GALEN GROWTH ASIA Q3 2018 YTD
2018’s third quarter has now closed, and the year is already the most-funded year ever for HealthTech in Asia Pac which continues to demonstrate the dynamism of the ecosystem at a startup, investor and enterprise level.
Previously in H1 2018
Asia HealthTech funding closed H1 2018 on par with the US and exceeded $3.5B of total funding deployed. Last July, as reported in our last Asia HealthTech Investment Landscape 2018 Half Year report, Galen Growth Asia predicted that 2018 would close above the $5B mark.
Building Towards the Largest Year to date
However, Q3 2018 HealthTech funding came in unexpectedly strong at $1.4B, up ~2.2x YoY for the quarter (excl. $678M IPO of Berry Genomics and the $254M IPO of BGI Genomics). We saw the largest number of deals in Q3 compared to any other quarter in 2018. As a result, 2018 Q3 2018 YTD funding crossed the line at $4.97B, just shy of our initial forecast of $5B for full year 2018. We are therefore revising our forecast and expect full year 2018 to exceed $5.5B, and nudge the $6B mark.
A Maturing Ecosystem
Asia HealthTech continues to display the signs of a maturing ecosystem. While the $ share of early stage deals continues to decrease, growth and late stage deals have gained further momentum. We are pleased to report that Myanmar, a new frontier market, recorded its first digital health funding deal, testament of the far-reaching impact of the digitalisation of healthcare.
Asia HealthTech Funding History
Are $1B plus quarters becoming the norm in Asia Pac?
Q1 closed just short of $1B, Q2 in excess of $2.6B and Q3 just north $1.4B in quarterly funding. The latter was driven by Series B, C and D stage rounds, each of which saw in excess of $300M invested.
This latest $1B plus quarter of total funding invested in Asia HealthTech, represents a 11% QoQ $ value increase deployed across 78 deals when compared to Q2 2018 and a 24% YoY increase compared to Q3 2017 YTD.
Although Q3 recorded a greater number of deals executed, the average deal size decreased to $25.6 million, down $2.5M from Q2’s average (when excluding the $1.12B IPO by Ping An Good Doctor).
HealthTech in the region also recorded its first Series E deal in two years, with the Chinese health services search platform So Young (新氧), raising $70M led by Matrix Partners China.
More mega deals than ever!
Q3’s record was driven by seven mega deals, which we define as financing rounds exceeding $100M. These were LinkDoc (零氪科技), Medlinker (医联), Jianke (健客), Keep, CureFit, Allcure (北京全域医疗), Yitu Technologies (依图科技), of which six were closed in China and one in India.
| Startup | Funding Size | Country | HealthTech Category |
|---|---|---|---|
| LinkDoc (零氪科技) | $150M | China | Research |
| Medlinker (医联) | $146.23M | China | Online Health Communities |
| Jianke (健客) | $130M | China | Online Marketplace |
| Keep | $127M | China | Wellness |
| CureFit | $120M | China | Wellness |
| Allcure (北京全域医疗) | $103M | China | Health Management Solutions |
| Yitu Technologies (依图科技) | $100M | China | Medical Diagnostics |
India recorded its first HealthTech mega deal with the $120M investment in the Indian Wellness Platform Cure.Fit. A closer look at this venture’s business model reveals a hybrid of online and offline capabilities including fitness centre membership, akin to ClassPass. This represents India’s largest health technology related investment round since Practo’s Series C round of $90M in August 2016 and was led by IDG Ventures, with Accel Partners and others co-investing.
China continues to lead Asia HealthTech investments Asia Pac ranking table in both the value and volume metrics. By volume share however, China dips slightly by 2%, to 44% deal share, down from 46% in 2017 and 50% in 2016, reflecting deal volume growth in other parts of the region such as SE Asia which increased its share from 9% in 2016 to 11% in 2018.
Later stage deals volume outgrows Early stage deals
Early stage deals continue to lose volume share in Q3, decreasing by almost 45% YoY compared to the same period last year and by 24% vs Q2 2018 (QoQ).
Growth and Late Stage deals (from Series A to Series E) continue to gain momentum for the 5th quarter in a row, accounting now for two thirds of all deals being executed in Asia Pac, which represents an increase of 56% YoY.
