It’s undeniable: COVID-19 has changed the way care is being delivered in Canada. The pandemic has put immense pressure on those in our health care system to adopt new ways of working, and we’ve seen new levels of collaboration between the private and public sectors as they’ve come together to protect the wellbeing and safety of citizens.
The pandemic has put immense pressure on those in our health care system to adopt new ways of working.
Digital health, defined as the use of technologies to drive improvements in the design of medical products and the delivery of health care services, is powering much of this collaboration and innovation. As the pandemic continues to put pressure on health systems in the months to come, we expect this trend to continue to accelerate.
While we were already moving in this direction here in Canada, demand for virtual care—a prominent segment of digital health—is now up dramatically. And virtual care is just the start. There are many other areas of opportunity in digital health, whether it’s secure ways of sharing images and records from smartphones, intelligent health care diagnostic equipment or novel machine learning algorithms that predict disease and infection outbreaks. PwC Canada estimates the digital health market to be worth more than CA$5 billion in Canada and the global market size to be greater than CA$100 billion, as of 2020.
But it’s not just demand that’s up—we’re also seeing corresponding levels of satisfaction with digital health solutions. Citizens are adopting these solutions and forming new, potentially longer-term habits, such as online booking and quantified self and virtual visits.
The bottom line? We’ve seen a supercharge in the adoption of digital health solutions. Startups in the space have already raised US$17.8 billion year to date (YTD), well on track to outpace last year’s levels.
Our Digital Health Market Map
In collaboration with CB Insights, we’ve mapped out the top 50+ venture capital (VC) backed digital health companies across the health ecosystem in Canada. They’re categorized based on the following segments: provider, patient, life science R&D and payer & public health.
Historically, provider and patient-centric solutions have dominated Canada’s digital health sector. But this year, the spotlight’s on a new segment: life science R&D, which has helped drive the development of diagnostics, vaccines and treatments against the COVID-19 virus. Despite the segment having an average company age of 5.9 years, many of these companies have quickly become digital health champions, raising US$202.4 million in 2020 YTD.
We’ve used CBI’s data to bring to life some ideas about the health ecosystem of the future, and we’ve also highlighted some trends to watch in the coming months in this increasingly hot investment space.
The health ecosystem of the future
Around the world, digital health companies are accelerating transformation in health care by enabling important shifts, for example, from institutional care to digitally-enabled care in the community and from doctor-centred care to patient-centred care. All signs point to the health ecosystem of the future continuing to align with the concept of 4P medicine, which means it will be predictive, preventative, personalized and participatory.
As you can see, many of these shifts align with and will be enabled by new health technologies like the ones offered by the Canadian companies on our map.
Predictive health technologies are all about the intelligent use of data: many of these tools accumulate, analyze, synthesize and act on data—often proactively. With these tools, we can see artificial intelligence (AI) in action, leveraging the power of health care data sets. An example is Knowtions Research’s AI platform, which helps insurers unlock and use predictive insights from health data to automate claim management and enhance the patient experience. Another example is Deep Genomics, which is one of many companies using AI to accelerate all stages of drug discovery and development.
As we learn and begin to be able to predict risks for people, we can take action in a more preventative way, whether at home or in the community. An example is Ayogo’s gamified health applications, which provide timely, personalized interventions to patients with serious or chronic diseases. The trend of simplified and often gamified access to knowledge and information will likely lead to improved awareness and less strain on the health care system.
Instant, real-time health monitoring allows us to understand the consumer’s needs as an individual and help them act on and manage their health in a personalized way. An example is Swift Medical’s AI-powered mobile app that captures wound care information and provides immediate personalized tissue analytics using machine vision algorithms. Technologies such as this one provide a new level of accessible and affordable personalization that will likely raise the bar for what individuals expect going forward.
In this new, connected health ecosystem, we can activate the most untapped potential: the time each individual has to themselves, allowing them to take a participatory role in managing their own health. Examples include Dialogue’s and Maple’s virtual care platforms, which allow citizens to access on-demand primary care, mental health therapy and other services.
A look into the future: Key trends to watch
Another important function of maps such as this one is to work as a window into the future. We can start to see early signals about how the future system might look based on what’s trending right now. We’ve highlighted some key areas to keep an eye on in the coming months:
Virtual care companies allow people to see doctors and other medical professionals remotely and on demand by using their smartphone, tablet or computer. With the COVID-19 pandemic driving increased demand for health care and promoting a policy of social distancing, virtual care services are quickly expanding. As mentioned above, Dialogue and Maple are two examples of emerging companies in Canada.
How will we reduce harm to people with comorbidities, seniors and others who are at elevated risk until we have a COVID-19 vaccine? We may see more remote care monitoring and other innovative home-based care solutions to help reduce the risk of infection and transition to more cost-effective care settings. An example is Mavencare, which connects seniors who need home care with caregivers and provides loved ones with updates throughout the home care appointment.
Predictive analytics in health care aim to alert clinicians and other stakeholders of potential events and outcomes before they happen, helping them to better prevent and manage health issues. An example is BlueDot, a Toronto-based company that combines public health and medical expertise with advanced data analytics to anticipate infectious disease risks, such as COVID-19 or future pandemics.
Throughout the pandemic, many individuals have become more comfortable allowing companies to not only use their data to better protect and manage their health—but also to store it in the cloud and provide it to third parties. This means we’ll likely continue to see solutions that help organizations handle this data securely. An example is MedStack, which reduces the time and cost to build integrated patient-centric health care apps by addressing challenges faced by app developers: data integration and privacy compliance.
We’re seeing increased momentum in terms of digital mental health solutions, as many people struggle with the short- and long-term effects of social isolation. An example is BEACON, a digital platform that provides users with a personalized cognitive behavioural therapy experience integrating the one-on-one support of a registered mental health professional.
Bringing it all together
Here at PwC Canada, we expect to see significant investment inflow into digital health in the near future. In fact, we estimate digital health spending will more than double by 2030—going from making up 3 percent of global health care expenditures to an estimated 8 percent. Valuations have started and will continue to increase as investors express renewed interest in digital health given the accelerated timeline to adoption and, as a result, the return on investment. As target valuations increase along with total addressable markets, we expect to see new challenges to consolidation attempts of existing market participants with an increase in competition from global players looking to tap into the potential of the Canadian digital health ecosystem.
Organizations shouldn’t be going about this alone. Engaging in joint ventures, partnerships and other collaborations with expert partners will empower them to accelerate new product and service offerings. Digital health platforms are now going to experience what other sectors have for years—technology isn’t the answer in and of itself. As such, market participants should have a clearly defined strategy, use cases and a framework in mind when partnering with emerging digital health companies.