New research from Australian digital health commercialisation firm ANDHealth has revealed that a lack of digital health specialised investors and limited access to capital remain the most significant impediments to commercialising new health technologies in Australia.

ANDHealth CEO and Managing Director, Bronwyn Le Grice, said the Australian market needs more options for digital health investment in order to support the future commercialisation of our best and brightest new technologies.

“The core issue from industry is that Australia lacks dedicated digital health investment options,” said Ms Le Grice.  

“The top 5 commercialisation challenges for digital health companies are limited access to capital and investors with skills and experience specific to digital health, lack of dedicated grant programs, implementation and uptake issues, and difficulty in accessing customers,” said Ms Le Grice.

“Digital health offers a unique blend of the scalability of tech and the impact of health. Addressing the lack of dedicated and skilled capital for these emerging companies will be transformational for the Australian economy,” Ms Le Grice said.

“It is positive to see that the Albanese government has made innovation and commercialisation central to the national agenda. From Minister Mark Butler’s proactive stance on healthcare reform, to Minister Ed Husic’s large scale commercialisation platform through the Industry Growth Program and National Reconstruction Fund, there is enormous potential for much needed additional capital and policy support for evidence-based digital health SMEs.”  

For planned sources of new capital, the ANDHealth data shows an increasing number of companies are shifting gears away from venture capital funding and instead looking to grants (56% compared to 42% in FY22), angel & high net worth individuals (51% compared to 41% in FY22) and accelerator/incubators (31% compared to 12% in FY22), while a smaller proportion is looking to venture capital (41% compared to 47% in FY22).

“Programs available through the Medical Research Future Fund’s Medical Research Commercialisation Initiative have been a new and highly valuable source of non-dilutive finance, but without follow-on investment and investors with specific digital health capability, companies can struggle to raise sufficient funds and access the knowledge and experience they require to reach their global potential,” said Ms Le Grice.

ANDHealth’s Commercialising Digital Health in Australia: FY2023 Industry Sentiment Survey of over 100 leading digital health SMEs represents the nation’s most comprehensive look at the Australian digital health sector. Positively, the research found that confidence levels in local investors is improving, but still remains relatively low overall at just 20% compared to 38% for international investors.

Despite this, 85% of companies were hoping to raise further finance in the future, compared to 80% in FY22. Further, 31% of companies said they were hoping to raise larger amounts of funding in the next 12 months, looking at raises of $3M to $10M, up from 23% of companies in FY22.

While expansion internationally has slowed overall, the lucrative US market remains the priority for both near-term international expansion (30% of companies) and future international expansion (65% of companies).

Sanji Kanagalingam, the founder & CEO of startup WeGuide and a participant in ANDHealth’s non-dilutive investment and support program ANDHealth+, said that “digital health specific funding and expertise is not always easy to find in Australia.”

WeGuide has developed a global self-service platform that allows healthcare providers, clinical trial sponsors and medical research institutes to quickly and securely create their own bespoke, digital health tools, driving over $1 million in annual revenue across a range of Australian, UK and US health networks, and enabling 12 times faster and 10 times cheaper development of new solutions.

"There are not many funds out there that offer the advice that we’re looking for in terms of digital health, particularly the expertise and the connectivity that we are seeking globally, which has the potential to create massive upside for us as a startup,” he said.

The COVID-19 pandemic had ‘shifted the needle’ for the digital health sector, with significant transformation in health delivery here to stay according to the survey results.  

“The digital health sector is anticipating significant future growth opportunities in remote monitoring (up 28%) and wearable technologies (up 58%), aligned to the trend of shifting care from the clinic to the home,” added Ms Le Grice.

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Read the full report here