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Whilst many people would like to see healthcare as philanthropy, there is no denying the fact that it is also a big business worldwide. It is not only about curing or preventing diseases but about the overall quality of life. There are so many areas that can be explored to make all our lives better. Many big businesses are already operating in health, but there are still ample opportunities for startups.
The realm of health startups is booming. They are revolutionising healthcare services, products and health technologies. The startups are focusing on different critical sectors where there is an unmet need. They are leveraging innovative approaches to bridge crucial gaps in access, affordability and quality of care.
However, this is not a smooth journey in any way. Any startup, health or otherwise, is fraught with unique challenges. Even more so for healthcare, as the stakes are particularly high given the sector's impact on human well-being. Strong regulations and scrutiny from the government and the general public make things extremely sensitive.
The health startup sector is characterised by a high risk and variable returns. According to a wide range of industry data, only about 10-20 per cent of health startups achieve long-term success, defined by market penetration, sustained presence and growing profitability. The remaining 80-90 per cent either fail or are absorbed by larger entities within five years of launch, especially pharmaceuticals or venture capital firms. This is actually not that different from the overall startup scenario.
There is a broad range of challenges for health startups. The recipe for success relies on the ability to navigate these challenges and doing so determines whether the venture will succeed or fail. These hurdles are often more complex than those faced in other industries due to the sensitive nature of healthcare.
One of the largest challenges comes from the government. Healthcare is a highly regulated sector and must comply with rigorous regulations and standards. There are country-specific regulations, e.g. the FDA for the US, the European Medicines Agency (EMA) for Europe, etc. If the startup is working on a solution that does not comply with the policies and procedures, it will not even be allowed to launch. Moreover, overcoming these hurdles is very expensive and time consuming, which may not be feasible for many startups.
This brings the funding to the forefront. Health is an expensive business, and startups need to secure their finances, including substantial funding. Attracting investment is a persistent issue for any startup, but there are added challenges for healthcare companies due to perceived regulatory hurdles and overall scrutiny. Investors may be wary due to lengthy product development cycles and uncertain returns.
With the rapid advancement of AI, many startups are building advanced technologies or integrating modern systems into their telemedicine platforms. This requires substantial expertise and resources, which are not always readily available. Healthcare has unique terms and processes, different from those in other sectors, so what works in another business may not be applicable to a healthcare startup.
Another challenge is achieving product-market fit. This is essential to convince investors that the startup has a viable product, and the regulators that there is a space and need for this initiative. Healthcare providers and patients may be resistant to change, necessitating extensive education and outreach.
Any health startup should be prepared for intense competition: the health sector is crowded with established players and emerging startups, making differentiation and sustained growth challenging. So, any startup must have a well-defined plan, adequate funding commitments and resources in place before they start their journey.
Even with numerous challenges, there are many successful health startups over the years. Their case studies reveal valuable lessons, especially for aspiring entrepreneurs. One example is Tempus. It was founded in 2015. This startup built an AI-based tool to analyse clinical and molecular data, helping doctors make personalised treatment decisions. Key factors in its success include strong leadership, robust technological infrastructure and strategic partnerships with healthcare institutions.
Then there was Babylon Health. This UK-based startup provides telemedicine services. They also leverage AI to offer virtual consultations. Its user-friendly platform, focus on accessibility, and early adoption by national health systems contributed to its rapid expansion.
Another example is Glooko. This startup targeted a critical area of healthcare - diabetes. The product of Glooko was a platform where patients and clinicians can track and manage health data. There was a great unmet need for such a product, so it was a great fit for the market and received endorsement from medical professionals and regulatory bodies.
But let's be careful: for every success story, there are multiple failures. Take Theranos. It was once a company with a valuation of over $9 billion. They promised a revolutionary blood testing technology. But it failed miserably because it promoted the product even before it was finished or tested. This put them in direct contradiction with regulators. They tried to hide their shortcomings and made misleading claims. When all this came out it broke the trust of the investors and resulted in lawsuits. The company eventually dissolved. The founder was prosecuted and convicted on several charges.
