Corona pandemic: The call for healthtech entrepreneurship

There are many fantastic examples in history of devastating crises that have led to a great wave of innovation. Perhaps the most famous example is the Second World War that drove innovation we are still using and perfecting today, such as computers, jet engines and the large scale application of several drugs including penicillin. But there are of course many other examples throughout history of how crisis drives human ingenuity. The current corona pandemic is proving this all over again.

We are seeing examples of healthcare professionals innovating on the front line and in real time, such as healthcare apps being adopted at high speed, large scale deployment of drones for health checks, and deployment of robots in the hospital. Surely, there are thousands more that will have been improvised as the crisis develops and will need scaling as soon as the immediate crisis is under control. At NLC we are seeing this happening right now, through our extensive network in the healthcare community and our 40 ventures that are all contributing to solutions to the current situation, in one way or another.

In this article we would like to share some observations and predictions regarding the potential consequences of the coronavirus pandemic to innovation in healthcare. We see consequences inside of the healthcare system, in the emergence of new technologies, and around entrepreneurship as part of the solution for the challenges being faced. Corona and the re-invention of healthcare systems The coronavirus pandemic has been described as the ultimate stress test to our healthcare system. Heroic efforts are being made at all levels to save lives while maximizing the resources at our availability. At the same time, we are already seeing areas where the system falls short of the mark. When the smoke clears, the pressure to improve these areas will be tremendous. Here is what we expect to happen:

• Pressure to reduce fragmentation. The current crisis is making it crystal clear that the current fragmented approach to healthcare, particularly in Europe, is inefficient and decreases the chance of positive healthcare outcomes under pressure. This is visible throughout the healthcare chain, from the lack of universal standards that make sharing of resources hard, through the supply chain and standards of care, to strategies that differ between countries that share open borders. We expect a strong drive for common standards across continents and perhaps globally, which in turn will lead to lower entry barriers for new players, while also increasing the potential benefits for providers of regional/global standards.
• Increased demand for frugal innovation. Due to the coronavirus pandemic, we see a heavily increased demand for healthcare in general, with the market predicted to grow by 10+% this year. Once the crisis passes, we expect societal pressure on the healthcare system to improve its readiness for similar situations in the future. At the same time, it is questionable whether societies will accept a structural increase in healthcare spending, which already represents 14-18% of GDP in many countries. There will likely be an increased demand for technologies that can deliver similar outcomes at lower cost.
• Accelerated acceptance of innovation. Healthcare has been notoriously slow in embracing innovation. This was systemically embedded in the integrated systems, from education to standards of care through to reimbursement. While this was changing even before the current crisis, based on the trends described above, we foresee a strong drive to increase the acceptance rate of innovation in healthcare by structurally tackling all systems that currently inhibit it.

Embracing of new technologies driven by coronavirus

As healthcare professionals battle the virus at the front line, they are discovering new ways to solve problems they face on the go. They are also discovering the limitations of the solutions that are currently available to them. It is hard to predict what the outcomes of this will be and impossible to be complete, but based on our insights into the healthcare system, we can at this point expect the following:

• Demand for more flexible technologies. We expect that technologies that increase healthcare flexibility, i.e. that are able to repurpose or expand usage of resources to the area of greatest need, will surge. In the current crisis we see repurposing of diagnosis equipment to triage (e.g. CT scans). We also see rapid redeployment of technologies to other purposes (e.g. AI being repurposed from treatment aid to diagnosis; telehealth solutions deployed for coronavirus monitoring, etc).
• Embrace of POC diagnostics. The healthcare system has been largely reluctant to embrace Point-of-Care (including Home) diagnostics given the high rate of misdiagnosis and resulting patient misinformation. The current shortage in diagnostic capacity and resulting societal inefficiencies will create a push to start taking POC diagnostics more seriously, and making them more robust. The societal costs of a ‘lockdown’ are obviously huge, and only much more and more frequent diagnoses can target these measures at those affected. People will want to be empowered to take action themselves, driving home diagnostics, telehealth solutions and other ways to extend the reach of healthcare professionals into the homes of consumers in order to provide health professionals and policy makers with aggregated real time health status information, for example via apps.
• Even more focus on AI. While AI is already transforming care, we expect the learnings from the crisis to further speed up its adoption. AI can mass diagnose conditions by making more effective use of the scarce time of medical professionals and expensive equipment with limited throughput. It can often be used remotely to speed up diagnosis (and give hospital staff some much needed time at home). And it can be rapidly redeployed to benefit patients with previously unknown conditions.

Unleashing entrepreneurship as an answer to the healthcare challenge

The healthcare market is heavily regulated and fragmented, leading to very thorough yet slow innovation cycles. As the world watched Jennifer Haller being injected with an experimental vaccine, we see innovators cutting traditional corners all around us at the moment, leading to a record-breaking speed to market. With lives at stake risk trade-offs are changing dramatically, which we predict will impact innovation going forward.

• Speeding up of healthcare innovation cycles. While the current efforts to create a vaccine are heroic and the fastest ever, the speed achieved is still very far from good enough. This also applies to diagnostic tools like CT equipment aided by AI for diagnosis, et cetera. We expect significant efforts to bring healthcare to life more quickly, leading to opportunities for anyone involved in these processes, or supplying innovation to speed them up. We also expect regulatory bodies to adjust their approach, allowing for tailored approaches that will enable speed, depending on both risks involved and health rewards. In the regulatory field we also see potential for global collaboration and standards.
• The new healthcare supply chain as fuel for entrepreneurship. The shortage of face masks is perhaps the most striking example of a product that despite its relative simplicity is costing lives due to its unavailability. We see companies rapidly entering this void, as we also do for respirators, the inputs for coronavirus tests and many other critical components. We believe that societies will want to be able to revert to being more self sufficient when it comes to critical components. Combined with manufacturing techniques like 3D printing this could lead to local integrated innovation ecosystems that can bring novel solutions to the market much more quickly, pilot them locally, and scale globally when successful.
• Surging investments in the healthtech sector. Healthtech was already the fastest growing economic segment in many geographies, and the coronavirus pandemic will only spur this growth. Impact investing has changed the way investment opportunities are selected, and the investment community will no doubt want to take its responsibility following the pandemic. On top of this, the current crisis shows that healthcare is not as vulnerable compared to other sectors. The early stage side of the investment spectrum offers vast opportunities to make an impact, while its financial risk/reward profile has become much more attractive.

It is clear that the coronavirus pandemic has led to an urgent worldwide need for accelerated innovation. Healthtech more than ever offers the key to issues like supply chain, speed of diagnosis and flexibility and is therefore a key investment.

We call on all parties to grab the opportunities offered by healthtech entrepreneurship to turn this pandemic into a huge leap forward for healthcare around the world.