Current Trends in Digital Health
Article II/II in our Series on Digital Health
At Earlybird, we like to think about digital health along three dimensions: the treatment value chain (i.e. from monitoring/preventing over diagnosing, treating, recovering and managing), the medical field (e.g. mental health, women’s health, etc.) and the involved instances (e.g., the patient, provider, payor, regulator). These three axes result in a conceptual model of the digital health space that is displayed in figure 1.
Innovation can happen at the intersection of any of these axes but in this article, we would like to outline recent developments that we’ve observed in three steps of the treatment value chain: Monitoring & preventing, Treating, Monitoring & managing.
Monitoring & Preventing
While monitoring and preventing was originally standardized and the same for all people, it is becoming increasingly personalized. This personalization is enabled by the democratization of various biomarkers, spanning a wide range from heart rate to metabolic indicators, to complex genetic tests. A first wave in the space saw many companies emerge that combine some sort of biomarker testing with personalized prevention interventions such as food and exercise regimens or personalized supplements. For instance, companies such as Veri (Finland) use a continuous glucose monitor (CGM) to measure glucose levels and derive lifestyle recommendations, Lykon (Germany) conducts blood-tests to give nutritional advice and recommend supplements while Healthpath (UK) tests the gut microbiome to derive gut health recommendations.
Recently, a second wave of innovation started in the space that focuses on providing the infrastructure for this personalization. For instance, DasLab (Germany) aims to connect various players in the lab environment or Physikit (Germany) plans to offer dry blood spot testing as a service to other healthcare providers. While we believe that this market segment is still at the very beginning and has some things to figure out (e.g. how to achieve mass market adoption, how to combine online and offline patient journeys, how to create sustainable competitive advantages), we are excited to see what’s to come. The biohacking market alone was worth 12.1 bn USD in 2019 and is expected to grow at a CAGR of 20% to reach 53.4 bn USD by 2027 (VC Bay News). With this in mind, we expect the overall market for personalized monitoring and prevention to reach a substantial size in the near future.
→ Trend 1: While the first wave of personalized monitoring and prevention of diseases was focused on D2C testing of various biomarkers, we now see a second wave of providers offering the underlying infrastructure as a B2B service.
Treating
Driven by Covid-19, there was a strong increase in remote treatments enabled by technology. In fact, according to Statista, the telehealth market is estimated to be worth 49.9 bn USD in 2019 worldwide and expected to grow at a CAGR of 33%. The first wave of telemedicine saw the emergence of horizontal players such as Babylon Health or Kry that treat a broad spectrum of indications, often in purely online one-off interactions.
Recently, however, we see that a second wave of telemedicine focuses on verticalized players that combine online and offline journeys. We see several players that integrate products into their service for certain medical fields or indications such as dermatology (e.g., FORMEL Skin from Germany) or weight loss (e.g. Embla from Denmark). At the same time, we see full-stack players emerge that combine a telemedicine offering with an offline practice. These players again often focus on a specific medical area such as dermatology (e.g., Skinera from Germany), ophthalmology (e.g., Checkup Point from Germany) or veterinary medicine (e.g., Rex from Germany).
→ Trend 2: While Covid significantly accelerated the use of digital treatment offerings, there is currently a move towards a combination of online and offline solutions — be it through the integration of products or offline practices.
Monitoring & Managing
As hospitals, doctors, and nurses face unprecedented workloads and a marked shortage in staff, there is an urgent need to increase efficiency in the healthcare system. IoT technology can be an enabler especially for monitoring and managing diseases.
The healthcare IoT market was actually estimated at 46.4–71.8 bn USD in 2020 with CAGR estimates ranging from 12–26% (Mordor Intelligence, Fortune Business Insights, Grand View Research, BioSpace), showing that the segment is growing at a high rate. While IoT has long been standard for monitoring wellness and fitness via devices such as smartwatches or smartrings, we now see more companies that aim to integrate IoT into the processes of traditional providers, be it GPs (e.g. Suvera from the UK) or hospitals (e.g. Doccla from the UK, Medoma from Sweden).
We at Earlybird are very excited about this movement as we see it as a lever to solve some of the pressing challenges of the healthcare industry. What is particularly important when working on a solution in this space is that companies focus on aligning the incentives of all involved parties, (especially the provider, patient and payor), to ensure widespread adoption.
→ Trend 3: IoT is more and more integrated into the provider landscape to enable efficiencies in the traditional healthcare systems
Final thoughts
While the outlined trends will likely play an integral part of the digital health landscape going forward, we see them as just the beginning. There is a lot more to be done in the space to improve human health, healthcare services, and wellness for all of us.
At the same time, we believe that significant economic performance can be achieved in these areas. This was proven by several companies who achieved at least unicorn valuations in the outlined fields such as Fitbit (US) for monitoring, preventing and managing, or Babylon Health (UK), Kry (Sweden), and Hims (US) for digital treatments. While most of these players are still based in the US, it is only a matter of time until these achievements are transferred to Europe, giving rise to more European unicorns.
There are significant structural differences between the US and European healthcare markets. At Earlybird, we see the collaboration with the European healthcare systems as key to achieve widespread adoption for several services. We therefore are in such close contact with the public German health insurers that some of them are even invested in our healthcare fund. However, we also believe that there is a mindset shift in Europe paving the way for a more service-oriented mentality and willingness to pay out-of-pocket opening up new opportunities.
