Healthtech Drives Post-COVID-19 Opportunities in India’s Healthcare Industry
COVID-19 has accelerated an ongoing shift within the healthcare sector towards the use of digital health technologies (healthtech). Around the world, the pandemic situation has prioritized patient centric remote monitoring solutions and deployment of non-contact technologies.
This is more so in countries like India with poor or uneven healthcare infrastructure, low ratio of healthcare providers to the population, and/or high population density as well as in areas where the population is at high-risk.
Regardless, the adoption of digital solutions and non-contact processes – activated suddenly during the pandemic and sometimes with no alternative – is likely to influence how the healthcare sector evolves long after COVID-19 ends.
As patient familiarity with healthtech increases and their widespread use is forced upon reluctant and willing medical practitioners, the delivery of healthcare is bound to experience significant change.
Moreover, dealing with the fallout of the pandemic has pushed policymakers to plan for expanding access to and enhancing the capacity of emergency health services and laboratory testing, which is why the role of digital technologies in optimizing the use of resources will amplify.
In India, COVID-19 has already propelled the practice of telemedicine to the forefront, enabling doctors to examine a multitude of patients via video conferencing tools.
Telemedicine, which specifically refers to remote-based clinical services, comes under the broader segment of telehealth – that is, the distribution of health-related services and information via digital technologies. Telehealth systems allow long-distance patient and clinician contact, care, advice, reminders, education, intervention, monitoring, and remote admissions.
In India, telehealth systems have helped relieve some of the immediate pressures on the country’s overburdened healthcare infrastructure as its COVID-19 cases shot up.
Here we briefly discuss the new regulation on telemedicine and other emerging investment opportunities in India’s healthcare sector.
Regulation of telemedicine in India
In March 2020, the Indian government issued the Telemedicine Practice Guidelines to enable registered medical practitioners to provide healthcare services using telecommunication and digital technologies. Registered medical practitioners in India are persons who have completed their recognized medical qualification and are enrolled in the state or national register under The Indian Medical Council Act, 1956.
Given the urgent need to overcome major gaps in India’s healthcare system during the pandemic, the new guidelines are essential towards establishing legal transparency and accountability while also providing immediate consultations and preventing exposure to infection.
The Telemedicine Practice Guidelines recognize the following models of patient consultation – video, audio, and text, which includes telephones, video devices, chat platforms (like WhatsApp, Facebook messenger), email, fax, or special apps developed for remote consultation. The registered medical practitioner will use their best judgment with respect to whether a teleconsultation is acceptable, or the patient requires an in-person consultation. The consultant must maintain a record of the telemedicine interaction – phone logs, email records, chat or text records, and video interaction logs as well as patient records, reports, documents, images, diagnostic data, etc.
The general requirements under the Indian Medical Council Act, 1956 relating to professional misconduct and ethics will be applicable to telemedicine consultations as well.
The Telemedicine Practice Guidelines also outline the process for prescribing medicines, first consult and follow-up consult, identity and consent, action to be taken during emergency situations, among other concerns.
The Guidelines, however, do not allow the use of digital technologies to conduct surgical or invasive procedures remotely. The Guidelines do not cover data management systems or consultations outside India’s jurisdiction.
Previously, the government drafted a bill for the Digital Information Security in Healthcare Act (DISHA) in 2018. In July 2019, the Ministry of Electronics and Information Technology sought to include it in the forthcoming ‘Data Protection Framework on Digital Information Privacy, Security & Confidentiality’ Act. However, more information and clarity on these regulations are still awaited.
Snapshot: State of India’s primary healthcare infrastructure
Major infrastructure and resource gaps exist in primary healthcare delivery in both rural and urban India. According to research by IndiaSpend, a data-driven, public-interest journalism nonprofit, India’s spending on primary healthcare lags across the country. The research quotes the Rural Health Statistics, 2017 report: “Of the 156,231 sub-centers in India that are responsible for delivering the most basic healthcare, 78,569 were without male health workers, 6,371 without auxiliary nurse midwives and 4,243 without either.”
