India: Shift towards digital spurs growth of healthtech firms amid pandemic

Photo by Hush Naidoo on Unsplash

Healthtech startups in India have got a fresh lease of life as the nationwide lockdown and social distancing norms have created a significant demand for them in the past few months.

In the peak of the pandemic in India, in June, DocsApp, a 24×7 digital healthcare platform that connects patients to specialist doctors through chat, call and video, merged its operations with MediBuddy to cater to a larger consumer segment.

The merged entity attracted $20 million in funding from a host of investors such as Bessemer Venture Partners, Fusian Capital, Mitsui Sumitomo, Beyond Next Ventures, Milliways Ventures and Rebright Partners.

“With tailwinds supporting the healthcare industry and e-health becoming the new normal, we have seen an increase in people opting for online doctor consultations, with an average of 60 per cent increase in consultations across various departments,” Satish Kannan, co-founder & CEO, MediBuddy-DocsApp, told DealStreetAsia.

Meanwhile, e-health platform Practo Technologies, backed by Sequoia, Matrix, Capital G, and Tencent, among others, reportedly registered a whopping 600 per cent growth in online consultations since the Indian government announced a nationwide lockdown on 25 March. As much as 70 per cent of its consumers comprised first-time telemedicine users.

And these are not the only ones. Teleconsultations at Bengaluru-headquartered, on-demand healthcare service Mfine, too, is said to have recorded 3-4 times growth since March-end.

“Healthtech, especially app-based solutions, home healthcare, and telemedicine have found huge acceptance among consumers over the last few years,” said K. Ganesh, serial entrepreneur and promoter of Portea Medical and online grocery store BigBasket. “The demand has increased during the pandemic and in the new normal and post-COVID scenario, India is poised to witness significant advancements in this domain.”

Portea Medical, of late, has been busy servicing COVID patients through its home isolation management programme.

“Healthtech overall has got a strong fillip but key segments within the sector that have witnessed traction are telehealth, e-pharmacies, B2B e-commerce, digital therapy, online fitness, clinical intelligence platforms, patient triaging, doctor discovery platforms,” said Sunil Thakur, New Delhi-based managing director at healthcare-focused private equity firm Quadria Capital.

“COVID has brought healthcare at the centre and front of not only on the policy but also in the minds of general public,” he added.

Currently, the doctor-patient ratio in India is abysmally low, standing at 1:1400. “This is where home healthcare and telemedicine services have the potential to become force multipliers. In most cases, doctors only need to remotely monitor the patient’s condition, analyse the diagnostic reports, and suggest the course of action. These services can be provided from the comfort of their homes and there is no need to visit a clinic,” said Ganesh.

Although telemedicine has been around for years in developed countries, in India, it did not pick up due to a slew of factors such as lack of technology adoption and consumers’ overall reliance on conventional healthcare.

Hits and Misses: The Road Ahead

Benefits of healthtech have indeed come to the fore during the COVID-19 pandemic that has forced people to stay indoors and yet avail healthcare services.

“What demonetisation has done to digital payments, COVID has done to the adoption of online health,” said MediBuddy-DocsApp’s Kannan.

According to statistics from DataLabs, the Indian healthtech market is set to contribute $21 billion by 2025.

“There is ample room for further growth…..development will be primarily led by homegrown health-tech startups, with telemedicine, out-of-hospital home healthcare providers, and online pharmacies leading the wave,” said Ganesh.

However, this doesn’t mean the sector is devoid of challenges. Important factors that are currently critical for the healthcare sector to grow are “coherent policy framework, resourcing, infrastructure and financing,” said Quadria Capital’s Thakur.

Currently, there is a paucity of physical resources in India in areas of primary care, secondary and tertiary care and diagnostics. Also, in terms of financing, while the government has rolled out a few policies for the lower-end of the population, there is a big “missing-middle” population which is left out of any sponsored scheme, said Thakur.

Echoing similar concerns, Ganesh also reflected on the lack of clear guidelines and public-private-partnerships that continue to plague the sector.

“Aspects such as insurance coverage for non-institutional healthcare, digital healthcare, and diagnostic devices and guidelines for home healthcare need more focus,” he said.

Investors, however, have recognised the initial signs of growth in the sector and are looking to bet big on emerging startups.

Apart from MediBuddy-DocsApp, other startups that raised funding this year include CureFit, Wellthy Therapeutics, Mindhouse and PharmEasy.

According to data available with research firm Venture Intelligence, private equity and venture capital firms have invested $1.14 billion in healthtech startups since 2018.

VC Investments in B2C Healthtech Startups

Expand Table

YearNo. of DealsAmount ($M)
H1 202014148.39
H2 201923361.95
H1 201917279.73
H2 201819268.08
H1 20182582.63
H1 20171978.17
H1 20161648.89
H1 2015822.87
Source: Venture Intelligence

India has produced a unicorn in most new-age sectors such as e-commerce, transportation, food delivery, and travel and hospitality. Even, content, fintech, logistics and business software have seen companies riding over a $1 billion valuation.

But there is yet to be a unicorn in the health sector, despite its prospects.

“Models that have the ability to offer a wider and deeper use case, be it with consumers or with institutions, have a better chance to succeed,” said Thakur. “Ease, cost and benefit of adoption is critical for success of these models. We believe e-pharmacies, teleconsultation, service aggregators, supply chain disruptors, digital therapy models have better chances to succeed.”

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.