Decoding Sectors That Will Disrupt Indian Healthcare Delivery

Necessity spawns innovation. In an exponentially growing population like ours with increasing life expectancy, affordable healthcare innovation emerges as a prime area of focus. In India, the doctor to patient ratio is heavily skewed with only one doctor for every 30, 000 people in rural areas. Further, rural India accounts for 50 – 70 per cent of non-communicable diseases, the economic burden of which is likely to be ~$6.2 trillion for the period 2012-30 (Harvard School of Public Health).

Our fragile healthcare economy is grappling with multiple barriers – lack of disease awareness, trained staff, inadequate screening and diagnosis facilities and lack of timely intervention to name a few. To tackle these, innovators are introducing newer mechanisms that are enabling inclusive healthcare and making diagnosis as well as therapy quicker, more accurate, remotely available and affordable.

With the current technologies and advancements, we at Unitus Seed Fund believe these four sectors will have the potential to play a disruptive role in the course correction of healthcare delivery in India –

Devices

Low-cost devices have the potential to decentralise healthcare, eliminating existing inequities of absolute absence of care in more than 70 per cent of the country.  A great example is our investee, Mumbai-based UE LifeSciences’ flagship product iBreastExam, which is an ultra-portable and radiation-free device that accurately detects breast lesions with sensitivity higher than 85 per cent in under five minutes and a low false alarm rate of less than 6 per cent, not causing any pain or discomfort.

UE LifeSciences’ has tied up with private hospitals, diagnostic labs, non-profits and state governments, offering the scan at a very low-price point of ~INR 100, as opposed to a traditional mammogram that can cost a few thousand rupees. With one in every two diagnosed women dying of breast cancer, UE LifeSciences’ vision to make breast cancer screening less than $1 and a model that doesn’t require expert clinical manpower is noteworthy. The company, also backed by Biocon’s Kiran Mazumdar-Shaw has already screened ~20,000 women and has financial commitments to screen 600,000 women in 2017.

Affordable point-of-care devices like iBreastExam are displaying tremendous potential, by filling critical gaps in the entire care delivery value chain, while ensuring care is accessible at a low cost. The medical device industry in India alone is expected to grow to approximately USD $4.8 billion by 2019. The VC industry backing players such as UE LifeSciences, Neurosynaptics, Forus, Tricog and Achira Labs among others is a testimony to the potential this sector has.

So far, bigger corporates such as GE and Phillips have ruled the device market. However, their limitation of innovating for masses is an opportunity for younger startups to create innovative solutions. Whether those innovations scale in a standalone manner or merge with a bigger strategic player is something that will be witnessed in coming times. However, fact that most of these corporates are starting their own incubators is a validation of a ripe ecosystem for startups to innovate.

AI & Analytics

Data mining, data science, data analytics, cognitive computing, neural network, etc., we come across these terms more than often these days. And the usage is going to increase exponentially as cognitive systems creep into existing infrastructure.

According to Mordor Intelligence’s report, ‘Healthcare Analytics Market – Growth, Trends and Forecast (2016-2021)’, the global healthcare analytics market is projected to grow to $31.75 Bn by 2021, at a CAGR of 26.1%. Though the current funding landscape is nascent, few companies such as SigTuple, Niramai, QorQI, Qure.ai and Predible Health are making significant inroads. Data is considered king but not in its raw form. So, unless there are insights drawn from this data, their value will remain unexplored.

Taking leads from analytics, the insights could then aid in training the additional layer of machine learning algorithms thereby increasing the efficiency of care delivery. The combination of analytics and AI are bound to increase the accessibility of healthcare in India’s remotest corners in areas of remote monitoring, public health and telemedicine among others.

Currently the biggest challenge faced by AI/analytics startups is lack of annotated or curated data. Though data exists in fragmented pockets in India and is being tapped/digitised by a few companies, what it lacks is seamlessness and the curation in which it can be readily consumed by startups.

Rather than waiting for the middle layer market of data curating to mature, startups must innovate to integrate different formats of data coming from multiple sources by building their own APIs, extraction models and bartering with data source organisations. Lack of patents and defined regulatory needs, first mover advantage and deep neural networks capable of learning faster will be winning factors.

Home Health

Healthcare at Home’s recent $40 Mn funding should be seen neither as a surprise nor as an indication of saturation with the likes of Portea ($46.5 Mn) and Nightingale (USD $38 million) already existing in the market. Why? Because, the broad nature of home health services ranging from peripheral and wellness services to core medical care is bound for further disruption with newer models.

The biggest challenges are two; execution and operations. Thus, the defensibility for newer players will come through uniqueness in business models. Whether it is a standalone aggregation of existing services or an extension to brick and mortar hospitals through hub and spoke models -reduced cost of customer acquisition, retention of care delivery personnel, lean operations will be key factors of success. Building hyperlocal will be a key aspect of ensuring a solid fundamental while scaling simultaneously. While use of technology & innovative devices for point of care and remote monitoring and diagnosis will further aid these business models.

What Will It Take For Startups To Succeed In Healthcare

1. Within the existing frameworks, we believe most of the healthcare startups in India, will turn out to be B2B or B2B2C models, with very few B2C, typically focussed around the hospitals and care providers. Pay per use models will largely be B2B2C. In such a scenario, it is important to figure out what will enable these care delivery centers (hospitals, clinics etc) to push the product to the end customer. Asking the right questions in the beginning will ensure greater stickiness and sustainability.
2. Currently in the market, there are several well-funded startups, especially market aggregators and home health providers. Churn rates of both customer sign ups (in case of aggregators/online consultation etc.) and care provider retention (in case of home health companies) are the key parameters to determine success. Many of these providers are able to do very quick early sign ups, however if the LTV (long-term value) of the product isn’t attractive enough, drop rates are bound to be high. Thus, whether it is a WhatsApp like free model or a freemium model that should be adopted to penetrate technology and prove the value before getting to monetisation, needs to be determined well in advance.
3. If the solution is ahead of its times, it is generally considered “good to have.” In such cases building a compelling model around it to be unit positive since the beginning is tricky. Thus, a long-term vision and thought towards connected healthcare should be kept at back of mind while crafting the business model.

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