How COVID-19 is impacting innovation in healthcare
Lars Buch, CEO Rainmaking MENA & Russia, explores how innovation can be used as a force for good, enable healthcare services which are more inclusive, and looks at the role innovation has to play in overcoming corporate barriers – a necessity if the healthcare industry is to do more than simply meet the immediate demands of a crisis.
Every industry is feeling the impact of changing consumer expectations during the COVID-19 crisis. Healthcare is arguably one of the most impacted sectors. The rapid evolution of e-health has set a long-term expectation of more remote services for consumers. Crucially, the innovation that is happening at new break-neck speed within the industry can be used as a force for good and enable healthcare services that are more inclusive.
Let me explain. Since 2015 we have been focused on the positive disruption of healthcare through dedicated multi-partner Startupbootcamp programmes in Berlin, Chengdu, Miami and Hartford with additional single partners and projects across the globe, as well as by investing in more than 100 start-ups in this space. Our consistent strategy has been around finding technology-driven improvements along the patient journey, namely:
- Disease detection, diagnostics and treatment optimisation
- Chronic disease treatment (with a view to an ageing population)
- Remote-/Home care
A commonality we have seen across these areas is the search for innovative and automated ways to obtain, analyse and interpret data and a clear understanding of whether new solutions require regulatory approval. Knowing this enables the identification of solutions that have a tangible impact to target groups and a real opportunity to change healthcare as we know it. Significant progress has been made over the last five years, but COVID-19 has propelled us faster than we could have imagined.
Obstacles for new tech solutions
Before we look ahead, it’s imperative to take learnings from the journey of healthcare innovation. During our 5+ years of healthcare innovation a consistent frustration is finding new solutions that then never pass regulatory approval. In the early days this was because there was doubt even how to do the approval – but nowadays it’s just a time-consuming process that requires any healthcare start-up to have solid seed funding, even before they can really prove that you have something real.
The market has adjusted with “sandboxes”, clear approval paths for digital solutions and health focused investors who understand what it takes to get approval. Once the regulatory ‘tick’ is in place they can gain traction fast and then raise real scaling money – but this rarely happens.
This is because the adoption of new solutions by the healthcare providers and even individual healthcare professionals is extremely slow, and without traction it becomes difficult to raise the needed funding to expand. The result is that the healthcare start-up scene has previously been fragmented with thousands of small start-ups who are fighting for customer attention, paying clients and for “bridge” funding. In the past we have seen individual companies gain momentum and become a “local market leader” but not having the financial power (or strategy) to expand globally or even across regions.
This is why we have found innovation is best achieved via an alternative path – by government healthcare providers and corporate healthcare companies working directly with healthcare start-ups. If a healthcare provider is able to define a clear need or a gap, they can be sure that there is a start-up that can facilitate a relationship with the right team or teams to serve their needs and ultimately innovate healthcare.
The COVID-19 effect
So how has healthcare innovation played out during COVID-19, and what innovations have come as a result? COVID-19 and the accompanying panic reaction has put improved healthcare at the top of the priority list for governments, corporations and every human being. Every single person now wishes to be the “CEO of their own health.”
We have already seen some start-ups capitalise on this and use COVID-19 to break through a difficult market. Clearstep has developed a chat-bot based COVID-19 screening app, designed to give individuals better insight into their symptoms and health status. Unlike traditional ‘symptom checkers’ it goes more in-depth to combine symptom checking with screening for potential exposure to the virus.
biotx.ai, with its proprietary algorithms they identify complex patterns in high-dimensionality biomedical data (or in other words, technology that identifies why a person gets sick and how to fix it) is now applying its superpowers to a COVID-19 fix. Its AI approach on investigating interactions of novel genes is being validated with data from 500,000 subjects in the UK Biobank.
During just the past few months we have engaged with multiple healthcare providers to get an updated view of what solutions we should be looking for during the coming year. COVID-19 solutions are obviously top of the list, alongside anything that proves to be faster, cheaper and higher quality than what has existed previously.
The pandemic has shown that there is power in cross-sector collaboration, with healthcare organisations, charities and big corporations and start-ups working together to deliver quickly on changing public needs.
The combined superpowers of FAMGA (Facebook, Apple, Microsoft, Google, Amazon) entering healthcare and upping the ante during COVID-19 is already changing everything. All of the above tech companies invest heavily in their own R&D and start-up investments and acquisitions and have the power and reach to fix the fragmented market and roll out winning solutions globally. The VCs/PEs, with more dry powder available than ever before, with an impending recession at hands, and a promise of potential fast exits opportunities created by FAMGA, will pour more money into the best of health start-ups.
Corporate interest and focus on healthcare has never been stronger in the form of both internal and external spending’s. A number of analytics companies claim that 2020-21 is the time where the Corporate R&D spending in healthcare will overtake all other industries and be the domain with overall highest spending. Most corporates in the health space have by now established Corporate Venture entities which again bring more capital to the start-ups.
Plus, after years without IPOs in the healthcare domain suddenly we have recently seen five big IPOs (Livongo, Health Catalyst, Change Healthcare, Phreesia, and Peloton) with a combined value of $18 billion. Now that a lot of health focused investors and entrepreneurs in this space had their payday, we anticipate the investment appetite will increase. Exciting times ahead.
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