Healthcare technologies or healthtech can be very easily defied as the cross section of healthcare and technology. It refers to any technology created/implemented for developing and improving the delivery, standards and procedures in the health vertical. It would be folly on our part to not really understand the importance of health tech and the role it has played in development of the society over the years.
In 1800, global life expectancy on average was 29 Years, in 1950 this number increased to 46 Years and in 2015 the global life expectancy on average was 71 Years. In 215 years from 1800 to 2015, life expectancy has improved by a multiple of 2.44 and majority of this growth can be rendered to last 65 years with a growth of 1.54x.
Healthcare in 2018 accounted for roughly about 18% of the US gross domestic product, which is 11,303.02 USD in per capita figures. This showcases the size of the healthcare industry in US and if we look at this figure from the global perspective, healthcare industry is worth around 12 Trillion USD and fast growing, one of the fastest.
This leaves a lot of space for worthy entrepreneurs to come in and create value for themselves and other key stakeholders involved while also ensuring that healthcare will not be anymore an eluded concept for most of the world that does not find itself in the developed nations.
Today the global healthcare scenario is riddled with problem like:
a) Rising healthcare cost
b) Limited access
c) Slow incumbent processes
Health tech solves these three problems by incorporating technology with the incumbent healthcare sector thus making it cheaper, accessibleand faster.
Technology has unlimited uses in the healthcare industry, major is:
1) Streamlining Administration: Digital transformation of patient records etc have streamlined the clerical work in hospitals which have saved valuable resources and make it easier and efficient to see higher number of patients in the same amount of time. In recent times AI have taken a front seat in this sub vertical and have been implemented to various uses by different ventures.
2) Surgery: In last 50 years, the field of surgery has seen massive incorporation of technology which have made it less invasive, more targeted and efficient. This has led to reduction in recovery time and have helped to ease out the burden on surgeons. Imaging techniques, telescopic surgeries have resulted in cardiac angioplasty to only last for an hour or so. In the same manner the use of Robotics, IOT and other technologies have taken surgeries to the next level altogether.
3) Drug Development & Diagnostics: With the improvement in imaging technologies and other diagnostics techniques it has become easier for medicos to understand and predict the underlying condition to ensure that the treatment can be started as soon as possible and is apt for the underlying condition. Drug development has been benefitted through the availability of data, which has improved in last 10 years or so. This speed of development be attributed to the growth in health tech.
4) Fitness and wellness: Fitness has over the years has become a mainstream focus of the larger health tech eco system. The industry has developed hundreds of wearables, apps and other things that help us to track our workouts or measure our sleep schedules. This has led to a massive reduction in healthcare costs to the households which have then been directed towards other areas.
Other areas like Regenerative Medicine and EPharmacies have also really taken centre stage in recent years by development and integration of technology.
We expect the future to be driven by 3 archetypes in the healthcare sector:
a) Data & Platforms
b) Wellbeing & care delivery
c) Care enablement
In 2019, health tech innovators in the US attracted around USD 7.4 Billion in 2019. With well being and care delivery attracted 3.6 Billion USD, Data & Platform attracted 2.8 Billion USD and Care Enablement attracted roughly 900 Million USD.
2018 was an all-star year for the health tech sector, with the US market attracting 8.2 Billion USD, with an average ticket size of 21.6 Million USD. This showcases contraction in the US health tech markets, though this can be interpreted more as moderation rather than contraction.
Indian health tech market is expected to be valued at around 352 Billion USD in 2025. Indian startups were able to raise 504 Million USD in 2018 from various sources. There are over 3500 startups creating major disruption in the Indian healthcare market with success in the E-Pharmacy, Diagnostic, Wellness and Therapeutics sub sector. Prominent startups like CureFit, PharmEasy, 1mg, Practo and Medlife have been able to create a name for themselves in this fast-growing market.
The gap between what healthcare incumbents offer today and what will likely be table stakes in the future have created an opening for nimble, consumer focused and tech centric companies. Incumbent healthcare majors like Cipla, Abbott and Merck etc have been actively investing through their investor arms into the sector as they understand the importance of health tech to ensure survival and growth in the new world.
These incumbents approach investing in healthcare with a different perspective with a more proactive approach, they provide the innovators with major infrastructure and other resources to ensure that the solution works out.
In last couple of years health tech solution with AI & ML and IOT capabilities have attracted the investors eye. Investors believe that solutions with these capabilities will produce the next Unicorn in the sector
Investors are bullish about the sector and keep 4 things in mind for decision making in the sector, they are:
1) Enhance care quality
2) Reduce costs
3) Improve access to care
4) Solutions catering to problems of the next billion people
They expect a solution with all these 3 qualities and a scalable model will be the game change in the health tech space.
The onset of Covid-19 pandemic has showcased how fragile our incumbent health infrastructure is. Not just in developing or underdeveloped nations, developed nations like United States have faced the worst brunt of the pandemic. This showcases that the need of the hour is to ensure better healthcare for all at feasible cost.
Health tech is going to be the torch bearer to ensure the same.
The investor community has echoed this sentiment and investors have stick to their bullish sentiments regarding the sector. Though we expect the rules of investing in health tech will now change.
With global population touching the feeble 7 Billion mark, ensuring healthcare for all with limited resources looks like an impossible task, but this can be achieved by leveraging and integrating technology at every step of the process.
Written by: Ayush Dadhich & Manas Vashistha
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