Edition 6 — June 16, 2021
Our latest infographic on MedTech VC funding across Europe's largest medical technology markets led to a lively discussion on LinkedIn. Of course, the comparison of employees and venture capital was slightly provocative—and not meant to suggest that the German medical technology industry is fully doomed. Nevertheless, we believe VC is an important building block of successful innovation ecosystems.
For this edition’s infographic, we turned our attention to another important innovation metric, namely patents. In addition, we cover:
And now, happy reading with our bi-weekly MedTech roundup.
- Our thoughts on Apple’s plans to turn iPhones into health records
- An interview with the dentist-turned-founder Dr. Paul Hadrossek
- Hadi Saleh’s thoughts on why humanity will always trump technology in medicine
Apple turns iPhones into health records
Illustration by Mary Delaney
Over the last few years, Apple has steadily moved into the healthcare market. Since 2011, the company has filed more medical patents than any other big tech player. A look at Apple’s homepage makes it clear that the powerhouse has turned into a health tech company. For example, the Apple Watch is not promoted as the best smartwatch on the market, but by the slogan: "The future of health is on your wrist.”
→ Apple is therefore well on its way to turning the iPhone into users' ultimate health record. This strengthens the company's ties to its customers and makes it an indispensable stakeholder for all the players in the healthcare market.
At its developer conference last week, Apple once again impressively underlined its ambitions in the healthcare market. The new Apple Watch can now measure users' breathing and detect abnormalities. The AirPods officially have a hearing aid feature. And the iPhone can now track and measure the user's gait.
Most exciting, however, is the unmistakable move to turn the iPhone into a personal health record. With iOS 15, users can not only store health data collected via their devices, but also document lab results and medical records including immunizations and test results. In addition, users can choose to securely give others (e.g., their loved ones or doctors) access to their health data.
→ What supports this strategic move: In recent years, Apple has invested massively in user privacy. We are convinced that this investment will pay off in cementing Apple’s role in the healthcare market, as many consider the company more trustworthy than Amazon, Google, Huawei, and Facebook.
Clinics are coming home
Every week we screen countless deals and news from the MedTech startup scene. This week, we noticed an interesting pattern: A variety of startups are working on solutions that dissolve “jobs-to-be-done” in the medical industry from the physical location of a clinic.
→ Against this backdrop, hospital operators should ask themselves what their mission is for the future, as more and more clinical tasks are becoming independent of the hospital as a physical location. We think that the education market is an interesting analogy for this development. In the course of the digitization of education, digital-only educational institutions such as Udacity have emerged, and many of the established universities have evolved from places to brands.
The startup LetsGetChecked, which offers at-home tests for more than 100 fields (from sexual health screening to diabetes), raised $150m to help users manage their health from home. HumanFirst, which is building an operational infrastructure to support decentralized clinical trials at home, raised a $15m Series A. And the University of Illinois Hospital is partnering with PhysIQ to remotely monitor COVID-19 patients. These startups have one thing in common: They enable activities that used to require an in-person clinic visit to be done from home.
Medical imaging AI fails to meet expectations
Just a few years ago, most experts agreed that algorithms would dominate radiology until 2021. Medical imaging was considered the predestined field of application for artificial intelligence, since it involves pattern recognition in large amounts of data.
→ So, what’s holding AI back? According to AI guru Andrew Ng, the reason is a proof-of-concept-to-production gap that AI not only has in healthcare, but in all types of application fields. It is not unusual for an algorithm to work perfectly in one hospital but then produce completely worthless results in another one due to a slightly different imaging protocol.
Turing Award winner Geoffrey Hinton said in 2016: “We should stop training radiologists now. It’s just completely obvious that within five years, deep learning is going to do better than radiologists.” And he was not alone in his assessment. According to a 2018 survey of 322 Canadian medical students, 68 percent believed AI would reduce the demand for radiologists.
Fast-forward to 2021, and more than 80 AI algorithms for medical imaging have been approved by the FDA (and a similar number in Europe). However, the reality about these algorithms’ utilization is sobering. Only about 11 percent of radiologists use AI for image interpretation in clinical practice, and 72 percent of those not using AI have no plans to do so. The reason for this slow adoption is poor performance. Only 5.7 percent of users report that AI always works, while 94 percent report inconsistent results.
→ A rule of thumb in artificial intelligence is that for every euro you put into developing an algorithm, you have to put another 100 euros into deploying and supporting it. In the medical field especially, we need to be more realistic about our expectations for AI.
→ The FDA should give greater consideration to the robustness and transferability of algorithms during the approval process. Unlike medical devices, AI algorithms are extremely sensitive to variations in operating conditions.
