Digital health developments: a new investment era for start-ups

Healthware Labs’ Kristin Milburn explores how digital health start-ups can harness the huge potential for the sector in a post-COVID world and the paths they need to take to grow their business.

Digital health has come a long way in the past decade – and Kristin Milburn says that the sector could now be about to enter its most exciting period yet.

Through her role as managing director of innovation consultancy Healthware Labs, Milburn has seen first-hand how digital health has evolved. In particular she points to a move beyond tools that surround or support medications – such as adherence solutions – or those that take proven analogue programmes, such as CBT or physical therapy solutions, and digitise them for wider availability.

“Now we’re starting to see more solutions that have novel modes of action with no analogue equivalent,” she says. “The next frontier is really around digital solutions that cause drug-like changes in the body; so far, these are typically seen in CNS – the video game Akili for ADHD being one example.”

Although the digital health sector began by mostly targeting highly prevalent conditions like diabetes, cardiovascular disease and respiratory conditions, Milburn says it is now expanding to more specialist disease areas like oncology, gastroenterology, or dermatology, as well as rare diseases.

“Sometimes we find that clients don’t think they can learn anything from digital tools in disease areas they aren’t working in – but what’s happening in one area will eventually start happening in another,” she says.

“A lot of these platforms, such as One Drop for diabetes, were originally built for one disease area but ended up expanding into other conditions. Once you show that your app or your solution can have traction and user engagement, you can apply those same learnings to other disease areas. Of course it’s always going to need to be customised to suit the needs of a specific user-base, but the baseline, core functions of how you create a usable service can remain fairly consistent.

“Generally, the pharma industry lacks the experience to build those kinds of consumer-focused solutions – so that’s where specialist digital companies can help.”

User-centric digital start-ups

The sector’s maturation also means that robust evidence is becoming more important than ever for companies who want their digital solutions to be widely used.

“Payers, doctors and patients aren’t going to take your product seriously unless you have studies to support its value,” says Milburn. “In the world of healthcare that would typically involve conducting an RCT. However, some digital start-ups – such as One Drop – proved their value by providing a valuable service to their customers, and then showing real-world evidence of impact.”

Meanwhile, COVID has acted as an accelerant for digital adoption, and in a post-pandemic world the sector is likely to see even more rapid growth.

Milburn says this is evidenced by the increasing numbers of M&A deals in the sector that are creating end-to-end service companies – such as the merger of Teladoc and Livongo.

“I don’t think either of those companies were necessarily thinking about combining forces before COVID, but the pandemic demonstrated that these kinds of solutions can be more powerful when working together.

“The merger is a combination of an episodic care platform with a chronic care management platform – which shows that as the space matures there’s a need for more platforms versus point solutions, as companies start to consider the entire patient journey.”

She adds: “I think we’re going to see similar mergers happening in the future – there’s been talk about Omada joining with Amwell, another big telemedicine provider, for example. Meanwhile, the number of healthcare-specific SPACs [special purpose acquisition companies] happening also shows that start-ups are stronger when bonding together.

“All the signals are pointing towards more consolidation in the market overall, and newer companies really need to keep that in mind.”

As such, Milburn says that start-ups need to be building their companies with the knowledge that they could likely be a part of a larger platform down the road.

“It’s still smart for start-ups to think about solving a specific challenge, but eventually they should also consider merging with adjacent solutions to create end-to-end services for patients – whether that’s integrating into another platform or partnering with another start-up that has a complimentary service.

“This requires knowing what the patient journey looks like and knowing specifically where your solution fits.

“Oftentimes start-ups have just got their heads down, trying to get traction with their own solution. That is of course important, but from a strategic standpoint, they also need to have a vision for what their next step might be and where they can fit in the overall scheme of things.”

Milburn says that if a company is truly building a solution from a user perspective, they need to consider how they can support patients at every stage of their journey – not just how they can get the solution into patients’ hands.

“In other words, a solution needs to be user-centric, not healthcare system-centric.”

Digital start-up investment rises

On top of this, Milburn says that the high levels of investment flowing into digital health suggest the sector will be buoyant for years to come.

“We’re seeing more and more late funding rounds. Weight management app Noom, for example, just got $540 million in a series F round, and they’re probably going to IPO soon.

“That’s a lot of money for an investment round, which really goes to show that there’s a huge need for the service that they’re providing. It also highlights the importance of being able to demonstrate evidence of impact in a difficult area like behaviour change.”

Milburn believes the environment for start-ups over the next few years will continue to be positive, assuming the financial recovery post-COVID continues.

“The pandemic has highlighted more inequities, more challenges, and more gaps in healthcare. It has also made people overall less resistant to adopting technology. That creates more opportunities for digital health solutions to step in and fill those gaps.

“Now that we’re starting to move past the pandemic and resume some semblance of ‘normal life’ – and given the vast amount of money flowing into the digital health space – this is probably the best time ever to launch a digital health start-up.”

Startups to watch

Milburn runs through a few of the most exciting start-ups Healthware has worked with:

YourCoach – “This platform helps health coaches to run their business. It reaffirms the need for a human element as part of any kind of behaviour change.”

Savor Health – “A nutrition bot designed to help support patients with cancer. There aren’t enough nutritionists, and certainly not enough oncology nutritionists, and what you eat during your treatment can have a huge impact.”

Health Tunes – “This app combines music tracks with binaural beats to help alleviate stress, anxiety and pain. A unique solution in a sea of mental health apps with a built-in mode of action people actually enjoy – listening to music.”

Patch AI – “This ePRO for clinical trials is currently gaining a lot of traction in oncology trials.”

Hi.Health – “This company recently launched their digital health expense account service in the EU. It makes it easier to submit expenses for reimbursement – allowing for immediate reimbursement of costs – which I believe could be a real game changer.”

Kristin Milburn

A twenty+ year veteran of consulting and digital marketing, Kristin Milburn’s experience has had a consistent focus on healthcare, technology and the intersection of the two. She is a strategic and innovative thinker, who has held leadership roles in strategy/planning and client engagement at various digital firms with numerous Fortune 100 pharmaceutical and technology clients. After launching her own digital shop and rising through the ranks on the agency side, Kristin jumped to the client side and joined the Digital Medicines team at Novartis for several years. Looking to gain experience on the start-up side, she then joined the digital mental health start-up called Headspace, helping integrate meditation and mindfulness into healthcare. Kristin is now the managing director of Healthware Labs, the digital health innovation consultancy of Healthware Group.

Healthware Labs is the digital health innovation division of Healthware Group.

Healthware Group is a global consultancy and digital health organisation that has been driving the transformation of health for almost 25 years by offering a unique set of services and expertise in strategic consulting, communication, technology, and innovation to companies striving to improve patient outcomes and transform business results in the life sciences, medical device, and health insurance industries.

Founded in Italy in 1997 by CEO and digital health pioneer Roberto Ascione, Healthware Group encompasses several vertical brands, including flagship full-service marketing and communications agency Healthware International, media consultancy Healthware Engage, innovation consultancy Healthware Labs, and virtual events specialist SWM.

Healthware Group is also the co-host of the global leading digital health conference Frontiers Health and operates Healthware Ventures, the corporate investment arm that supports digital health startups with a focus on digital therapeutics and telehealth.

Together with its joint venture partner, Intouch Group, Healthware has a combined team of over 1,300 communicators, connectors, and builders of future health and 15 offices in Europe, the US, and Asia.

For more information, please visit healthwaregroup.com and follow us on LinkedIn and Twitter.

Don’t miss your complimentary subscription to Deep Dive and our newsletter