Nowadays digital health is a trending topic but how are new technologies changing our medical experience? In this article, we show you the market situation, some notable innovations of digital health and why it has become an investment trend, which we focus on for our next roadshow.
What is digital health?
The term Digital Health is broadly defined and often used interchangeably with mHealth, telehealth, or especially eHealth. All of them use information and communication technologies. Furthermore, they aim to improve the quality, efficiency and reduce the costs of healthcare.
A picture of the digital health landscape
As you can see in the graphic above, the use of digital means in the healthcare sector covers a variety of processes and it can range from business process support to patient-to-professional telehealth.
Health is our priority
You cannot regard digital health separately from conventional health. Indeed, health is the most essential good everyone has. Therefore it’s not surprising that it is the most popular and one of the most thoroughly researched scientific topics.
Despite the global health improvement, we are still facing some major healthcare challenges – such as fighting diseases like HIV/AIDS or finding a better cure for cancer. Tackling those challenges will need a different approach and digital health will be involved in this approach.
To increase efficiency, we will need radical improvements in how healthcare systems acquire and use information related to our health. As an illustration, we could observe over the last decade how the extended use of mobile devices has been transforming the channel of communication between doctors-to-doctors or doctors-to-patients, referred to as mHealth.
Time has proven that eHealth (healthcare practice supported by electronic processes and communication) and mHealth have both become an integral part of our everyday life. These technological means are being used to save lives more effectively, without having any restrictions due to isolated locations or weather conditions. A good example of this notion is the AKDN eHealth program in South and Central Asia, where communications technologies help to link health institutions and health providers, minimizing the barriers of distance and time.
It’s very exciting to observe the emerging use of new technologies. Chatbots are one example how technology can help schedule appointments, issue reminders, or support with refilling prescription medications. The graphics processor manufacturer NVIDIA writes on its blog that it can quickly produce first-class neural networks for medical imaging processes, assisting with a classification of diseases, recognition of human patterns, and segmentation of cancerous cells. These neural networks are useful for the development of new oncology medicine, faster genome analysis, and precise imaging processes.
Algorithms are already able to compare millions of medical cases in just a few minutes by using pictures and text databases. This technology has a potential to dramatically reduce wrong diagnoses in the future.
HealthTap from California is an example of a company using Artificial Intelligence (AI) to deliver all-in-one healthcare globally at any time. Through text, voice, and video chat, it connects hundreds of millions of people in 174 countries with experts from a network of more than 107,000 doctors.
Another company challenging the traditional healthcare practices is 123Sonography.com. The Viennese startup developed a digital learning platform for the medical sector. Their ed-tech platform for diagnostic ultrasound and echocardiography is already the global leader in the field.
More time for doctors
Most importantly digital health will have a huge impact on the patient-doctor relationship. Doctors will be able to spend more time with patients through artificial intelligence, which will take over bureaucratic tasks. One example for that is MAIA, a tool for automating the obligatory “informed consent” process between doctors and patients before surgery. Currently, doctors are spending more time on electronic health record (EHR) and paperwork (deskwork) instead of interacting with their patients.
A look at the Digital Health Market
Despite these amazing innovations, patients in Europe are still hesitant to pay for digital healthcare services compared to the US because charging between the insurances and industry happens in Europe more in the background. This fact forces companies to reconsider their business models. Therefore digital health companies primarily focus on the industry as the buyer, instead of patients.
Nonetheless, Transparency Market Research valued the global digital health market at almost 196 billion U.S. Dollars in 2017.
Growth in this market is anticipated to rise at a Compound Annual Growth Rate (CAGR) of 13.4% between 2017 and 2025, reaching $536.6 billion by the end of 2025. Mobile health and telehealth are estimated to be the leading drivers of this growth.
Digital health startups were able to raise an all-time high of $11.5 billion in 2017, topping 2016’s record of $8 billion according to the Startup Health Insights Year End Report. The number of investors worldwide increased by 37% from the previous year.
International hubs are beginning to emerge. Outside of US cities, Beijing raised the most money with $647 million. In Europe, London came in first with 22 deals and a total sum of $189 million.
