Faces of digital health

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Special episodes 74/75: Healthcare innovation financing in times of COVID-19 

Investments in digital health and biotech have been steadily rising in the last few years. When the coronavirus reached Europe and the US, the use of telemedicine surged, and numerous companies built digital solutions within days to support healthcare and individuals. What will be the economic consequences of coronavirus on fundraising?

To answer this question Healthday.si and Faces of digital health organised a webinar, supported by Project Arte and Technology Park Ljubljana. Below you can find the summary of the introductory presentations and panel discussion.

Webinar agenda:

14:05–14:20 Overview of the global digital health scene up until now, COVID-19 related investments (Levi Shapiro, mHealth Israel (Israel))

14:20–14:35 Collabetition: New Possibilities to Create, Co-Create and Rethink Healthcare Businesses (Nana Bit-Avragim, Digital Health Business Architect (Germany))

14:35–15:10 Round table: Effects of COVID-19 on business (Nana Bit-Avragim (Germany), Levi Shapiro Israel), Giovanni Loser, investor (Italy), Blaž Triglav, healthcare executive (Slovenia))

15:10–15:20 Q&A with the audience

You can watch the webinar here: 

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or listen to the podcast. The whole program was adapted for radio and published as separate episodes of Faces of digital health podcast.

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Tune in in iTunes.

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Tune in in iTunes.

Future opportunities

For an introduction to the discussion about funding on the webinar, Levi Shapiro outlined the trends we can expect in the future in the so-called back casting format, predicting what will happen between 2020 and 2025. He divided the key trends in six segments:

1. BioConvergance — there will be a big wave of investment focused on the integrations of biology with a variety of disciplines from artificial intelligence, physics or computation, and nanotechnology.

2. Pharma is KING — Pharma for the short-term will be king as companies will represent by far the largest portion of value capture in the health sector. Medtech manufacturers, on the other hand, might be a very different story since they are dependent on health systems. Health systems are at the moment dealing with overload and as an example, elective surgery is basically on hold. Therefore, for the next few quarters, there may be an impact on the equity price and market cap of the Medtech sector meaning they’re less likely to have capital available for acquisitions or early-stage investments.

3. Remote medicine spikes — because of the crisis we already see the spike in demand for remote medicine  in the US— combining high-level medicine with minimizing physical contact to deliver the highest level of Medicare with basically contactless interaction. Additionally, we can expect a spike in demand for digital mental health solutions because of the healthcare workers who will be suffering from PTSD after the pandemic ends. This crisis also showed the need to rethink care for the elderly, to bring them more remote moderate monitoring and other tools in addition to all the other sub-sectors. “I think the doctor of the future is going to be probably spending more and more time in front of a variety of screens tracking monitoring and intermediating a variety of swings almost like a trader on a financial desk a very different model from tradition today,” said Levi Shapiro.

4. The decline of direct to consumer models — Safety, quality and efficiency will be the main drivers on the market rather than convenience. Shapiro argued that the public sector is going to reorient priorities in terms of spend and direct-to-consumer models will have a more difficult time succeeding.

5. Providers step back from the venture game — Hospitals will retreat from the venture game certainly in the next couple of years, expects Levi Shapiro. “Right now it’s all hands on deck ensuring the continuity of the core business. More than half of all of the health system venture funds are less than 5 years old, of course, those with capital will deploy, but there’s a good probability that providers will fall back to translational science prioritization meaning of commercializing their own in-house intellectual property rather than seeking investment in outside external Innovation startups,” he argued.

6. Hospital supply chain and IT management — An area that startups may want to consider relating to hospitals is the supply chain and its inefficiencies. Hospitals generally employ more staff then nearly any other sector. Hospitals are very human dependent and in clinical practices, the ratio between staff and doctors is around 3–4 per one doctor doing nothing but administration. The crisis has really emphasized the fragility of the hospital supply chain — from lack of supplies, expired products at the time of an emergency, many different quality issues related to supply chain. “About 20 to 25% of physician time is devoted to the hospital supply and these systems are not evolved to where they oughta be.”

Time for collabetititon

Community will be an integral part of success in healthtech, says Nana Bit-Avragim.

Nana Bit-Avragim discussed the new funding models that are already present in the startup world, but perhaps less known to the wider public. 

Collabetition is a mixture of the two nouns collaboration and competition. It describes the situation where businesses competing in the same market collaborate to help promote their joint market share, rather than compete (www.catalysoft.co).


In contrast to Levi Shapiro, Nana Bit-Avragim believes Biotech, not Pharma is King as we are currently observing a new balance of power. 

Some examples to support that theory are: 
“Cyclica is a Toronto-based neo biotechnology company that is decentralizing the discovery of medicines by leveraging artificial intelligence and computational biophysics. To support researches across the globe, Cyclica has recently launched Stimulus Plan for all who have been affected by Covid19,” mentioned Nana Bit Avragim. Further more, the Danish company ImmuniTrack has published open access 174 epitopes (an epitope specific piece of the antigen to which an antibody binds) offering biotech and pharma community a faster and effective way in producing vaccines against SARS-CoV-2.

Open science 

At the same time, a global scientific community is offered a unique chance to value the impact of Open Access on research and technology development. And the next example is about Structural Genomic Consortium, a not-for-profit organization, which accelerates research by making all its research output available to the scientific community with no strings.

