The Healthtech Boom: What Makes A Unicorn

The healthtech industry in India is gearing up for exciting times ahead, say industry pundits and several reports as the sector is growing rapidly and exponentially. According to a 2022 report by consulting firm RedSeer, post-pandemic the healthtech sector is set to grow at a CAGR of 35 to 45 per cent over the next five to ten years

The healthtech industry in India is gearing up for exciting times ahead, say industry pundits and several reports as the sector is growing rapidly and exponentially. According to a 2022 report by consulting firm RedSeer, post-pandemic the healthtech sector is set to grow at a CAGR of 35 to 45 per cent over the next five to ten years. 

The industry is poised to touch USD 9-12 billion gross merchandise value (GMV) by 2025 and US$ 40 billion GMV by 2040. Currently healthtech in India is a US$ 1.9 billion industry with a huge headroom available for the healthtech firms to grow in times to come.

Experts believe that the increasing prevalence of chronic diseases and a focus on preventive care along with rising healthcare expenditure are acting as catalysts in the healthtech growth story of India. Namit Chugh, Investment Lead, W Health Ventures states that the healthcare industry in India is a massive USF 400 billion market and is growing rapidly at 20-25 per cent year-on-year.

He says that although technology in healthcare remains at a nascent phase it is gaining importance given the increasing digital penetration among consumers. “There are over 9,000 healthtech startups in India and over 2,500 investors with USD 16 billion of dry powder among them. These are strong catalysts for a rise in investments in healthtech in the coming years. In the last two years, despite dampened market conditions, healthtech startups raised over USD 4.2 billion cumulatively. Going forward, we expect this to exponentially increase,” Chugh says. 

According to a 2021 report by the RBSA Advisors, the healthtech sector accounts for less than one per cent of the overall healthcare industry implying that the sector has an imminent opportunity to scale its growth. Many experts believe that although the progress of the healthtech sector is commendable it is producing fewer unicorns than other sectors.

As per media reports the healthtech industry currently has seven unicorns of valuation above USD 1 billion which the industry experts say is lesser than other booming sectors like edtech. 2022 saw two startups wearing the unicorn hat, the online pharmacy Tata 1mg and the molecular diagnostics firm Molbio Diagnostics aided by investments from Tata Digital and Temasek respectively. 

The other unicorns in the healthtech space include Innovaccer, Pristyn Care, Pharmeasy, Citius Tech and Cure Fit. In this rosy picture of the startup world in India remains a hard fact that only a few startups really take off and become multi-billionaires grabbing the majority of the market share. So what makes them stand out?

Success Diet Of Unicorns

BW Healthcare World got in touch with three healthtech unicorns to understand what works for them to take the lead and garner investment from giant investment firms.  

Harsimarbir Singh, Co-founder, Pristyn Care says, “We are optimistic about reaching a revenue of Rs 1,000 crore by FY24 and have plans to go international soon. There are almost 44,000 private hospitals in India with only 10 per cent being in the organised sector mostly centered around Tier-1 metros, which prevents people in Tier-2 and Tier3 towns from accessing quality healthcare.”

Backed by Hummingbird Ventures and Sequoia Capital among other investors, the elective surgery platform Pristyn Care has over 400 in-house super-speciality surgeons across 42 plus cities and has treated 1 lakh patients successfully. “We have also created 20,000 jobs (direct and indirect) in surgical and non-surgical roles, most of which are in Tier-2 and Tier-3 cities,” informs Singh. 

“Since our start, exemplary patient care and service have been pivotal to our business. Initially, while we were also facing challenges in onboarding hospitals to use their empty operation theatre (OT) space, we were able to do this effortlessly by integrating technology with operations,” Singh points out.

For the Goa-based ‘Molbio Diagnostics’ backed by Temasek and Motilal Oswal, it was innovation that brought success, the company innovated a point-of-care PCR test platform ‘Truenat’ which took almost two decades of R&D to complete in its latest form.  

“It took almost two decades of research, development and commercialisation efforts to make Truenat the world’s first and only truly pointof-care, multi-disease real-time PCR platform that is completely laboratory independent and that can be deployed in the most remote locations,” says Sriram Natarajan,Director, Molbio Diagnostics. 

