Digital doctors here to stay as telemedicine deals surge

The digitalisation of healthcare systems has been ongoing for many years, with Unquote Data recording telemedicine deals as early as 2004. But the onset of the coronavirus pandemic eight months ago has fast-forwarded the trend significantly.

UK-based company Your.MD, backed by Smedvig Capital and Orkla Ventures, said it has seen a 350% increase in the number of users over the past 12 months, going from 6 million between January and August 2019 to 26 million in the same period in 2020. Elsewhere, VNV Global-backed Babylon Health recorded a 70% increase in daily consultations and a 3x increase in revenues in Q2 2020 compared with the same period last year, according to the VC. Meanwhile, video consultations on Eurazeo Growth-backed Doctolib's platform jumped from 1,000 a day to 100,000 at the beginning of the pandemic, according to its website.

Investor appetite has continued unabated, with recent venture-capital-backed deals in the space including eConsult Health, Joint Academy, HomeDoctor, Infermedica, Practio and Doktor.se, all of which were signed in the past six months.

One of the changes in the sector since the pandemic started, according to HealthCap managing partner Bjorn Odlander, is the willingness among regulatory authorities to change protocols. "They have become flexible in changing protocol, and they are doing that in a very diligent way, which is not compromising patient safety. They have been willing to accept such amendments because it has been impossible to stick to the original protocols," he says.

The NHS's Long Term Plan, published in January 2019, signalled the openness of the UK's healthcare system to adopt digital solutions, with its current partnerships including a number of VC-backed companies. In France, the reimbursement of telemedicine by the public healthcare system since 2018 paved the way for more healthtech startups to offer video consultations. Doctolib, which started as a medical appointment booking service, has since added teleconsultations to its list of services.

Similarly, in Germany, the passing of the Digital Healthcare Act in November 2019 has meant digital healthcare apps are now eligible for reimbursement by the public healthcare system, making it one of the easier countries in Europe to operate in for startups.

What's in portfolios: a selection of recent telemedicine deals

Company	Date	Country	Value (€m)	Equity Lead
eConsult Health	Oct 2020	UK	5.5	Gresham House
Joint Academy	Sep 2020	Sweden	19.3	Kinnevik
HomeDoctor	Sep 2020	Poland	3.7	Cogito Capital Partners
Practio	Aug 2020	Denmark	n/d ( < 25)	Spintop Ventures
Infermedica	Aug 2020	Poland	8.7	EBRD, Heal Capital
Siilo	Jul 2020	Netherlands	9.4	Heal Capital
eCovery	Jul 2020	Germany	n/d ( < 25)	CFH Beteiligungsgesellschaft
Synapse Medicine	Jul 2020	France	7.0	XAnge, BNP Paribas, BPI France
H4D	Jun 2020	France	15.0	BPI France, LBO France, Supernova Invest
Doctorly	Jun 2020	Germany	5.0	Speedinvest
Doktor.se	May 2020	Sweden	45.1	Carnegie Asset Management, Handelsbanken
Cureety	Apr 2020	France	1.2	BPI France, Crédit Agricole, Crédit Mutuel
Direct Health Services	Mar 2020	Germany	n/d ( < 25)	Holtzbrinck Ventures
Wellium	Mar 2020	France	2.0	Advent France
Selfapy	Jan 2020	Germany	6.0	HTGF, Think Health, IBB, SHS
Deeplink Medical	Dec 2019	France	5.0	BNP Paribas
OnlineDoctor	Aug 2019	Switzerland	1.8	EquityPitcher, FortyOne
Doctolib	Mar 2019	France	150.0	General Atlantic

Source: Unquote Data

Mixed diagnosis
While there has been a lot of enthusiasm over completely digital healthcare companies, most of these startups and their backers foresee a future involving a mix of digital and physical consultations. Odlander says: "As with everything new, there has been a lot of enthusiasm over true digital and a lot of people have been a bit carried away by that. But in reality, the biggest impact will be from all the small, incremental steps where you apply new thought processes and new technology into already existing stuff."

He adds: "The most successful digital doctors will be those who combine potential access to physical care where needed and those who tap into existing structures more efficiently, instead of completely betting on a situation where a patient never meets the doctor."

According to Babylon Health's data, among patients who have signed up to the NHS app in the UK, as many as 40% of all interactions start and stop with the chatbot, with patients not requiring a prescription or a physical appointment with a doctor. For many similar startups, reducing the burden on the already-stretched healthcare systems across Europe is the key focus.

While reducing the number of physical visits might be the goal in one country, it might not be in another, says Heal Capital managing partner Christian Weiss: "The challenge is the vastly different incentives within different healthcare systems in Europe. In some countries, doctors and practitioners are interested in getting more patients into their practice, but that is not necessarily the case in all countries. So, it all depends on payments and incentives, and companies need to get their business models right."

Even with easing regulation, healthcare remains a highly regulated space for tech startups to navigate. But the regulation, says Eurazeo Growth partner Yann du Rusquec, is not at odds with technology: "Regulation is there to make sure that the treatment you offer is the best that patients can get, and that the patients' data is secure." He adds that in this sector, data security plays an important part in reassuring both doctors and patients.

The coronavirus pandemic and associated lockdowns have shown that consulting doctors digitally is possible, but will the newly formed habits stick? Nora Blum, CEO and co-founder of digital mental health therapy provider Selfapy, says: "Society needs to open up for digital health. Currently, most doctors are not used to prescribing apps to patients. But going forward, apps will be a standard part of a patient's journey."

With ample room for market penetration, healthtech companies are far from maturity and VCs are not looking for quick exits. VNV Global managing partner Per Brilioth says: "It is important to have patience. Our rule of thumb is that it takes five years to build enough liquidity or enough data to start to generate any revenue whatsoever. It takes a long time to build a dataset and to have a good enough product."

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