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Why Nascent Health Tech Start-ups are Seeing Increased Interest from Investors

Why Nascent Health Tech Start-ups are Seeing Increased Interest from Investors

With the pandemic bringing healthcare infrastructure in the country into sharp focus, many nascent healthtech start-ups have seen increased interest from investors

Illustration: Anirban Ghosh Illustration: Anirban Ghosh

Necessity is the mother of invention. This is perhaps best exemplified by the innovative solutions being developed by start-ups to tackle Covid-19. From drones for delivery of vaccines and medicines, to robots instead of guards at hospitals, to on-the-spot Covid-19 testing, to smart stethoscopes that shield doctors from the virus, and much more, India’s start-up story in health, pharmaceuticals, and artificial intelligence (AI)-based medical technology is gaining momentum. There were 7,128 healthtech start-ups in India as on March 24, 2022, according to Tracxn Technologies, a global platform to track innovative companies.

There has been greater investor interest in these start-ups after the Covid-19 pandemic when healthcare took centre stage in all aspects of life. An indication of their success is the fact that these start-ups are increasingly becoming unicorns. According to Invest India, the national investment promotion and facilitation agency under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce, Noida-based healthtech start-up Innovaccer became the first Indian healthcare unicorn, and is currently valued at $1.3 billion. Innovaccer analyses healthcare data to provide actionable insights to hospitals, insurance companies, and other organisations and businesses. Earlier this year, PharmEasy, an online pharmacy and diagnostics company, became a unicorn, with a valuation close to $1.5 billion. The company is now eyeing a valuation of about $7 billion through an initial public offering (IPO). Invest India predicts that healthcare in India is likely to see more unicorns with the growth of healthtech start-ups such as CureFit, Practo, HealthifyMe, etc.

The market is also significant. According to Invest India, the health-tech market in India is estimated to reach $5 billion by 2023, growing at a compound annual growth rate (CAGR) of 39 per cent post the pandemic. Digital shift, use of better technology, and favourable government policies are facilitating the growth of the market.

The pandemic years have not only motivated start-ups to enter the health and pharma domain, there is also a clear trend of other companies investing and partnering with them. For example, Tata Digital, a wholly owned subsidiary of Tata Sons, acquired a majority stake in e-pharmacy 1mg in June 2021 with the start-up receiving capital infusion of $100-120 million in total. In February 2019, Cipla acquired a 11.71 per cent stake in healthtech start up Wellthy Therapeutics for Rs 10.5 crore.

The union government has been supporting the start-up ecosystem for the past few years, but Covid-19 triggered special support for health, pharma, and medical technology solutions. Financial and infrastructure support is pouring in from across departments. So far, the government has supported over 1,000 biotech, pharma, and medical devices start-ups since the start of the pandemic through various ministries. “The Covid-19 pandemic has not only presented challenges but also several opportunities for India to grow. The crisis has opened the floodgates for Indian start-ups, many of which have risen to the occasion and accelerated the development of low-cost, scaleable and quick solutions,” says Amitabh Kant, CEO of NITI Aayog, the government’s policy think tank.

Further, the National Start-up Awards 2022, organised by DPIIT, has a new category this year, targeted at identifying innovations tackling the pandemic (preventive, diagnostic, therapeutic, monitoring, digital connect, work-from-home solutions, etc.). According to Invest India, the country has more than 66,359 DPIIT-recognised start-ups across 642 districts as of March 21, 2022, of which the second highest—9 per cent—are from healthcare and life sciences.

The private sector has also got into the act, in partnership with government agencies and educational institutes. For instance, Krishna Ella, Chairman & MD of Bharat Biotech, is contributing `200 crore to a corpus of funds with the Technology Development Board (TDB) of the Ministry of Science & Technology (which will contribute an equal amount) to support start-ups in different fields on relaxed terms and conditions.

