Experts have been predicting an explosive growth for the digital medicine market for several years now while very few investors doubt its prospects. The United States and China remain the key regions where digital healthcare solutions are flourishing. However, other countries are increasingly attracting attention and Russia is one of the emerging markets. CB Insights analysts found out which medtech startups are most appealing for venture rounds, what technology is worth investing in for funds and corporations and, of course, what niches will create new unicorns in the industry. Invest Foresight covers the major findings of the research.
150 investment projects
In order to understand which medtech areas of focus attract more investors, CB Insights identified the most successful startups in terms of raised funds. As it turns out, the list includes quite a variety of projects in the global market, including telemedicine, new insurance technologies, non-invasive test developers and even genetic tests.
The genetic startup Grail, which develops systems of genetic blood tests to diagnose cancer, ranks first in terms of financial support (over $1.6 bln). The startup founders hope that their tests will be able to diagnose cancer at early stages, and they have already succeeded in detecting lung cancer. Among the investors are Jeff Bezos and Bill Gates, pharmaceutical corporations and tech giants.
The medical insurance startup Oscar Health ranks second with a $1.26 bln worth of investment. The company is trying to optimize the cost of medical services for customers by offering them both insurance policies and helping find medical specialists.
The Chinese platform WeDoctor ($1 bln) comes third; its offers online access to medical services, for instance, making doctor appointments, ordering medicines and even holding online consultations.
Among another top-10 projects are the 23andMe startup, which develops genetic tests; Proteus Digital Health, which invented a smart pill with electronic microchips; as well as the telemedicine platforms Babylon Health and American Well, and the Bright Health insurance startup.
Stages and countries
Most medtech startups are established in the US: 116 of the existing 150 are based there. The US is followed by China (however, according to CB Insights, there are only 7 such projects there). Israel with 4 companies ranks third. In terms of regions, Asia has 17 medicine startups, Europe has 16 and Canada has one.
Speaking of the number of unicorn companies, China’s position looks more stable. Three of 17 companies with over $1 bln capitalization are based in China: the oncology big data company LinkDoc and online medical platforms Tencent Trusted Doctors and WeDoctor. France and UK have one unicorn company each, Doctolib e-health company and Babylon Health telemedicine platform mentioned above, respectively. The remaining companies operate in the United States. Notably, the Chinese startup WeDoctor, which is estimated at $5.5 bln, is the most expensive one on the list. The startups include both new projects with products not ready yet to be launched in the market as well as recognized global unicorn companies.
The projects that are currently at the stage of attracting seed investments are the least numerous, while most startups are late-stage projects that have already drawn series B and C funding. Five years ago, the situation in the market was different, with about 40% of all projects at the seed stage.
Projects that involve AI technology will be the most relevant, analysts at CB Insights say. The technology can be utilized in various healthcare areas, but its use for developing new medications, as well as for improving the quality of medical diagnostics, so far looks most promising.
Investors should also pay attention to niche projects for certain age groups and even genders. This primarily includes women’s healthcare solutions; startups that offer birth control solutions, as well as specialized women’s healthcare clinics, will be in demand. Solutions for the elderly are also extremely relevant: with the rapidly aging global population, the demand for technology will only increase. This applies to both homecare projects and remote healthcare consulting services.
Concierge solutions will certainly be a promising niche, with the use of a paid membership model to provide patients with a proper level of medical care. The approach is aimed to make their visits to medical institutions easier and also help them estimate future medical expenses more accurately.
By Olga Blinova