Healthcare Tech Startups in India, Part 1: Bringing Digital Health Services to an Underserved, Dispersed Population

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KEY POINTS

In this first report in our Healthcare Tech Startups in India series, we look at the emerging categories in India’s healthcare startup ecosystem and notable startups in each category. We note that the majority of startups in the Indian healthcare sector are focused on convenience or preventive approaches to health management.

  • Indian healthcare tech startups had received $200 million in disclosed funding this year, as of July 31. That figure is already ahead of the $154.8 million in funding that Indian healthcare startups received in 2016.
  • Five categories in which Indian healthcare startups are innovating are online pharmacy and e-commerce; home healthcare; telemedicine; online physician directories; and health, wellness and lifestyle management.
  • Players in the home healthcare and health, wellness and lifestyle management categories primarily target middle-income or higher-middle-income consumers.
  • Startups in other healthcare categories are largely focused on the mass market and enabling access to sections of the Indian population that are otherwise hard to reach.

Executive Summary

India’s economy is growing rapidly, but there are many challenges that are hindering progress in various sectors, including healthcare. This has led to a rise in the number of startups seeking to create solutions for India’s unique healthcare sector problems.

According to data from Indian business blog and startup tracker Trak.in, Indian healthcare tech startups had received $200 million in disclosed funding this year as of July 31. That figure is up from total funding of $154.8 million in 2016, according to startup platform YourStory.

Most Indian healthcare startups are innovating in one of five categories:

  1. Online pharmacy and e-commerce
  2. Home healthcare
  3. Telemedicine
  4. Online physician directories
  5. Health, wellness and lifestyle management

While players in the home healthcare and health, wellness and lifestyle management categories primarily target middle-income or higher-middle-income consumers, startups in other categories are largely focused on the mass market and enabling access to sections of the population that are otherwise hard to reach.

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Introduction: Healthcare Technology Startups in India

A common goal for many governments, healthcare providers and humanitarian organizations around the world is to provide affordable healthcare for those in need of it. India’s government and healthcare startup sector share this goal as well, and there are many promising homegrown startups that have created cutting-edge solutions to help bridge the gaps in the Indian healthcare supply chain.

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In this first report in our Healthcare Tech Startups in India series, we look at the emerging categories in India’s healthcare startup ecosystem and notable startups in each category. We note that the majority of startups in the Indian healthcare sector are focused on convenience or preventive approaches to health management.

In subsequent reports, we explore some of the challenges that are unique to India’s healthcare sector. We also look at how India compares with some of its Asian peers, its BRIC cohorts and other major economies, and explore what it can learn from them in terms of dispensing healthcare.

 

Emerging Categories in India’s Healthcare Startup Ecosystem

According to data from Trak.in, Indian healthcare tech startups had received $200 million in disclosed funding this year as of July 31. That figure is already ahead of the $154.8 million in funding that Indian healthcare startups received in 2016, as estimated by startup tracker YourStory.

India’s successful healthcare startups have gained strong footing thanks to the disruptive products and services they have built. These businesses have connected consumers with providers in ways that were previously unexplored or unviable due to a lack of awareness and an absence of sufficient technology. Below, we examine the top five categories in which Indian healthcare startups are innovating:

  1. Online pharmacy and e-commerce
  2. Home healthcare
  3. Telemedicine
  4. Online physician directories
  5. Health, wellness and lifestyle management

The table below lists some of the healthcare startups that have generated innovative solutions to India’s unique needs.

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1. Online Pharmacy and E-Commerce

The Indian pharmacy retail market was worth some $15 billion in 2015 and Indian securities company Microsec Financial Services predicts it will grow at a CAGR of 14% to 2020. The market is heavily fragmented, with numerous small pharmacies, most of which are concentrated in urban areas. Online retail forms only a tiny part of the Indian pharmacy market. In 2016, online pharmacies in the country received about $28.5 million in funding, down from $62.2 million in 2015, according to startup data aggregator Tracxn.

Key drivers for online pharmacies in India are the dearth of pharmacies in rural areas and tier-2 and tier-3 cities, and the relative unavailability of medicines and medical products at physical stores.

Three of the most highly funded startups in this category are Netmeds, which we profile below, 1mg and PharmEasy.

 

Startup Profile: Netmeds

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Business brief: Netmeds is an online pharmacy that sells prescription medicines as well as over-the-counter drugs.

Competitive advantage: Netmeds was one of the first online pharmacies to be established in India, and though 1mg, a competing startup, began operating a few months earlier, Netmeds managed to secure a higher amount of funding ($50 million) early on. 1mg’s total funding so far, across five rounds, has amounted to only $47 million.

