What is putting India on the world map for DeepTech in Healthcare?

June 1, 2018

 

One in 17 women in the world are likely to develop abnormalities in the breast that can lead to cancer if not detected early, according to WHO. But regular screening with mammography is expensive and unavailable to many. As a result, in India and other developing countries, half of the women detected with breast cancer die within a couple of years, even though this is one of the most curable forms of cancer.

 

Mammography is also less effective in younger women because it’s harder to detect lumps when breast tissue is dense. Besides, it involves periodic exposure to x-ray radiation which can also contribute to cancer.

 

Bangalore-based startup Niramai has an alternative: non-invasive thermal imaging that shows lumps in the breast when analyzed by artificial intelligence. “What motivated us was that actually there is a technology limitation today which is not enabling early detection of cancer,” says Niramai CEO and co-founder Geetha Manjunath, who was the head of Xerox Data Analytics Research in India till the end of 2016.

 

The startup has two US patents for its methods of detecting breast tumors, and eight more are pending. Last April, it raised a seed round led by AI-focused early-stage fund Pi Ventures, which was also an early backer of Bangalore-based SigTuple that uses AI to improve the speed and accuracy of pathology. SigTuple raised a US$5.8 million series A round last year.

 

Niramai and SigTuple represent a new trend in the health tech sector, which was one of the hottest in India last year, with US$333 million in funding, according to data from venture capital analytics firm Tracxn. This was 61 percent more than in the previous year, and close to the level reached in 2015, which was the boom year for funding in India.

 

 

 

Notable investments

 

More than the amount of funding, what’s interesting is where the money is going. Doctor-appointment platform Practo raised US$120 million in 2015, accounting for more than a third of the total health tech funding that year, whereas funding has got diversified in the last couple of years.

 

From online platforms and marketplaces to medical devices and applications of deep tech like AI, internet of things, and genomics for analytics, investors see potential for startups to play a growing part in supplementing or even disrupting traditional healthcare systems that are inadequate for such a large, diverse country.

 

One of the biggest-funded startups last year was MedGenome, which raised US$30 million in a round led by Sequoia and Sofina. The Bangalore-based startup has developed genetic diagnostics for cancer, eye disorders, neurological problems, prenatal conditions, and metabolic diseases like diabetes. It has labs in India and the US for deep sequencing of DNA that enables testing for genetic biomarkers of a variety of diseases. As India’s top biotech hub, Bangalore is home to Biocon, which reported US$40 billion revenue in FY2017.

 

Sequoia also led a US$6 million round in Bangalore-based OncoStem, which uses genetic tests to predict the recurrence of cancer. A third bet by Sequoia in this space is Mitra Biotech, which had a US$27 million round in August 2016. Mitra personalizes cancer treatment by rapidly assessing the impact of specific drugs on cancerous tissue.

 

“We’ve been perhaps more experimental than others, along with Accel of late,” says Shailesh Lakhani, principal at Sequoia Capital, adding that the promise of new technology makes the theoretical upside much bigger than older investments, such as in platforms connecting doctors and patients. Sequoia had earlier invested in Practo, online marketplace for consumer health products Healthkart, and online marketplace for hyperlocal pharmacies 1mg.

 

Lakhani offers a caveat about the deep-tech bets striking out on a new path. “Theoretically, yes, they have much more upside. But it’s way too early to tell how they’ll actually play out […] Everyone has theories of what big data and AI and genome sequencing will do, but there’s very little evidence of what plays out in practice,” he tells Tech in Asia.

 

The excitement over rapid advances in AI and genomics, however, has to be tempered with ground reality. India has lots of programmers to write software, but the skills required for deep tech are different. “This is much more hardcore, and we’re not sure of the depth of the talent in India to do this stuff,” says Lakhani. “And it may require a lot more money, so we’re also not sure of the downstream financing environment for these types of companies.”

 

What investors see

 

Accel is another global VC making early bets in the Indian healthcare space. Among its investments are home healthcare services provider Portea, which raised US$26 million in a series C round in November, and fitness services provider Curefit, which raised US$25 million in a series B round in 2016.

 

 

But from a deep-tech perspective, what’s more notable is Accel’s investments in the aforementioned AI pathologist SigTuple and medical-device maker Axio, which raised US$7.4 million last month in a series B round led by Indian biz tycoon Ratan Tata.

 

Founded by bioengineer Leo Mavely in Bangalore, Axio is the first Indian company to make an emergency hemostat – a device designed to stop bleeding in minutes. The certified and patented Axiostat is now part of the Indian army’s field kit. “The medical-device market in India is in a nascent stage, [but] Axio has demonstrated that it is possible to build world-class products [from here] to cater to the Indian as well as global markets,” says Ranjith Menon, executive director of IDG Ventures India, which invested in Axio at an early stage along with Accel.

 

“In medical technologies and life sciences, we see significant capital efficiencies in building companies out of India compared to regulated markets,” Barath Shankar Subramanian, principal at Accel, tells Tech in Asia. Thus, companies in these domains with strong IP potential can get backing with an eye on global markets. Accel portfolio company Zumotor Biologics, for example, is developing antibody products in Bangalore for immuno-oncology, using the body’s own immune system to fight cancer.

