Professional investors – especially corporate venture units – are increasingly eyeing up business initiatives combining healthcare and digital technologies.
Investment in the digital health sector is expected to double over the next twelve months. That was the conclusion of a study* presented in London on 4 October to investors, healthcare professionals and medical sector executives at an event marking the launch of HealthXL, an accelerator programme set up under the umbrella of the Dublin-based accelerator Startupbootcamp to find innovative startups using technology in the health industry. Investment in Digital Health, now regarded as a key emerging sector for investors, has already overtaken the Tools & Technologies and Diagnostics segments in attracting funds, presenters at the event revealed.
An emerging investment sector
Another recent report from Burrill & Company, which specialises in channelling venture capital into life sciences companies, points to a 194% leap in total financing for Digital Health companies, defined as a “segment fuelled by the convergence of information, wireless and healthcare technologies,” in first-half 2012, versus the same period last year. And the lion’s share of this capital is flowing in from the venture units set up by major corporates. Among the most active investors we find Philips, Abbott, Boston Scientific and Johnson & Johnson. One third of all buyouts in the Digital Health sector over the last year received funds from corporate-based venturing units. Total exit valuations in this sector are now three times as high as those from social networks and twice as high as from mobile applications, presenters told the audience.
Time to call on Big Data to aid diagnosis and prescription?
New technologies have a vital role to play in improving medical care, says the Vital Signs report. Its authors point out that nowadays “consumer technology is outpacing the health delivery system.” Meanwhile, “medicine has become too complex”, with information doubling every five years, most of it unstructured, warned Steven Shapiro, Chief Medical and Scientific Officer at the University of Pittsburgh Medical Centre. So doctors are struggling to keep up and “only 20% of the knowledge clinicians use today is evidence-based,” he estimated. This means that fully one in five medical diagnoses in the United States is currently “inaccurate or incomplete”, leading to 1.5 million errors in the prescribing or delivery of medicine in the US each year, speakers at the HealthXL event alleged.
*Vital Signs: Startups in Digital Health