Traction: In February 2017, Netmeds founder Pradeep Dadha told the Business Standard newspaper that Netmeds will expand operations, moving from serving retail customers only to also wholesaling to pharmacies later this year. Dadha also mentioned that Netmeds will serve more smaller cities through the year.

Funding: Netmeds has undertaken only a single round of funding so far—$50 million in October 2015.

 

2. Home Healthcare

In India, the home healthcare market—which consists of healthcare services that are provided within the consumer’s home—was worth an estimated $4.1 billion in 2016, according to consultancy firm RedSeer. The firm expects the market to grow at a CAGR of 40% to 2018, to $8.1 billion.

Key drivers in this category are India’s growing aging population, consumers’ increased disposable incomes and a cultural shift that is resulting in fewer joint families residing together in a single home.

Portea Medical is one of the most heavily funded startups in this category. Other notable names are HealthCare atHome (HCAH) and Medwell Ventures.

 

Startup Profile: Portea Medical

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Business brief: Portea Medical provides in-home medical services across 16 cities in India. It has about 4,500 staff, including physiotherapists, nursing attendants, nurses and doctors, who undertake at least 100,000 home visits per month. Portea Medical provides geriatric care, postoperative care, palliative care and physiotherapy. It also collects lab samples from patients’ homes for diagnostic analysis and rents out medical equipment necessary for in-home care.

Competitive advantage: Portea Medical has a first-mover advantage and has built its brand in this segment. It is part of an entrepreneurship platform called GrowthStory that founds and mentors startups, several of which have turned into successful ventures.

Traction: Apart from steadily expanding its offering and availability in more cities, Portea Medical has been making strategic acquisitions and investments in healthcare tech.

Funding: Portea Medical has raised $46.5 million so far from Ventureast, Qualcomm Ventures, International Finance Corporation and Accel Partners. Founder Meena Ganesh told reporters recently that Portea Medical hopes to raise some $25 million this year.

 

3. Telemedicine

Telemedicine is the remote diagnosis and treatment of patients via phone or the Internet. The Indian telemedicine market was worth about $15 million in 2016, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The trade association estimates that the market will grow at a CAGR of 20% to 2020, to $32 million.

Key drivers for telemedicine in India are a majority rural population with little or no access to primary healthcare and a relative shortage of doctors and specialists.

Top startups in this category include Doctor Insta and Practo.

 

Startup Profile: Doctor Insta

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Business brief: Doctor Insta enables patients to have online consultations with doctors through its website and smartphone app.

Market opportunity: A majority of India’s population lives in smaller cities and towns that may not have a clinic or a specialist doctor available nearby. Telemedicine helps patients in underserved areas instantly connect with a doctor trained in a particular specialty.

Competitive advantage: Doctor Insta provides only tele-consultations. Its business model includes representatives working in villages that help patients use tablets and phones to consult with doctors online. One of Doctor Insta’s innovations, called Health ATM, is a unit comprising a screen for virtual consultation and a network of health Internet of Things (IoT) devices. Patients can walk into a Health ATM and have some of their vital signs (such as blood pressure, heart rate and blood sugar levels) measured. Users can also consult doctors through the screens.

Traction: Doctor Insta was established in December 2015 and is still in the early stages of growth. CEO Amit Munjal told newspaper The Economic Times in June 2017 that Doctor Insta hopes to capture 2% of the Indian primary care consultations market in two years, which translates to a million consultations per day. While all of Doctor Insta’s current customers are from India, the company hopes to expand to other emerging markets such as Brunei, Nepal, Bangladesh and the Philippines later this year.

Financials: Doctor Insta began with seed funding of $500,000 and received $2.5 million from US-based investors RoundGlass Partners and BrahmaX Ventures.

 

4. Online Physician Directories

There are more than 900,000 doctors in India, but no single, comprehensive online database groups them by location and specialty. Many doctors and clinics are not listed online at all, and booking appointments with those that do use an appointment-booking system is usually done via telephone. At most clinics, patients simply queue up and are then attended to in turn.

Key drivers in this sector are an increasing online population and doctors’ need for higher visibility.

Top startups in this category are Practo and Lybrate.

 

Startup Profile: Practo

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Business brief: Practo offers two products, a subscription-based practice-management software solution for doctors and clinics and a website that lists doctors along with their contact details and a brief profile of their specialty and professional experience. On the website, patients can look up doctors by location and specialty and book appointments with them. Practo also allows patients to consult with doctors online through its website and app, and order medicines online for home delivery.