No clear trend can be drawn yet for exits in the region, but it seems that historically most exists occur in the second half of the year. We are also watching two more large IPOs which are rumoured to be in the pipeline:
- Announced earlier this year, Temasek-backed US-based liquid biopsy venture Grail and
- Tencent’s WeDoctor, after raising additional $500M in May this year, are expected to list on the Hong Kong stock exchange by the end of 2018.
Discussions in the past few months with a number of Growth Stage investors in the region have included concerns that the ecosystem could experience a potential HealthTech pipeline drought as Seed and Pre-A deals lack the funding required to scale.
QoQ Asia HealthTech Deal Volume Share By Stage
China dominates, India regulates, SE Asia exceeds
China continues to represent the lion share of HealthTech investment in Q3, raising more than $1B driven by 6 of the 7 mega deals in the region. These 6 mega deals accounted for 73% of all digital health funding deployed in China in Q3 2018, with a Series C investment of some $150M (RMB 1B) in the AI powered Research Clinical Trial provider LinkDoc (零氪科技), and approx. $150M (RMB 1B) Series D investment in the Doctor Networks platform Medlinker (医联).
Driven by the $120M Series C investment in Wellness provider Cure.Fit, ventures in India closed deals worth a total of $294M in Q3, racking up a total of $447M YTD. We are witnessing significant expansion of the India digital health ecosystem, driven by Online Marketplace providers which have raised in excess of $100M in Q3 2018 and a total of $147M in 2018 YTD.
In September 2018, the Times of India reported that all Online Marketplaces will come under the purview of the drug law, forcing portals to register and maintain proper information about stocks, transactions as well as prescription against any sale. Will we start seeing funding in Online Marketplaces slow down and/or consolidation around well-funded startups such as Pharmeasy and 1MG?
In August, Softbank’s unicorn PolicyBazaar announced a partnership with Ping An Good Doctor to strengthen its Telemedicine platform DocPrime and pumped in $50M for its market expansion.
Conversely in China, thousands of prescription drugs from manufacturers such as Pfizer are freely available on the websites of two of China’s largest ecommerce companies, namely Alibaba and JD.com, with third party sellers taking advantage of a loophole to skirt regulations. The two sites are operating in a grey area. The drugs are paid for on delivery, allowing Alibaba and JD.com to classify the transactions as “offline”. But they host the listings, take a marketing fee from the stores and, in some cases, deliver the orders through courier companies they part-own.
With total funding raised reaching $28.9M in Q3 2018, SE Asia YTD total of $86.6M has already exceeded 2017’s year-end total. Noteworthy in Q3 were the $9.75M announced by Singapore’s Patient Solution platform Holmusk and a $100k investment in Flexible Pass, the first recorded investment in a HealthTech provider in Myanmar.
Asia HealthTech Noteworthy Deals – Q3 2018
| HealthTech Category | Funding Size & Stage | Principal Investor | |
|---|---|---|---|
| LinkDoc (零氪科技) (CN) | Research | US150 million Series C | China Investment Corporation |
| Cure.Fit (IN) | Wellness | US$120 million Series C | IDG Ventures, Accel Partners, Kalaari Capital |
| DocPrime (IN) | Telemedicine | US$50 million Seed | PolicyBazaar |
| Lunit (SK) | Medical Diagnostics | US$14.3 million Series B | Mirea Asset, InterVest, Softbank Ventures Korea |
| Holmusk (SG) | Patient Solutions | US$ 9.75 million Pre-A | Veritas Venture Fund |
Wellness and Online Marketplace solutions grab greatest share of funding
By $ value, Population Health Management ventures, which include China heavy weights Ping An Good Doctor and WeDoctor, as well as other Integrated Health Solutions, remain in first place YTD, adding a further $146M to their H1 2018 total.
With more than $250M raised in Q3, Wellness solutions closed the most funding by $ value in Q3, primarily driven by a $127M investment in China’s Keep and the aforementioned investment in Cure.Fit. It should be noted that of the 9 recorded Wellness funding deals, 4 were undisclosed.
