Asia has more space to heath tech startups than anywhere else. The region’s economies have gained spectacular development, enclosed with higher spending on the healthcare sector among Asians’ pockets.
According to OECD’s report, Southeast Asia (SEA) has seen an extreme expansion of healthcare expenditure. Except for Singapore, SEA nations are predicted to spend more than 70 per cent of the budget on healthcare system compared to the statistic from 2017.
In the next five years, ASEAN 6 countries, including Vietnam, the Philippines, Singapore, Thailand, and Indonesia, expectedly raise their expenditure to roundly US$750 billion. Furthermore, the value of the medical tech industry will surpass US$130 billion in 2020.
It means that digital health and medicine will remain a hot topic in the next decade. In which, Electronic Health Records (EHR) are reported to grow by approximately five per cent per year. This prediction comes up with the idea of “beyond hospital to community”, which is claimed to be the future of the health industry. In this kingdom, digital hospitals will be the king.
In the dawn of a new decade, we expect remarkable change in the healthcare sector, including novel projects, investment flow, IPO, cybersecurity, and M&A.
E-commerce giants join the digital health market
Undoubtedly, e-commerce firms could gain confidence in the race of health tech innovation. They own enormous customer data and purchasing behaviour, which is valuable in building customer relationships for their next project.
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In 2019, Amazon revealed a minor part of its Amazon Care plan, a virtual care platform.
In pursuing its project, Amazon acquired a digital diagnostics platform Health Naviator and integrated it with JP Morgan insurance. Amazon Care will predictably be launched as an Amazon Prime service at the end of 2020, serving over 105 million current subscribers of this brand.
Asia currently holds powerful advantages in the forms of high population and rapid growth in the e-commerce industry. With a similar scenario, Asian e-commerce giants could create another version of Amazon serving in Asia.
Typically, Alibaba and Lazada have a high incentive to invest in telehealth. Additionally, after the coronavirus crisis in Wuhan, China might upgrade their healthcare strategies to be in favour of private sector investments.
Digital health startups to mature in 2020
As mentioned above, 2020 is the game of incumbents. Several digital therapeutics startups might feel confident with their financial ability, while others might get into a joint venture with tech giants.
As a successful Singapore startup, DoctorAnywhere readies itself to expand to Vietnam. It integrated with ViettelPay, a big Vietnamese payment platform, to set up the first virtual clinics in Vietnam.
China’s Ping An Good Doctors collaborated with tech unicorn Grab to deliver their internet hospital in Singapore. As a result, a higher barrier in the health tech sector has been built to deter new entrants.
This situation also encountered in the US, where well-funded digital therapeutics providers got enough cash to sustain. Livongo added a series of small companies to its partner networks. Omada announced an expansion plan that provides treatment for more diseases, instead of just diabetes.
At the end of 2019, several medical incumbents return to the race. That time, the world saw a decreasing trend in investor appetite globally. The measured indicated both funding and deals experienced an extreme drop by roundly 40 per cent.
Digital health providers keen on staying private –instead of going public
We have no optimistic view of the IPO situation of private health tech firms in 2020. Although Asia Pacific dominated the global IPO volume last year, we have evidence to believe that IPO activity will slow down shortly. This perspective mainly due to the economic instability in Asia at the beginning of 2020.
IMF has cut down its growth forecast for the majority of Asian countries. Particularly, Singapore’s expected growth rate dropped from 2.4 per cent to one per cent. The forecasted growth rate for China would be 5.8 per cent instead of 6.1 per cent.
Reasons came from the political crisis between China and the US; or China and Hong Kong. The current situation would lead to a significant decrease in foreign investment in this area. In fact, the IPO activities in the Asia Pacific fell by 12 per cent in volume and 27 per cent of the process in 2019, in comparison with that in 2018.
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IPO reports for Asia proposed the downtrend in the IPOs market from several nations, including Greater China, Japan, and Australia. The same situation had happened in SEA 2019, where both IPO deals and fundraising decreased by eight per cent and 55 per cent, respectively.
With the economic slumps predicted to continue in 2020, several health companies have the incentive to keep its business in private.
Cybersecurity risks in healthcare
In fact, 2019 was seen many serious cyberattacks targeting healthcare firms. A data breach resulted in exposing health data of over 32 million people. Additionally, those attacks were worsened by the increasing trend of scales, frequencies, and money loss.
Over 14,000 Singapore citizens’ medical data from HIV Registry has leaked to the internet. Australian authorities announced the risk of roughly 100 breaches detected from January to June 2019.
Healthcare leaders have more concern in ransomware attacks than any other threat. The risk for ransomware in Asia reported being 40 per cent higher than the global average.
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Vietnam, Indonesia, and India remain with the highest encounter rates. In 2020, there will predictably be more hospital shutdowns with larger volumes and more disruptive because of ransomware.
In fact, governments and authorities would invest a high effort in dealing with cyberattacks. Government funds expectedly address unchecked cybercriminals. Alternatively, they should enforce cybersecurity protocols supporting hospitals.
M&A could be efficient strategies for health tech firms in 2020
M&A activities in the Asia Pacific will expectedly follow the global increase trends in 2020. Instead of IPO, telehealth startups tend to choose M&A and joint ventures in terms of optimising financial and operational performances.
Following the US, Asia would become the largest regional location for medtech growth, predictably rise by 35 per cent in 2023. Additionally, M&A across the continent might increase, since 61 deals have been made by Asian buyers and firms in the EU and US.
Regarding electronic health record (EHR), Google plans to develop a project for potential EHR tools. The power of Google is indisputable, causing current EHR firms in the market to pursue M&A plans in beating the potential domination of tech giants in the market.
A combination of the factors above makes the scene for healthcare startups in Asia in 2020 quite exciting.
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