Digital health startups and tech giants are using consumer technology to change the way patients access care, potentially disrupting the industry.
Boyden's perspectives on the news and trends that are transforming industries
Technology has been permeating the healthcare sector for decades. In the past few years, technological and scientific advancements, along with the pandemic, have hastened this process. Patients have come to embrace online and digitally enabled healthcare, creating a fundamental change in the market—and a massive opportunity for digital health firms that take healthcare directly to patients.
Venture capitalists and entrepreneurs see an opportunity for disruption in the global healthcare sector. Worldwide investments in digital health startups nearly doubled in 2021, to $57 billion, according to CB Insights. The influx of capital is fuelling a proliferation of new telemedicine platforms, e-pharmacies, wearable devices, home testing kits and other consumer-oriented products and services. The number of unlisted digital health startups valued at $1 billion or more has quadrupled from five years earlier.
Digital health startups are competing both with established healthcare companies and technology giants. Some big healthcare incumbents, including Johnson & Johnson and GlaxoSmithKline, are spinning off their consumer healthcare divisions in hopes they will become more innovative. Others are venturing into digitisation and consumerisation of their own. Israeli firm Teva, for example, has developed a digitally enabled inhaler.
The tech giants have also awakened to the consumer health boom. Alphabet, Amazon, Apple, Meta and Microsoft invested about $3.6 billion combined in health-related deals last year, according to CB Insights. They are especially keen on devices and data. Google acquired FitBit. Amazon launched its Halo band. Apple’s newest watch has an electrocardiogram (ECG) function. Samsung’s smartwatch has ECG and blood-pressure monitors. The giants are also adding health-related services to their cloud offerings.
The digital health startups are diverse, including simple online pharmacies like India’s PharmEasy, and Truepill, an American firm that now fills 20,000 prescriptions a day, The Economist reports. Telemedicine firms offering a wider range of services have thrived. China’s WeDoctor, which operates “internet hospitals”, was last valued at nearly $7 billion. In the U.S., Teladoc saw its revenues shoot up 80% year on year in the third quarter of 2021. At-home diagnostics is another rapidly growing area, offering devices that analyse blood or stool samples for a wide range of health conditions.
Doing business in a highly regulated industry has slowed consumer technology’s disruption of healthcare. Eager startups must proceed with caution as regulators in many countries step up their scrutiny, setting standards for software and addressing data privacy. This could catch up with some firms, while others are seeing slowdowns as the world adjusts to life with COVID. But as Scott Melville of the Consumer Healthcare Products Association says, “There is no going back to the old paternalistic system where you are relying exclusively on a medical professional for your healthcare.”
