The future of healthcare reimagined: Insights into a resilient sector

What does the future of healthcare hold?


2022 was a turbulent year for the healthcare sector with several challenges impacting not just healthcare providers, but also patients and startups. However, there is plenty of reason to be optimistic as cutting-edge innovations with deep impact potential enter the market. The Sagana team sat together with Senior Investment Director, AINA GAUR, to look back on 2022 and glance into the near future of healthcare.


Looking back at 2022, what were some of the major shifts in healthcare?

As we know, 2022 saw challenging economic shifts in capital markets. The health sector funding cycle decreased after 3 years of upward progression. New and follow-on funding rounds were delayed as investors waited for companies to adjust their valuations to market realities. Experienced and resilient founders very quickly realized the onset of a funding downturn. They modified business plans to reduce cash burn and moved faster toward profitability. It is time to bet on these strong horses, not chase unicorns.


Hospital systems faced two major challenges: wage inflation and a rising clinical staff shortage. This led to a desperate need for higher clinical efficiency with fewer resources in both developed and emerging markets. The good news is that healthcare startups found it easier to sell their innovations to healthcare providers keen to find tech-based solutions that drive efficiency.


We also saw a decrease in patient interactions with healthcare systems. Patients continued to stay away from hospitals even post-Covid. Fewer patients received the medical support they needed, leading to missed opportunities for managing chronic conditions early on.


Despite last year’s challenging conditions, we continued to see founders solve the toughest challenges in healthcare and continue to build stable, steady businesses that can achieve health equity for all.


“It’s time to bet on the strong horses, not chase unicorns.”


With your global healthcare expertise, what is the one key trend that you are seeing emerge in healthcare?

I am very excited about the attention that the healthcare and venture funding community is paying to Health Equity. This is the very first time.


Put simply, Health Equity is defined as the attainment of the highest level of health for ALL people. This acknowledges that health disparities exist because of social, economic, and environmental disadvantages. Certain groups systematically experience greater obstacles to good health based on racial or ethnic groups, sexual orientation, gender, age, mental health, geographic location, as well as other dimensions. Being a global firm, we see this disparity up close every day when talking to patients, providers, founders, and investors.


Fortunately, we find ourselves at a unique time in history when, for the very first time, the healthcare community is seriously talking about Health Equity. Companies and funds are taking note of health disparities that limit access to timely healthcare interventions and are pledging to reverse them – not just to achieve equity, but also to grow their business by reaching untapped markets and needs.


At Sagana, we define Health Equity as the Democratization of Healthcare driven by higher access, affordability, and accuracy for all patients and families. A good example is our portfolio company, Homage, an elderly home care provider, that drives Health Equity for its customers. Homage ensures that Asia Pacific’s vulnerable aging population has access to high-quality care at home to help them age respectfully. Another portfolio company, Helex, is driving Health Equity for an underserved population in India by focusing its efforts on making gene therapy more affordable for everyone.


Now, this is what we call truly game-changing — when new innovations meaningfully serve all populations!


“Companies and funds are taking note of health disparities that limit access to timely healthcare interventions, and they are pledging to reverse them for the first time”


What innovations are you most excited about this year?

What if we could one day cure diseases like cancer, previously regarded as untreatable? This is the promise of gene therapy, and it is quickly becoming the next frontier in medicine. I am particularly excited about companies innovating in gene therapy to increase affordability and safety. We know that 100+ new therapies in the clinical development pipeline may ultimately fail, either because of high costs or safety concerns. Our portfolio company, Helex, set out to address both these issues. For one, they make gene therapies safer by reducing their off-target, unintended effects on the gene. Secondly, Helex’s bioinformatics platform eliminates today’s trial-and-error-based drug design process. Can you imagine the cost savings this transfers to the end customer?


I remain bullish about the potential of Artificial Intelligence in driving better, faster and cheaper clinical decision-making and treatments. Our portfolio company, inHeart, is a great example of a company that harnesses the power of Artificial Intelligence (AI) to guide a clinician’s decision-making when conducting a complicated heart procedure. inHeart uses AI to create a 3D model of the heart, a digital twin so to say, which helps the clinician plan the procedure and conduct it in half the time. This results in a 30% lower recurrence rate! The next, truly revolutionary frontier for AI is predictive diagnostics even before the onset of critical symptoms, and I believe this is where AI’s true potential lies. We are speaking to some fascinating companies in this space, so stay tuned!


Lastly, innovations promoting longer ‘Health Span’ hold tremendous potential to transform the quality of our lives. While life span explains how long we live, health span defines how long we stay healthy. Seeing a profound shift in public awareness about the impact of lifestyle decisions on long-term health and well-being is encouraging. Solutions driving longer Health Spans enable us to make timely lifestyle changes by predicting the onset of diseases even before symptoms start to show. They also support us in better managing existing chronic conditions like chronic kidney disease or chronic pain. It is not enough to just live longer, it is important to live healthier!


“The next revolutionary frontier for AI is predictive diagnostics even before the onset of critical symptoms. This is where AI’s true potential lies.”

Looking back at the last decade you have spent supporting healthcare companies, what unique learnings have you had?

Supporting our growing portfolio of healthcare companies and funds globally has helped us pick up some very important insights.


One of my key takeaways has been the importance of understanding healthcare reimbursement plans, even during a startup’s productization stage. While innovation is a starting point, it is critical to convert that innovation into a product, that fits the payer ecosystem. Otherwise, a company is bound to fail. Let me explain this through an example. Company A builds an AI solution that scans X-rays and classifies them as normal versus abnormal. This product saves USD 40 per scan. Company B goes one step further and classifies whether the abnormal scan is benign or malignant. This product saves USD 600 per biopsy and therefore commands a higher pricing point in the health system. Not many businesses understand such nuances of the payer ecosystems when defining a product. No matter how game-changing your innovation is, if you have not considered the entire payer ecosystem, your innovation stands little chance of succeeding in the market.


Another key learning has been to avoid the itch for global market expansion too early in the game. A startup has limited resources — particularly in funding downturns and pursuing a multi-country sales approach does not come cheap. We advise our founders to focus on their home turf before chasing new territories. And if they are ready to expand into new geographies, to take the time to understand the fee-for-service or one-payer models that countries like the USA and UK use respectively. Once you understand these primary markets and have cracked these models, expanding to other countries will become much easier.


Lastly, it is important to realize that not all service models can be online and not all models can be offline. To promote efficacy, some require a blended approach or omnichannel presence. Yes, the scale of physical or offline models is smaller, but once the physical base is established, the online layer can kick in to achieve maximum scalability and impact. Sagana’s portfolio company, Butterfly Learnings, provides therapy to children with behavioral issues. It uses a “phygital” model (physical+digital), offering children the opportunity to have 1-on-1 sessions with a therapist either in person, online, or a combination of both. This is particularly beneficial for families living far away from the centers that do not have easy access to therapists. It is exciting to see that hospital systems worldwide are picking up on omnichannel approaches to reach patients as they are and where they are.


Overall, as the Covid-19 pandemic made clear, healthcare is one of the most resilient sectors driven by underlying consumer demand. It is not seasonal, it is not recreational – it is an essential service to live healthy lives. However, the sector does require long-term patient capital to systemically drive the ecosystem forward. This is where you will find our team constantly ideating, at the intersection of capital and impact.

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