Medical Startups Aimed at Giant IT Companies
Companies such as US Alphabet and US Microsoft are actively investing in medical startups. They find business opportunities in the inefficiency of the medical industry, where waste is noticeable in various areas, from new drug development to hospitals. The idea is to use a new company’s digital technology to connect it to a new business. Summarized the investment trends of major IT companies, to which companies IT money is flowing.
Healthcare is a large and inefficient industry. In the US, this industry is 19% of GDP, but some research suggests that 20-25% of spending is wasted.
Such inefficiencies are noticeable throughout the industry. There are more than 175,000 medical office workers who calculate doctors and hospitals’ remuneration, and the average cost of a new drug being brought to market is $ 2.5 billion. Health care costs contributed by companies now reach $ 20,000 per year.
Investment in startups in the US digital health sector in 2018 reached a record high of $ 11 billion, up 16% from the previous year. Earlier this year, medical insurance company Clover Health raised $ 500 million in Series E and genetic analysis company Ginkgo BioWorks raised $ 290 million in Series E Companies that are committed to technological innovation have raised a lot of money, with a value of $ 4.2 billion and a pharmacy US Capsule raising $ 200 million in Series C.
On the other hand, China, the world’s second largest economic power, has invested large amounts of money in healthcare as a national policy against the background of aging population and demand for better medical care. These efforts were promoted by the new health care system reform in 2009 and the “Health China 2030 Plan” (announced in 2016). As a result, according to the World Health Organization (WHO), the Chinese healthcare market is growing at a rate of 17% per year.
As the digital health market grows, non-medical companies are also interested in this area. The number of investments in digital health companies by major technology companies in 19 years has risen to 38 so far, which is the same pace as 49 companies in 18 years, the highest ever.
Investor strategy trends
The biggest technology companies investing in the most digital health startups are Google, Microsoft, and China’s Tencent. The three companies account for more than 70% of all investments in the digital health sector by major technology companies, but their investment destinations and strategies differ.
Google (alphabet) is a recognized leader in digital health investment, with 93 investments and 57 investment companies. More than 70% of these investments are undertaken by Corporate Venture Capital (CVC) Google Ventures, Capital G and Gradient Ventures.
“Moonshot” companies, such as Verily Life Sciences, who research the life sciences field, invest in companies that are directly related to their projects. For example, Berylly is investing in US startup Ciitizen, which keeps personal health records.
Google’s start-up development and entrepreneurship support program “Google Launchpad Accelerator” is invested in 17 digital health companies.
Google’s main investment areas are “genetic analysis” (18 cases), “clinical research” (15 cases), and “insurance and benefits” (12 cases).
US-based 23andMe genetic testing service, US-based Flatiron Health, which handles cancer analysis software, and US-based Freenome, which seeks early detection of cancer, include patient data. Is collected in large quantities, and gains significant knowledge and promotes commercialization using state-of-the-art artificial intelligence (AI) and machine learning. This is a strategy very similar to the way Google built a search empire.
Google also invested in Oscar Health and Clover Health, which provide online medical insurance, in the United States, the highest-value private medical insurance startup in the United States. The two companies are using cutting-edge data analytics and innovative patient-building models to differentiate themselves from existing major players.
Google previously did not invest directly in companies in the field of “remote patient monitoring,” but in 1919 acquired the US Fossil Group’s smartwatch R & D department for $ 40 million, making the first investment in this area. This area will be extremely important in promoting Google’s healthcare, especially clinical research strategies. Berylly has already used its own wearable device “Study Watch” in several studies.
Unlike Google, most of Microsoft’s investment comes from training and corporate support programs such as “Microsoft Scale Up” and “Microsoft AI Factory”. These programs target early-stage digital health companies, and 35 digital health companies have completed the program.
Microsoft is shifting its healthcare strategy from personal health data to promoting the storage and use of such data by major healthcare companies, and the investment destinations are also changing. Most of the investments since 2016 have been directed to “data management & analytics” and “gene analysis” companies.
Tencent in China is the third largest technology company with the third most active investment in the digital health sector. There are 52 investments and 40 investment companies. Of these, 31 investments are made in China, where the company has a customer base.
Tencent is known for investing in a wide range of companies, with over 700 investments in 18 years. Tencent’s digital health investment is 84%, and the rest is conducted through the AI training support program.
Tencent has invested in “clinical research” and “management tools” with the goal of strengthening its business response capabilities. On the other hand, the company is also the company with the largest investment in “medical content & marketing”. The interactive application “Wee Chat” alone has 1.1 billion monthly users, providing a valuable customer acquisition route to investment companies.
Other major technology companies that have invested in more than 5 digital health companies since 2010 include Intel, South Korea, Samsung Electronics, the largest online mail order group in China, Amazon.com, and major media companies. Cast.
Investment fields of the top 5 companies in the digital health sector
Comcast is the only telecommunications company with a unique investor on this list. The company spends about $ 1.3 billion a year on medical expenses for 225,000 employees and families. Therefore, in order to improve the medical experience of employees and manage medical expenses more appropriately, such as the US system Accolade, the health app US Health (K Health) and the US Shine (Shine) Investing in startups.
Apple is not in the top 10 because it has few investments in the healthcare industry. But in this area, the strategy is focused on acquisitions, and so far it has acquired three digital health companies.
All acquired companies in the field of “personal health data management and monitoring”, Apple is doing business in line with the direction that Apple aims for healthcare. For example, Gliimpse, which manages personal health information, has become the foundation of an innovative app called “Healthcare” on iOS devices.
Grimp CEO later founded Citizen. The company is funded by Google.
Investment trends by sector
With the rise of new technology and changes in regulations, the field of digital health that major technology companies are paying attention to is changing.
Eight companies are funded by more than two technology giants. U.S. Grail (founded by GRAIL, Google and Tencent, Amazon) who discovers cancer by blood test, Indian doctor search site management Pract Technologies (Practo Technologies, Google and Tencent), US cognitive scale (Visualization inference by AI) CognitiveScale, Intel and Microsoft).
Companies in the “Content & Marketing” field are working on community building and content generation (often generated by users), with the ultimate goal of commercializing web access to healthcare companies. Companies in this field include Chinese cosmetic surgery platform New Oxy (SoYoung), Chinese surgeon site Weiyi, and US Outcome Health, which deals with educational medical content.
Startups in the field of “Assistive & Rehabilitation Tools” use technology to help people with disabilities and help patients recover. For example, Sword Health, who has completed Microsoft’s “scale-up program,” sells digital physiotherapy tools.
Medical Startups in the United States and China - /10