Health | Pharmaceuticals

A recent investor rating reveals a 5x decline in funding for health technology. The market appears to be experiencing some significant challenges following a massive pandemic-driven boom in digital health investing that we observed in 2021. 

Key points:

  • Health tech funding totalled $2.2 billion in the third quarter of 2022, a dramatic decrease from $11 billion in the second quarter of 2022. 
  • According to the Health Tech 50 study, the investor distribution by deal stage type in the digital health sector has remained moderately altered. 
  • In 2022, the largest investment activity was seen in digital health firms focusing on complicated diseases such as cancer and mental illness.

The amount of money raised for health technology in the third quarter of 2022 was $2.2 billion, which was much less than the $11 billion raised in the second quarter and the least amount since 2019. There is no doubt that the funding landscape for health technology will be very different in 2022 than it was in 2018.

But why?

According to a recent Health Tech 50 report published by Kilo Health and Galen Growth, the sharp loss in deal value was accompanied by a decline in the total number of unique investor transactions, which fell by 35 per cent in Q2 2022 as compared to 2021.

It’s important to note that the slowdown wasn’t exclusive to the digital health industry. According to Crunchbase, global venture capital reached $160 billion in Q1 2022, a 13 per cent decrease from the amount raised in Q4 2021.

The good news is that, though the pace of investments has dropped, VC funding for healthcare companies is still ahead of where it was back in 2020. And while it’s true that increased interest in digital health has cooled off, health tech startups remain a focus for investors – even despite the fact that the dynamics of the market have shifted.

Investors that are standing behind the best deals in health tech 

In 2022, a few mega-rounds dominated total funding for the sector, including kidney care platform Somatus’ $325 million series E. Freenome (an early cancer detection business) raised $290 million in a series E financing. 

Despite the fact that the health tech sector has been declining this year, the investment landscape remains healthy and full of opportunity. Some investors are making major splashes in this attractive industry, according to the Health Tech 50 rating.

The rankings were determined using a number of measures, including direct parameters (such as the number of portfolio firms and exits in the last 18 months) and indirect indicators (brand awareness score, public score, and more).

Here are the top most prominent funds on the list; Khosla Ventures (Early Stage), General Catalyst (Growth), Google Ventures (Corporate) or MTIP (Public’s Favourite).

Australian HealthTech market and investment

Over 16 healthcare companies are listed in Australia, with a market value of more than $1 billion. CSL, Cochlear, Sonic Healthcare, Fisher & Paykel, Ramsay Health, and ResMed are among the companies worth $10 billion or more. 

Furthermore, the following five Australian healthtech businesses are considered to be valued at more than $100 million: HealthEngine, HotDoc, Eucalyptus, Harrison.ai, and Seer Medical. According to Ben Armstrong, founder of Archangel Ventures, one of the most difficult areas to succeed in is healthtech.

This is due to customer behaviour, the business environment, and the legislative system designed to protect customers from physical harm. See the full ranking and download the report here: healthtech50.com 

About Health Tech 50 

Hosted by Kilo Health in partnership with Galen Growth, Health Tech 50 is a platform that was created to acknowledge forward-looking VCs allocating capital to speed up the transition beyond traditional healthcare.

Learn more at healthtech50.com.

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Monday, 22 February, marks the official start date of the COVID-19 vaccine rollout in Australia as more than 142,000 Pfizer vaccines touched down at Sydney Airport – an endeavour that has been dubbed Australia’s biggest peacetime operation.

The shipment, delivered by Singapore Airlines cargo, is the first of 20 million doses that the Government has secured as part of the COVID-19 Vaccine and Treatment Strategy.

“It was March the 11th last year that the pandemic was declared and now on Aussie soil we have the Pfizer vaccine and it’s ready to go,” Pfizer’s Medical Director Krishan Thiru told the Today show this morning.

“Our focus is on delivering the vaccine to the points of use where the Government asks us to deliver them. That’s what we’re focused on and that’s what we’ll do.”

The vaccine rollout is due to begin next week with the first Australians to begin receiving the vaccine from 22 February.

“The vaccine has landed and we’re stepping up our fight against the pandemic,” Prime Minister Scott Morrison said.

“Once the final safety checks are completed we can start rolling out the vaccine to our most vulnerable Australians and to our frontline border and health workers.

“The hard work of Australians has meant we’re in an enviable position in our fight against the pandemic, so we’ve been able to take the time to properly assess our vaccine decisions and give our world-class regulator the time they need to review the safety of the jabs.

