Dr Pankaj Jethwani, CEO, 2070 Health in an interaction with Kalyani Sharma gives an overview of the current state of the healthcare startup ecosystem in India and also highlights that investments in healthcare have witnessed significant growth, with a high number of investors actively participating in the sector
Could you throw light on 2070 Studio and how does the venture studio work? Where do you see 2070 Studio in the next 2-3 years?
Founded in 2022, 2070 Health is India’s first Healthcare-focused Venture Studio. We operate as a unique innovation platform that aims to create disruptive healthcare startups from scratch that can transform the healthcare landscape and impact billions of lives.
The approach adopted by 2070 Health for launching startups is a structured and systematic process that encompasses three key stages:
First, we identify white spaces with large unmet needs and conduct extensive diligence on the concepts. This stage typically spans 3-6 months and involves clinical research, patient and doctor interviews, assessment of the innovation landscape in other geographies, and vet our ideas with industry leaders and KOLs.
Second, we work with exceptional founders and EIRs to further shape and launch these companies.
Third, we drive towards achieving product-market fit leveraging our in-house operating team and utilising hundreds of executions ‘playbooks’ across functions like – marketing, Go to Market, talent, product, and technology, which are all critical building blocks required for company building. The goal is to scale our companies faster, better, and cheaper than traditional start-ups in the riskiest early months of company building, especially in this macroeconomic environment.
Using this approach, we have launched four companies in the last twelve months. Over the next 2-3 years, we will launch another 8-10 healthcare ventures and look at expanding the venture studio outside of the US and India, where we operate currently.
What are the parameters on which the studio launches the startups?
The launch of start-up is a long, critical process where we try to de-risk failure points related to the core idea and the team. Thus, we at the Venture Studio spend a significant amount of our time in idea research/validation and talent focusing on the following:
Ideation: This initial phase involves identifying unsolved problems and proposing innovative solutions. The studio conducts comprehensive research, validation, and feasibility assessments to refine and validate these solutions. We typically check for (i) large, growing markets where the solutions are more urgent (ii) we look for problems with clearly defined patient/demand side problem statements that are not solved by existing solutions and finally (iii) we focus on areas where we can create disruptively different, 10x better solutions.
Team building: Once a viable concept is identified, we select experienced Entrepreneurs-In-Residence (EIR) or founders to lead the startups and to co-develop solutions. A critical aspect is forming a senior founding team, with the right expertise and passion for the mission, to drive the idea forward. We typically look for founders who have (i) seen 0-1 and scale journeys (ii) a core passion for healthcare and (iii) the relevant essential skills for the particular solution (commonly known as founder market fit)
This approach ensures that healthcare startups supported by 2070 Health can structurally identify clinical whitespaces while not replicating what other startups might have built already.
Can you provide an overview of the current state of the healthcare startup ecosystem in India? What are the key factors contributing to its growth and development?
The Indian healthcare startup ecosystem is growing steadily with 9,800+ startups leveraging technology to augment healthcare services in the country. Here is a quick snapshot of the ecosystem:
In 2023, two key themes stood out:
- There was a rise of vertically integrated, omnichannel healthcare service providers, with majority capital flowing into companies in this segment. This comprised players focused on therapy areas like oncology, dermatology, nephrology, ophthalmology, etc. This trend will continue as healthcare becomes more specialised, offering patients with comprehensive, end-to-end care.
- Healthcare SaaS and services focused on the US/India corridor is an upcoming exciting segment. We believe this segment will flourish due to India’s capabilities in building AI for healthcare and servicing clients globally with Indian-built technology.
A major catalyst for the ecosystem’s growth was the increased adoption of digital health by patients and providers, leading to higher funding with key institutional investors backing healthcare ventures. The biggest tailwind is the pressing need, arising from the widening demand-supply gap between the growing disease burden and dearth of clinicians in the country, to improve accessibility and clinician productivity. On the positive end, availability of AI solutions presents the opportunity to create robust solutions that enhance healthcare for all.
Healthcare startups often require substantial investments in research, technology, and infrastructure. How has the investment landscape evolved in India to support these needs?
