Indian health-tech startups get booster shots from investors, customer shift
By Atul Ranjan
NEW DELHI, NNA - The growing adoption of digital platforms among doctors and patients in India amid the pandemic last year has given a new impetus to health-tech startups in the country.
It is also helped by supportive government policies to push e-healthcare as a viable alternate channel for healthcare services.
According to industry experts, the nationwide lockdown to contain the spread of COVID-19 last year saw a rapid rise in digital practices, enabling health-tech startups to receive a massive jump in patient traffic.
It opened many doors for young companies trying to gain a foothold in the country’s highly- regulated healthcare sector.
The demand for e-healthcare services in turn boosted the country’s telemedicine market, which is now expected to grow at a compound annual growth rate (CAGR) of 31 percent in the next five years to reach $5.5 billion, according to a joint report by consultancy firm EY and the Indian Pharmaceutical Alliance (IPA).
In March last year, India unveiled its telemedicine guidelines for the first time. The government finally recognized e-pharmacies as part of essential services allowed to operate during the lockdown.
As a result of these regulatory changes, most leading health-tech startups saw big increases ranging from 300 to 500 percent in patient numbers from March to May, according to a joint study by the Federation of Indian Chambers of Commerce & Industry (FICCI) and Boston Consulting Group (BCG).
During that severe lockdown period, 50 million Indians accessed tele-consultation services, with 80 percent of them being first-time users while 44 percent came from non-metro cities, said the report.
Experts believe this trend is most likely to continue as online consultation is fast gaining traction, and may emerge as a critical way to treat patients looking for convenience and affordability. This is especially so even in a developing country like India where quality healthcare can be lacking in many places and expensive too.
A report by the Telemedicine Society of India and health-tech startup Practo found that in-person appointments with doctors declined by 32 percent while online consultations soared by 300 percent between March and November last year, compared to the same period the year before.
The report also noted a seven-fold increase in patients from smaller cities with inadequate health facilities.
In a recent survey, Boston Consulting Group (BCG) found that 60-65 percent of patients residing in metros and other big cities have started to favour Internet or phone-based health consultations over in-person consultation.
This shift towards digital healthcare can be attributed to factors like reduced waiting time, easy access with no geographical limitation, and avoiding the risk of getting a coronavirus infection, said BCG.
According to the EY-IPA report, consumer behaviour in the new normal is likely to shift towards a hybrid model called 'phygital' which combines both in-person and digital.
The report noted that the telemedicine or virtual care market which encompasses teleconsultation, telepathology, teleradiology and e–pharmacy is expected to grow from over $1 billion in 2020 to around $5.5 billion in 2025.
The two strongest segments - teleconsultation and e-pharmacy - are likely to account for around 95 percent by 2025.
Analysts expect the coming years to see the entry of new players which might disrupt the future of the healthcare ecosystem in the country.
Already, significant deal activities have created much excitement for the health-tech startup segment as global investors injected funds to help local startups ramp up operations to cater to increasing demand.
In January, India's leading digital health-tech startup MFine said it has obtained $16 million of funding from investors such as Heritas Capital, a Singapore-based private equity and venture capital investment firm. Its other investors include SBI Investment, SBI Ven Capital, BEENEXT and Alteria Capital.
Chik Wai Chiew, chief executive officer and executive director of Heritas Capital, said, “We believe that MFine's collaborative partnership model with hospitals and doctors powered by the application of AI will enable smart optimization of limited healthcare resources to address unmet needs throughout India and beyond."
Yoshitaka Kitao, representative director and chairman of SBI Investment, said MFine’s offering is a good example of how mobile connectivity and advances in technology can aid in providing primary health care to millions of people.
“We see huge potential in MFine's state-of-the-art AI and mobile technology platform and its ability to scale beyond India as COVID-19 has accelerated the use of telemedicine and digital health in India and other regions in Southeast Asia,” he said.
Prasad Kompalli, co-founder & chief executive officer of MFine, told NNA that the company will utilize the extra funds to grow local operations.
Its users can consult doctors of their preferred hospitals via chat or video to get prescriptions and or routine care, among other services.
Another health-tech startup Saveo Healthtech, a B2B (business-to-business) e-commerce platform for pharmacies, raised $4 million in seed funding last month from various investors including Japan’s Incubate Fund, a leading venture capital fund.
The startup, which offers local pharmacies a single procurement point for almost all kinds of medicine in the country, said it will expand operations in the country.
Nao Murakami, founder and general partner of Incubate Fund India, said he is supporting the Indian startup as its platform is designed to address the highly fragmented supply chains in the Indian pharmaceutical industry and make them efficient.
“It took only two Zoom calls for us to make an investment decision,” said a pleased Murakami writing in his blog post on Feb. 2.
Last year, even at the height of the COVID-19 pandemic, many health-tech startups including women's healthcare startup Zealthy managed to obtain funding.
According to Inc42 Media-run DataLabs, a research agency that tracks startups, Indian health-tech startups received investments amounting to $2.3 billion for 459 deals between January 2014 and March 2020.
Following their crucial role in providing teleconsultation, medicine delivery to homes, and door-step sample collection during the pandemic months last year, they are now strengthening their capabilities to help out in the country’s massive vaccination drive.
India started to inoculate its population of 1.3 billion last month.
The country’s leading digital healthcare platform 1mg, which offers e-pharmacy, e-diagnostics and e-consult services, is allocating $1.4 million to $2 million to expand its cold chain for storing vaccines in many locations in the country apart from training lab technicians.
Prashant Tandon, co-founder and CEO of 1mg, told NNA that the company is training up to around 10,000 health workers for the vaccination drive.
Another health-tech startup, WONDRx App, has launched an application for Indian citizens to book an appointment with the nearest doctor or the vaccination clinic to get a jab.
The government is also relying on startups to help it scale up vaccine distribution in the country.
Recognizing their contributions to healthcare, the health ministry and the ministry of electronics and information technology recently invited startups and technology specialists to help boost its CoWin platform which is being used to drive the vaccination campaign.
It facilitates real-time information of vaccine stocks, storage temperature, and tracking of registered vaccine beneficiaries such as the priority group of frontline health workers.
In August 2020, India announced the launch of the National Digital Health Mission (NDHM), an agency that will create an integrated digital health platform that, experts believe, will bring about a paradigm shift in Indian healthcare delivery.
It will bridge the existing gaps among the different stakeholders of the healthcare ecosystem by sharing health information with consent and enabling seamless and timely follow-up care., among other things.
As it will be a shared infrastructure that can be leveraged by both the public and private sectors, it will offer immense opportunities for health-tech startups to flourish.
“The entire ecosystem is now on an accelerated transformation,” said MFine’s Kompalli.
“India is on the cusp of redefining healthcare delivery and we are actively engaged in shaping and leveraging this big shift," he said.
But B.K. Swain, a senior doctor based in the eastern Indian city of Cuttack, feels that while digital practices are getting popular, in-person consultation will continue to remain the preferred choice for patients and doctors in post-pandemic.
“Doctors are still reluctant to offer online consultation as they fear legal consequences if the treatment goes wrong, even though such practice is allowed now. Many doctors insist on having an in-person appointment after offering online consultation wherever possible for better diagnosis and treatment,” he told NNA.
“In the long run, online and offline platforms will complement each other,” he concluded.