He says that one of the primary challenges that his company faced was steady access to funding to sustain through interlude periods of product R&D and subsequent validations. Moreover, Natarajan states that as a company operating since the pre-Covid period tremendous patience and efforts were required to establish the credibility and capabilities of an indigenous manufacturing company. 

For the data analytics healthtech firm ‘Innovaccer’ it was solving the interoperability challenge by building a cloud platform that would put them in the limelight years later. In 2011, co-founders Abhinav Shashank, and Kanav Hasija, began a data analytics project at Wharton and Harvard University that focused on bringing distributed data sets together and leveraging them through analytical technologies. 

The project explored how big data can be studied, crunched, and analysed to derive valuable insights. In February 2021, Innovaccer entered the coveted unicorn club after raising US$ 105 million in a Series D funding round led by Tiger Global.

“Since the beginning, Innovaccer has aimed for scalable products because we knew they had a use case that could save lives, and we wanted it to reach as far as it could. What sets Innovaccer apart is that it was the first to deliver plug-and-play connectivity with pre-built connectors,” says Abhinav Shashank, Co-founder and CEO, Innovaccer. 

He further says that this feature ensures that the data platform company’s customers have access to real-time, state-of-the-art analytics, which in turn puts Innovaccer ahead of its competition. 

Challenges In Healthtech

Industry leaders say that a healthtech venture is a slow growing business and to get established one needs to first build trust and reliability. “Unlike the e-commerce sector where one can bring in overnight business and customer acquisition through aggressive sales and marketing campaigns, the companies in the healthcare sector need to first build trust and reliability,” states Natarajan. 

On the current diagnostic industry challenges, he further says that presently innovation and technology development is limited to top medtech companies, and is still significantly reliant on imports. 

“The Government needs to enable this through the provision of better research facilities and more innovation funds to encourage healthtech startups to build meaningful platforms that deliver quality healthcare,” adds Natarajan. 

Industry pundits believe that building platforms in healthcare is hard, given the industry is highly complex. Being a massively trust driven sector makes it difficult for new brands to acquire clients with multiple stakeholders in the healthcare delivery such as patients, doctors, pharma companies, hospitals, diagnostic providers, etc. which only makes incentive alignment a difficult task. 

The healthcare sector is heavily regulated. When dealing with people’s lives, innovations need to be validated comprehensively leaving no stone unturned. Although necessary, this increases the difficulty in building new solutions in the healthtech sector. 

Experts further say that healthtech startups should find solutions to mitigate the complexities by partnering with traditional healthcare providers to leverage their trusted brand, and employ strong clinical protocols leading to substantially better clinical outcomes and patient experiences. 

To embark upon a scaling journey, startups often require sustained funding in order to gather as much ground as possible. Investment experts state that the time for free money is over, implying that VCs and VC firms are now looking at much broader aspects than just the market cap or the innovation. 

Chugh explains that the most vital parameters for investors while evaluating startups, especially in the current economic climate are large TAM (Total Addressable Market) ventures obsessed with user delight that have quantifiable metrics depicting 10x better clinical outcomes and patient experience; Product Market Economic Fit (PMeF) and a high ability to scale, startups that demonstrate growth powered by judicious spending and not at obscene costs; and a stellar founding team that comprises synergistic skills across areas like business, technology, and clinical knowledge. 

Looking Ahead

Industry wizards say that promising times await the healthtech sector in the future with 2023 touted as the year of innovation, experts say that innovation will spur in unexplored therapy segments like pain management, weight loss, oncology and respiratory ailments among others. 

These therapy areas have a large addressable market and comprise patients with high Lifetime Value that investors look at closely while providing funding implying that strong business models solving big problems will find customers and capital. 

Though the innovations are set to take over, the funding climate may remain restrained, say investment elites, and hence startups will need to focus on other metrics like working on user delight while working towards bettering their experiences and clinical outcomes. And additionally having a strong omnichannel presence will be vital to their holistic growth. 

Another growing trend that Chugh believes will be taking shape is the Indian healthtech companies building products and services to address the growing global demand for digital solutions from healthcare organisations. These could be nonclinical models or provider-assisting tools, he says 


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