Covid-19 pandemic brought the need for health sciences companies and healthcare service providers to fast track their digital transformation journeys. The venture funding for digital health reached an all-time high, surging from USD 8.1 billion in 2019 to USD 29.2 billion in 2021. However, in 2022, the investor bubble burst, with funding declining to USD 15.3 billion, a significant underperformance, compared to 2021. The negative funding trajectory has been attributed to investor caution due to uncertain global markets.
This may carry both positive and negative connotations for the sector as the investment market recalibrates to a more sustainable rate. With recession concerns looming, H2 2022’s quarterly average of USD 2.4 billion may be a bellwether for the next several quarters – which means that 2023 could be digital health’s first USD 10 billion, or lower year in venture funding since 2019. However, most investors expect that digital health funding in 2023 will remain consistent with 2020, generating an estimated USD 15 billion to USD 25 billion. There are signals that funding could start to inch back up again – investors have dry powder stockpiled, and difficult exit climates are likely to draw late-stage digital health companies back to the fundraising table.
As digital health funding slowed significantly in 2022, many companies in the space shifted from direct-to-consumer (DTC) to B2B, an indicator of the macroeconomic situation – consumers having less disposable income to spend on DTC health solutions. In comparison, B2B appears to be a safer bet for big companies and startups alike, with both clinical and non-clinical workflow solutions ranking number one in the list of top-funded value propositions. DTC in digital health is generally an uphill battle with high advertising costs.
India, under its G-20 Presidency, has already prioritized digital health as one of its three health objectives, seeking global consensus on a global digital framework. Proactive steps have been taken by having already created a framework, fabric, platform, and highway. The government is working with stakeholders on the validation of digital health devices, including wearable devices and AI equipment in health systems in appropriate settings and, thus, the creation of appropriate standards where technologies can be tested. Private sector participation is also being sought.
The healthcare clinicians of the future may indeed become medical engineers – they will be trained in AI, big data, robotics, and other emerging technologies and disciplines. They will remotely manage multiple patients at a distance with the help of AI, AR, nanobots, and other powerful tools, which are already growing rapidly today in technological maturity and commercial value.
With the rate of change and adoption of digital care models accelerating, arguably at an exponential pace, once the stakeholders step up to the challenge, and digital technologies are leveraged across the full spectrum of prevention, diagnosis, and treatment, healthcare in India can be transformed beyond imagination.