Investments in healthcare have witnessed significant growth, with a high number of investors actively participating in the sector. The number peaked in 2021, with over 628 active investors followed by 487 in 2022. Notably, 68 per cent of the investors in 2021 were first-time healthcare investors, signifying the growing interest in the space. Multiple sector-agnostic funds are developing dedicated healthcare teams to keep up with the dynamic industry and the in-depth research required to make bets in the space.
Recognising the unique needs of healthcare sector and the need to focus on patient centricity, over the last few years, a key development has been the rise of thematic funds curating their entire portfolio within healthcare. These funds possess deep healthcare expertise, enabling them to offer targeted support to their portfolio companies across research, technology, industry insights, etc. There are ~10-15 healthcare funds in India.
According to you, why is innovation in healthcare in the startup space hard
There is no doubt that innovating in healthcare startups is undeniably challenging.
Firstly, healthcare is inherently a complex field with multiple stakeholders (patients, doctors, hospitals, pharma, insurance, and regulators) who have to coordinate for achieving the ideal healthcare outcomes and improvements. Involving the viewpoints, benefits, and incentives of all these stakeholders is an arduous task.
Secondly, healthcare innovation faces slow adoption by both patients and healthcare professionals. Patients tend to trust only established healthcare providers and solutions, making it a longer process for new entrants to gain their trust. Healthcare professionals often adhere to stringent protocols and established models of care, which make them skeptical about accepting new treatments or digital solutions. The downside of experimentation is very severe in terms of the patient outcomes, financial cost, and reputational risk.
Lastly, the complex and ever-changing regulatory landscape in healthcare presents a significant, though understandably necessary, hurdle. The start-up philosophy of “move fast and break things” does not work here as there are patient lives at stake. Entrepreneurs and startups must not only navigate intricate regulations but also stay updated on evolving guidelines and laws, such as the Clinical Trials Bill, e-Pharmacy Guidelines, and the ART (Assisted Reproductive Technology) Bill.
Despite these challenges, the healthcare sector presents immense opportunities for innovative solutions to address the diverse healthcare needs of India’s vast population.
Scalability is crucial for healthcare startups since most problem statements require large scale adoption and implementation. What are the challenges for scalability in the healthcare space?
While innovating in healthcare is difficult, that is only half the challenge. Once you have an innovative proof-of-concept or early solution that has proven its efficacy, the next phase of the challenge is to open up access to a large segment of the population. Given that we are a $400B healthcare market with a 1B+ potential users, every nuanced sub-market in healthcare has a huge multi-million-dollar TAM and the potential to improve 100s of Millions of lives.
First, achieving standardisation in care and operations is complex due to the diverse clinical conditions and evolving clinical approaches. Every doctor and solution-provider has a unique approach to providing care based on their own education, experiences, and environment. Providing a replicable solution means balancing professional judgment with uniform “protocolised” care while adapting to new research and operational insights. This diversity also extends to technology solutions, as each hospital and clinic in India may have a different technology stack. Thus, any tech solution needs to be adaptable across these technology formats to enable fast deployment.
Second, onboarding multi-functional talent with a deep understanding of the healthcare industry, forward-thinking mindset, and strong commitment to the mission is a significant hurdle in an ever-evolving healthcare talent ecosystem.
Finally, achieving widespread distribution has been a big Achilles heel for innovation in India. You may have the most effective, affordable solution but how do you reach all the patients in India? The low insurance penetration and fragmented provider ecosystem make it tough to reach more patients faster. The diverse healthcare market demands a comprehensive and multi-channel distribution strategy tailored to different patient segments and regions, making scalability a dynamic and adaptive process.
It is thus crucial for founders to build with a scale mindset where they foresee these challenges on day 0. A Studio like ours will help plan for this with a deeper insight given our executive networks, experienced playbooks, and research capabilities.
What advice would you offer to entrepreneurs looking to enter the healthcare startup ecosystem in India, considering the unique challenges and opportunities in the sector?
We believe two things are true about building in healthcare in India today. First, there has never been a better time to build a healthcare company in India than today, given the digital adoption and availability of both digital and physical infrastructure. Second, despite the spike in healthcare entrepreneurial activity, there are large white spaces/problem statements that still exist. And hence, now is the time of unprecedented opportunity to build in healthcare in India. As a founder, focus on large white spaces, build solutions that are obsessed with patient experience and clinical outcomes, and be clear about your moat or competitive advantage.