Why investing in health is different
Disruptive Health Technology
Investing in Digital Health/Health Tech right now means tapping into a promising new and disruptive line of business, already established, while contributing to health impact.
The Digital Health market is taking off. Annually hundreds of billion USD is going into the market and it’s certainly growing. Investments increased by 45% in 2020. But despite improved global health during the last decades, healthcare demand is still increasing, e.g.:
An increase is chronic disease because of both lifestyle and an aging population
Healthcare spending increases accordingly
50% of the world’s population still lacks access to proper healthcare
Insufficient funding and competence
We are in a unique time in history where multiple technologies which would historically occur once in 100 years, are emerging simultaneously and thus creating amazing opportunities for rapid growth and technology application
Digital Health/Health Tech is the key to solving current healthcare issues. This includes efficiently promoting a healthy lifestyle, improving access to high quality care, and preventing accelerating chronic conditions. Norway and the Nordic countries are advancing rapidly when it comes to investing in and developing their health care systems.
Three key pointers from the North:
In the Nordics, the markets are less complex (single payer systems) and increasingly incentives get in place to promote the paradigm shift enabling more and equal health for the buck
Companies from this region combine world class health and tech competences from the start. They build to address health by means of tech, and handle all the issues at hand without the hurdles of internal tradition and legacy. They are high quality and fast paced and proactively prove themselves by gathering medical/technical/market data on the highly accessible Nordic markets
These companies increasingly attract big pharma, big tech, big medtech, private healthcare providers, insurance companies, and others. This is largely due to being able to adapt faster to new market circumstances
What are the risks?
Say that the product is medically and technically validated, available and in operation on the market and the team performs well. What risks do you need to prepare for?
Risks include:
Legal aspects – Policy and laws are slowly adapting to the digital opportunities and they also vary from country/region to country/region, potentially leading to increased expenses surrounding gathering intel, securing approvals and generating user adoption
Healthcare systems (and clinicians) could be resistant to new technologies, possibly opposed to change or struggling with hurdles such as negative attitudes and legal, organizational, infrastructural and financial hurdles such as reimbursement models
Early stage companies – Risks includes:
Medical risk – the product doesn't solve what it claims
Technical risk – the product doesn't work
Product/market fit – the market doesn't want it
Team risk – the team doesn't have the necessary skill-set and experience to build and run a successful company
Financial risk – the company cannot raise enough funds before they become profitable enough to self-sustain their activities
How does the Health sector differ?
The upside is the sectors’ purpose and societal impact while still being economically lucrative, while the downside is time and costs to market as well as medical risks in addition to other traditional risks.
However, Digital Health/Health Tech often has the advantage of developing and adapting a lot faster than traditional life science and thereby mitigating medical risks – by gathering data and clinical results from more users a lot faster. And the health sector in general has the ability to make vast improvements in speed, data utilization and streamlining the potential for scalability through technology. This potential speed and rapid utilization of data was illustrated during the clinical studies of vaccines developed for Covid-19. The global crisis and a common goal also paved the way for new tools and new ways of working.
Contribution by
Marianne Larsson, Innovation Skane
