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News articles mentioning healthcare’s digital transformation (CB Insights)

Now, could it be too late? As an investor we always get encouraged to be ahead of the curve. Is the digital health transformation too far advanced already to promise lucrative margins? The answer is a simple “no”, especially after taking a closer look at the European market.

The Bigger Picture

When it comes to digital, Europe has not seen much action as a global healthcare industry hotspot. Especially in comparison with the US, here, the number of deals and exits are almost insignificant so far – but this has started to change. In this years’ second quarter, European investment in healthcare nearly doubled quarter over quarter. As a European investor, it is a perfect time to get familiar with digital health and what makes a start-up successful. Today, we will discuss exactly that.

Being first pays off: mySugr at a glance

Four years after what was probably the most famous exit in the European healthcare landscape, the story of mySugr still offers valuable lessons for the European digital health industry. By learning about the factors that contributed to its success, we might be able to expand our collective understanding of the digital health ecosystem in Europe. While the story of mySugr won’t happen again exactly like it played out for them, we may broaden our knowledge on the underlying dynamics of digital health start-ups.

In 2010 already, two of the later four founders of mySugr explored the idea of an user-friendly diabetes app for smart-phones – in a year where doctors still frequently asked for fax numbers (some are doing it until today). They quickly found support in a third founder who brought expertise in MedTech and software design to the party. In 2012 the group launched mySugr and from there on things started to move quickly: €6M in three equity rounds (one business angel, two VC’s and one CVC). The CVC was Roche Ventures and eventually Roche acquired mySugr for up to $100M!

Lessons learned from mySugr + Roche

  1. Execution is key.

A good product is valuable, not the idea of a good product. While the latter is fiction, the first can make a business. And mySugr was the best-in-class product. One way to assess the quality of a digital health product is simply popularity: how many users are attracted to the product in relation to the marketing budget of the company? mySugr created a product that worked for their users – and in the world of start-ups it is like in the rest of the free market: the best product often wins.

  1. Problem-solution fit

Is there a real pain in the patients’ life that could get fixed by this particular solution? In the case of chronic diseases management tools, most of them fail or struggle. But diabetics are used to manage their condition themselves. For them it is also reasonable to use a “digital helper”. mySugr had the advantage of first-hand experience in the field of diabetes since two of the founders themselves were diabetics.

  1. A tangible value of the app

Clinical data needs to show positive outcome to get contracts with partners in healthcare and insurers alike. mySugr accomplished to prove the benefits of their app even before DiGAs were born in Germany and managed to get reimbursement contracts and therefore much higher revenues.

  1. Preparing to venture beyond Europe

Digital health solutions are often unique to the specific healthcare system in which they are embedded. Nevertheless, mySugr entered the US-market and with this tremendously increased attractiveness to potential buyers.

  1. Find corporate collaborators with a shared vision

We often talk about disruption, but digital health’s impact on the treatment system is less about disruption and more about expansion. mySugr managed to expand in various directions by partnering up with MedTech, diagnostics companies and insurers. With Roche, mySugr eventually found a company with a shared vision that had the willingness and need to evolve their business model.

  1. Getting the timing of the deal right

The venture started in the early days of digital health. The exit deal came after they had already established their business in Germany and the US. Additionally, the timing was also right for Roche who were in need for an innovative solution after only having cash-cows for quite some time.

  1. Focusing on the best team

… and keeping them on board after the acquisition! mySugr started with a diverse team with first-hand experience of the condition to enable a patient-centric solution. One third of the whole staff was living with diabetes at the time of exiting. Also, to keep succeeding, the founding team should stay committed to continue the journey even after the exit.

  1. Start-up culture + corporate culture pays off

The combination of both worlds lead to benefitting from each other. Roche took its time in bringing the cultures together, retaining a lot of talent at mySugr and at the same time inspiring many of its own employees through exchange and collaboration with the mySugr team.

Opportunities in digital health

Patients in healthcare are demanding more convenience, more transparency, and lower prices together with a higher level of personalization. mySugr is a great example of how software can improve existing systems without actually disrupting them but bringing together lots of pieces to collaborate with each other. This is the future of healthcare. It is also a great example of how digital health companies with a global footprint can start in Europe!

If there is one thing to take away from the mySugr case for start-ups, it is the importance of customer-centricity in digital health. Their laser-focus on a great customer experience enabled them to create a product, which is bound to lead to success if no major mistakes are made down the road.

Europe’s digital health ecosystem is expanding and digital health past-covid is more relevant today than ever. With the halt of in-person services, healthcare stakeholders are in the process of adopting strategies that are both patient- and customer-centric. We are entering a new age of healthcare and there is still a lot of work to be done here in Europe. Good signs for investors. It is far from too late.

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