Deep dive into… healthcare
Healthcare has become a thriving field to follow in the last few years and we are witnessing, as a venture capital, more and more investment opportunities related to it. Prior to the pandemic crisis, the trend was already emerging, and figures show that it is accelerating. VCs have invested no less than $89 billion into digital health companies since 2010, among which $30.7 billion (so more than a third) of that investment happened in 2021, according to data from Digital Health Business & Technology.
In each part of the world, health is an important topic. Not surprisingly then, the healthcare industry is also one of the hardest ones for startups as it relates to privacy, personal data, and other sensitive information. So when it comes to bringing solutions, things get way more complicated. New healthcare challenges are also growing with the aging population, the rise of chronic diseases, the more difficult access to healthcare, and the more demanding quality expected by patients.
Let’s dive into the different healthcare systems first, in order to understand how it is currently working. Then, we will see how these last years emerging trends in the healthcare industry will build tomorrow’s healthcare system and improve it to the benefit of the collective.
How does the current healthcare system work?
In western countries, the healthcare system is mainly digitized. This means that it relies mainly on digital softwares to centralize the patient information thanks to a unique patient ID. The healthcare system is built in order to provide all stakeholders of the patient care system with the same level of information. Centralization by the digitalization of patient data in the healthcare system is obviously the main benefit and prevents caregivers from spending too much time on administrative tasks. There is still a lot to be done in this direction as we estimate the digitalization of the healthcare system and the adoption of the patient personal health record are very variable in western countries: 15% of the population in France, 69% in Italy, 87% in the UK and the US…. and almost 97% in the Netherlands.
Health is wealth, as we’ve said in a previous article, where we talked about one of our Purple portfolio startups Lifen. Founded by Franck Le Ouay (former CSO of Criteo and member of the daphni community), Lifen is one of these startups whose goal is to improve the healthcare system by providing an e-health platform for healthcare professionals.
More than just gathering, data sharing has another main asset as it helps to be provided with general “trends” analysis, while protecting patients’ privacy and ensuring security. This has been enabled thanks to the emergence of AI and its applications in the healthcare system. For instance, Epigene Labs, another start-up of our Purple fund, uses AI to provide cancer drug hunters with a fully integrated genomics database in the cancer search field. Data is gold!
Digitalization and emergence of AI open up a lot of opportunities and result mainly from a change of paradigm, that the whole healthcare system has to adapt to: putting the patient in the heart of his care journey.
Building the future of healthcare industry
Startups and investors are seriously getting more interested in building the future of the healthcare industry. The health market represents between 10 and 15% of GDP in Europe and 18% in the US, so we can say that major changes are expected in the next few years. By 2028, the healthcare industry will witness a boom to reach a $250 billion market, with a growing place given to digital health (Source: Europe Digital Health Market, Magna Report).
In such a context, new solutions have emerged in the healthcare industry, towards different pain points that are emerging priorities for all health stakeholders:
- empower the patient by giving him connected tools to follow his health
- empower the healthcare professionals by providing them with modern tools, in the research field or in the hospital
- create a smart-hospital
- modernize pharmaceutical research and leverage tech and data to boost drug discovery.
In the last few years, we have then witnessed some interesting “medtech” or “healthtech” startups answering one or more of the identified priorities above.
- If there’s one topic that has been highlighted in the healthcare industry recently (and we are delighted to see the mentality evolving towards this), it is female health. For a really long time, endometriosis, menopause, fertility and other female-related health issues have been hiden and considered as taboo. We have seen several startups emerging in order to address these issues, such as Fempo or Lola Health in France, where the market is expected to boom, reaching a $50B market by 2025. But if we talk on a bigger scale, did you know there were 807 Femtech companies in the world (208 of which in Europe)! Many of these were born after the founders themselves (so women, obviously…) did not find any solution and decided not to wait for things to change, but actually changed things by themselves! That is the entrepreneurial energy that we are enthusiastic about!
- “You are what you eat.” You may have heard this before! A booming number of people are beginning to be concerned about what they feed their body with, and are in need of tools to adapt their food to their specific needs. ZOE, another of our Purple portfolio startups, is a gem of innovation and scientific research. Based on AI and backed by a team of scientists leading the world’s largest in-depth nutritional research program, ZOE is an app that helps you understand how your body responds to food. It analyzes your unique gut, blood fat and blood sugar responses, in order to give you personalized recommendations. Imbalanced microbiome (the bacteria that form the gut flora) has been identified as responsible for many healthcare issues such as food intolerance, intestinal inflammation, acne, etc. That is another example about the healthcare industry being completely adapted to the patient
- Giving more space to the post-illness period, to help the patient in his journey to resilience. What an important word when talking about health. Resilience is also the name of a startup founded by Céline Lazorthes and Jonathan Benhamou. They both decided to tackle one of the heaviest issues (but how important!) in the medtech industry, oncology. Resilience has an ambitious mission to support patients and doctors at every stage of the cancer treatment pathway. In partnership with Gustave Roussy Hospital, a leading institution for cancer treatment and research, Resilience is also giving more space to side effects of treatments (on mental health for instance) and provide patients with a community to fight the feeling of loneliness. They have raised a €40M Series A in January 2022, proving that the need for change in the healthcare industry is urgent.
- Are mental health issues the evil of the century? An increasing number of start-ups are tackling what was, up until now, considered as a cultural taboo. Anxiety, depression, addictions, … and many other troubles that should not be relegated as they affect no less than 12M people in France, and represent more than cancers and cardiovascular issues, regarding health expenses (according to a recent study by Institut Sapiens). Fortunately, things are evolving, whether we consider the way that the healthcare industry and society tackle those issues or the growing investments realized in this direction.
We could have quoted dozens of other topics, but let’s keep it simple, as you have understood the main idea: the healthcare industry has become enriched with solutions built by game-changer startups willing to improve it. Sometimes, if not most of the time, the idea was born after a negative experience or a lack of solutions. Albert Einstein said: “We can’t solve problems with the same thinking we used when we created them”. That could sum up the most important idea of this article. It is not surprising then to notice that many founders of healthtech startups were unfortunately very closely concerned by the topic they were tackling and decided to make the largest number benefit from it. Patients being actors and builders of the future healthcare system, that is what we are expecting to see expanding more globally.
We’re seeing this every day in our daily job in VC: playing collectively is key. More than the patient-caregiver duo, institutions, investors, states, NGOs, associations all have a role to play. So do investors, in order to bring what it needs to accelerate the movement. The VC ecosystem in the healthcare field is flourishing and supports ambitious startups and programs to create that big revolution of the healthcare industry.
What's next then?
Things are evolving very quickly and an important focus has been given lately to healthcare topics, especially with regards to the Covid-19 pandemic. But this crisis is not the only accelerator of interest for healthcare startups: an increasing number of start-ups are tackling subjects related to the consequences of environmental changes on our body. Fortunately, innovation and research are here to bring solutions in order to adapt the healthcare system to new health challenges that may appear. So we are expecting to witness huge changes in the upcoming years.
“The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition.”
Constitution of the World Health Organization, New York, 1946