According to Mangrove Capital Partners, it won’t be doctors but industry outsiders which will reinvent healthcare. In its new report “Healthcare Reimagined,” the firm highlighted that of the top 50 medical apps by revenue, only five (10%) were founded by doctors. Meanwhile of the top 50 medical apps by monthly active users (MAU), none were conceived and built by doctors.
Best known for early investments in Skype and Wix.com, Mangrove has made a number of investments in the digital health space including women’s health app Flo, the fastest growing medical app by revenue and monthly active users (MAU).
Its report describes healthcare as “archaic, capital intensive and, in many ways, broken” — citing rising costs, a dependence on a corrective rather than preventative approach and a “painfully disjointed patient experience” in its critical assessment of the sector. The report highlights how the industry is now moving from a structure that treats sick people to one an AI-enabled one that will be predicting and preventing illness and disease.
The firm also argues that healthcare is “best revolutionized from the outside and not from within” and that those from outside of the industry are “more readily able to conceive patient-centric solutions.” In that sense, it explains how the fastest growing health startups are circumventing traditional healthcare, often putting off regulatory approvals until mainstream adoption has been achieved.
“The idea that you need to be a clinician to build a successful digital health business is a complete fallacy. In fact, it is more likely a hindrance than a help,” commented David Waroquier, Partner at Mangrove Capital Partners and board advisor at Flo Health. “Quite simply, we are going to have to get used to the idea of entrusting our health to tech companies.”
The report also highlights the rise of digital therapeutics (DTx), which are software-based interventions that are proven to have a direct impact on an illness or disease. Examples include Mangrove portfolio company Happify Health, which recently partnered with Sanofi. The DTx market is still in its infancy but is expected to be worth more than $32bn by 2024 according to Juniper Research.
As well as making treatment far more accessible for patients, DTx create new revenue streams for pharmaceutical companies at a much lower cost than their traditional products. They also give pharmaceutical companies access to invaluable data from patients that can be used to improve treatment or even create entirely new products.