 

Like Sequoia, Accel is also reading the tea leaves when it comes to deep tech in healthcare. “We believe this is still very early. We’ve got some great stories from our own portfolio – Mitra Biotech, SigTuple, and Zumutor – that are at the cutting edge of what they are working on, not only in India but globally. Hopefully they will inspire and push others to take on such large problems,” says Subramanian.

 

For the Indian market, diagnostics is a major area for tech intervention, given that that there’s just one doctor available for every 1,700 people. In specialist care, that gets even more compounded.

 

For example, Tricog, established by a cardiologist in Bangalore, tackles the problem of access with cloud-based analytics of ECG data. “The reason why four out of five doctors do not own an ECG machine is because the skill to read an ECG is tough. The waves are complex to read,” Tricog founder Dr. Charit Bhograj tells Tech in Asia. “You need a specialist to interpret that ECG. So we use advances in computer science, communication, algorithms, and the cloud to amplify the work of a few specialists.”

 

Hubs attracting investors

 

Not surprisingly, all the deep-tech startups mentioned so far are in India’s main tech hub of Bangalore. Data analytics plays a big part in this: Bangalore has a large concentration of people who have done such work for MNCs, many of which have their development centers in the city. Niramai co-founder Geetha Manjunath is a case in point – she worked earlier for Xerox Research Lab, and holds a PhD in data mining and semantic web. But deep-tech startups need the right kind of talent, and this is not limited to founders.

 

 

 

Chennai, Delhi, and Mumbai are the other main hubs. Founded in Silicon Valley, Innovaccer has a large tech team in Delhi for big data analytics. It provides insights to client organizations for healthcare interventions based on hospital, insurance, and patients’ clinical data. The startup raised US$15.6 million series A funding in 2016.

 

UE LifeSciences is a deep-tech startup based in Mumbai. Like Niramai, it aims to provide a low-cost, radiation-free alternative to mammography, but it uses a different technology. Its iBreastExam ceramic device has tactile sensors that detect lumps when pressed against the breast. The startup has backing from Drexel University in Philadelphia, where the technology was invented.

 

Based in Seattle and Bangalore, Unitus Seed Fund has UE LifeSciences in its portfolio. Unitus is the most active investor at the seed stage in Indian health tech, and looks at startups through the prism of their potential for social impact.

 

During a visit to Bangalore, Unitus co-founder Dave Richards explained to Tech in Asia how it evaluates companies. Referring to UE LifeSciences’ breast-cancer screening device, Richards said they asked questions such as, “Is this innovating for the masses?” and “Is this good at delivering value?” He adds, “Sometimes, it requires a lot more creativity because of the unit economics.”

 

Unitus is “a speciality investor,” according to Richards. “The opportunities for improving access to healthcare – affordable healthcare – is really what we’re all about. Around 1 billion people in India live on less than US$2 per day per capita income, and that’s really the market that is very underserved in healthcare.”

 

He continues, “So, if someone came up with a very high cost but very powerful new cancer treatment that was only accessible to the top 1 percent of people in India, that could be a great business, but we won’t invest in it.”

 

Jury is out on viability

 

It isn’t only the deep-tech startups that are still figuring out business models and how big an impact they can make with their innovations.

 

One-year-old TreatGo, for instance, serves overseas patients who travel to India to seek more affordable medical procedures. Its founders’ earlier startup Dexetra, funded by Sequoia Capital and Qualcomm Ventures, was acquired by Alibaba-backed Quixey.

 

“Over 500,000 patients traveled to India last year for medical reasons. Their average spend is about US$3,000. Our technology plays the role of an inside man for these patients in the hospitals they choose to get treated, giving them online access to expert assessments, treatment plans, cost estimates, and so on,” TreatGo co-founder Binil Antony tells Tech in Asia.

 

So far, majority of its users are from neighboring Bangladesh, who go to India to get cardiac and orthopedics-related treatments. Since its launch in June 2017, TreatGo claims to have processed around 2,000 patients through the platform, generating close to US$6 million revenue for hospitals.

 

While TreatGo has a revenue-sharing opportunity with hospitals, most of the top-funded startups targeting India’s mass market – like Practo and Portea – have focused on scaling fast and burned investor money in the process.

 

Practo raised US$55 million last year to take its total funding to US$180 million, after its losses nearly tripled to US$29.5 million in FY 2017, according to a report that cites research firm Tofler.  It managed this despite having a parallel revenue stream from SaaS products for doctors and clinics to handle their services.

 

As for Portea, its US$27 million series C round in November came at a 22 percent lower valuation than earlier, says a report citing documents filed with the registrar of companies. So even though digital delivery of services fills massive gaps left by traditional and government systems of healthcare, the jury is still out on how to do it in a sustainable and viable way.

 

The first wave of health tech in India focused mostly on marketplaces and aggregators of products and services, hospital management systems for efficiency, and telemedicine to provide wider access to scarce doctors. But it’s the second wave that could make a deeper impact. This is coming from startups applying new technology to make medical devices as well as various forms of diagnostic screening for cancer, heart disease, cataracts, diabetes, and other conditions affordable to the masses.

 

Investors too have come into the space after chasing ecommerce, home services, and food delivery. What it needs now is a few winners to give it a push.

 

Source : https://www.techinasia.com/deep-tech-startups-making-inroads-into-healthcare-in-india

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