The story of HealthSpot is less dramatic, but still a failure. Like Babylon, they tried to bring a telemedicine service solution. Their idea was to deliver this service through kiosks. They secured a lot of funding. But the launch was a failure, leading to low user adoption, high operational costs and difficulty integrating with existing healthcare workflows. Within a few months, they burnt through $40 million of investors' money and the plug was pulled.
Then there was Quibi. It was a hyped-up mobile streaming service that operated in 2020. To be fair, it was not designed as a health startup. However, some of its content, such as news programmes, included health-related segments or episodes. Quibi Health struggled with unclear value propositions and insufficient differentiation, leading to its closure within two years of launch. So it isstilla cautionary tale for those who are thinking of similar initiatives.
Financially, successful health startups can have transformative impacts. In 2022, global digital health startup funding exceeded $15 billion, with average valuations for successful startups ranging from $50 million to over $1 billion. However, failures contribute to an estimated loss of $5-7 billion annually in sunk costs and unrealised investments. Key industry trends include increased investment in telemedicine, AI-driven diagnostics, and remote patient monitoring, accelerated by the COVID-19 pandemic.
Bangladesh's health startup ecosystem is emerging, attracting interest from both local and international investors. The sector saw the rise of several innovative ventures, such as Doctorola, which connects patients to doctors online, and Arogga, a digital pharmacy platform. With the onset of the AI revolution, more and more startups may come to the forefront soon.
However, health startups in Bangladesh face distinct challenges. Funding is a critical issue, as there is little government support for startups. Venture capital is scarce, and international investors are cautious due to perceived risks and uncertainties. Bureaucratic red tape and regulatory complexity may deter any prospective venture. Our health authority is not equipped to deal with startups, especially AI-based ones. Moreover, there is a lack of policies and procedures in this area, making the process unclear.
High-speed, uninterrupted internet and phone service are crucial for the success of any health startup. But Bangladesh is lagging behind in this. Whilst urban areas have good internet penetration, many rural areas still remain outside the network. This makes it difficult to implement any health startup idea focusing on providing telemedicine, virtual consultation, data tracking, or decision making. Furthermore, there is a lack of skilled professionals in health technology and data science. We must also take note of cultural barriers. Trust in digital health solutions is low, with many preferring traditional, in-person care.
Despite these challenges, Bangladesh's health startups have demonstrated resilience and adaptability. Successful startups focus on local needs which appeal to the general population. They are also able to navigate through the bureaucratic and regulatory complexities and form strategic collaborations with hospitals. Failed ventures, on the other hand, often struggle due to regulatory delays or limited market reach.
To foster growth in Bangladesh's health startup sector, a multi-pronged approach is therefore needed. First and foremost, we need to have a well-defined policy to streamline regulatory processes. Clear guidelines should be available for health technology ventures.
Government may initiate incentive programmes for startups. This could be in the form of tax breaks, or government loans/grants to deserving startups. The process of foreign investment must also be made easier for health startups. They should be offered government support to secure international funding and partnerships.
Skill building is something we should invest in too. Establishing skill development programmes to develop experts in health tech and entrepreneurship, offering AI education and training, and bringing in foreign experts with the goal of developing local talent are all doable approaches. The general public should also be educated about the benefits of digital health solutions to build trust and increase adoption. Also, infrastructure improvement is critical, especially expanding high-speed internet and mobile connectivity across Bangladesh and ensuring seamless services.
Health startups have immense potential. They can transform healthcare delivery and outcomes on a global level. However, they also face significant obstacles, including, but not limited to, funding uncertainties, regulatory difficulties, and challenges of market acceptance. Case studies demonstrate that innovation and strategic execution are paramount for success, whilst non-compliance, failure to understand the market, and mismanagement would lead to doom.
In Bangladesh, health startups encounter additional obstacles related to infrastructure and cultural acceptance. Addressing these challenges through targeted policy reforms, investment and capacity building can unlock new opportunities for entrepreneurs, investors and researchers, paving the way for a more robust health startup ecosystem.
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