The Non-Profit Digital Health IncubatorBringing together Digital, Data, Devices, Research and Industry to Disrupt the Sector

INNOVATION LAB

The emerging convergence of digital, physical and biological information is driving unheralded growth in new innovations. The digitisation of all human data and interactions will form the core of these innovative technologies and is set to reshape all industries and services. Nowhere is this more evident than in health care, where traditional incumbents will no longer be the main purveyors of innovation.

Against this backdrop, Australia has a strong international reputation in health and medical research. Therefore the issue is not if Australia should pursue this opportunity, but rather how.

How do we best harness this research and innovation, to:

• Create viable businesses that attract investors,

• Improve human health

• Grow the Australian economy, and

• Create high value jobs.

The starting point to achieve this is to create a specific digital health eco-system to grow innovative start-up businesses.

Creating an Ecosystem

What does Digital Health Cover? The term ‘Digital Health’ is much more than fitness bands, diet apps and wellness platforms. It is a much broader field encompassing many existing healthcare technology domains such as electronic medical records, population health, medical imaging systems, electronic medical devices, and clinical trial management to name a few.For our purposes, we define Digital Health as any healthcare product, technology or service that has a digital component for translation, storage, codification, analysis, management or delivery.

To illustrate, Digital Health covers the following domains:

• Outcomes based healthcare –

using technology solutions to move away from activity based funding to outcomes funding mechanisms that improve quality and create cost efficiencies

• Population health management – platforms for managing population health utilising risk based analysis

• Healthcare consumer engagement – tools for the enablement and purchasing of healthcare services, health insurance and education

• Big data and analytics – data aggregation and analysis to support a wide range of healthcare requirements

• Digital medical devices – using low-cost, mobile, clinical point of care devices to improve efficiencies

• Personalised medicine – software to support the practise of medicine customised to an individual

• Improved access – technology that creates new ways of accessing healthcare using IoT, devices and TeleMedicine

2011 saw the launch of the first health-focused incubator in the USA, Rock Health. Its founders identified several innovation barriers in the healthcare industry, and created a non-profit entity to assist entrepreneurs to overcome such obstacles. Their success in assisting entrepreneurs obtain venture financing, create sales channels and effectively market their companies led to an explosion of incubators across USA and Europe, including HealthBox, Blueprint Health, Matter Chicago, Start-up HealthTech.

The US digital health venture and M&A financing has subsequently grown 400% in just over 4 years to over $4.5Bn.

The US Experience

*Source Rock Health

USA DIGITAL INVESTMENT 2011 – 2015*

AVERAGE DEAL SIZE

$15M

$10M

$12.4M

90

138

188

295 302

$1.8B $1.5B $2.0B $4.3B $4.5B

$10.8M $10.9M

$14.7M $14.8M300

200

100$5M

TOTAL FUNDING

DEAL COUNT

Australia holds deep scientific expertise in many healthcare domains from medical devices, tele-medicine and genomics research, to life sciences and healthcare IT platforms. However, the digital health entrepreneurial ecosystem and the potential scale of innovative endeavours is at an embryonic stage compared to developments overseas. A preliminary survey1 mapping Australian companies by heath technology domain is shown in Figure 1 below.

The appetite for a digital health ecosystem is strongIn realising the potential for growth, there are an increasing number of entrepreneurial education programs, industry challenges, hackathons, and accelerators funded by both government and business in Australia. This has successfully boosted healthcare technology entrepreneurship. For example, a recent Westpac Innovation Challenge received 250 applications from healthcare startups.

