New technologies are conquering the healthcare sector and providing an additional growth boost for the industry. Venture capitalists have invested billions of dollars in private digital health companies in recent years. Stefan Blum and Marcel Fritsch, portfolio managers of the Swiss Bellvue Group, an asset manager specialising in the healthcare sector, therefore expect a wave of IPOs from this young segment of the healthcare market.

30.05.2018, München / Frankfurt – The added value can be seen in advanced medical treatment methods, but also in urgently needed increases in efficiency and cost savings. Thanks to disruptive technologies such as sensors, connectivity or cloud computing, companies are now bringing new or improved products and services to the market with a positive effect on treatment quality and costs. The breakthrough of digital health is evident in areas such as telemedicine, robotic surgery and blood glucose monitoring. For Bellvue’s investment strategists, who have invested 5.4 billion Swiss francs in the healthcare sector worldwide, this is the occasion for the launch of a new equity fund that will invest decisively in companies in this emerging sector. “Venture capitalists have invested around USD 24 billion in 1,700 private digital health companies over the past seven years, so we expect numerous attractive IPOs over the next few years. This is another reason for investing in the sector,” says portfolio manager Stefan Blum.

The early bird catches the worm

However, music for the digital health sector still plays in the pre-market segment. In the case of an IPO, investors usually want to see annual sales in the almost three-digit million dollar range. Health Catalyst, Welltok, American Well, Grand Rounds Health, GoodRx, Oscar Health, Doximity and Zocdoc are considered candidates for IPOs in the USA. But not only an IPO (Initial Public Offering) can raise or disclose the value of innovative newcomers in the healthcare market. Experts predict lively M&A activities for the coming years. The best example is the diabetes app mySugr: the Viennese start-up was acquired last year for 80 million euros by the Swiss pharma group Roche.

In addition to Internet giants such as Apple, Google, and Microsoft, pharmaceutical companies, in particular, are considered potential buyers in the digital health sector. Interest is focused on the health findings that can be derived from the data collected with the apps. This allows conclusions to be drawn for the development of new treatment methods and drugs. But this is only one of three reasons for the imminent triumph of digitization. At the same time, the networking of doctors and patients ensures better quality care – especially for the chronically ill – and lower costs. The management consultancy PWC sees potential savings of 100 billion euros within the EU alone.

Why the focus on chronic diseases? They cause the most costs, do not need to be constantly re-diagnosed and the number of patients is constantly increasing as people get older. So far, many apps focus on diabetes and coronary heart disease. The diabetes market has become a real race. Livongo from Mountain View has collected 240 million dollars so far, Glooko from Palo Alto has been endowed with 71 million dollars risk capital since 2015. Google and the French pharmaceutical giant Sanofi concluded a 500 million dollar joint venture called Onduo. Welldoc ($55.2 million VC funding) entered into partnerships with Samsung and the US pharmaceutical group Johnson&Johnson. No wonder: after all, the market for diabetics in the USA is worth around 200 billion dollars, in the EU around 100 billion euros. However, the cost of treating chronic lung diseases, at 82 billion euros per year in the EU, is not significantly lower, and WHO expects the number of lung patients to continue to rise sharply until 2030. The App KATA, which has just been presented on aescuvest, is nevertheless entering largely unoccupied territory and is the first holistic app to be developed together with patients with respiratory problems and is therefore specifically geared to their daily needs.

Eine Übersicht zum Thema E-Health