Radical generosity

An absolutely different and powerful model of generosity empowered by a network — to build a sustainable innovation within women-led ecosystem comes from Canada as well. This is the SheEO concept, which represents women investors investing or donating into women-led ventures interest-free to support female entrepreneurship at a global scale. I think this is an amazing example of the community-driven economic model, which can be applied everywhere else to support many industries and local communities.

Source: Nana Bit-Avragim.

“As it has never happened before, we are observing a huge boom to catalyze innovation by crowdsourcing and building agile partnerships. If biotech is King, telemedicine is Queen. Finally and eventually, a change in regulations has opened up German market for telemedicine and here we can see a massive adoption this technology by primary care physicians,” said Nana Bit-Avragim.

Nana Bit-Avragim also mentioned significant European funding has been made available for work specifically on SARS-CoV-2 including through the European Commission within Horizon Europe and other sources.

“This is a great time to start a company”

Digital Health investments as tracked by StartUp Health.

The four panellists — Levi Shapiro, Nana Bit-Avragim, italian investor and CEO of Biovalley Investments Partners Giovanni Loser and Blaž Triglav, CEO of Mediately, shared their opinions regarding how countries they reside in are coping with the situation. Coming from Italy, which became the epicentre of the pandemic in Europe, Giovanni Loser, said other countries, mostly their healthcare systems, can learn a lot from Italy. While Italy has a spread out healthcare system, it lacked any program for a situation such as COVID-19 induced crisis.

The capability to go straight to measurements for containing the outbreak in the future needs to be outlined by any healthcare system that wishes to mitigate future similar situations better than we approach the problem today, emphasized Loser.

One of the main news about Germany and COVID-19 was that the country had relatively few deaths compared to other countries. “This in part can be attributed to the fact that Germany has the highest number of intensive care beds per 100.000 people in Europe if not in the world. Germany had 29 intensive care beds per 100.000 people compared to Italy which only has 12,5. The number was even increased to 40 when the outbreak began,” mentioned Nana Bit-Avragim. Additionally, she added, diagnostic tests were relatively widely available with the governmental goal to screen a population of one million people soon. Similarly to other countries, Germany also faced communication challenges and how to give doctors and nurses timely access to reliable information.

According to Levi Shapiro, Israel wasn’t overly shocked by the virus outbreak, since the country is used to responding to emergencies. The startup nation has a lot of startups with validated solutions that were easily available in the crisis. This showed that technologies for tackling COVID-19, such as home assisting diagnostic tools, telemedicine, etc. that did not have to be developed from the ground up and go through lengthy approval processes were a key component in battling the virus outbreak. Companies offering these kinds of solutions are consequently thriving in the current crisis. As an American, Shapiro believes, the US was to slow to respond to the crisis, which will contribute to difficult times ahead, that will not end until a vaccine reaches the market. “California, Massachusets and New York represent 90% of venture funding and these three states were hit the hardest,” illustrated Shapiro.

Shapiro predicts less funding will be raised in the upcoming months as investors will focus more on keeping current investments alive. His advice to startups is to plan financially wisely for the next 18 months. At the same time, he believes that while healthcare has always been a hot election topic in the US it will be even more so in the current election. Consequently, in his opinion, this is a great time to start a startup, but a more challenging to keep Medtech startups alive in the moments of incomes on hold.

Slovenia, a small country with 2 million people but bordering to Italy, seems to be handling the outbreak quite well, said Blaz Triglav, the CEO of Mediately — startup offering their 100.000 doctors in 8 European countries clinical decision support tools in an app. A week after the first cases were discovered, the country put in place social distancing measurements and tightened them further after two weeks. When the outbreak began, Mediately immediately surveyed their users regarding their needs and started providing them with relevant clinical information which was aligned with local guidelines or in absence of those, with international ones.

What can or should startups do in the COVID-19 crisis?

As a founder of a startup founded right after the recession in 2008, Triglav believes now is a great time for starting new companies which will be forced to focus more on the value they can deliver and long-term financial stability, compared to high valuations and fast growth common in times of economic prosperity. Like many startups, Mediately in the past experienced tense situations of granted financing received with delays. Because of these experiences the company reacted quickly when the COVID-19 outbreak began. “Investors called us and said, guys, the healthcare crisis will finish in a few months, but the economic crisis will hardly begin then.” To cope with the future as best as possible Mediately immediately started mitigating less necessary costs, talked to landlords to mitigate renting costs and prepared several scenarios to be financially stable for the next few months without the need to fire people.

Levi Shapiro believes fewer funds will be raised in general in the upcoming months, hence companies should expect a slow-down for the next 18 months.

Investor Giovanni Loser is optimistic about the future of healthcare startups. He believes, digital health solutions are now very clearly proving their value and the emergency for the first time changed the culture of the buyers of innovative products, which will impact business models. This is why, at least in digital health, this is a very different financial crisis compared to the recession in 2008, says Loser.

Nana Bit-Avragim believes well-being and wellness app have an opportunity to shine today, at the same time she observes that Germany is adapting fast and the eHealth law enacted this year is accelerating the speed of digital health innovation and adoption in Germany.