Israel emerged as one of the leaders in both money and deals: Haifa companies raised $208 million in funding but only had three deals while Tel Aviv landed 17 deals and $146 million in funding. According to the report, there has been a rise in deals of all sizes, ranging from $1 million up to $100 million. The overall deal median has increased by 27 % since 2016.
Regarding Rockhealth, startups are selling more to providers than other customers:
—60% of digital health startups funded in 2017 were selling to providers, compared to 20% selling to payers and 15% selling to biopharma.
Silicon Valley is also entering the digital health market as tech giants like Google or Amazon are experimenting in the market. Google Alphabet is applying AI to early-stage disease detection, data management, and the insurance market, while Amazon started their Alexa Diabetes Challenge.
A reason why such big companies are joining the markets is that they recognize the changing mindset of the patients. In the EU, 48% of the population look for health information online, which is a significant difference from the 16% ten years ago.
(Sources: taken from Infermedica)
However many patients don’t trust the digital exchange of health data due to concerns about cybersecurity. These concerns are not unjustified, as we pointed out in our recent article about the cybersecurity industry.
Interested? Read here about the cybersecurity industry
While patients are worried about the privacy and security of their health data, the vast majority (77%) are interested in sharing their health information, especially to get better care from their doctor. Patient and clinician expectations are also changing at a rapid pace alongside technology change, fostering healthcare transformation. However, many regulatory frameworks have not been adapted at the same pace. According to an Accenture report, 66% of health executives confirmed that many innovations in their organizations are focused on subjects that fall into gray regulatory areas.
What can we expect?
The development is going slowly but safe in the right direction, and it has the potential to lift the traditional health experience completely to a fully digital level. Patients are being more confident and open towards the idea of sharing their health data online.
New technologies have the potential to make every interface both simple and smart – setting high expectations for future developments. Robots are already working alongside people, and smart machines are augmenting clinician decision making. However, the traditional relationships between healthcare organizations and people will remain. But AI will be essential in making those relationships stronger through new services that make the medical experience both – more personalized and effective in accordance with Accenture.
To support this trend, the healthcare providers need to adapt faster to new technologies. Meanwhile, all companies participating in the ecosystem must ensure their technology is secure and that sensitive data is protected.
Written by Tom Jovanovski.
ESAC and Digital health
Our next roadshow will focus on eHealth in autumn 2018. During the preparation period, we have been scouting and screening many high-quality startups across Europe. Having in mind our selection, we are excited to welcome our investors to the next roadshow with promising startups and their innovative solutions in the world of eHealth.
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Thursday 19th April saw ESAC’s 3rd roadshow stop in Madrid. The event was made possible thanks to CaixaBank DayOne, Wayra, KPMG and Venionaire Capital. The participating startups are looking for combined financing of €6 million.
Madrid’s startup scene is rapidly developing into a leading hub in Europe, with multiple factors such as engineering talent, the presence of world-renowned business schools, good value office space and an increasing cultural acceptance of entrepreneurship combining to make the Spanish capital one of the best places for European super angels to invest.
Read more: Madrid is hot!
Around 50 top-tier startup investors accepted our invitation, crowding in to CaixaBank´s DayOne events room to hear the 5 pitches from the startups.
Some of the participants told us that is not very common in Spain to attend to investor events in another language (English). However, the investors were very excited to meet startups from all over Europe and were able to ask questions and network. In total, we created over 45 leads for investment across the 5 ESAC startups pitching.
Great feedback from the event include:
“I liked the format, it was agile and dynamic. The location was very good, it had the right size and suitable for such an event, it really looked very good. The catering and networking were also very good.
I am glad that there are events in English in Madrid, they are not very common. I liked two startups…..see you at the next one.”
“Yesterday I talked with (…) that there is a client interested in a demo.
Santander’s feedback was really positive. I will put you in touch with the person in charge of the investment division.’’
We took advantage of our Roadshow in Spain and met some important investors in Barcelona too the following day, continually expanding our pan-European network.
The investor network was launched last year by partners of KPMG and Venionaire Capital. Since then, its members and associated partners have invested a total of four million euros. The main verticals of the first two roadshows were Fintech and Cybersecurity/HR-Tech.
We are already planning for the 4th Roadshow series for autumn 2018 with a focus on the ‘quantified self’ and e-health. We are already looking for suitable partners, startups and interested investors across Europe.
