Sergei Voinov: Investment in MedTech slowed down by regulatory environment

Russian venture funds are not overly enthusiastic about investing in digital solutions for medicine, especially compared to Western ones. Meanwhile, digital innovations are expected to revolutionize medicine soon – even today, doctors advise patients remotely, and an electrocardiogram can be taken with an ECG app on Apple Watch. Sergei Voinov, Acceleration Director and head of the Skolkovo Foundation’s Digital Health cluster spoke with Invest Foresight about the barriers hampering implementation of digital healthcare solutions in Russia and digital technologies driving the medical industry during the Open Innovations Forum.

– Which digital technologies are changing modern medicine most of all?

– One of the most important innovative technologies is definitely artificial intelligence. This important technology has been applied in medicine for a long time. If you remember, when in the early 1990s the internet came into our lives, debate arose over its implications – whether it was necessary, useful, or even convenient. The same thing is happening in medicine now – there is a lot of talk about whether artificial intelligence is effective, or whether it can actually replace a doctor. True, it is unlikely to do so fully, within the modern horizons. But it is capable of automating routine business processes as well as of building some new ones – these changes in the medical industry’s framework are important, and they are about to occur. For example, AI can be used to analyze medical images. Skolkovo companies such as Botkin AI and Third Opinion are working on solutions that detect tumors on computed tomography, MRI, X-ray, or mammography images.

– What other technologies are becoming increasingly important in medicine? What about virtual reality?

Yes, this technology is widely used – for example, in solutions for patient rehabilitation. Among Open Innovations Forum participants there was founder of the MindMaze project, a Swiss unicorn company that uses VR and gamification in the rehabilitation of patients after stroke, including by helping them to practice movements. Modern methods allow providing stroke or car accident survivors with a new quality of life. This is a very hot topic and the more such projects, the better it is for medicine. There are many such projects at Skolkovo.

Is the Augmented Reality technology in demand?

Augmented Reality is a more complex technology in terms of implementation. Still, its adoption by the medical industry is an achievable goal for the next five to seven years. The technology may be useful in the operating room environment. For example, in the United States there is a Surgical Theater that creates a 3D replica of a patient’s anatomy for neurosurgeons to practice, using AR goggles, before an actual neurosurgical procedure. However, there are many obstacles for wide implementation of AR-based solutions. They will take about ten years to overcome. It is hard to make predictions about such things but I’m sure it is inevitable.

During the Open Innovations sessions on digital medicine, participants hardly discussed blockchain. Does it mean the industry is disappointed with this technology?

There is no disappointment. But the hype around this technology is over – just like around telemedicine, by the way. This is not bad. After disappointment peaks and interest drops, the blockchain industry will simply part with the people who had very little to do with it. They will be replaced by true professionals who will not be “washed away” by the period of disappointment and will stick around to develop more solutions for medical applications.

I am looking forward to it and I am sure that blockchain will be popular in many industries, including medicine. This is clearly a positive technology, and it would be absolutely rewarding to develop systems based on it. Yes, there are some issues related to the technology itself, but these obstacles can be overcome and I think that within several years, we will see very good blockchain projects.

– Are there many digital medicine startups at Skolkovo?

Skolkovo currently has about a hundred companies that are engaged in digital solutions for healthcare. It is a large number and a good selection of projects; there are 60%-70% of all companies on the market that have investments, piloted projects and clients. Some 15% of them are telemedicine platforms for various uses; there are also many companies that develop and manufacture medical devices: the internet of things in medicine is associated with telemedicine and even becomes inseparable from it. And, of course, there is a number of projects that develop AI solutions. There are not too many promising companies, some 17-20 of them, but all of them are Skolkovo residents.

– Digital medicine projects in Russia complain about a lack of investment, is that so?

Unfortunately, it is. Russia provides financing for digital medicine projects in rubles, while the US offers US dollars. The same relates to the capitalization of our AI startups in medicine: for instance, if a Russian company’s valuation is $2 mio, a similar Israeli company would stand at $50 mio.

Speaking of investments for pilot products, there are no difficulties. But entering the international market requires hundreds of millions of dollars, especially when it comes to large-scale biotech startups; such investments are hard to find in the Russian market. Yet, speaking of AI solutions in healthcare, they require less investments as compared to biotechnological projects and development of pharmaceuticals; regulatory load is less as well concerning clinical studies. It is a different matter that so far regulatory environment does not encourage large investors to believe in AI solutions for healthcare and roll in.

What initiatives is Skolkovo taking in this regard?

We are taking part in developing special regulations for innovation centers to have a corresponding status, which would allow for conducting research and development as well as pilot testing of unregistered solutions. Work is underway to develop such initiatives, and we are in contact with the regulatory authority on this issue. In this particular case, Skolkovo’s efforts are based on the delegated task of eliminating digital divide as part of developing digital economy in Russia. Today, two key barriers in medicine are registration of software as medical product and regulation of the use of personal medical data. The latter can be stored only on servers of healthcare institutions that have corresponding licenses. Out task is to make it possible; from the investment point of view, this will help the market advance, attracting clients, providing hospitals with an opportunity to legally purchase digital solutions, and making investors see potential revenue. And much in this area depends on regulatory environment.

By Olga Blinova

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