Health technology became the most watched startup sector in 2021. The COVID-19 pandemic fuelled investor interest in disrupting healthcare. Private capital poured into companies offering healthcare at a distance, like telehealth platforms. Nevertheless, health tech has always had its challenges. In Canada, potential disruptors must consider multiple stakeholders, specifically the three Ps: providers, practitioners, and patients. They have to manage different regulations for different regions and complex procurement practices. Nevertheless, there are opportunities for investors to take advantage of health technology in 2021 by taking a strategic and targeted approach.
- Digital health spending is expected to more than double. Today, digital health spending represents 3 percent of global health expenditures. That number is expected to hit 8 percent by 2030. With the Canadian health tech market currently valued at $5 billion dollars – 5 percent of the current global health tech market – there’s exciting growth potential.
- Poor UX can hinder consumer adoption. Despite the recent surge in popularity of healthtech solutions, digital health usage rates were in decline before 2020 and the onset of the global pandemic. Smartphone and tablet usage for healthcare dropped from 48 percent to 35 percent at the beginning of 2020. Meanwhile, wearable usage dropped from 33 percent to 18 percent. Interestingly, these drops were among younger users. This suggests that poor user experiences are hindering digital health usage despite growing consumer trust and confidence in these tools.
- Corporations are increasingly engaging in healthtech funding. The number of corporate venture capital (CVC) players sits at around 2,000, double what it was a century ago. This comes as corporations adopt a strategy of cooperating with and enveloping disruptive elements rather than fighting them.
- Align with incumbents based on your area of disruption. A healthcare organization’s venture funding arm will likely invest in care delivery and wellness while a life sciences organization will invest in data and platform technologies. Pursue partnerships and collaborations accordingly.
- Ensure your tech lines up with the right value prop. In healthcare, the tech comes second to the clinical models. The tech can’t automatically change existing healthcare workflows. Instead, it has to scale up healthcare processes that have been difficult to scale in the past. This helps innovators overcome the many hurdles to procurement and adoption.
- Understand who your target market is. The Canadian healthcare system consists of three main stakeholders: payers, providers, and patients. Even though the country has a single-payer healthcare system there are several entities that facilitate the delivery of services. So if a startup comes up with a cool solution for improving access to or quality of care, who do they sell it to? The patients directly or the providers who could improve their processes?
Watch out for
In 2020, Canadian health tech startups doubled the amount of money they raised in 2019. Over the past year, investors and consumers alike paid closer attention to telemedicine and AI-powered drug discovery solutions that speed up pharmaceutical research and development. This led to companies like Maple, which offers a telemedicine platform, and BenchSci, which developed an AI-powered drug discovery tool, to raise $75 million and $22 million, respectively, in 2020.