Digital Chronic Disease Management – Fast Growing Opportunity in India

India's healthcare system is a complex mix of public and private healthcare providers. The public healthcare system is primarily funded and run by the government, while the private healthcare sector is largely unregulated and can vary widely in terms of quality and cost. Overall, the healthcare system suffers from poor infrastructure and low insurance coverage leading to inferior quality on a national level but more so in smaller towns and cities.

The disease load is led by chronic conditions such as diabetes, hypertension, and cardiovascular disorders which last over the lifetime of the individual.  More than 400 mn chronically ill people are exposed to a considerable risk across the country. The risk is further aggravated owing to the systemic challenges within India’s healthcare infrastructure which is largely an out-of-Pocket expenses market (+ 60%). A dismal doctor-to-patient ratio adds to the challenge making the chronic treatment journey expensive and fragmented thereby establishing an inherent need for convenience and affordable solutions to manage chronic conditions digitally.

There are multiple VC-backed players apart from the GOI (National Digital Health Mission & Ayushman Bharat Digital Mission) who are trying to solve this challenge for better health outcomes. Internationally there have been many successful models. Teladoc Health-Livongo in the US and Ping-An Model in China demonstrate that digital health, even though considered a nascent sector, is a rapidly scalable space.

However, the Indian chronic care market has a unique set of challenges compared to developed economies in terms of willingness to pay. This can be demonstrated by the fact that only 12% of the 70 mn (2.3x of US) Indian diabetics use a device for actively monitoring their conditions. The US market has formal organizations such as the American Diabetes Association through which an individual can reach out to 10k+ diabetologists in an effective manner, unlike India. Accessibility is another issue where despite 95% of diabetics being from tier-2 cities and beyond only 5% of the specialists are available in these towns. Hence, there is a need for an affordable holistic ecosystem approach spanning various lifestyle choices such as regular monitoring through connected devices, medicines, diagnostics, exercise, nutrition, sleep tracking, mental wellness, and intensive programs (health coaches and doctors) for rich clinical outcomes.

Over the last 5 years, global health-tech startups have raised more than $75 bn. Within the Indian ecosystem, chronic conditions-focused platforms solving for a single chronic disease along with few adjacencies is a good strategy owing to higher customer lifetime value. Such platforms can then build low-cost acquisition hooks, either with connected devices or affordable programs, and then leverage other value-added services for monetization.

For such platforms to succeed at scale, they should ideally possess the following characteristics:

• A strong understanding of the dynamics of smaller cities and towns and the ability to build solutions to cater to such populations which is where the real opportunity exists
• Aggressive acquisition strategies with low-cost Customer Acquisition Cost (CAC)
• An app ecosystem with real-time data-driven feedback and nudges to drive ensure continuous adherence
• Ability to converse with all users coming on the platform (since the need of everyone will not necessarily be the same) by having entry points to multiple offerings
• Demonstrate sustained outcomes at scale; studies in peer-reviewed journals
• India is essentially a low Average Revenue Per User (ARPU) market, hence the platform should be built keeping in mind future expansion by targeting neighbouring countries, Middle East and Southeast Asian economies that have similar chronic conditions as India
• Platform could start with one ailment with a higher Average Order Value (AOV) but should be able to quickly build into adjacencies since it drives retention and ARPUs
• Partnerships with large pharma and insurance companies create a top-of-the-funnel opportunity; working with multiple stakeholders creates multiple acquisition channels

In conclusion, all of the above would essentially lead to higher engagement levels, and retention translating into effective monetization for the platform.

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The Healthcare industry in India has drastically evolved over the past decade. From affordable insurance, and easy access to doctors and medicines to the invention of tech enabled life-savings treatments, the quality of healthcare is growing by leaps and bounds. Thanks to innovation and disruption offered by health tech start-ups, this trend is likely to grow. The health-tech sector was valued at $5 bn in 2019 and is slated to witness a growth of 4x to stand at $21 bn by FY25. India alone has 5000 start-ups offering innovative solutions in areas such as chronic disease management, fitness and wellness, IT and analytics for better clinical outcomes, telemedicine, online pharmacy, home healthcare and e-diagnostics which are rapidly changing the landscape of the healthcare industry.

The HealthTech team at Merisis strives to identify these trends early on and assist companies in the identified sub-segments with their growth plans. The team comes with extensive experience in fundraising and M&A transactions across the healthcare landscape worked with companies operating in chronic disease management, preventive healthcare platforms, diagnostics, pharma amongst others. Read more

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