Mar 20, 2023

VC funding in the world's second-biggest digital health ecosystem decreased by 41% year on year. Photo: MONTY_RAKUSEN/Getty Images Latest research finds majors shift in investment strategies in Asia-Pacific vis-a-vis the global digital health scene. Digital health-focused market intelligence provider Galen Growth and PR firm FINN Partners shared some findings from their upcoming report into digital health venture capital funding trends in the region, drawing inputs from 250 million data points and more than 14,000 digital health ventures. FINDINGS 2022 saw VC funding in APAC decline by 41% compared to the level seen in 2021. It was observed that while funding dropped in the first three quarters of the year, it bounced back by the last quarter, ending 2022 at $5.79 billion. The decline, researchers shared, was largely due to a fall in China's investment by 66% year on year – a five-year low – amid the pandemic. Meanwhile, investments in Northeast Asia (including South Korea and Japan) doubled to $1.9 billion, surpassing bigger markets like China and India. The report also noted that M&A activity in the region decreased by 33% year on year. Still, APAC digital health ventures accounted for 60% of global acquisitions. Over the past 18 months, only 34% of growth-stage ventures in APAC were able to raise capital. Despite the decrease in venture valuations, the digital health sector's resilience in 2022 will "strengthen the venture pipeline, driving innovation and business model viability to show the value of digital health tools in improving healthcare research and delivery," the researchers emphasised. WHY IT MATTERS APAC is home to 27% of the digital health ventures in the world, making it the second-largest ecosystem. Although funding sources seemed bleak last year, the region's digital health landscape still saw some significant flow in investment, particularly in India and Singapore. Noteworthy examples were telehealth company MediBuddy from India, which reportedly secured over $100 million in Series C funding, and Singapore-based e-pharmacy startup SwipeRx , which netted $27 million in Series B funding. Elsewhere, Ubie in Japan raised a total of $45 million in Series C capital to accelerate the deployment of its AI symptom checker app in the United States. Tech-enabled healthcare provider Jio Health from Vietnam raised $20 million in Series B funding. Most of the digital health fundings Mobihealthnews.com reported in 2022 were directed towards telehealth, e-pharmacy, insurtech, and platforms focused on preventive healthcare. Investments had flown also to startups offering AI solutions (like AIRS Medical from South Korea and AI Medical Service from Japan), mobile mental health (such as India's heyy and Singapore's MindFi ), and even digital dermatology solutions (like CureSkin from India). THE LARGER TREND Globally, total investment dollars in digital health "took a steep dive," Galen Growth and FINN Partners noted. Researchers pointed out a "new phase" of digital health investment, shifting from an aggressive approach during the height of the pandemic to a strategic engagement as seen in previous years. Private equity and business development funding mostly went to research solutions and online marketplace clusters among technology categories, cornering almost half of the total funds invested in 2022. Among therapeutic areas, oncology and cardiovascular diseases attracted the most investments. ON THE RECORD "With the slowdown of venture funding in 2022, digital health is anchoring back to reality, becoming more focused, and demanding more verification that ventures are offering solutions that will bring value to the digital health ecosystem," Julien de Salaberry, CEO and co-founder of Galen Growth, commented. "Compared to the pre-pandemic levels, digital health has shown clear signs of resilience with the [APAC] region witnessing an increase in funding," noted Aman Gupta, Managing Partner and Health Practice Lead at SPAG – a Finn Partners company. Tags: