In the wake of COVID-19, regulatory fragmentation, competing priorities and knowledge gaps are all currently creating impediments to the much needed development of digital healthcare in the Asia Pacific region.

That is according to a new report, Hyper-Hybridity: Defining a New Era of Digital Health Innovation in Asia Pacific, which compares and consolidates the views of key players within the Asia Pacific digital health ecosystem; namely healthcare & life sciences, tech and financial companies.

The research, which includes a survey of 750 healthcare and life sciences, tech and finance executives, found that each group was prioritizing the development of digital health and was experiencing rising market pressure to build new solutions and systems. However, while all respondents ranked clinical trial administration as a high priority area, their priorities quickly diverged when looking across other categories of digital health.

There are also perceptions of misalignment in terms of outcomes and knowledge. Despite 74% of respondents agreeing that greater collaboration across the healthcare ecosystem would significantly accelerate progress, 78% of healthcare & life sciences companies report concerns that technology organizations push a more commercial agenda over healthcare excellence, while 71% of technology players indicate that healthcare companies often lack the tech know-how to operationalize new solutions.

As a result, 72% of those surveyed across all groups believe a radical rethink of how innovation is organized, funded and scaled is required to meet demand for new solutions. The complex, highly regulated nature of the healthcare ecosystem by governments and misalignment between organizations' business interests are also barriers to accelerating innovation.

But these challenges are not deterring new funds and players from entering the market currently, as the opportunity for growth and development of the digital health sector remains vast. In fact, investors surveyed for this report alone intend to direct USD 22 billion of new global funding into digital health innovation.

Across the Asia Pacific region, a rapidly expanding population, an empowered and tech-savvy middle class and a physician shortage has created the perfect conditions for digital health innovation, and COVID-19 has created an even greater imperative to develop future-proof digital health solutions and systems.

The research found there were five key drivers of digital health acceleration in Asia Pacific today:

1. Disruption to traditional healthcare delivery and management arising from COVID-19
2. Advances in digital health technology
3. Cost pressure in healthcare systems
4. Perception of the healthcare sector as a “safe haven” for investment amid economic downturn
5. Requirement to provide personalized patient care

Elisabeth White, Head of Healthcare and Life Sciences, Asia Pacific, Baker McKenzie, said that underpinning both the challenges and opportunities in the sector was user/patient data.

"Data is the new gold. From healthcare records to wearable tracking data to payment information, it is the currency which drives digital health innovation and is shaping the next generation of digital health solutions and systems. It is critical to establish what relevant data collaborators bring into the partnership and, where a new and valuable dataset will be created, who is responsible for, has access to and is able to monetize this information and for what purpose."

Asia Pacific Digital Health Hotspots

While deal flow data shows digital health VC deals in Asia Pacific largely centered on the major population centers of China, South Korea, India and Japan, 62% of survey respondents cited Singapore as their top destination in the region for intended new investment and development in digital health, followed by Australia (56%).

This suggests Singapore is emerging as a key hub for digital health innovation and cross-jurisdictional deal making in Asia Pacific, which is in part attributed to the aggressive incentives the Singapore Government has introduced to attract digital health investment.

Ren Jun Lim, Principal, Singapore, says that governments could also play a major role in supporting the sector through working towards regulatory harmonization across jurisdictions.

"While digital health is accelerating in spite of regulatory complexity, harmonization can provide a confident basis for greater investment and innovation. If regulation was designed to support cross-jurisdictional, cross-industry collaboration, we would expect to see digital health innovation accelerate by a huge order of magnitude.

Therefore, while 72% of digital health players believe that at present government intervention can in fact be counterproductive to their efforts to innovate - referencing regulatory enforcement and cross-jurisdictional fragmentation - the fast growing interest in Singapore does suggest that grants, incubators and incentives are shifting the dial on digital health innovation. This approach also has the potential for developing economies to leapfrog some of the more traditional healthcare hubs through digitalization.

Chung Seck, Partner, Vietnam, said that the Vietnamese government, for example, is seeking to modernize the healthcare system through attracting private investors, deploying public funds and encouraging public-private partnerships.

"The healthcare sector is also tapping on high growth players from across the country’s emerging digital economy – including digital health, Fintech, and e-commerce – to pioneer new approaches in telemedicine, personalized medicine, health payments, drug delivery and patient record management. These collaborations between government bodies, healthcare providers and technology companies as well as reforms in legal framework, will help Vietnam to overcome limitations and inefficiencies in the system. This will also create exciting investment opportunities and better patient and user outcomes in the healthcare space."


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