in men. To date, however, the amount of investment in research and innovative therapies does not reflect serious or sustained acknowledgement of these facts.
Health and Funding Disparities for Women:
Women’s Health as a Key Driver of the Economy:
III. Sources of Capital and the Current Funding Environment for Women’s Health
Several different pools of capital are required for innovation in women’s health to reach patients, including:
Funding for Basic Research
While there was an increased focus from the federal government on funding women’s health in 2024, it is unclear at this time if these funds, aimed to improve this disparity, will be appropriated.
2024 U.S. Government Funding for Women’s Health:
- $100M funded from the Advanced Research Projects Agency for Health (ARPA-H)
- $500M committed from the Pentagon
- $558M committed from the Department of Health and Human Services (HHS) for maternal mortality research and prevention
- $440M from the Health Resources and Services Administration (HRSA) for maternal and infant health services
- $118M from the Centers for Disease Control and Prevention (CDC) for maternal mortality infrastructure
- $12B requested from Congress by the Biden administration
Seed-Stage Financing
Early-stage financing through venture capital is crucial for both transitioning innovations from government or academic settings into a corporate structure and supporting the exploration of high-risk, high-reward projects atypical for traditional sources of funding. Over the past few years, there have been several seed funds dedicated to financing innovation in women’s health, enabling a pipeline of companies to begin product development; Foreground Capital, SteelSky Ventures, and Avestria Ventures are three examples. However, while these funds have both spurred and supported many new women’s health companies, they are limited in their ability to capitalize them through multiple rounds of financing, as most are below $50M. This means that while these funds can provide early capital to de-risk technology and markets, larger funds will need to become involved to continue product development and market penetration, which can require large amounts of capital. If larger funds do not invest, these early-stage companies may struggle to remain funded, which in turn may kill progress in innovative product development.
Venture Capital Financing
We explore what is hindering venture capital investment in the section below, ‘Barriers and Opportunities for Increasing the Flow of Venture Capital Investment to Women’s Health’.
Public Market Investment
Public market investment fuels commercialization and scale. The success of women’s health companies in the public markets can indicate investor confidence in the sector and bolster further innovation. While the number of public companies focused on women’s health has been increasing, including Hologic, Organon, Daré Bioscience, and Sera Prognostics, among others, there are still few investment opportunities for public investors.
Strategic Acquirers
IV. Barriers and Opportunities for Increasing the Flow of Venture Capital Investment to Women’s Health
Today funding for women’s health is in a state of push-pull. There is the push of funding for early-stage innovation from the government and seed-stage investors, and there is the pull for transactions from acquirers and public investors. A clear need exists for venture capital to bridge this gap and advance promising innovation receiving early seed funding to a point that the companies can be acquired or become public companies. However, venture capital investors have an enormous pipeline of opportunities and typically fund only 1–3% of the deals they evaluate. They also have constraints related to fund life and portfolio time-to-liquidity. That said, there are several strategies to unlock investment, which fuels the enormous opportunity to create value in women’s health products and technology.
INCREASE EDUCATION & AWARENESS
BARRIER
Investors are often unfamiliar with and uncomfortable discussing diseases that relate only to women. This leads to focus on investment areas team members already know from previous experiences or portfolio investments. To increase capital flow to women’s health, investors need more and better education about its unique characteristics, including quantification of the market size and potential.
OPPORTUNITY
Education about women’s health issues to bring awareness and social normalization
National Child and Maternal Health Education Program
Eunice Kennedy Shriver National Institute of Child Health and Human Development (NICHD)improves the health of women and children by providing pregnant women, mothers, families, and health care workers with evidence-based information about maternal and child health.
The Heart Truth®
National Heart, Lung, and Blood Institute (NHLBI)raises awareness about heart disease and its risk factors among women and educates and motivates them to take action to prevent the disease and control its risk factors.
Important areas for future educational campaigns could be:
- Menopause management
- Endometriosis and polycystic ovary syndrome (PCOS)
- Autoimmune disease that disproportionally affect women
- Postpartum mental health
- Female sexual dysfunction
OPPORTUNITY
Education on the economic opportunity associated with improving women’s health
INCREASE SCIENTIFIC VALIDATION
BARRIER
OPPORTUNITY
Increase the federal budget for women’s health research
Historically, women’s health research has not been prioritized by the federal government (Congress, Agencies such as NIH, FDA, CMS). Budgets for landmark healthcare initiatives such as the Human Genome Project, NIH’s BRAIN initiative, and other disease-specific endeavors, have far outstripped that of the women’s health initiative; the Office of Research in Women’s Health (ORWH) received only $76M in 2023.
