A fundamental transformation of the healthcare industry in terms of profitability, efficiency, productivity of healthcare services, and better customer experience is envisaged through the integration of AI solutions into the many sectors of the healthcare ecosystem.
Startup is a high-growth potential entrepreneurial venture that is technologically oriented to meet the most pressing need of a marketplace by offering or developing innovative services, products, or processes. Investment in artificial intelligence (AI) was up 108 percent year-over-year in 2021, with USD 66.8 billion in global funding for startups. Healthcare AI accounted for nearly one-fifth of the total funding, CB Insights reports. The average AI deal size increased 78 percent from the last year. Companies based in the US and China led AI deals and funding, raising USD 10.5 billion (273 deals) and USD 4.4 billion (268 deals) respectively in the fourth quarter of 2021. A record number of new AI unicorns, 65 companies, reached USD 1 billion or more in valuation in 2021. In Q4 alone, there were 10 new AI unicorns globally, bringing the total number of billion-dollar AI startups to 125.
The Covid-19 pandemic helped contribute to growing investment in healthcare AI, which made up 18 percent of AI’s total funding last year. Healthcare funding nearly doubled, with startups raising USD 12.2 billion in 505 deals for the whole year. The US led in healthcare funding in Q4 2021 with USD 2.6 billion, followed by Asia USD 0.7 billion, and Europe with USD 0.3 billion.
With such large increases in investment, companies will, more so than ever, need to assess the risks of AI integration – especially in applications that aim to address broad societal health challenges.
North American region, especially US, has the highest share of AI-based healthcare startups. The highly nurturing entrepreneurial ecosystem of the region, availability of immense private funding, several government initiatives for the large-scale deployment of AI-based healthcare solutions, presence of large pharma and biotech companies in the region and a favorable regulatory environment that is expediting the approvals of AI innovations are all steering the emergence of startups in the region. European region has a respectable share in the number of startups based in the region among the various startups that we analyzed. The AI-based healthcare startup ecosystem in the region has heated up with several startups emerging recently due to the availability of all resources, government support for widespread deployment of AI, presence of the numerous large pharma, medical device and biotech companies in the region, a streamlined regulatory environment for AI invention approvals and sophisticated infrastructures for the development and implementation of AI in the healthcare sector of the region. But compared to the North American country, US, the European region significantly lags in the number of startups mainly due to the relatively less healthy startup ecosystem in the region, inability of the companies in the region to raise enough private funds, and a relatively fragmented regulatory landscape of the region due to the presence of numerous countries in the region. Countries like UK, France, and Germany lead in the number of startups in the region.
The AI-based startup scenario in the APAC region is slowly gaining ground due to the several government initiatives for the adoption of AI into the healthcare sector, the promotion of entrepreneurship in the region for the acceleration of indigenous technological innovations, and the huge market opportunity lying in the region for addressing various pressing healthcare needs of the region. In the region, China followed by Singapore, India had the largest number of AI-based healthcare startups. The AI-based healthcare startup ecosystem in the ROW region is slowly developing due to several government schemes for the promotion of entrepreneurship in countries like Brazil, availability of plenty of AI expertise and a flexible, entrepreneurial spirit-based innovation ecosystem in countries like Israel, and the existence of several unmet healthcare problems in the region that can only be efficiently soothed through innovative AI solutions. In the region, Israel occupied the largest share of the startups.
Deals, which are mutual agreements between two or more business organizations for their mutual benefits, have been increasing rapidly over the past few years in the healthcare sector, attributed to the advent of disruptive AI technology. To keep pace with the rapidly evolving AI-embedded healthcare industry, the pharma, biotech companies, healthcare organizations, research institutes, and government organizations are entering into partnerships or collaborations with AI companies to leverage the disruptive technology to drive systematic innovation in their field, to improve their productivity efficiently, to streamline and reduce their operational expenditures, to enhance the value of their services and products to the customers and ensure customer effectiveness, and to gain a competitive advantage over their peers.
The healthcare sector’s partnership, adoption, and collaboration deals for using AI technologies from some of the top AI businesses were analyzed by IQ4I. Most of the pharma and biotech companies partnered with the AI companies to accelerate their drug discovery and development process efficiently. Through the deals, AI companies receive option exercise fees, technology access fees, royalties, and also income based on sale or sublicensing of sale of assets created under the collaboration. Diversification of collaborations or deals across various companies was noted owing to the large pharma companies adopting AI solutions of various innovative companies for different therapeutic areas or different stages of drug development.
Hospitals and other healthcare settings are partnering with AI companies to leverage their AI capabilities for improving the efficiency of their healthcare services without burdening their healthcare personnel, increasing productivity, and optimizing their administrative workflow.
Research Institutes are leveraging AI solutions to accelerate their biomedical research. Researchers of Michigan Medicine and the University of Michigan College of Pharmacy and U-M Life Sciences Institute, have leveraged Atomwise’s AI approach to accelerate their drug discovery research. Governments or government organizations are also leveraging AI technology to ensure the democratization of value-based healthcare services.
The city of Seoul (South Korea) launched the I Care You project to support its citizens during the Covid-19 pandemic by utilizing the IBM Corporation-developed AI-based Virtual Assistant.
Thus, through a large number of existing and emerging AI-based healthcare startups across the globe, motivated by the vast opportunities in the healthcare industry, various AI innovations for improving the efficiency of the healthcare services and for solving the real-world problems can be expected. Through the integration or leveraging of AI solutions into various sectors of the healthcare ecosystem, a radical transformation or revolution of the healthcare industry in terms of profitability, efficiency, productivity of healthcare services, and better client experience is anticipated.