Further, as per the Indian Public Health Standards (IPHS), primary healthcare centers require 25,650 doctors across the country to examine at least 40 patients per doctor per day for outpatient care. That would result in one million patients getting basic medical care every day. However, with the current shortage – around 1,974 PHCs lack doctors, meaning that about 12 percent or 121,080 patients, are without any access to primary healthcare every day, according to IndiaSpend.
Public healthcare spend is divided between the central and state governments in India, with the latter assuming greater fiscal responsibility. Public health researchers have estimated that an ideal goal would be to allocate at least eight percent of the state budget for healthcare – so far, only the union territories of Delhi and Puducherry are on course to meet this goal, based on an assessment of state government budgets for 2019-20 by the Reserve Bank of India.
The snapshot view of the country’s abysmal rural healthcare coverage presents the clearest opportunity for increased telehealth and telemedicine services. We further elaborate on how technology will drive investment growth in healthcare below.
Telehealth, healthtech emerge as drivers of new investment growth
The prolonged pandemic and the current absence of a vaccine will ensure that telehealth services, and telemedicine in particular, will be preferred for the foreseeable future. That gives healthtech manufacturers and service providers in India a crucial window of opportunity – to tap into new trends in the healthcare sector, capture local markets, and facilitate the need for effective remote patient care and long-term monitoring.
While not at a nascent stage, the country’s healthtech industry has clearly targeted finding solutions to specific gaps in the healthcare system and emerging consumer needs. Prior to COVID-19, the healthtech industry catered mainly towards developing diagnostics and medicine delivery solutions, building wearable gadgets, treating lifestyle-related issues like stress and anxiety disorders through remote therapy, enabling early diagnosis of genetic disorders, and the alleviation of pain after painful procedures.
With the disruption brought about by the coronavirus pandemic and the successful application of remote methods of patient care (also facilitated by improved internet connectivity and access) – the focus of healthtech in India is going to diversify.
Key segments where new opportunities will emerge include the development of tools to facilitate emergency care and improvements to medical infrastructure through technology-based optimization.
This includes expanding the scope of wearable devices to track health conditions, developing patient-facing mobile health apps, and the greater integration of artificial intelligence (AI), robots, and blockchain technologies – for example, surgical robots, robotic carriers, electronic records and monitoring systems, sensors, remote diagnostics, etc.
Contactless healthcare tools and systems, immunity-boosting nutrition, and safety and hygiene are some of the most viable segments for investors going forward as COVID-19 has brought about a paradigmatic shift in our consumption priorities and social behavior. Among others, the virus outbreak has convinced consumers to purchase more healthy foods, practice social distancing and mask-use, and implement constant hygiene be it through sanitizing hands, material surfaces, and deep cleaning of ventilation, workplaces, and living environments.
Already in 2019, the international consultancy PWC had forecast that India would be among the top 10 global growth markets for healthcare and nutrition. The country’s healthcare sector was expected to grow threefold between 2016-2022 to reach US$372 billion according to 2016 estimates. On September 23, 2018, the country launched the government-funded healthcare scheme, Pradhan Mantri Jan Arogya Yojana (PMJAY) Ayushman Bharat to help low income households avail better healthcare services. The scheme has yet to gain traction as anticipated due to low awareness levels but this may change in the coming years as India will likely prioritize structural reforms to its healthcare system after COVID-19. According to IBEF, the government had planned to increase budgetary spend to three percent of the GDP by 2022.
Last year, India’s apex healthcare industry body, NATHEALTH, announced it had reached an MoU with global health-focused innovation platform, Well Technologies Ltd ( Well Tech), to enable healthcare startups in India with access to capital and market, industry partnership, mentorship, and technology development assistance. NATHEALTH, in collaboration with Well Tech, announced plans to infuse seed investment of upto US$1.5 million. Also last year, in June, the National Association of Software and Services Companies (NASSCOM) announced that its Center of Excellence for the Internet of Things (CoE-IoT) was partnering with NATHEALTH to will leverage the benefits that technology, including IoT and AI, can bring to the healthcare sector.
Meanwhile, the Indian government is actively encouraging the participation of both public and private players to develop digital solutions.