In a congressionally mandated 2024 report released by the National Academies of Sciences, Engineering, and Medicine, one solution calls for the creation of a new institute focused on women’s health under the NIH. Currently, many women’s health conditions, such as endometriosis, polycystic ovary syndrome, uterine fibroids, vulvodynia, and women-specific life stages (including menopause) are not within the purview of any of the 27 existing institutes or centers. Elevating the Office of Research on Women’s Health to the level of an institute would allow it to focus research efforts on conditions that primarily affect women and do not currently fall under the scope of the existing 27 institutes.
In this same report, The National Academies of Science has asked Congress for:
- $4B for a dedicated, independent budget comparable to other institutes with a similar scope for the new institute’s first five years
- $11.4B over five years to create and support a new NIH-wide fund for interdisciplinary research. This fund should be managed by the NIH Office of the Director and support interdisciplinary women’s health and sex differences research with a focus on innovation and accelerating biomedical discoveries.
- $315M to support expanded workforce programs to build and retain a research workforce that has the necessary expertise in women’s health research.
- Additional funding to cover operational costs, increased oversight by the NIH director, and increased funding for the National Institute on Minority Health and Health Disparities.
OPPORTUNITY
Requirement by the FDA to report gender-based data
Requiring the collection of needed data will help researchers, policymakers and entrepreneurs address women-specific health challenges. There has been a start with the NIH Revitalization Act of 1993, the policy requiring women to be included in clinical trials. The Act mandates that the NIH include women and minorities in all clinical research unless there is a scientifically valid reason to exclude them, effectively making it federal law to include women in clinical trials. In 2001, this Act was further updated in the NIH Policy and Guidelines on the Inclusion of Women and Minorities as Subjects in Clinical Research.
DECREASE CHALLENGES RELATED TO PRODUCT DEVELOPMENT AND REGULATORY APPROVAL
BARRIER
The FDA is supportive of innovative products for women’s health. However, clinical trials are expensive and time consuming. Therefore, it is important to have agreement with the FDA on the path to approval early in the trial design. This helps to determine the time and cost related to regulatory approval. There are several areas that can cause delays, increase cost and increase overall risk of continued commercialization, for instance:
- Real or perceived legal risk of running trials on pregnant women or women of childbearing age can sometimes deter investors from moving forward with supporting a project. This risk can also result in a study being conducted on males which can be irrelevant or even dangerous to women due to differences in biology.
- FDA requirements of additional reproductive safety data can add additional time and cost to an already long and expensive endeavor.
- Several innovative products in women’s health are new for the FDA and therefore require more interactions to reach a path for approval, which can increase time and cost.
- Due to limited validated biology and biomarkers, many clinical trial readouts today consist of self-reported data which can be highly variable and difficult to interpret.
OPPORTUNITY
Increase funds for the FDA Breakthrough Therapy Designation for women’s health
OPPORTUNITY
Adopt FDA programs for women’s health along the lines of the Orphan Drug Act of 1983 and the GAIN Act of 2012 for Women’s Health
Implementing additional financial incentives legislatively to encourage drug development has been prioritized in the past. Two key programs that encouraged therapeutic development in underdeveloped spaces are the Orphan Drug Act (ODA) and the GAIN Act. These policies serve as potential models in shaping the possible financial and regulatory incentives for development of women’s health therapeutics. The ODA represents a more holistic approach to incentives compared to the GAIN Act which has had limited development success.
Orphan Drug Act (ODA)
GAIN Act
OPPORTUNITY
Reduce the legal liability for manufacturers
Liability protection for manufacturers, similar to vaccine protections, are an example of a sensible model to follow when it comes to executing clinical trials, particularly for pregnant women.
As a reminder, in the 1980s, the National Vaccine Injury Compensation Program (VICP) was created to provide financial compensation to individuals injured by a covered vaccine. The protection was further expanded in 2016 through the 21st Century Cures Act. The program is funded through a $0.75 excise tax on vaccines recommended by the Centers for Disease Control and Prevention (CDC) for routine administration.
