What’s Behind the Meteoric Rise of Indian Health Tech?
A tale of two India's
The world is changing, and a shift in the balance of power to Asia is taking place before our eyes.
That's what I've learnt from my time at a health tech startup in India.
A push toward a digital revolution has completely rejuvenated a once nascent health tech sector, and the health of millions of people is on the cusp of changing as investors see the promise of a nation with a burgeoning economy sheltered from the gloomy outlook of the rest the world.
In 2010, the Indian health tech market stood at $500 million. Twelve years later, the market size is roughly $10.6 billion, with an expected annual compound growth rate of 39% post-pandemic. It's feasible the sector will capture at least 3% of the global market share in 2025.
As European health tech reels from a 50% decline in funding amid a tech downturn and looming recession, a $4.7bn investment in the Indian health tech space is a sign of things to come.
What's happened in the space of 3 years?
Before you say Covid, there are three other essential factors to consider when considering Indian health tech's meteoric rise.
Trust is a two-way street
There is no secret ingredient in getting people to adopt new technology. Trust is the single most important factor for someone taking the leap of faith and implementing a new health app, smartwatch or medical device. Trust that the product can deliver, and trust from institutions which have allowed the products into the market.
India has been able to capitalise on the failings of the pandemic and create one of the highest levels of trust in its health and technology sectors compared to the rest of the G20. Trust has been won through the speed of innovation of the private sector delivering on its promise of cost-effective solutions, and perhaps more importantly and often overlooked, government legislation instilling confidence in the health tech sector.
We've already seen how trust in public and private institutions directly influenced vaccine uptake rates worldwide, with those with the poorest vaccine uptake having the highest levels of mistrust in their government and healthcare. Similarly, India's trust in its health and technology sectors has been the direct enabler of more than 400 million people adopting digital health at an incredible pace.
Trust remains the most critical measure for the widespread adoption of health technologies, and India's story of trust in the sector started at the beginning of the pandemic when the government announced:
"Commercial and private establishments shall be closed down, with the exception of delivery of all essential goods including food, pharmaceuticals and medical equipment through e-commerce."
~ Ministry of Home Affairs, Government of India
In a single stroke, the government facilitated a relationship between health technology products and its citizens, which was lacking in the previous decade. Before covid, many Indians remained skeptical and distrustful of health technologies despite their enormous potential.
In particular, medication delivery in the country was completely fragmented. A supply/demand mismatch between the 60,000 wholesale distributors and 600,000 retail pharmacies meant the Indian patient going to their local brick-and-mortar pharmacy could expect to find their prescribed medication filled approximately 60% of the time.
In 2014, E-pharmacies were able to integrate supply chains and achieve a medication fill rate of 95-100%, but this technology did not catch on despite the time and money it would've saved.
However, after the government announcement, companies such as PharmEasy, Tata 1mg and Netmeds saw an overnight boom of people using their technologies to get medications delivered to their doorstep. The government provided layers of confidence in the health tech sector, and the trust that developed was pivotal for the acceptance of new technology.
Other legislation changes have allowed public-private partnerships, such as the esanjeevani app, a national teleconsultation service, to flourish. By extension, online laboratories, wearable technologies and other telehealth platforms have seen an exponential rise in users as more people accept the digital transition.
The emergence of nearly 8000 health tech startups in 2022 vying to capture a slice of the market shows confidence that post-pandemic changes are set to last.
While covid might have been a catalyst, combining government legislation and private sector innovation has been the rocket fuel that has deepened trust in the health technology sector and led to faster adoption rates. With the number of internet users in India expected to reach 900 million in 2025, the trust built by the industry will pay dividends in the next five years.
Changing population behaviour is not down to one single business or innovation. There has to be a collective effort with government backing for the widespread adoption of health technologies, or they will gather dust in a draw.
Ayushman Bharat Digital Mission
Currently, most patients in India have paper copies of medical notes and letters and carry them in large bags. You can imagine the doctor's look of exasperation as they trawl through the notes.
Taking advantage of the increased digital connectivity in India, an ambitious target spearheaded by the Ayushman Bharat Digital Mission (ABDM) aims to integrate the digital health infrastructure of the country completely.
Having started in 2020, the ABDM aims to supply every Indian with a unique health ID granting access to a digital locker holding all the past medical history, lab reports and diagnoses across the patient's journey. Over 223 million unique patient IDs have been created in the last two years.
The ABDM will have a unified health interface allowing the patient to find a doctor, book a lab investigation or order medications through multiple healthcare providers. Even more ambitiously, the ABDM stack will have open API and interoperability, allowing different healthcare providers to access healthcare records and document their interactions, storing the information in the digital locker.
The ABDM will present a major boon to health tech startups as the unified health interface provides a country-wide platform for entrepreneurs to showcase their products and services. The significant increase in market reach will also benefit Indians living in tier 2 and 3 cities who find it challenging to access specialised health services.
Public health is also beginning to become a priority in India. The ecosystem developed by ABDM will allow enormous amounts of data to be harvested to plan population health programmes. Innovative startups can begin to target areas that have long been a source of national emergencies, such as child malnutrition and neonatal mortality.
The IT mission will completely revamp the digital health infrastructure and provide startups with a platform to network and partner with critical stakeholders while significantly increasing their market potential. Over 62000 health facilities have signed up for the programme since 2020, and many more health providers are expected to leap as the mission goes country-wide.
But…
I've been really optimistic about India's ABDM. It's a step in the right direction. However, there is a sense of dread after seeing how ambitious national IT programmes pan out in real life (NPfIT). If India is to succeed where others have failed, it must learn from system-wide failures in other countries, or they are doomed to repeat the same mistakes. Nevertheless, the mission represents a significant opportunity for health tech startups. If the major rollout of the universal payment interface is anything to go by, there are reasons for confidence.
A Bottom Heavy Pyramid
Indian health tech has a unique advantage over other countries, with over half of the 1.4 billion population being under 30, incredibly tech-savvy and increasingly becoming more health conscious. The young, digitally literate population is more likely to adopt health technologies and accept digital health transitions, reflecting the 76 million Indian health and wellness app downloads in the last year, making it one of the fastest-growing sectors in the world.
Part of the download surge has also been driven by over 600 million people now owning a smartphone in the country. As the figure rises to 1 billion by 2025, the ramifications for health tech companies being able to harvest data and personalise care are too big to ignore.
The other benefit of a young tech-savvy generation is the likelihood of influencing the adoption of health tech services for their parents and grandparents, as the traditional Indian home continues to be multi-generational. A typical scenario I envisage is a son or daughter downloading an app like Practo, a telehealth consultation service, to manage their parent's chronic conditions and save time going to a f2f clinic.
Given India's title of diabetes capital of the world, health tech companies focusing on glucose control, such as BeatO, have found considerable success onboarding the elderly population, and the demographic advantage of younger people influencing the country's health attitudes is playing a significant role.
As care shifts from the hospital clinic to the home and from the home to 24/7 access to care driven by the smartphone, India's young population will drive forward digital health adoption at much faster rates than other Asian countries, and more unicorns will inevitably emerge from the growing health tech sector.
A Final Comment
Optimism is surging in the Indian health tech space. The country's ability to capitalise on growing levels of trust in its health and technologies sectors, integrating a nationwide digital health infrastructure and a young, dynamic population are reasons why a once nascent industry is experiencing a meteoric rise.