In the wake of the devastating Covid-19 pandemic, we have all learned to live in an altered universe. Healthcare, in particular, has undergone irreversible changes. From drug discovery to patient care, new and strong business models, powered by technology, have started to emerge, leading to fundamental shifts in the entire healthcare delivery value chain. What would have happened in 10 years has telescoped into 12 months. Notably, patients have embraced digital healthcare.
At Endiya Partners, we were able to foresee as early as 2015 that inevitable shifts in consumer behavior towards healthcare would catalyze the emergence of scalable business models that would, in turn, disrupt the healthcare landscape. Over the past eight years, we’ve carefully calibrated our investment strategy to bet on businesses that solve specific problems at scale. Often, that has led us to stay away from investing in some of the popular business models. Today, we are happy to see that our conviction has played out beyond our expectations within our digital health portfolio.
Clear business opportunities are emerging in areas such as telepathology (SigTuple), teleradiology (Synapsica) and chronic disease management (SugarFit and Karkinos). These are business models which address pain points at scale and have the potential to become reasonably large businesses globally.
Non-communicable diseases – an untapped opportunity
Chronic disease management is a particularly compelling opportunity. The United Nations flagged non-communicable diseases or chronic diseases as a global health emergency as far back as 2011. Surprisingly, not much has been done since then. These conditions include diabetes, obesity, hypertension, cardiovascular disorders, cancers and chronic obstructive lung disorders. All of these are amenable for digital therapies and are large opportunities globally.
Take cancer, for instance. Nearly 90% of cancers in India are diagnosed at stages 3 and 4. Patients have to travel to advanced centres in Tier 1 cities for treatment. But if we can identify these cancers at stages 1 or 2, we can treat them at hospitals nearer to their homes. Obviously the cost of treatment will be far less, the results of the treatment will be better and patients would not have to travel to larger cities and face challenges such as finding accommodation in a new place. There are many cancers which can be identified at earlier stages through mass screening including head and neck, thyroid, breast, stomach, and cervix cancers.
That is the problem Karkinos, our most recent investment in digital health, is trying to solve. It is a complete technology play, organizing the journey from early screening and diagnosis to treatment and post-treatment, and all the way up to genomics and clinical trials.
Similarly, Sugarfit is addressing the diabetes market. There are roughly 100 million diabetic and pre-diabetic patients in this country alone. The traditional treatment plan is to go to a doctor once every three months and get the medication changed. And that's it. Patients hardly consult a dietician or consult someone who guides them on a daily basis. We have a strong belief that if these patients are tracked virtually, both by technology as well as a human coach, we can significantly decrease the quantity of drugs that a patient has to take or even do a diabetic reversal.
Bridging the healthcare gap with technology
Our investments in Synapsica and SigTuple are also exemplary of critical problems that are being solved using technology.
If you look at the current market, 90% of the specialist pathologists and radiologists are located in Tier I cities. But, 90% of the patients don't live in those cities. So how do you bridge the gap? It can only be done by using technology. Luckily, the cost of internet bandwidth is coming down and reliability of bandwidth is better. That's the problem we are trying to solve.
In addition to building sophisticated tele-pathology and tele-radiology solutions, these companies are building AI solutions as a top layer. Pathology and radiology, in particular, are specialties in healthcare that are very amenable to AI adoption because both of them deal with images.
Good life sciences startups will emerge soon from India
As we move forward betting on emerging business models such as chronic disease management, tele-radiology and tele-pathology, we continue to track developments in medical devices and life sciences. We haven’t really done hardware or medical devices investments, but going forward we believe that hardware and software will merge. To that extent SigTuple covers the hardware piece.
Eyestem is the only bet we have made in life sciences. It’s developing cell therapy to address a rare disorder – age-related macular degeneration. 150 million people in this world have this condition and there are only four or five startups globally trying to tackle this problem. There are a couple of them in Japan and a couple of them in western world and all of them are roughly at the same stage.
We're proud to say that Eyestem has completed their animal studies in the best centres in the world. The initial data looks very promising and hopefully we'll be in human clinical trials in 9-12 months.
But, we believe that it is still a bit early for life sciences investments in India. The talent is available. But what is more important is the development of the entire ecosystem. In addition to the scientific talent, we need expertise in regulatory affairs, commercialisation capabilities of new technologies around the globe and investors with the right risk appetite. However, we believe that in five years, maybe ten, good life sciences startups will emerge from India.
Ayushman Bharat – a move in the right direction for digital health
While Covid-19 has accelerated the adoption of digital health, there are a few obstacles. Patients have embraced it. The bottleneck is the providers. Hospitals and doctors are resistant to accepting the change. But that’s also changing fast. In teleradiology and telepathology, for example, it’s a B2B business. While the end-user, like radiologists and pathologists, may be impressed with the solution, the decision-maker is not the end-user but a hospital administrator and his/her priorities may be different. That said, these are not insurmountable problems.
What’s encouraging is the impetus that digital health is receiving from the government. The Ayushman Bharat Digital Mission (ABDM) aims to develop the backbone necessary to support the integrated digital health infrastructure of the country. It is a move in the right direction.
Right now the government is going with a softer approach and making it voluntary for providers and patients to register. At some point a carrot-and-stick approach is necessary. The real benefit will occur, when every provider, whether it's an individual doctor or a laboratory, or a pharmacy, or a hospital, registers themselves and provides a digital record to the patient which is linked to the patients' unique ID.
What is not clear at this time, is how startups can make a compelling business proposition in this space. But once it picks up momentum, those opportunities will emerge as well.
(This opinion piece is also published by Yourstory at https://yourstory.com/2022/03/digital-health-business-models-endiya-partners-eyestem-karkinos/amp)