The Advisory Commission on Childhood Vaccines provides recommendations on the operation of the National Vaccine Injury Compensation Program (VICP). The U.S. Court of Federal Claims (the Court) makes the final decision regarding the scope of the program and whether an individual should be compensated.
The VCIP covers most vaccines routinely administered in the U.S. For a vaccine to be covered, CDC must recommend the category of vaccine for routine administration to children or pregnant women, and it must be subject to an excise tax by federal law. Respiratory Syncytial Virus (RSV) vaccines are not currently covered as they are not subject to an excise tax.
OPPORTUNITY
Provide funding for best practices training for clinical trials with self-reporting
The main challenges of self-reporting in clinical trials include potential for bias due to social desirability, recall bias, misunderstanding of questions, inaccurate reporting of symptoms or behaviors, and difficulty in objectively measuring subjective experiences, which can ultimately impact the reliability and validity of the study results.
Areas important to mitigate to reduce self-reporting bias and challenges include:
- Clear and concise questionnaire design
- Validation with objective measures
- Pilot testing questionnaires
- Training for participants
- Confidentiality and anonymity
- Statistical analysis techniques
The FDA could help identify study designs and centers that have been successful and support best practices training for other centers.
CREATE A STRAIGHTFORWARD REIMBURSEMENT PATH FOR CMS AND PRIVATE INSURERS
BARRIER
Once a product has regulatory approval, the next step is to have a path for insurers to pay for the medicine, device, or service. Unfortunately, reimbursement for women’s health products is not as straight forward as for other products because they are often viewed by payors as products of convenience or an improvement to quality of life by CMS. This sets off a cascade of challenges for obtaining the required codes and pay levels for insurance.
OPPORTUNITY
Breakthrough Status Leading to Mandated CMS Coverage
An idea that has gained traction is one that requires automatic Medicare/Medicaid coverage to medical technologies that are deemed “Breakthrough” devices. The Breakthrough Devices Program is a voluntary program for certain medical devices and device-led combination products. These are typically devices that are addressing an unmet need. Final guidance on breakthrough devices was released in September 2023.
Approximately 300–500 medical devices each year receive Breakthrough designation, but only about five end up being FDA-approved. There have been bills in the Congress (see MCIT below) introduced that would allow for automatic coverage for Breakthrough therapies. Clearly this would be a tailwind for new technologies.
Coverage is one thing, payment is another. Should the agency be required to cover a breakthrough technology, the agency would ultimately have the autonomy to assign payment through usual processes. Meanwhile, legislation that mirrors Medicare Coverage of Innovative Technologies (MCIT) is being considered. The Ensuring Patient Access to Critical Breakthrough Products Act, a bipartisan bill, requires Medicare to temporarily cover all FDA-approved breakthrough medical devices for four years, starting on the day of approval.
Examples of conditions that could benefit from reimbursement clarity:
- Immunology medicines being tested in more women could lead to optimal dosing and other considerations that likely differ in males versus females
- Observational trials of women and men presenting with symptoms that become heart attacks can be amalgamated for optimal treatment and identification for an education campaign that helps saves lives
- Health insurers may require gender-stratified economic analysis of new therapies that may create coverage/payment policies that reflect optimal outcomes (and can be adopted by other insurers, CMS)
- Guidance on products that alleviate pain
INCREASE THE NUMBER OF INVESTORS CHAMPIONING WOMEN’S HEALTH INNOVATION
BARRIER
OPPORTUNITY
Support fund manager programs focused on women’s health
Governments can support new fund managers through “Emerging Manager Programs” which actively seek out and invest in funds managed by underrepresented business owners. The government provides these emerging managers access to large institutional capital that they might not otherwise have, such as pension funds, and helps to set specific goals for allocating investments to diverse managers. Examples of these types of programs are:
W-GDP Fund
The Women’s Global Development and Prosperity (W-GDP) Fund is a White House-led initiative that aims to advance women’s economic empowerment. The W-GDP Fund invests in partnerships with the private sector, locally-led organizations, and U.S. government partners.
Invest2Equal Program
This program from the International Finance Corporation (IFC) encourages fund managers to make commitments to increase gender diversity within their firm and investment processes.
