Now that Covid-19 has made its ugly presence felt in every sphere, including business and economy, a huge portion of upcoming businesses shall have to rely on small industries and other forms of entrepreneurship. This, contrary to opinions of scaling up and infrastructure, also stands true for healthcare markets.
Healthcare, medical, and health-tech entrepreneurship has already imparted tremendous value and volume to healthcare industries globally. Many such startups and their products or services have been licensed and marketed by pharma and med-tech behemoths. Appropriate nurturing and valuation of such startups and scale-ups is being recognized—albeit gradually—in the Indian healthcare scenario. However, with Covid-19 (and more generally with such pandemics and crises), the economic aftermath can change abruptly, and sometimes for the better; and this can be conducive to a fresh slew of ideation/conception of healthcare and health-tech startups.
Healthcare startups typically consist of medical technology (hardware devices and diagnostics), software-based medical applications (AI/ML, app-based solutions, AR/VR and radio imaging solutions); healthcare delivery solutions (digital platforms and their deployment); telemedicine operations (the entire remote-based infrastructure with strategic nodes and internodes); and supply chain logistics (part of healthcare value chains).
There have been a few reports about apprehensions and challenges that will be faced by such startups in a post-Covid world. Here are some of the atypical and obscure challenges that will present itself to healthcare startups and med-tech crunchers—maybe a while later in their entrepreneurial journey.
The seven-point challenge and how to mitigate them
Revamped regulatory models/frameworks: To counteract the financial losses, extensive regulatory strategies to overhaul and remedy the healthcare market, including the medical technology market, are poised to be devised. These will be backed by government and other industry-regulatory apex bodies and will be on a global scale. The startup founders, platforms and entire ecosystem along with other industry stakeholders need to be aware of the strategies and incentives (and roadblocks) and judiciously and proactively devise innovative implementation strategies—both at the technology level and the business level to gain the momentum.
Infrastructure support required: Huge healthcare/med-tech breakthroughs like AI/ML, AR/VR coupled with novel applications has brought a paradigm shift in addressing patient-centric and precision medicine approaches to diagnostics and theranostics. Effective adoption and penetration of such state-of-the-art technologies concomitantly require an equally sophisticated and cost-effective business platforms like remote operations, telemedicine, digital interfaces, computational power, supply-chain logistics, etc. Specifically, healthcare technologies and business models that are based on remote operations—a strategic and essential lesson in current times—require a high level of seamless integration between the respective technologies, back-hand infrastructure support, and highly-skilled workforce.
Redundancy and ‘me too’ products: In order to ride the forthcoming wave of entrepreneurship opportunities (and constraints of employment economics), there will be a flurry of products and devices that will flood the healthcare/medical market. Many of such technologies are not suitably IP-protected nor are aware of Freedom to Operate regulations. Lack of proper innovation strategies will be a deterrent to monetise the product (or a delivery platform) over a period of time. Additionally, there will be steep competition to navigate and reach out to the appropriate customer segment. As a result, many of these ventures will face the “valley of death” even before the pre-launching phase (prototype development phase/scale-up phase).
Judicious investment: Concomitant with the above point, the same entrepreneurs and startups will face tough investment deals and options from angel investors, venture capitalists, series funders, and other non-dilutive sources of funding, especially at the initial stage. Even if they have crossed the initial path, they will face a steeper adoption curve for their technology as well as have difficult negotiations with the bigger corporates while licensing deals/trajectories.
New business model and delivery model: With breakthrough healthcare technology innovation comes the need for brilliant delivery models and newer business models to maximise the value of the output and accessibility of such an innovation. The appropriately-selected choices of delivery platforms (and business models) to target the appropriately-segmented customer profile can harness the innovative brilliance of the technology—by both clinicians (medical workforce) and patients alike. This itself needs a sustainable and robust inter-connection of different healthcare stakeholders from clinicians (and medical workforce) to the patient on the one hand, and healthcare startup strategists/platforms to startup founders/entrepreneurs themselves.
Resource utilisation, including personnel training: Effective deployment of healthcare technology and delivery needs to be supported by proper, sustainable, and cost-effective resource utilisation, including medical personnel and patients training for remote operations and digital deliveries. Some of these platforms are in the nascent stage for the Indian healthcare system and proper uptake and directed training are very critical for sustainable leverage—clinical and commercial—of such technologies.
Strategic and reciprocal partnerships with bigger entities: Newer and innovative technologies, applications, and platforms have to be (and have historically often been) incorporated into bigger device platforms or deployment systems or have been independently licensed by bigger med-tech/biopharma corporates. This will become even more crucial (and hence a deciding factor in the sustainability of the startup) especially in the post-crisis period for mainly two reasons: the breadth and continually-innovative capabilities of such startups and the effective deployment and accessibility acumen (including investments and business development strategies) of bigger entities.
Ecosystem development: What are the imminent roles/duties of structural and functional support?
In keeping with the forthcoming wave of healthcare entrepreneurship, there has been an extensive inception and development of a network of think tanks, startup platforms, incubators and accelerators that have offered strategic support, mentoring, and financial networks to both startups/scaleups in their entrepreneurial journey—globally, and in India.
In this aspect, what are the pain points and remedies incorporated to address the post-crisis period?
According to Pradeep K. Jaisingh, who is founder and director of cancer centre chain International Oncology and chairman and founder of Healthstart, India’s leading healthcare incubator, there are two main roles/challenges in a post-Covid scenario:
(i) Building collaborations and partnerships will be key. There would be networking efforts between innovators-entrepreneurs and bigger corporates to help gain business momentum and accelerate innovation. This will include initial funding, mentorship, and incubation/acceleration support.
(ii) Selection and validation of proof-of-concept stage and prototype stage-specific technology/concepts and identifying those areas where the startups need maximum help and support for clinical deployment through well designed pilots in carefully selected settings.
Avelo Roy, a prominent startup promoter, investor and mentor—and managing director of Kolkata Ventures—echoes positive encouragement with similar sentiments. Fresh startups venturing out in the health-tech space in current times will have massive opportunities as there is widespread awareness of the need to innovate in this domain, he says. However, it comes with a steep competition curve and one has to push above all the noise. The three big steps are: a solid team, IP protection, and strategic partnerships with big players in the industry, he says.
Sarang Deo, professor at ISB and executive director of Max Institute of healthcare management, is optimistically cautious about the long-term gains derived from Covid-19. There are short-term distinct demands for say teleconsultations (many existing big players are moving into this territory) that have emerged. However, for long-term hospital and healthcare delivery, the focus should be more on adoption of appropriate business models and the business literacy of key stakeholders and leadership involved. He feels that healthcare still has major gaps and the emerging startups and entrepreneurs/innovators should focus on long-term solutions and approaches for gaining maximum traction in both their business and market demands.
2020 is a revolutionary year, a challenging year, a game-changing year. Science, technology, healthcare, business, literacy—every sector is poised to change gears, embrace change, and be prepared for the long-term. To all the healthcare/tech startups out there: seize those (hidden) challenges and create opportunities.
Views are personal. The author has held both innovation and business development roles in the healthcare/med-tech/biopharma industry and is an innovation/startup advisor and mentor. She is a Harvard Medical School alumna.