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Can Healthtech Startups Stand Up To The Task Of Organising India’s Scattered Healthcare Ecosystem

Can Healthtech Startups Stand Up To The Task Of Organising India’s Scattered Healthcare Ecosystem

From 2015 to Q1 2019, the total funding in healthtech startups was $1.34 Bn with a deal count of 334

DataLabs by Inc42 estimates India’s healthcare industry to be valued at $202 Bn this year

Medical tourism and the use of emerging technologies is the biggest opportunity for healthtech startups

The healthcare system in the Indian subcontinent has had a unique tinge of tradition and reliance on natural treatments for millennia. Ayurveda, the ancient system of medicine based on natural elements is native to the Indian subcontinent and has been a pillar of the country’s healthcare system over the centuries. The infusion of technology to create the “healthtech” sector has expanded the reach and availability of healthcare further. Of course, in modern times medicine and healthcare in India got revamped with a greater focus on allopathic medicine, alternative wellness, delivering services to the rural sector and the improvement in the overall public healthcare landscape, which has made India a hotbed for medical tourism.

The government has estimated the market value of medical value tourism (MVT) in India to reach $9 Bn by the year 2020. The estimated growth rate of the medical value tourism industry is at 24.57%. In 2018 the total contribution of MVT ($6 Bn) was 2.40% in the overall market value of tourism in India ($242 Bn).

As per DataLabs by Inc42 estimates, the total market size of the healthcare industry in India is projected to be $202 Bn this year. This is a growth of 84% from the $110 Bn market size in the year 2016. The driving force behind the phenomenal growth of the healthcare industry can be linked to factors such as the emergence of healthtech, the rise in medical value tourism and the increase in the number of lifestyle or urban diseases and disorders such as cardiovascular diseases and diabetes.

Funding And Deals: Healthtech Startup Ecosystem In India

As per DataLabs by Inc42, the total number of funded healthtech startups between 2014 and Q1 2019 is 268. Although healthtech startup contributes a mere 9.26%, it is still the sector with the fifth-most number of funded startups in India.

From 2015 to Q1 2019, the total funding in healthtech startups was $1.34 Bn with a deal count of 334.

Looking at the QoQ trend of investment inflow in the Indian healthtech startups we can conclude that in Q3 2018 the funding had reached its historical peak with a total investment inflow of $285 Mn. Since that time, a declining trend in the venture capital investment inflow is evident, in the following two quarters (Q4 2018 and Q1 2019) the total recorded investment in healthtech startup is below the “Average Q” (quarterly funding average for 2015-2018) which stands at $84.35 Mn.

The primary factor for the huge dip in funding amount is the cloud of uncertainty over the legitimacy of online pharmacy operations, after the Delhi High Court ban in December 2018. That status has since been clarified thanks to a Madras High Court ruling this year, but the damage to the investor sentiment towards healthtech is seen in the decline in funding amount. However, funding Indian online pharmacy startups started picking Q2 2019 onwards with the likes of 1Mg and Pharmeasy raising funding rounds.

Although the contribution of online pharmacy startups to the total investment pool of healthtech startup was 18.52% with total investment inflow of $280.6 Mn (2014 to Q1-2019). The impact of startups in online pharmacy segment is comparatively higher than its contemporaries provided the adoption of online pharmacy in India is higher than any other healthtech sub-sector in India.

Emerging Opportunities For Healthtech Startups In India

Merging Deeptech With Healthcare

The advent of technologies such as artificial intelligence (AI), machine learning (ML), gene-editing techniques such as CRISPR, along with infrastructural improvements through blockchain and IoT has opened the door for more entrepreneurs to capitalise on business opportunities in enterprise solutions, medical devices and disease diagnosis.

According to an Accenture study, AI and ML in medical tools and robotic intervention could address 20% of the unmet clinician demand. In the context of India, the shortage is even more severe, given that the year on year growth of Indian population is around 26 Mn in contrast the combined supply of doctors and nurses in our country is approximately 182.5K per year. The magnitude of the shortage is best exemplified by Bihar, a state where one doctor servers around 28.3K people, and Uttar Pradesh, where one doctor serves 19.6K patients.

The use of emerging technologies such as robotics and AI can help public doctors in India in — patient consultation, improve the efficiency of treatments and reduce patient turnaround time without impacting the quality.

Disrupting Health Insurance

The penetration of health insurance in India is still low as 62% of the medical expenditure is paid out of pocket by patients. By 2021, the percentage share of the population over the age of 65 to the total Indian population is estimated to be 6.7%, which means that by 2021 around 95 Mn people in India will be above the age of 65. This highlights the need to increase insurance penetration in India as soon as possible. The emergence of insurance tech startups in India can play a crucial role in terms of making insurance more affordable, cashless and easily accessible to the masses.

Tapping Medical Tourism

Medical value tourism remains a big growth prospect for healthtech startups in India. As per DataLabs by Inc42 estimates, the number of medical value tourist inflow in India is projected to be $448 Mn by the year 2020. So far the majority of the startups operating in Indian healthtech sector are operating in segments such as online pharmacy, doctor discovery, home healthcare etc. The business opportunity in medical tourism available for healthtech startups in India is projected to be $9 Bn by 2020.

What India’s Healthtech Ecosystem Needs

Overall the advent of technology in public healthcare of India can improve the lives of billions of people. For optimal penetration of technology in the healthcare system, fundamental problems such as tech readiness of Indians, lack of awareness and non-availability of high-speed internet in remote areas need to be addressed.

While AI and ML have improved the delivery of healthcare services, there’s still work to be done in terms of customising their applications for the Indian context. Since healthcare is so personal and dependent on geography as well, a one-size-fits-all approach would never work.

In addition to this, a strong and robust data protection framework is also required to boost investor confidence towards the healthtech sector in India. Healthcare data is currently unstructured and available in as many languages as are spoken in India, so the task of structuring this data is not small either. These improvements would pave the way for more entrepreneurs to pursue healthcare business opportunities in India.



Sandeep Singh

Inc42 Staff

Sandeep is a research analyst at Inc42 DataLabs. As a market researcher, he has a keen interest in blockchain and public policy.

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