With demand for health care on the rise across the developing world and many governments struggling to keep pace with the changing needs of their populations, a new generation of health tech start-ups is entering the market. Harnessing the possibilities brought about by the digital revolution – notably the expansion of mobile phone penetration, but also emerging disruptive technologies such as artificial intelligence (AI), blockchain and drones – these new companies are providing innovative solutions to the health care challenges of the 21st century.
Start-ups utilising digital platforms and logistics software are expanding and enhancing treatment, helping to bridge the rural-urban divide in access to pharmaceuticals and medical professionals, while also improving pre- and postnatal care at a distance through smart phone-enabled telemedicine. Others are forging ahead in facilitating the early detection and treatment of non-communicable diseases (NCDs), along with psychiatric disorders and dementia. Many countries have recognised the potential of these non-traditional private sector players, introducing start-up accelerator programmes and forming deals with emerging tech companies to boost coverage and treatment. Nevertheless, a number of barriers to the expansion of health tech start-ups remain, ranging from underdeveloped ICT infrastructure, a lack of access to start-up capital and limited human resources.
Rising Demand
A combination of demographic and economic trends is driving an increase in demand for health care across the developing world. Populations are growing and – in some countries – ageing, while economic development supporting is the emergence of an increasingly prosperous middle class. Indeed, according to the UN, the global population is set to rise from 7.7bn in 2019 to 8.5bn in 2030 and 9.7bn in 2050, with the countries of sub-Saharan Africa projected to account for over half of this expansion. Concurrent with both population growth and a shift in consumer habits and lifestyle choices as a result of greater disposable income, emerging economies have experienced a rapid rise in NCDs, including cancer, cardiovascular and chronic respiratory disease, and diabetes. This shifting disease profile is placing considerable financial strain on developing countries, with a 2019 World Health Organisation (WHO) study of 11 emerging economies finding that the negative impact of NCDs on these states averages 4.4% of GDP per year, largely as a result of lost productivity. Due to these factors, both public and private spending on health care is rising steadily, with the combined value of the sector in emerging markets standing at $1.3trn in 2018 and set to grow by 6.3% annually through the decade to 2030 – double that of developed countries – according to UBS Investment Bank.
State Capacity
While state investment in the sector is rising across low- and middle-income nations, spending often falls short of what is required to adequately address diverse and changing health needs. The WHO estimates that up to 5bn people worldwide will be excluded from health care by 2030 unless countries invest an additional 1% or more of GDP into primary care provision. With many countries struggling to meet the health care requirements of their populations, a high and rising amount of procedures in the developing world are paid for out-of-pocket, with payments of this kind amounting to around $500bn per year and disproportionately affecting the poorest, residents according to the World Bank.
Faced with these challenges, governments are increasingly looking to leverage digital technologies to improve efficiency and enhance services, especially through the digitisation of health records, with tech start-ups playing a central role in these endeavours. “The biggest challenge by far is the lack of credible data. There needs to be further public-private collaboration in terms of gathering data,” George Kesse, global head of business development at the Accra-based medical logistics firm mPharma, told OBG. Nigerian mobile health provider InStrat Global Health Solutions also recognises this problem, and is collaborating with local authorities to introduce a digital platform that enables health practitioners to access and manage centrally stored medical records. Similarly, in 2013 Cote d’Ivoire launched OPISMS, a mobile phone-based electronic vaccination booklet developed by two health tech entrepreneurs and backed by the Ministry of Health.
This move towards the digitisation of medical records is, in turn, creating further business opportunities for new companies, providing them with invaluable data that can be leveraged through digital technologies to offer improved care and better responses to changing consumer demand. “If the government guarantees the availability of medical information, big data is going to play a key role in the sector,” Sandra Ramírez, country manager for Colombia of the global pharmaceutical company Bristol-Myers Squibb, told OBG. “Providing real-time information about individual patients allows providers to quickly make the right decisions for treatment on a case-by-case basis.”
