As the pandemic enters its third year, few among us will fail to acknowledge the benefits of technology. It has allowed us to stay in touch with loved ones through punishing lockdowns and carry on with our social lives and work – at least those of us with jobs that require little more than a computer and an internet connection.
Technology has also given us the tools to tackle the ongoing healthcare crisis. The development of the messenger ribonucleic acid (mRNA) platform has enabled large parts of the global population to be inoculated in record time from the worst effects of the novel coronavirus. While there maybe holdouts, the ubiquity of technology in our lives has bred a growing openness to innovation in healthcare, or healthtech, as demonstrated by the boom in telehealth consultations and downloads of mental health mobile apps.
Naturally, this has drawn the attention of astute investors. They are now pumping record amounts of money into the sector, which could trigger a virtuous cycle of innovation and digital transformation on a global scale, but looks particularly promising in our home region of Asia Pacific.
Booster shots of cash
While Big Tech’s pursuit of digitising healthcare is well known, there is also an army of well-funded start-ups doing their bit to revolutionise the sector. In 2021, the global digital healthcare industry attracted a record US$57.2 billion worth of funding – a nearly 80% jump from the previous year – with companies in the therapeutics, mental health and wellness categories attracting significant investor interest, according to CB Insights research.
Asia drew in funds worth US$10.7 billion in 2021, a 62% increase over the previous year, and ranked second behind the US in terms of deal volume and amount in the fourth quarter. This capital infusion helped create two new unicorns in Q4 alone.
Source: CB Insights
Investor funds are also flowing into a wide variety of companies. Among the top recipients of equity funding in the last quarter of 2021 were a China-based social networking platform for doctors and an Indian online pharmacy. Even smaller markets, such as Pakistan and Sri Lanka, and various economies across Southeast Asia, are drawing on an influx of global funds to advance plans to overhaul their respective corners of the healthcare sector.
While consumer tech is clearly attracting the big bucks, another report shows enterprise healthtech start-ups are not far behind, having raised US$20.2 billion in 2021, a 67% increase over the previous year. We can expect more action on this front with the market predicted to be worth US$1.3 trillion by 2025.
Asia is primed for further progress in the healthtech space for a number of reasons. For starters, there is the demographics. The region, which suffers from a shortage of healthcare professionals and infrastructure, is expected to have 456 million people aged 65 or older by 2025, a 14% jump over 2021. This highlights the need for innovative delivery methods that can effectively address the upcoming boom in demand for healthcare services.
Source: HKTDC Research
Sure enough, insurers across Asia are reporting a spurt in telehealth consultations – a trend that has grown 38 times compared to before the pandemic. Studies also estimate that the market for wellness and therapeutics, diagnostics and caregiving, will grow at a compounded annual growth rate (CAGR) of 21% to over US$100 billion between 2020 and 2025.
A joint report from Google, Temasek and Bain & Company on tech trends in Southeast Asia highlights a growing readiness to pay for tech-enabled healthcare services and offers an optimistic outlook for the insurtech industry, as insurers move their distribution channels online through proprietary digital platforms, strategic tie-ups with healthtech players, or both.
What’s more, Asian governments currently spend only about a third of what OECD nations do on healthcare, pointing to a significant ramp-up in funding as the region ages and grows more prosperous. Southeast Asia’s six largest economies are expected to double public health expenditure to US$740 billion (from 2017 levels) by 2025.
Yet another key factor driving the adoption of healthtech in Asia Pacific is the ongoing transformation of consumer tastes and preferences. An increasingly wealthy population is growing more conscious of healthy living and wellness concepts – the region’s roughly US$240 billion wellness market is set to become the world’s largest by 2023 – and demanding access to quality and seamless care.
Then there is the fact that business is increasingly conducted online in a region that is home to about half of the world’s internet users. Studies estimate that the internet economy could reach US$1 trillion by 2030 in Southeast Asia alone, and that digital health in Asia could collectively create up to US$100 billion in value by 2025, up from US$37 billion in 2020.
Ultimately, in a world permanently influenced by the pandemic where everyone is leading increasingly virtual lives, it’s perhaps inevitable that technology and healthcare will become inextricably linked and consumers will grow ever more comfortable with tending to their mental and physical well-being online.
Asia's unique combination of the pressing need for healthcare infrastructure and delivery; digital appetite; growing affluence; and demographic trends ideally position the region to chart a course for the rest of the world to follow in guiding healthtech firmly into the mainstream.
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