Market opportunity: A large number of doctors in India are not listed in any online database and do not have a system of maintaining medical records electronically. Practo hopes to solve these problems and make doctors more visible and accessible.

Competitive advantage: There are a few other databases that list Indian doctors, but none appears to be as comprehensive as Practo’s. Practo also offers a user-friendly design and interface.

Traction: Practo says that it facilitates more than 50 million appointments every year (up from the 7 million that YourStory reported in August 2014). Apart from India, the patient-facing website is available in Brazil, Indonesia, the Philippines and Singapore. The doctor-facing practice management software is available in 10 additional countries.

Funding: Practo has been through four funding rounds. It raised $4 million in series A funding in 2012, according to startup database Crunchbase.com. In 2015, it raised a series B round of $30 million from two investors and a series C round of $90 million from seven investors. In its latest round, it raised $55 million from nine investors.

 

5. Health, Wellness and Lifestyle Management

The Federation of Indian Chambers of Commerce and Industry (FICCI) estimated that the Indian wellness sector was worth $13.3 billion in 2015. The organization’s definition of the wellness market in India included beauty and personal care, nutrition services, fitness centers, and alternative treatments and therapy. FICCI expects the market to grow at a CAGR of 12%, to $26.3 billion, by 2020.

Key drivers in this sector are the lifestyle diseases that are resulting from consumers’ increasingly busy lives, growing awareness of healthcare management, rising affluence and an increasing cost burden on the healthcare system.

Top startups in this segment include Grow Fit, Cure.Fit and Gympik.

 

Startup Profile: Grow Fit

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Business brief: Grow Fit is a health and wellness company that provides advice and counseling on various aspects of wellness through its website and app. Grow Fit also sells packaged foods—including breakfast items, healthy mixes, snacks and beverages—and meal plans that include fresh food in three packages—the Whole Grain Office Lunch, the Stay Fit Diet and the Lean Machine Diet. Consumers can buy these through a subscription program, based on their health needs and fitness levels.

Competitive advantage: Grow Fit is one of the few startups in the Indian health and wellness segment that enjoys high visibility. It is part of GrowthStory, a well-reputed entrepreneurship platform that has founded and mentored several successful startups in India. Dr. Ranjan Pai, the CEO of Manipal Education and Medical Group (MEMG), is on the company’s board of directors. MEMG is the private equity arm of the Manipal Hospitals group—one of the top hospital chains in India. Grow Fit uses a combination of data science, medical science and behavioral insights to create well-researched, personalized meal and fitness plans for each customer.

Traction: Grow Fit has approximately 25,000 customers for its packaged food and meal plans, and its customer base has registered growth of 30% every month. Grow Fit’s fresh food plans are currently available only to customers in Bangalore, but will be available in two more cities in the next six months. The company’s packaged foods are available for purchase across the country.

Grow Fit’s chat services subscription revenue has been doubling every month and food subscription orders have grown by five times since March 2017. Some 60% of the app users are from tier-2 and tier-3 cities in India, and more than 1,000 chat sessions are held every day. So far, some 200,000 diet charts have been shared and Grow Fit’s customers have lost over 90,000 kilograms (198,000 lbs) in total.

Grow Fit intends to use the funds it recently raised to expand to 10 more cities across India.

Funding: Grow Fit has raised $4.5 million in series A funding and is one of the top-funded Indian health tech startups in its category so far this year.

Most of these healthcare startups’ solutions are positioned to be affordable to lower- and middle-income consumers in India. For example, anyone with a smartphone can use it to consult with doctors through telemedicine apps or book appointments with doctors in their neighborhood, and those with the ability to afford medicines can buy them through the online pharmacies.

 

Wrapping Up

Services that are more niche in nature, such as those provided by Portea Medical, are positioned for Indian consumers in middle-income or higher-middle-income brackets. Grow Fit is also targeted toward consumers in these income groups, but specifically those who “have done their homework”—meaning, informed consumers with specific results they wish to achieve by using Grow Fit’s offering.

But players in the online pharmacy, telemedicine and online physician directory categories mainly target the mass market and enable access to underserved sections of the Indian population.

Healthcare expenditure in India has been growing significantly, but the sector is vast and remains largely unorganized. Look for our next report in this series, in which we discuss the size and scale of the Indian healthcare sector, identify the key characteristics of India’s consumer healthcare industry, and examine what the Indian government is doing to develop the healthcare sector.