Amongst HealthTech investment categories, Online Marketplaces came in second to Population Health in dollar value. Over 10 deals raised a total of $237M, including Chinese startups Jianke (健客) and 7LK (七乐康). Also, worth noting that 50% of Asia deals in the Online Marketplaces category were closed in India.
Online Marketplaces ranked second in Q3 with over 10 deals raising a total of $237M. Whilst Chinese Marketplace Jianke (健客) raised the highest amount of funding with $130M, it is noteworthy to mention that 50% of all deals in this category were closed in India. Another likely sizeable deal in 7LK (七乐康), was announced undisclosed.
The past 12 months have seen an increasing number of HealthTech ventures in the region building solutions for research purposes. This Research category includes a range of solutions from drug discovery support to clinic trials management. In Q3 2018, LinkDoc (零氪科技), a HealthTech platform which contributes primarily to the research clinical trial process including the collation and standardisation of healthcare data from hospitals and providers, raised approx. to $150M (RMB 1B) in a Series C round led by China Investment Corporation (CIC). If compared to Q3 2017 YoY, this Research category has achieved an 8-fold increase in funding, the most significant increase of all the HealthTech categories we track.
Asia HealthTech Most Funded Categories By Value in 2018
HealthTech Alpha, Asia’s only Healthcare Insights Platform
In view of the ever-expanding landscape of HealthTech ventures in Asia Pac, Galen Growth Asia has completed a comprehensive revision of its categorization methodology which enables greater precision and differentiation which helps our clients better understand and assess each venture. Complementing this detailed categorisation, each startup is classified by their enabling technology, market value proposition, therapeutic focus (when relevant), and our proprietary composite maturity scoring.
For further information, visit healthtechalpha.asia
Corporates are expanding their strategic partnerships
Through our work with industry, Galen Growth Asia has witnessed a growing appetite by corporates to establish strategic commercial partnerships with proven Asian HealthTech ventures. It is only a small representation of all ongoing partnerships, but the last quarter has seen a number of high-profile announcements of corporations partnering with HealthTech ventures.
Noteworthy partnership announcements:
- Mundipharma, a regional pharmaceutical company, announced its partnership with Biofourmis, a Singapore startup, to development painfocus™, a revolutionary new end-to-end pain management solution that significantly increases the objectivity of pain measurement, something that has been historically difficult. It leverages Biofourmis’ biovitals™ analytics engine
- Global insurer Prudential announced an exclusive partnership with UK-based healthcare technology and services firm Babylon to give millions of their Asian clients access to digital tools aimed at helping them to better manage their health.
- China’s leading healthcare services platform, Ping An Good Doctor and Grab Holdings Inc (“Grab”), a leading O2O platform in Southeast Asia, announced a joint venture company to deliver transformative online healthcare services in Southeast Asia. The joint venture, the first of its kind to operate regionally, will provide an array of integrated medical services such as artificial-intelligence (AI) assisted online medical consultations, medicine delivery and appointment bookings through an online platform.
- Inter Partner Assistance Hong Kong Ltd. has partnered with The CareVoice, a China HealthTech startup, to provide fully digital health journeys and integrated healthcare solutions to the insurance market.
Teva announced a series of partnerships and initiatives including a partnership with Healint, a Singapore HealthTech startup, the developer of the Migraine Buddy© platform, which will provide real-world evidence (RWE) on the many issues and outcomes experienced by migraine sufferers.
Note
This is the Galen Growth Asia Q3 2018 YTD Asia HealthTech Investment Landscape update, which, similarly to our Q1 2018 snapshot, is an update to our comprehensive go-to-reference half year reports. These can be downloaded for free at: galengrowth.asia/research/
About GGA
Founded in late 2015 by five HealthTech innovators, Galen Growth Asia (GGA), is at the epicentre of HealthTech innovation, aka digital health, currently a $70+B startup ecosystem.
GGA has built a portfolio of solutions which enables it to be the catalyst of direct collaboration between enterprises, startups and investors to prototype, evaluate and implement HealthTech solutions to solve healthcare system pain points and create significant financial and social value in the region
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We partner with enterprise, investors and startups to accelerate and deepen their understanding of this exciting ecosystem. We offer client specific analytics and advisory solutions to help you find the right options and scale your innovation plans.