“While we’re taking the time to get the rollout right, I am confident all Australians who wish to be vaccinated against COVID-19 will receive a vaccine this year.”

Who gets first dibs on the vaccine?

As part of the ‘Phase 1a’ vaccine rollout, 80,000 doses will be administered in the first week. 50,000 doses have been allocated to quarantine and border workers and frontline healthcare workers, while 30,000 are reserved for aged care and disability care staff and residents. 62,000 will be set aside for second doses which will be given 21 days after the first dose.

Supplied: Australian Government

The Government’s goal is to eventually deliver 150,000 jabs per day and have the entire adult population vaccinated by late October.

The vaccine will be administered in hospital ‘hubs’ across Australia as well as in residential aged care and disability facilities.

How will the vaccine be stored?

Logistics company DHL has stepped in to tackle the complex task of getting the vaccine to Australians around the country.

The company will employ a network of 200 portable ultra-low-temperature freezers to ensure the vaccine, which needs to be stored at minus 70 degrees, can be delivered safely.

Dr Thiru said the vaccines had been shipped to Australia on specially-designed thermal shippers and were kept in refrigerated containers.

“Our company has a rich heritage in cold chain vaccine storage and distribution. We’ve so far got a 99.9% success rate from delivering the vaccines from the factory door to where they’re used with the quality and integrity interact,” he said.

Will the vaccine stop virus transmission?

Although the vaccine is designed to protect against COVID-19 and its variants, it is too early to tell if it will stop the transmission of the virus.

“You’d need to see a larger proportion of the population vaccinated before you can tell whether it’s going to stop transmission or not and whether you’re going to see a downturn in the rates,” Dr Thiru said.

He explained that laboratory testing results were promising and indicated that the vaccine could be effective against some of the newer COVID-19 strains including the UK, South African, and Brazilian variants.

“If sometime in the future it becomes apparent it’s not effective, you can easily tweak the formula for the vaccine.”

Why has the vaccine rollout taken so long?

When asked why Australia has been slower than other countries in the vaccination rollout, Dr Thiru explained that “every country’s situation is different.” A vaccine, he said, could not start production until it was given the go-ahead by certain authorities.

“Vaccinations can’t start until the vaccine has been fully and thoroughly evaluated by the independent regulatory agency and approved,” he said.

“The TGA is one of the world’s most respected agencies. They get a full evaluation.

“They didn’t have that emergency situation we’ve seen in some other countries.”

The Therapeutic Goods Administration (TGA) is conducting batch tests on the first of the Pfizer vaccine arrivals to ensure they meet quality standards before they are deployed next week.

“Australians can be reassured this vaccine has gone through rigorous, independent testing by the Therapeutic Goods Administration to ensure it is safe, effective, and manufactured to a high standard,” Minister for Health and Aged Care Greg Hunt said.

“These vaccines will now go through further batch testing to further check for quality and efficacy, ensuring all Australians have confidence in the vaccines they receive.”

Why did Pfizer get first preference?

The Pfizer/BioNTech vaccine is the first to be provisionally approved for use in Australia by the TGA with a 95% efficacy score from a clinical trial last year.

Despite the promising results, there have been ongoing concerns over the vaccine’s safety and effectiveness.

33 Norwegian officials aged 75 and older died a short time after receiving the Pfizer vaccine in mid-January and other countries have since reported further deaths and side effects.

A World Health Organization (WHO) committee said this was “in line with the expected, all-cause mortality rates and causes of death in the sub-population of frail, elderly individuals” and that the risk-benefit balance of the vaccine “remains favourable in the elderly.”

The TGA said that, although no concrete link has been established between the deaths and the vaccine, it would work with international authorities and Pfizer to get more information.

Chief Medical Officer Dr Brendan Murphy told Nine News that he was not unduly concerned about the Pfizer vaccine rollout, which he says is part of a “diversified vaccine strategy.”

“That’s why we’ve bought more than one vaccine and I still think the Pfizer vaccine will be okay but we just have to wait and see,” he said.

In addition to the Pfizer vaccine, Australia has approved 53.8 million AstraZeneca vaccine doses and 51 million Novavax vaccine doses.

The Government has also signed up to the international COVAX Facility which provides access to a range of vaccines to immunise up to 50 per cent of the Australian population.

The full press release for the vaccine rollout can be found here.

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