ZocDoc, Doximity and Oscar Health have been rumored IPO targets by the media for awhile, and are among some of the larger digital health companies. Despite the large number of digital health companies, there just aren’t a lot of companies that are in the $100M recurring revenue mark, and predictable sales. Despite the M&A frenzy and activity, there hasn’t been many successful digital health IPOs. One advantage of taking pharma VC funding is that startups can hopefully pilot some of their products and platforms in clinical trials (most likely post-marketing studies) for validation. This is accelerating the digital health industry as whole, and we’re finally starting to see the digital health market mature with sizeable exit valuations above the $1B mark, which is attracting more investment in the sector. Several large payers and providers such as Aetna and Humana also have their own VC arm that invest in promising digital health startups, to gain access to cutting-edge technology and hopefully become an early adopter. There has been a surge in interest from corporate pharma VCs, such as Pfizer Venture Investments, the investment arm of Pfizer, to invest in digital health, who also launched Pfizer Healthcare Hub in 2017, to invest in startups in the health tech space. Roche recently acquired two digital health companies, a diabetes management business MySugr and a $1.9B purchase of Flatiron Health, a developer of oncology-focused electronic health record software. In the last few years, there has been increased adoption and appreciation of digital health by pharma.
What trends have you noticed in the digital health market? To help gain some insight to what might be happening in the sector and understand where market makers are placing their bets in the digital health space, we spoke to Kimberly Ha, digital health advisor and limited partner at Array Ventures, and founder of life sciences advisory firm KKH Advisors, to gain more insight in the digital health market, trends, and future outlook. Though the outpour of investment in digital health startups over the past few years has been significant, we have yet to see a major shift in the way healthcare is being delivered. A convergence of factors is driving this growth, with technology the biggest single factor.
The market for “Digital Health” technology should reach $400 Billion by 2024, according to Global Markets Insights.
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