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Health Startups Are Preparing to Be Flooded with Investments and Mergers

Health Startups Are Preparing to Be Flooded with Investments and Mergers

Venture capital predicts that Indonesian health startups will attract many investors and have the potential to consolidate in 2021. Meanwhile, similar startups globally have been flooded with funding last year, because their services are needed during the corona pandemic.

Based on CB Insights data, funding to health startups globally reached a record US$ 2.8 billion from 162 deals in the third quarter. In Asia, the increase has almost tripled. But only two of the total 107 Indonesian startups that achieved investment this year in the health sector.

Both, Alodokter and Medigo, received fresh funds in the fourth quarter. Mandiri Capital Indonesia President Director Eddi Danusaputro said that investors are actually eyeing Indonesian health startups stage B and above.

Health Startups Are Preparing to Be Flooded with Investments and Mergers

“The trend in the country should also increase (funding). However, there are not many healthtech startups, especially in the growth stage,” he said, Wednesday (30/12).

AI-based Health Startups in the United States are the Most Interesting for Investors

In the United States (US), the health startups that get the most funding are based on artificial intelligence (AI). Health startup clusters vary. “In Indonesia, there is still telemedicine, which helps the claim process, sells drugs, and others,” said Eddi.

With these various business lines, health startups are helping to deal with the Covid-19 pandemic from many sides. This has made the demand for services in this sector soar, so that investors are interested in healthtech.

In Indonesia, Halodoc recorded an increase in corona tests of more than 60% in September compared to April. Now, requests for Covid-19 testing services through the drive-thru facility have surged 300% in the third week of December.

VP Marketing Halodoc Felicia Kawilarang said, there are at least five services that are most frequently accessed on the platform. One of them is the most recent service for mental health consultation.

Another health startup, Good Doctor, also recorded requests for consultation reaching 10,000 a day during the coronavirus pandemic. Service usage also jumped eight to 10 times from March to September.

Edward Ismawan Chamdani, Co-Founder and Managing Partner at Ideosource and Gayo Capital, said that currently patients prefer remote consultations or access health application services. “This is likely to continue even after there is a coronavirus vaccine and the pandemic has subsided,” he said, Wednesday (30/12).

Based on Inventure and Alvara’s research on 1,121 respondents, the majority said that telemedicine was the main choice in accessing health services. However, 71% of respondents trusted the telemedicine services provided by hospitals or clinics.

However, Edward considered that technological advances would encourage telemedicine startups to enter mainstream health services. Then, an ecosystem will be formed, including a centralized electronic medical records (EMR) repository.

“An increase in funding will definitely occur, but there will still be checks and balances in terms of government regulations on existing regulations. After the alignment occurs, health startups will become the mainstream choice for many patients in Indonesia,” he said.

Health Startups Are Preparing to Be Flooded with Investments and Mergers

Health Startup Merger and Acquisition Opportunities

In addition to funding, he sees healthtech startups having the opportunity to consolidate next year. “Mergers and acquisitions are an acceleration action for the startup players to meet more complete criteria and features,” said Edward. The same thing was conveyed by Eddi.

“Consolidation will increasingly attract startup founders, following other sectors. This is a way to grow and an exit strategy,” he said.

Most recently, Farmaku acquired DokterSehat in November. Farmaku provides drug purchase services, while DokterSehat is a platform that provides health information. Based on Bain and Company data, the volume of payable purchases (buyouts) of health startups in Asia Pacific fell from 88 in 2018 to 68 last year. This is due to the decreased activity in China.