Common Challenges
Aside from limitations on the spending capacity of governments, emerging economies face a number of specific challenges to the provision of health care services. These problems include a significant rural-urban divide in access to medicine and medical professionals, along with fake or inaccurately labelled pharmaceutical products. However, tech start-ups are playing an increasingly proactive role in attempting to overcome these issues. In April 2019 the Ghanaian government announced a deal with the US-financed start-up Zipline to use drone technology to make on-demand deliveries of vaccines, blood transfusions and other medical supplies to remote areas of the country in an effort to narrow the gap. In a sign of the growing appetite among investors for innovative health tech start-ups, the project has attracted international investment “in the tens of millions of dollars”, according to Keller Rinaudo, CEO of Zipline. Once fully operational, the project is expected to facilitate 600 deliveries per day to 2000 health facilities, serving around 22m people.
Another pressing issue faced by many developing countries is the proliferation of fake drugs, with the WHO reporting in November 2017 that around 10% of all medications sold in low- and middle-income countries are substandard or counterfeit. The problem is particularly acute in Africa, from which 42% of all cases of fake pharmaceuticals reported to the WHO arose. According to the WHO, antimalarials and antibiotics rank among the most commonly substandard or falsified medical products, disproportionately affecting the least developed nations. The WHO estimates that between 64,000 and 154,000 people die each year in sub-Saharan Africa as a result of taking counterfeit antimalarial medication. A number of start-ups have emerged with the aim of combatting this problem. A notable example of this is Accra-based start-up mPedigree. Founded in 2007, the company provides a mobile phone platform that allows consumers to verify the authenticity of medicines. The company has since expanded its operations across the continent and also into India. Similarly, Nigerian tech start-up RxAll harnesses AI to enable drug authentication. While mPedigree functions by tracking the serial numbers displayed on the product packaging through a mobile app, RxAll provides a handheld nanoscanner that analyses the makeup of the chemical compounds found in the medicine before relaying this information to the company’s cloud-based platform for analysis.
Start-Up Boost
Recognising the positive role tech start-ups can play in the expansion and improvement of health care services, many emerging markets are pursuing policies aimed at supporting the burgeoning sector, through accelerator and booster programmes, and public-private partnerships.
Health start-ups have figured heavily in many accelerator programmes and award shows in sub-Saharan Africa. For example, Doctoora came first in the statebacked Nigerian Economic Summit Group Start-up Pitch Competition in October 2019, receiving a prize of N5m ($16,300). The company, founded in 2016, provides a digital platform through which health care professionals can rent space to treat patients on a payper-use basis, and allows patients to arrange consultations with doctors, thus better managing underutilised capacity and reducing end costs for the consumer.
Earlier in May 2019 the Australian-headquartered start-up accelerator BlueChilli announced a partnership with Enterprise Singapore to launch a programme to support new South-east Asian companies operating in the health tech segment. The firm also established an innovation centre in Amatil, Indonesia to help build regional capabilities among emerging firms and formed an additional partnership with the Singaporean venture capital firm Hatcher+ to invest in 240 health tech start-ups across the region. Upon becoming fully operational in 2020 the project will provide training, seed funding and mentorship programmes to innovative medical firms in five countries.
Nevertheless, more remains to be done to improve the business ecosystem of developing countries to ensure health tech start-ups can flourish and improve health outcomes. This includes implementing supportive legal frameworks and efforts to ensure that capital is available for new firms. Furthermore, tech start-ups in emerging markets often face hurdles in terms of insufficiently developed ICT infrastructure and a lack of adequately trained tech professionals, with many low- and middle-income countries facing a chronic shortage of software developers. The segment also faces a global shortage of health care professionals. According to the World Economic Forum, only half of all countries have the necessary number of health professionals, and the spread of the global health workforce is inequitably distributed: Africa, for example, has 24% of the global disease burden but only 3% of the world’s health professionals.
Middle East & North Africa
Faced with growing health care demand but an ever-growing presence of ICT, the economies of the Middle East and North Africa have recorded a rapid upsurge in health tech start-ups. According to Wamda Research Lab, Egypt and the UAE lead the pack in terms of the number of health startups, followed by Palestine, Lebanon, Jordan and Saudi Arabia. The lion’s share of the region’s health start-ups is orientated towards providing greater access to medical professionals by means of digital platforms. One notable success story is Cairo-headquartered online medical portal Vazeeta. Initially launched in 2011 the website provides a searchable database of medical practitioners, allowing patients to compare fees and patient reviews before booking an appointment. Initially limited to Egypt, the company has since expanded its operations to Jordan, Lebanon and Saudi Arabia.
This data highlights the strong potential for international expansion among the region’s health tech start-ups. Of the 120 companies surveyed by Wamda Research Lab in 2016, 48% were found to have the potential to grow across countries and continents, given that they address universal health care issues and are linguistically inclusive. A similar initiative is DabaDoc in Morocco, which offers both a website and mobile app that allows customers to find a doctor and book an appointment. In response to a pronounced rural-urban divide in access to health care, Morocco also saw the launch of the Medtrucks, a digital platform using logistics technology to provide mobile medical facilities in remote areas.
Sub-Saharan Africa
Sub-Saharan Africa has emerged as a leading centre for medical tech start-ups, with the segment attracting $18m in investment in 2018, according to the annual African Tech Start-ups Funding Report. The region faces major challenges with a significant disease burden combining both infectious disease and a recent rise in NCDs. Given the shortage of trained medical practitioners and the continent’s underdeveloped transportation infrastructure, telemedicine – the provision of medical services over distance using ICT technology – has seen particular growth, and the market is expected to grow from $18bn in 2015 to $41bn by 2021.
One such start-up is SeekMed, an app that provides digital consultations with health care practitioners from around the world. Other digital platforms aimed at improving outcomes include the Côte d’Ivoire start-up REMA, a mobile app that provides a social network for African doctors, allowing them to collaborate on cases to avoid misdiagnosis.
Despite significant improvements in recent decades, the continent retains the highest global rate of infant mortality, with sub-Saharan Africa having 52.7 deaths per 1000 live births in 2018, according to the World Bank. Faced with this persistent problem, a number of start-ups have emerged to provide mothers with improved access to pre- and postnatal care, including Omomi, a Nigerian app for pregnant women and mothers to monitor their child’s health and consult with doctors using a pay-as-you-go subscription.
Other emerging tech companies are providing digital solutions aimed at improving access to authentic pharmaceutical products at affordable prices, such as the MYDAWA website and app in Kenya. The platform allows consumers to purchase medicines directly from suppliers and had over 80,000 registered users as of late 2019. Similarly, the Ghanaian start-up mPharma uses logistics software to manage prescription drug inventories for pharmacies and streamline last-minute delivery of pharmaceutical products. Since its foundation in 2013 the firm has undergone significant expansion, widening its operations to other countries in the region and most recently purchasing Haltons – Kenya’s second-largest pharmacy chain – in March 2019.
Latin America
Across the Atlantic, Latin America has also experienced a rise in the number and variety of tech start-ups. These include firms providing digital platforms for telemedicine consultations, such as Medicato in Mexico and the Colombia-headquartered app 1doc3. Another notable telemedicine provider is the Mexico-based start-up Docademic, which offers free video consultations with doctors. The platform utilises AI to optimise its operations and uses blockchain to securely store patient data. The region has also pioneered the development of innovative digital products to support healthier lifestyles and achieve early detection of illnesses. Adult obesity has become a major health challenge, with one in four adults in the region being obese in 2019, according to the UN Food and Agriculture Organisation. As part of an attempt to combat this issue, Mexico saw the 2014 launch of InstaFit, an app that provides users with nutritional guides and allows them to stream over 600 workout and meditation exercises. According to the Mexican Psychiatric Association, around 30% of the country’s population has some form of mental condition, though only one in five receives treatment. In an effort to address this, 2016 saw the launch of Mexican start-up Jenny, an interactive mobile platform that asks users daily questions about their emotional well-being. Using AI, the app monitors the mental well-being of the user and provides therapeutic recommendations.
Asia
Supported by rapidly increasing ICT infrastructure and smartphone penetration, Asia plays host to the world’s second-largest health tech industry, attracting $6.3bn in investment in 2018. The health start-up ecosystem has been particularly dynamic in South-east Asia, with the region accounting for 22% of all health tech deals on the continent in the first quarter of 2019, up from 11% in 2017, according to figures from Galen Growth Asia.
Many of these start-ups offer online platforms that enable telemedicine consultations with medical practitioners, such as Halodoc and SehatQ in Indonesia, and Teleme in neighbouring Malaysia. In addition, a burgeoning number of start-ups are providing wellness solutions, such as Valea Health in the Philippines. Founded in 2018 the start-up provides a digital platform through which customers can receive virtual health coaching, view fitness classes and receive coaching. In addition, new tech companies are emerging that provide apps offering psychotherapy, life coaching and career advice, such as Mosia in Vietnam.
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