With the Australian Healthcare marketplace ripe for disruption (See Box), there remains a market gap for incubating early stage start-ups through to becoming viable businesses and/or to a stage of being attractive for further investment or acquisition.1 Data from HealthTech Sydney survey

Australian Potential and Market Gap

COMPANIES BY HEALTH TECHNOLOGY DOMAIN

024

2 2 23

1210 10

34 4

5

1 1 1

68

101214

Aged Care

Analytics

Cloud

Digital

Engagement EHR

Finance

Genomics

Marketp

lace

Medica

l

Device

Mental

Health PMS

TeleHeath

Weara

bles

Welln

ess

Australian Healthcare: ripe for digital disruption

Large and Growing

• $154 billion health spend in 2013-14 is 9.7% of GDP(1)

• Healthcare > 11.6% of workers(2)

• Growing and aging population, and

• Prevalence of chronic disease,

• Increasing personal spending on health. Individuals pay for 18% of total health expenditure.

Opportunity for improvement

• 30% of healthcare spend wasted3 due to poor data integration, repetition, lack of context, error and quality

Strong scientific, research and technology community

• In health, data analytics, devices and telecommunications, provide capacity to drive develop innovative technologies

6%8%

18%

27%

41%Australian Government 41%

States & Territories 27%

Health Insurance Fund 8%

Individuals 18%

Others 6%

(Data Sources: 1 AIHW 2 ABS 3 CMCRC,)

Our Vision is to Empower Australia’s digital health industry by providing an innovation ecosystem to grow viable businesses and investment opportunities, thereby growing the Australian economy and improving people’s health.

INNOVATION LAB

HUMAN Innovation Lab (‘HUMAN’) is an independent, non-profit vehicle which aims to address a gap in Australia for commercialising digital health technologies.

HUMAN will create an independent ‘sandpit’ which will:

• Provide start-ups a path to market through corporate partner pilot programs

• Create new business models by partnering with entrepreneurs and corporate partners

• Customise already proven and successful healthtech innovations for the Australian market

• Develop global market access capabilities to internationalise Australian innovation

The aim is to attract the best local entrepreneurial talent across technology and health disciplines, to create the optimal environment for start-ups to succeed.

HUMAN will• Focus on early stage companies

• Create a unique advisory board, with a broad mix of health sector players

• Partner with local and international passionate and proven entrepreneurs

• Access proven models in addition to new models, to de-risk and accelerate portfolio returns

Benefits for start ups• Education, connections and pathways

to market

• Access to strong entrepreneurial, strategic experience in health

• Potential to access propriety health data sets

• Expert healthcare and technology industry mentor network

• Global connections and aspirations

Benefits for Partners Immediate stake in equity growth as well as preferential positioning to further invest in incubated companies

Early visibility for innovation in healthcare technology industry and direct access to entrepreneurs in Australia

Competitive and industry intelligence on best practices to improve strategic vision and capabilities

Increase innovation capacity by co-funding and seeding projects in ‘Co-Innovation’ program with other industry partners

Reduce risk and capital outlay in developing in-house innovation program

Opportunity to partner with healthcare industry players and build reputation in Australia and internationally

Develop new sales channel to grow services and technology business in Australia and overseas

HUMAN Innovation Lab: Australia’s Digital Health Incubator

HUMAN aims to attract start-ups covering a broad range of domains, from ‘wearables’ to aged care telehealth platforms and from remote diagnostic devices to apps that personalise and improve management of chronic diseases.

We will be selecting start-ups at different stages of business maturity, which will range from totally new ideas to innovations already proven overseas.

National, with an initial Central Sydney location, HUMAN will accommodate up to 100 residents. Once Sydney is established, the plan is to set up satellites in other state capital cities. Start-ups receive incubator services in exchange for below market rent and a small percentage of equity.

Selection Criteria includes:

Team capability, including founder savvy

Healthcare transformation vision – potential to improve the market

Intellectual property or first to market

Product innovation and maturity

Profitable business model, realistic financials

Scalability

A diverse mix of start-ups

Accelerators Incubation Services

Idea Prototype Product Launch Growth

Australian Partners & Advisory Team

Business Model & Go-To-Market Strategy DevelopmentGrant Writing & FinancingRegulatory ValidationProduct & Clinical Trial DesignPartnered Healthcare Pilots

Global Growth Capability

AcceleratorsIndustry PartnersResearch Inst.Entrepreneurs

Int. Partners

The incubator program will provide a broad range of services and activities, from mentoring to information on appropriate regulatory frameworks and innovation education sessions.

