Healthcare IT Industry In India Needs A Major Push, Especially From Investors Community

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There is no speed breaker for India’s population growth, with the growing population, per capita spends on healthcare have increased at a CAGR of 10.3% from $43.1 in 2008 to $88.7 by 2015. The private sector is contributing immensely to this growth since there is a substantial demand for specialty healthcare services, medical devices in tier 2 and 3 towns.

Mobile connectivity, infrastructure and launch of 4G services are driving mobile health market to a considerable extent. Mobile health industry in India is expected to rise to $1 billion by 2017. Startups and SME’s are trying to ride this wave by coming up better technologies to tackle the healthcare delivery problem and also to make the healthcare IT system better. Healthcare IT and Mobile IT is the best way to solve the problems especially in chronic disease management.

In spite of the growth factor, India’s digital health and mHealth industry stand poorly in comparison to the global digital health. And to make the situation more worst, the funding scenario is way behind the west as most of the investors are not ready to lead the investment rounds and push the innovation to the level of market launch. As per Mercom report, the venture capital (VC) funding in the healthcare IT sector in USA more than doubled, coming in at $4.7 billion in 670 deals during 2014 as compared to $2.2 billion in 571 deals in 2013. While in India the deals have barely crossed half a billion dollar mark.

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It’s been a well-known fact that the issue with Indian investors is low risk taking capacity. The VC industry in India wants to bet on services/ideas which have traction, but this is really hurting the initial pre-seed stage startups and innovation horizon, in general. This is also true in the case of biotech startups where the failure rate is higher. More and more biotech startups are trying to tackle a problem that is low risk and thus are aiming to raise capital to survive.

This could be well attributed to the case of Diabeto, a medtech startup that is tackling diabetes management in an innovative way that faced the same situation. Diabeto is a hardware device that wirelessly transmits blood glucose readings from a Glucometer/Continuous Glucose Monitor into a smartphone. These readings can then be easily analyzed with the help of a smartphone application. The entire system is cloud based. Diabeto initially raised $70,000 in total ($40,000 from Startup Chile and $30,000 from a US based investor). When in Chile, they were being offered additional investment of up to $500,000 but they were asked to stay back in Chile. India being a more lucrative market and going global from India is much easier than in Chile given the size of diabetes market, the team decided to return to India. Around two years back, we interviewed the co-founders to understand the market potential and challenges. During the interview Shreekanth Pawar, Co-founder and CMO of Diabeto, said that the market looks quite promising and they were ready to launch their first version of full-fledged devices along with the app in the next six months, conditioned to upcoming investments and feedback and learnings from PoC already under execution.

However in spite of a number of Angel meetings and applauses, they couldn’t raise money to enter the manufacturing phase as they had a standard response from the VC community. Although they loved the idea but wanted to see traction before they invested. This disappointing phased forced Diabeto team turn towards the crowd-funding route and they raised 100% of their target goal on Indiegogo in just 4 days. Their campaign is still on – www.diabe.to/indiegogo till 5th March.

“Indian investors want to play safe, even if the idea is good and if the entrepreneur has a working prototype which has been validated, they either want it backed with patents or want traction in the market, this is a catch 22 situation for the entrepreneur” said Shreekanth Pawar, Co-Founder and CEO of Diabeto while talking to Dazeinfo. 

Team Diabeto was lucky in their endeavor however other health startups may not be so lucky. There is more failure rate in businesses that are trying to innovate in chronic health management space or worse in new drug discovery where the life cycles are long and the industry is governed by many regulations. The only way to boost the healthcare industry to create more job opportunities and in turn contributing to the GDP is by believing more in ideas which although if seem impossible to see the light of the day, need to be backed with motivation and funds!

5 COMMENTS

  1. congratulations to the Diabeto team, for doing what they wanted to, even if it was a little difficult, I am sure investors will come flocking soon enough!

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