As mentioned in the intro, we made the slightly provocative claim that Germany is the most under-funded MedTech market in Europe based on a comparison of Venture Capital (VC) funding vs. the total number of MedTech employees in various countries. Reading through many of the comments we received afterward, it seems that the chart might have suggested that a lack of VC in Germany prevents the country from driving forward significant innovation in the MedTech field.
Rightfully so, many of our readers challenged this view, especially the role of VC funding as a leading indicator to gauge the level of innovation in a given country.
Therefore, in today’s edition, we turn to another metric that might better illustrate how innovative a specific MedTech market might be. We researched patent filings and compared patent output per country to—wait for it—VC investments.
As you can see, German companies have filed 6,249 (+73 percent) more MedTech patents in the last 10 years than companies based in the UK. Nevertheless, startups from the UK raised five times more Venture Capital than MedTech ventures headquartered in Germany.
The takeaway: Yes, venture capital is not the only source of capital for generating new ideas and inventions. Germany’s impressive patent output proves this, despite a significant lack of VC funding over the past decade. However, long-term and scalable innovation depends on well-functioning innovation ecosystems. Startup founders are the source of many new ideas, especially in the digital context, and investors are the source of capital that helps bring those ideas to commercial readiness.
So Germany’s lack of VC investments in MedTech remains an alarming sign.
What’s your take? Let us know on LinkedIn.
Dr. Paul Hadrossek is a trained dentist who has long been concerned with the question of how care structures in medicine can be made more patient-centered, efficient, and quality-oriented. After establishing and expanding a dental care center in Westphalia-Lippe for three years, his path led him to Berlin in 2017 to oversee the founding of the digital health platform Heartbeat Labs. With a team of experienced founders, industry and digital experts, the Berlin-based company is driving the digitization of the healthcare industry. There he founded the telemedicine startup Kinderheldin – an online consulting service that connects experienced midwives with expectant mothers and parents. Since October 2020, he has also been a board member of Spitzenverband Digitale Gesundheitsversorgung (SVDGV).
"The momentum for change and innovation in the healthcare system is stronger than ever before."
Dr. Paul Hadrossek (CEO, kinderheldin)
LetsGetChecked, the New York City-based maker of at-home tests, raised a $150 million Series D round led by Casdin Capital. The company aims to launch care pathways, a 360-degree customer care platform incorporating telehealth services, pharmacy capabilities.
Crunchbase.com (21-06-08) ↗
Cerebral, the San Francisco-based mental health telemedicine startup, raised a $127 million Series B Access Industries. The company that provides counseling, medication, and other mental health services, has more than quintupled it's valuation to $1.23 billion.
Bloomberg.com (2021-06-10) ↗
Synchron, a brain interface platform startup, raised a $40 million Series B funding round led by Khosla Ventures. The New York City-based company aims to commence clinical trials of minimally invasive brain-computer interfaces in the U.S in 2021.
businesswire.com (21-06-03) ↗
Mendel, the company developing an AI to understand unstructured content within medical documents, raised an $18 million Series A funding round led by DCM. Mendel also announced its clinical data marketplace to source real-world data with clinics and pharmaceutical companies.
techcrunch.com (21-06-07) ↗
Standard Bariatrics, a Cincinnati-based bariatric surgery medical device company, raised a $35 million Series B funding round led by U.S. Venture Partners (USVP). The company develops devices designed to enable surgeons to deliver more consistent and repeatable surgical outcomes.
PRNEWSWIRE.com (21-06-01) ↗
Antidote, the clinical trials search engine, raised a $23 million venture round led by LBO France with participation from Merck Global Health Innovation Fund, Smedvig Capital, and Octopus Ventures. The startup uses precision recruitment to match the right patients with the right trials.
FINSMES.com (21-06-03) ↗
This newsletter is about technology-driven innovation in medicine. Two articles last week reminded me, despite all the enthusiasm for technology, that no technological innovation can replace the impact of humanity in medicine.
The New York Times published an impressive report on medical students who went directly from university to the intensive care units last year. They were on the frontlines when the coronavirus pandemic was at its peak in New York, and did an amazing job. Many of them are still struggling today with the after-effects of their impressions from that time. Similarly, in the British NHS, many staff complained of burnout after the pandemic.
If we don't solve people's problems in the health system, everyone's health will suffer, no matter how many technological innovations emerge. From my experience as a doctor, I can only agree with Paul Hadrossek's statement from his interview with us. No innovation can substitute the impact of personal relationships on medical success.