A key differentiation of HUMAN from other incubators is our deep focus on digital health and our breadth within the sector. Nowhere better is that illustrated than in the design for our unique advisory panel, bringing the views of key players in the digital health ecosystem.

A multi-stage commericalisation incubator

Partnership Model Creates Unique Ecosystem & Advice

HospitalsPharmacy

Software Providers

Health Companies

Hardware Providers

VC’sBanks

Health Insurers

ConsultingFirms

Medtech & Electronics

HUMAN ADVISORY

PANEL

Healthcare promises to be one of the major growth and investment sectors across all geographies. As human lifespans increase, 3 billion more people become digitally connected and as poverty levels reduce, the consumer demand for cheaper, more efficient and higher quality healthcare will remain unquenched. Projected expenditure and healthcare growth in several APAC economies exceeds 8% CAGR to 2020.

HUMAN will create an environment where start-ups can grow into viable Australian companies that can operate in global markets to capitalise on this potential.

Global Opportunities

Japan$563 billionCAGR 3.0%

Hong Kong$20 billionCAGR 3.2%

China$1,446 billionCAGR 15.5%

Taiwan$65 billionCAGR 7.8%

Vietnam$31 billion

CAGR 14.8%

Thailand$25 billion

CAGR 8.4%Australia$198 billionCAGR 3.4%

South Korea$127 billionCAGR 5.5%

Malaysia$25 billion

CAGR 8.4%

India$331 billionCAGR 14.5%

United States$3,922 billionCAGR 4.6%

Note: APAC includes India, China, Japan, Hong Kong, The Philippines, South Korea, Australia, Indonesia, Malaysia, Singapore, Vietnam, Thailand and Taiwan. Source: WHO, World Bank and Frost & Sullivan analysis.

Indonesia$47 billionCAGR 8.1%

The Philippines$26 billion

CAGR 11.5% Singapore$23 billionCAGR 9.6%

HEALTHCARE EXPENDITURE (GLOBAL), 2010 – 2020

APAC$2,927 billion

151.0% increase 2010 – 2020CAGR 9.2%

G7$6,147 billion

50% increase 2010 – 2020CAGR 4.0%

Brazil, Russia, India and China (BRIC)$1,958 billion

212.0% increase 2010 – 2020CAGR 12.1%

The HUMAN Innovation Lab will be a company limited by guarantee, with a membership structure, and a governing constitution.

There are four levels of membership

1. FOUNDATION PARTNER

2. PRINCIPAL PARTNER

3. INDUSTRY PARTNER

4. START-UP

The constitution allows for up to 12 directors, 4 nominated and elected by partners, 4 by start-ups, and 4 independent directors.

Strong organisations need robust governance

HUMAN Innovation Lab is seeking to raise a minimum of $2m p.a in partnership fees for the first two years. HUMAN will seek to build sustainable, diversified revenue models in its early years.

The Investment

FOUNDATION PARTNER PRINCIPAL PARTNER INDUSTRY PARTNER

Minimum $200,000 pa (2yr) Minimum $100,000 pa (2yr) Minimum $50,000 pa (2yr)

Branding on website

Referred for industry expertise

Propose problem for ‘Industry Challenge’ to community

Nominate for board position

Provide breadth of services and products

6M Right of First Refusal

First rights on pilots

First rights to invest in

Fast-Follower companies

Branding on website

Referred for industry expertise

Propose problem for ‘Industry Challenge’ to community

Nominate for board position

Provide selected services and products

Branding on website

Referred for industry expertise

Nominate for board position

Provide selected services and products

INNOVATION LAB

For more informationPlease contact Gaurav Sood, by email at sood.gaurav@gmail.com or by phone on +61 404 930 243. Gaurav can organize a presentation and provide the latest information on partners, as well as provide a copy of the constitution.