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A huge surge of venture capital investment into healthcare IT companies shows no sign of slowing as companies scramble to exploit potentially big money-making opportunities. Twelve Indian firms received VC funding in the vicinity of USD 28 million (Rs. 182 crore) in Q2 2016.

Notable Indian transactions in Q2 2016

  • 1mg (previously HealthKartPlus) - A Gurgaon-based online price shopping and drug delivery company that allows users to search for medication and get information on dosage, common uses, and warnings - raised USD 16 million (Rs. 104 crore) in funding from Maverick Capital Ventures, Sequoia India, and Omidiyar Network.
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  • HealthifyMe - A Bangalore-based developer of a health and fitness mobile app - raised USD 6 million (Rs. 7.8 crore) in funding from IDG Ventures India, Inventus Capital, and Blume Ventures.
  • DocsApp - A Bangalore-based developer of patient-centric telemedicine apps for medical consultations raised USD 1.2 million (Rs. 7.8 crore) from Japanese venture capital firm Rebright Partners and angel investors, Anand Rajaraman and Venky Harinarayan.
  • YourDost - A Bangalore-based online counseling and emotional wellness platform - raised USD 1.2 million (Rs. 7.8 crore) in funding from SAIF Partners and angel investors, Venk Krishnan and Subbarao Telidevara, Phanindra Sama, Aprameya, Paula Mariwala, Vibhu Garg, and Gaurav Bhalotia.
  • Sminq India Solutions - A Pune-based developer of a queue management app that allows users to predict the waiting time for consultation - secured USD 1 million (Rs. 6.5 crore) in funding from Saama Capital, Blume Ventures, and angel investor Vaibhav Domkundwar of micro-venture firm Better.
  • Integrated Child Health Records (iCHR) - A New Delhi-based developer of an app for tracking the health and growth of children, raised USD 450,000 (Rs. 2.9 crore) in Funding from a senior partner with financial advisory firm EY (formerly Ernst & Young).
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  • My Senior Doctor - A Gurgaon-based developer of a health consultation app for seniors - raised USD 200,000 (Rs. 1.3 crore)in funding from Dubai-based angel investor group BlackJag Partners.
  • ThingsMeet - A Pune-based, consumer-centric health service aggregator that is developing an app that will enable collaboration between consumers and service providers like doctors, labs, and pharmacies - raised USD 145,000 (Rs. 9.4 lakh) in funding from angel investor Ankush Mehta.
  • PurpleHealth (previously DoctorsCabin) - A Trivandrum-based online platform that allows users to choose doctors and schedule appointments raised USD 100,000 (Rs. 65 lakh) in funding from Katabole Technology Venture.
  • iCliniq (Orane Healthcare India) - A Bangalore-based telehealth consulting service platform, raised an undisclosed amount in funding from Erode-based laparoscopic surgeon Madhan Kumar Madathupalayam.
  • Parentlane - A Bangalore-based developer of a baby care app, which guides parents with advice on child development, raised an undisclosed amount in funding from angel investors, Aprameya Radhakrishna, Sumit Jain, Subramanya Venkat, Venk Krishnan, Ravi Machani, Hitesh Gupta, and Rohit Choudhary.
  • Visit - A New Delhi-based developer of a telemedicine app for general health consultations raised an undisclosed amount of funding from MapmyIndia.

Global Scenario

VC Funding for US companies fell by almost 37 percent quarter-over-quarter (QoQ) and Chinese companies for the first time emerged as the top healthcare IT funding recipients.

Healthcare consumer-centric companies raised USD 1.2 billion in 95 deals in Q2 2016 compared to USD 796 million in 97 deals in Q1 2016. Healthcare practice-centric companies received 23 percent of the funding in the second quarter of 2016 with USD 360 million in 45 deals, a 36 percent drop compared to the USD 569 million raised in 49 deals in Q1 2016.

The top funded areas in Q2 were mHealth apps with USD 779 million, Data Analytics companies with USD 234 million, Wearables and Sensors with USD 129 million, Mobile Wireless with USD 75 million and Wellness with USD 60 million.

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There were 43 early-stage deals at or below USD 2 million, including 12 accelerator and incubator deals.

Ping An Good Doctor raised USD 500 million and Chunyu Yisheng secured USD 183 million in VC funding in Q2 2016. Centauri Health Solutions, Codoon, and Proteus Digital Health each raised USD 50 million.

A total of 282 investors, including three accelerators/incubators, participated in healthcare IT deals in the second quarter of 2016, with 20 investors participating in multiple rounds. Khosla Ventures was involved in four deals.

Healthcare IT VC funding in the second quarter of 2016 originated from 12 countries worldwide. China topped the list bringing in USD 733 million in three deals, accounting for 46 percent of total funding. Funding fell sharply in the United States by almost 40 percent QoQ; this was the lowest funding quarter for American Health IT companies since Q1 2015.

There were 53 M&A transactions (seven disclosed) involving healthcare IT companies in the second quarter of 2016, compared to 58 transactions (nine disclosed) in Q1 2016. M&A activity was led by Data Analytics, with six deals, Rating and Comparison Shopping and EHR/EMR companies with five deals apiece, Health Information Exchange companies with four, followed by mobile health, telehealth, and population management companies with three each.

"The big reason for the jump in VC funding was record fundraising by Chinese companies. This is the first time since 2010 that health IT companies in the U.S. have been outraised by other countries," said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group. "This quarter is likely an outlier, but it is also a sign that investors and companies should pay close attention to digital health markets around the world."

The top disclosed M&A transactions in Q2 2016 included Veritas Capital's acquisition of Verisk Analytics' healthcare services business for USD 820 million; MedData's acquisition of Cardon Outreach for USD 400 million; Nokia acquiring Withings for USD 191 million and Teladoc's acquisition of HealthiestYou for USD 125 million.

Data Analytics and mHealth Apps were involved in the most M&A deals in the first half of 2016 with 11 each.

IT will have a tremendous impact on healthcare services in the next decade. It will enable massive structured and unstructured data related to patient history to be converted using advanced and predictive analytics. It will help healthcare organizations in managing costs, and reveal opportunities for revenue generation. Hospitals, individuals, and government organizations that provide health services will be better able to address challenges, such as increasing operational costs, regulations, outcomes, and many more.


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