European CommissionThis study analyses the EU digital health market and economic impact of digital health technologies, including AI-enabled solutions.

This area is a priority workstream for the AI Office, reflecting its importance for AI innovation and competitiveness. The study Observatory for digital health technologies in Europe was commissioned by the Directorate-General for Communications Networks, Content and Technology (DG CONNECT).

Growing adoption of AI in healthcare

AI has moved beyond experimentation and is increasingly embedded across the EU healthcare landscape. Results highlight that AI is not only one of the most promising technologies, but also one of the most broadly applicable across clinical, operational, and strategic domains:
  • 94% of healthcare providers report that they are already using AI solutions or planning to adopt them
  • AI is an investment priority among EU digital health vendors, with 23% investing in AI/ML and 20% in Generative AI
  • AI-powered diagnostic tools are the most mature emerging technology, with adoption projected to approach 80% by 2029
  • The most common applications include clinical decision support, early diagnosis, patient engagement and remote monitoring
  • SMEs and start-ups are the backbone of the EU’s digital health ecosystem. However, EU start-ups and scale-ups working on AI, virtual human twins, and digital therapeutics continue to face significant barriers to growth and cross-border expansion, notably limited access to funding and finance.

These figures reflect not only a strong appetite for digital innovation but also a sector-wide understanding that AI integration is becoming a strategic imperative.

Strong growth in the EU digital health market, amid structural challenges

With the anticipated transformation driven by AI and other key technologies, the EU digital health market is projected to grow from EUR 11 billion in 2023 to EUR 61,2 billion by 2035, representing a compound annual growth rate (CAGR) of 15,1%.

The vendor landscape remains fragmented and regionally concentrated. Of 690 digital health vendors identified, 196 are headquartered in the EU27, while 345 are based in the USA.

EU-based vendors are mainly active in core health IT and administrative solutions, with more limited presence in emerging areas such as AI, genomics and biological sensors. In these domains, healthcare systems often rely on solutions developed outside the EU, highlighting differences in market maturity and investment patterns.

Significant economic impact for healthcare systems

The economic impact analysis shows that several digital health technologies could generate substantial cost avoidance for EU healthcare systems over a ten-year period:
  • Clinical decision support systems could deliver up to EUR 252 billion in net cost avoidance, equivalent to around 1% of total EU healthcare expenditure
  • Automated medical image analysis could generate up to EUR 192 billion in net cost avoidance, particularly by improving diagnostic efficiency and accuracy
  • Mental health platforms show potential net cost avoidance of up to EUR 164 billion

Key policy recommendations

Based on the study findings, the authors proposed several policy recommendations including:
  • Boost frontier technology innovation by prioritising funding in strategically vital domains, notably AI and genomics
  • Enhance SME and scale-up support by providing targeted instruments to enable cross-border expansion
  • Strengthening interoperability and data infrastructure, notably by promoting internationally standards and upgrading national health IT systems
  • Strengthen organisational readiness and workforce by supporting digital training for healthcare professionals

Methodology

The study draws on a broad evidence base, including:
  • EU-wide surveys of 300 healthcare providers and 70 digital health vendors
  • interviews with experts
  • a market mapping of 690 vendors across 45 technologies
  • an analysis of more than 46 000 investment records

The economic impact analysis is based on a combination of desk research, workshops and validation interview with digital health technology experts across industry, academia and research.