The Pfizer Innovation Program, to support breakthrough healthcare innovations, is supported by Atal Innovation Mission (AIM), NITI Aayog, Accelerating Growth of New India’s Innovations (AGNIi), Foundation for Innovation and Technology Transfer (FITT), IIT Delhi and Social Alpha, a multi-stage innovation curation and venture development platform for science and technology start-ups. Version 1.0 of the programme had incubated nine healthcare innovators and supported 19 IP (intellectual property) filings. Now, in the first year of version 2.0, three winning start-ups each in the areas of oncology and digital health, will receive a grant of up to Rs 65 lakh each for product trials, pilot studies and product market launches. This is one of the largest such programmes, both by grant value and partnerships, focussed on incubating and commercialising healthcare start-ups in the country. AIM and NITI Aayog will provide the start-ups with access to their entire network of incubators and facilities via co-incubation and will also provide technical and strategic advisory to support the programme and the start-ups. IIT Delhi will be the principal incubation partner with support from others.

Healthcare start-ups, backed by digital technology, internet and AI, are now not limited to online pharmacies, drone deliveries of vaccines and medicines, or telemedicine. Several are targeting diverse areas of healthcare, and the approaches and business models are rather interesting.

For example, public health experts have said that the coronavirus infection has long-term effects on mental and physical health. There are known health benefits of wellness activities, yet building them into our daily lives is a challenge. Feeding into this need is Nagpur-headquartered NowZone. The start-up has developed a real-time breath monitoring device (global patent pending), which also contains, remarkably, Buddhist and Vedic teachings-based content for meditation, breath work, pranayama, yoga and even sleep stories.

“Nowfulness meditation is about experiencing the Middle Path, balancing the ‘What Is’ and ‘What If’ needs of current times based on science. Our device monitors breath in real time, notifying one-minute slow, deep breathing at 6 bpm (beats per minute), most needed when in stress,” says Akash Madnani, Founder and CEO of NowZone. So far, the start-up has received funding of over $1 million from Tata 1mg, Dineout and Healthark Insights. It has sold over 5,000 devices, with a target of 10 million subscribers—including device sales—in the next five years. The current valuation of the start-up is Rs 37.5 crore ($5 million).

Another start-up, Gurugram-headquartered Pristyn Care, recently entered the unicorn club with a valuation of $1.4 billion (`10,963 crore) and investments of $177 million (Rs 1,345 crore) from marquee investors like Sequoia Capital and Tiger Global, among others. The company specialises in elective surgeries using advanced treatments such as laser, laparoscopic treatment in ENT, urology, proctology and gynaecology, and kidney stones. It is also an end-to-end healthcare service provider (not an aggregator). Pristyn Care takes care of the patient through the treatment journey starting from the first OPD visit, diagnostics, admission, operation, post-op and IPD to insurance claims, discharge process, and follow-ups with the surgeon. Besides, Pristyn Care has used technology to integrate its panel of doctors, partner hospitals, care coordinators and the insurance claims processing team. “We invest heavily in upgrading the idle, unutilised space in hospitals in metros and Tier II and Tier III cities and towns. We handhold them and set up systems, including creating a robust IT infrastructure there,” says Harsimarbir Singh, Co-founder of Pristyn Care.

Or take HealthPlix Technologies. The Bengaluru-headquartered Software-as-a-service (SaaS) platform for doctors recently released the mobile version of its AI-powered electronic medical records (EMR) app. ‘EMR on Mobile’ enables real-time access to patients’ information from anywhere, at any time. The app is built on the same architecture as the company’s flagship AI-powered desktop EMR. “This is not just a companion app to a web-based EMR. It is a standalone, mobile-first EMR packed with features meant for the Indian doctor. Any doctor in India can instantly unlock remote care capabilities and adopt this EMR on the mobile with zero infrastructure requirements,” says Subhadeep Mondal, Vice President of Products at HealthPlix Technologies.

The mobile EMR has been accessed by doctors in over 350 cities, including Tier II and Tier III cities. In the wake of the Covid-19 pandemic, doctors can use ‘EMR on Mobile’ to manage both in-person and online consultations seamlessly across the same pool of patients. “We firmly believe doctors need agile and mobile-first solutions to drive better health outcomes,” says Burhanuddin Pithawala, Head of Growth Marketing at HealthPlix. The start-up is backed by Kalaari Capital, Lightspeed Ventures, Chiratae Ventures and JSW Ventures, and has raised $23.5 million in funding till date.

While start-ups are bringing cutting-edge tech into healthcare to improve patient outcomes, a bigger push is needed to help them scale up to benefit a wider population.