Below are some of the digital healthcare solutions adopted by the Indian government:
- Aarogya Setu: Mobile app developed by the Ministry of Electronics and IT (MeitY) to help citizens identify their risk of contracting COVID-19.
- Telemedicine Practice Guidelines: The Ministry of Health and Family Welfare (MoHFW) has released these guidelines in association with Niti Aayog to regulate the practice of remote clinical consultations. Doctors can now provide consultations through video, audio, email, or text.
- National Health Stack (NHS) and National eHealth Authority (NeHA): Digital framework to support healthcare across India. Goal is to compile digital health records for all citizens by 2022 to leverage benefits of telemedicine and e-health for Indians.
- e-Sanjeevani: An online platform enabling two types of telemedicine services – doctor-to-doctor and OPD (patient-to-doctor) consultations. The platform’s integrated telemedicine solutions was developed by C-DAC (Centre for Development of Advanced Computing) Mohali in 2019. The doctor-to-doctor teleconsultations have been implemented under the Ayushman Bharat Health and Wellness Centre (AB-HWC). Through a hub and spoke model, state governments have identified dedicated hubs, medical colleges and district hospitals, to provide teleconsult services to spokes, SHCs, PHCs, and HWCs. As of August 13, 2020, e-Sanjeevani has so far been rolled out across 23 states in India. The top five states utilizing e-health services through this platform are Tamil Nadu (56,346 consultations), Uttar Pradesh (33,325), Andhra Pradesh (29,400), Himachal Pradesh (26,535), and Kerala (21,433). Andhra Pradesh has recorded the most HWC-medical college interactions (25,478 consultations) and Tamil Nadu leads in the area of OPD services (56,346 consultations).
Examples of leading startups and private investors in India’s healthtech sector include:
- Leading US global medical device manufacturer, Medtronic plc, plans to invest INR 12 billion (US$ 170.24 million) in scaling up and expanding its current R&D center into a modern engineering and innovation hub in Hyderabad, Telangana state. The investment will make the Medtronic Engineering and Innovation Centre (MEIC) in Hyderabad the largest global R&D hub outside of the US; MEIC aims to create about 1,000 jobs in the next few years. The announcement has followed two years of discussions on investment modalities between the Telangana state government and Medtronic.
- Narayana Hrudayalaya, a chain of multi-specialty hospitals, which received funding worth US$48 million from the UK-based development finance institution CDC to expand affordable treatment in India.
- Practo Technologies, which develops and distributes medical information systems, and raised US$55 million in its Series D round of funding led by Tencent Holdings Ltd.
- Diagnostics startup SigTuple, which has secured multi-series funding, including a US$16-million Series C round led by Trusted Insight.
- M-fine, an AI-powered online doctor consultation app, which managed to raise US$23 million from an assortment of venture capital investors – founders of Myntra; Stellaris Venture Partners and Prime Venture Partners; SBI Investment, the venture capital unit of Japan’s financial services company SBI Group; Singapore-based SBI Ven Capital; and SBI Group’s Southeast Asian investment arm and tech-focused global venture capital firm, Beenext.
- 1mg technologies, which received Series-C round of US$15 million in funding from a group of investors led by HBM Healthcare Investments.
- The UAE-based Gamma Group, which is reportedly finalizing plans for investing US$450 million in healthtech.
State of mergers and acquisitions in the larger healthcare sector:
- Hospitals and diagnostic centers attracted foreign direct investment (FDI) worth US$6.72 billion between April 2000 and March 2020, according to the Department for Promotion of Industry and Internal Trade (DPIIT).
- Mergers and acquisition deals in the hospital industry jumped 155 percent to INR 76.15 billion (US$1.09 billion) in the fiscal year ending March 2019, according to data sourced from IBEF.
- In May 2020, Jubilant Generics Ltd, a subsidiary of the Noida-headquartered Jubilant Life Sciences Ltd, entered into a non-exclusive licensing agreement with the US-based Gilead Sciences Inc to manufacture and sell the COVID-19 drug remdesivir under the ‘JUBI-R’ brand in 127 countries, including India. As per media reports, Gilead has given Jubilant Generics Ltd the license on “a royalty-free basis till an alternative drug is discovered, or till the WHO declares the end of its ‘Public Health Emergency of International Concern’ for the drug.”