EFFM initiative
This initiative provides working and catalytic capital to reduce set up costs and accelerate time to market for female fund managers.
New York City Comptroller’s Emerging Manager Program
This program actively seeks out and invests in diverse fund managers, including minority-owned firms, to promote inclusion in the investment landscape.
INCREASE THE DATASET FOR EXIT VALUATIONS AND ROI OF WOMEN’S HEALTH COMPANIES
BARRIER
Investors typically look for comparable M&A deals or public companies with similar business characteristics to benchmark valuation.Valuation benchmarks are important because a major input to investment decisions is the possible return on investment. Among the most recent M&A deals aimed at women’s health solutions, the far majority are mature companies with products already in the market, an indication of the lower level of risk many acquirers are willing to take.
Some recent examples include:
- Oct 2024
Hologic acquired Gynesonics for $350M. Gynesonics developed minimally invasive solutions for diagnostic intrauterine imaging and transcervical treatments. - July 2024
Hologic acquired Endomag for $310M. Endomag developed products to improve breast cancer-related surgical procedures. - March 2024
Labcorp acquired the women’s health diagnostics firm Opko Health Bioreference Subsidiary for $237.5M. - Feb 2024
Pharmavite LLC acquired Bonafide Health for $425M. Bonafide Health is a menopause brand selling non-hormonal solutions to help women manage menopause. - Oct 2023
L. Catterton acquired Thorne Health for $680M. Thorne Health sells at-home hormonal health tests and supplements. - Nov 2021
Organon acquired Forendo Pharma for up to $954M, with an upfront payment of $75M. Frendo Pharma was entering Phase II with its 17β-hydroxysteroid dehydrogenase type 1 (HSD17B1) inhibitor for endometriosis. - Aug 2020
Bayer acquired KaNDy Therapeutics for up to $875M plus additional sales milestones,with an upfront payment of $425M. KaNDy had Phase IIb data with NT-814, a first in class, non-hormonal, once-daily, oral neurokinin-1,3 receptor antagonist, a treatment for frequent symptoms of menopause, including hot flashes and night sweats (vasomotor symptoms). - May 2017
Astellas Pharma acquired Ogeda for up to €800M. Ogenda had phase IIa data on its small-molecule inhibitor of NK3R, a potential non-hormonal treatment for postmenopausal vasomotor symptoms.
OPPORTUNITY
There is a pull from large companies to acquire commercial-ready products in women’s health, and from private equity and public investors to fund commercial products. However, there is a need for venture capital to move these products further in development before they can be acquired. The most significant area of opportunity is to enable more early- and growth-stage private capital to women’s
health innovation.
V. Conclusion
We believe investors, government, industry, and advocacy groups can work together to unlock investment capital to women’s heath innovation via the following:
Recommendations for Investors
- Become more educated about women’s health
- Bring together investors, acquirers and government to encourage collaboration and co-investment
- Invest in emerging fund managers focused on women’s health
- Raise $1B+ venture fund dedicated to women’s health
Recommendations for Government
- Understand the role private investment plays in innovation, health and medicine to reach patients
- Evaluate current initiatives that, if directed with a lens to women’s health, could reduce barriers for private investors
- Food and Drug Administration (FDA): apply existing policies to women’s health products that help reduce risk of investment in expensive clinical trials
- National Institutes of Health (NIH): fund basic research in women’s health so that we have the biology to develop effective and safe medicines for women
- Centers for Medicaid and Medicare Services (CMS): provide proactive clarity on reimbursement process and timing
Recommendations for Industry and Advocacy Groups
- Work with leaders in women’s health to educate government about how private capital is essential for innovation to reach patients and how government can help unlock private investment
- Collect and analyze data to support policy changes and continue to solicit recommendations from the investment community
- Help educate investors, government and communities about women’s health via talking to doctors, industry, and educators to make women’s health a topic that is important to address today
Please contact us to continue the conversation.
Misti Ushio, Ph.D.
Managing Partner
Digitalis Ventures
mushio@digitalisventures.com
Ipsita Smolinski, MBA, MPH
Managing Director
Capitol Street
ipsita@capitol-street.com
Many thanks to Michael Fall, Kate Felsen, and Allison Sullivan for their input and review.
To download this paper as a PDF, please click here.
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