- If you are a startup, apply through our DealMatrix software for the next roadshow
- If you are an investor and interested in learning more about ESAC, please email or click here:
We invited Alejandro Rivas, Director of Cyber Security & Forensic Technology at KPMG Spain, to write for our blog. Here we present his insights about cyber security and cyber risk challenges, as well as opportunities regarding investments and Mergers and Acquisitions (M&A).
Digital transformation is a reality that positively affects a broad range of organizational aspects. Its reach spreads from marketing channels and HR, across financial processes, to compliance. Digitalization also entails an important technological overhaul, exponentially increasing the interconnectivity between companies; and companies and consumers.
Unfortunately, greater interconnectivity also creates additional risks such as information theft and loss of services due to cyber-attacks. Eventually, these risks potentially lead to legal proceedings or regulatory fines. This is what we now collectively call “cyber risks.”
Today, cyber risks have affected governments and private companies in various ways. The attacks ranged from theft of databases and intellectual property to incidents affecting hotel electronic doors and Wi-Fi, online banking and interbank payment networks, etc.
The methods of attack employed by cybercriminals are truly impressive. Their capacity for innovation and adaptation is as advanced as that of the leading technology companies.
As a result of these criminal activities, thousands of people have been affected in one way or another. In the corporate world, very recently a CEO lost his job subsequent to a data breach report.
From Brussels to Washington, legislators, concerned with the proliferation of cyber-attacks, are demanding greater involvement from the Board and are enacting new legislation. The penalties are substantial. In the case of the General Data Protection Regulation (“GDPR”), they can reach as high as 4% of global revenue.
How does Cyber risk affect M&A transactions?
We see three distinct angles:
How do I protect my M&A or investment strategy from cyber espionage?
The M&A or investment strategy and any associated information, e.g. valuation models, must be handled so as to ensure confidentiality.
Although most companies with M&A activities understand this requirement, one can still find weaknesses such as failure to encrypt data and communications (email or telephone), or a lack of information access controls and mechanisms to detect security breaches.
How can I measure cyber risks on my M&A targets or investment portfolio?
At KPMG we have developed a unique cyber risk evaluation methodology, applicable to the Buy-side or Sell-side due diligence process, as well as on-going portfolio risk management activities. We apply traditional techniques based on interviews and documentation reviews in key areas: governance, operational model, architecture, detection and response capabilities.
The differentiating factor lies in the application of our proprietary cyber intelligence platform. Using this non-intrusive technique, we can investigate the Web at different levels, from the surface to deeper sources or so-called Darknets. Here is where we can see whether a Target’s confidential information is being sold by cybercriminals.
The combination of these two techniques, using a tech platform and a team of cybersecurity experts, enables us to correlate data from external and internal sources and provide more meaningful observations… with a quick turnaround.
What investment opportunities are there in the cybersecurity industry?
Without a doubt, cyber risks have fueled the security industry.
Significant R&D activities are being carried out with the involvement of government, the private sector, and academia, particularly in countries such as Israel where we see a large intellectual property marketplace. Europe, particularly Spain, is quickly catching up.
New technologies are being developed to tackle issues such as user access management more cost-efficiently through cloud-based solutions, or predicting fraud more effectively through machine learning algorithms.
We foresee exponential growth of the sector worldwide, augmented by interest among corporate investors, venture capital and private equity firms, as well as through IPOs.
Interested? Read here Madrid is hot!
Startups involved in Cyber risk
KPMG has also capitalized on this trend through strategic acquisitions of companies like Qubera Solutions, TRUSTEDQ, P3 and Zink Security.
The latter is, in fact, the company KPMG acquired in Spain and whose platform they now use across many different projects ranging from compromise assessments, VIP digital footprint, and as explained previously, pre and post-transaction cyber risk management activities.
As you have seen there is a growing market, the European Super Angels Club introduces you a selected group of startups focused on cybersecurity. Click here to learn more about them, and invest in the best opportunities.
Alejandro Rivas-Vásquez, Director at KPMG Spain, leads advisory and assurance services across the full life-cycle of cyber security and forensic technology programs. With experience in deals (pre- and post-transaction), he is responsible for “Cyber in M&A” services in Spain.