- In June 2020, DocsApp, an online doctor consultation app, announced it was merging with the Bengaluru-based healthcare platform MediBuddy to expand its presence in the online healthcare segment.
Finally, as the use of information technology (IT) in emerging verticals (retail, healthcare, utilities) continues to drive growth in the Indian market, the government will encourage greater foreign investment targeting research and development and innovation of hyperlocal solutions, which will in turn benefit the healthcare sector.
For instance, the Digital India Campaign envisages a US$20 billion investment covering mobile connectivity throughout the country, re-engineering of government process via technology, and enabling e-delivery of citizen services. And, the National Broadband Mission of the Government of India aims to fulfil the vision of ‘Broadband for All’ of the National Digital Communications Policy of 2018. The Mission’s deliverables include providing broadband internet access to all villages by 2022, increasing the present route length of 220,000 km of Optical Fiber Cable (OFC) to 5 million km, increasing the fiberization of telecom towers from 30 percent to at least 70 percent, and creating a Geographic Information System (GIS) based tool and setting up a National Fiber Grid to keep a mapping of the entire OFC network in the country.
The number of monthly active internet users in India is currently around 574 million, growing 24 percent over that in 2019 and indicating an overall penetration of 41 percent last year. This number is projected to reach 639 million monthly active internet users by the end of December this year, in major part due to the restrictions imposed by the ongoing pandemic.
Tapping into this huge internet consumer market is highly appealing for the world’s technology giants. Just last month, US-based search giant Google announced its plans to invest US$10 billion in the next five to seven years in India through equity investments, partnerships, and other arrangement to “accelerate digitalization” in the country. This flexibility of scope could have a wide-ranging impact, including enabling affordable internet access (it invested US$4.5 billion for a 7.7 percent stake in India’s leading telecom network provider, Reliance Jio Platforms) and building new products and services targeting consumer technology, healthcare, digital platforms to empower small entrepreneurs, the agriculture sector, and support for rural economies, etc. India’s recent reticence on Chinese firms in this space and the fact that leading technology firms are either restricted or prohibited from doing business in China (Google, Facebook, Netflix, and Twitter to name a few) has massively increased the investment prospects in the Indian market.
Overall, industrial verticals in India’s healthcare market are expected to diversify as an ageing population with a growing middle class increasingly favors preventative healthcare. Moreover, the rising proportion of lifestyle diseases caused by high cholesterol, high blood pressure, obesity, poor diet and alcohol consumption in urban areas has pushed the demand for specialized care services. Added to this will be the impact of the coronavirus pandemic, which will bring forth long-term changes in attitude towards personal health and hygiene, health insurance, fitness and nutrition, and health monitoring and medical check-ups. Finally, the poor to non-existent coverage of rural healthcare services will result in greater public healthcare spending and the government’s interest in the participation of private stakeholders using technology and R&D for improving ease of access and ensuring quality of care.
While the low cost of medical services in India has attracted considerable medical tourism in recent years, the country is also increasingly focused on developing its R&D capabilities given the relatively lower cost of clinical research. The challenges here would be the expansion of India’s hospital and medical education infrastructure, which is currently unable to provide sufficient coverage in the country. Expansion of educational institutions and medical facilities to tier 2 and tier 3 cities will be key to the growth of the healthcare sector. Here telemedicine will have a crucial role to play in terms of providing low-cost consultations and extending diagnosis facilities in remote and rural areas – this of course is dependent on the reliable availability of high-speed internet connectivity and telecommunication.
Foreign investors will thus find multifaceted opportunities when looking to enter India’s healthcare market – the hospital industry, medical electronics and devices, the medical supply chain, home healthcare, telehealth systems, and healthcare-focused software as a service (SaaS) platforms.
The article was originally published in July 2020 and last updated August 21, 2020.
India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to firstname.lastname@example.org for business support in India.
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