The healthtech sector is one of the most dynamic and promising sectors in the Indian startup ecosystem. The industry has been at the forefront of the response to the Covid-19 pandemic, which has disrupted the traditional healthcare system and created new challenges and opportunities for digital health solutions. Healthtech includes various segments such as online pharmacy, telemedicine, diagnostics, wellness, medical devices and others that use technology to provide innovative and affordable healthcare delivery and access solutions. The pandemic has accelerated the adoption of telemedicine, online pharmacy and home care. consumer diagnostics as well as increased collaboration between startups, hospitals, insurance companies and government agencies to fight the crisis. Let's dive into telemedicine as a segment of health technology: Telemedicine is not limited to video call consultations only, it extends to real-time monitoring of various health parameters like blood pressure, glucose, etc. and also includes storage and storage and transfer – storage and sharing of medical information such as: CAT scans , MRI, X-rays, photos, videos, etc. It is considered a tool for remote diagnosis and treatment of patients using technology.​In India, 67% of the total population still lives in rural areas. The rural health care system is plagued by several problems such as severe shortage of health workers, lack of necessary medical supplies and also non-medical infrastructure like electricity, clean water, lack of planning and finance. About 60-80% of doctor posts in various specialties are vacant in rural health services. So the task of reforming health care is daunting. The rural-urban health care gap is reflected in the health care outcomes as the IMR for the urban population is 27, while for the rural population it is 44. Similarly, the total fertility rate (TFR) is 1.8 for the urban population, while for the rural population is 2.6. There are no straightforward solutions to India's healthcare conundrum; however, leveraging India's advances in the Information and Communication Technology (ICT) industry in healthcare delivery is an innovative idea to address health inequalities. Widespread use of ICT in medicine has opened up new horizons for improving healthcare in India. India faces an alarming doctor-to-patient ratio of 1:1456, well below the WHO-recommended ratio of 1:1000. A shortage of hospital beds exacerbates the problem. This significant disparity is putting tremendous pressure on the nation's health care system and intensifying an already strained infrastructure. Therefore, the Government of India along with Dr. Ganapathy, a prominent neurosurgeon and widely regarded as the father of Indian telemedicine, Apollo Hospitals partnered with ISRO to set up India's first telemedicine center in rural Aragonda, a small village in the state of Andhra Pradesh. The world's first modern VSAT-enabled secondary care hospital was established on March 24, 2000. Since then, the Aragonda Apollo Telemedicine Center and Hospital has been a fundamental case study model for the entire telemedicine industry. Today, ATNF has become India's single largest private healthcare provider in telemedicine with over 125 peripheral centers in India and 10 overseas. In addition to government support, private businesses have also recognized the opportunity and numerous startups have been incorporated in this space. These startups address the shortage of specialist doctors in Tier 2 and Tier 3 cities in India. The recent surge in telemedicine adoption has been accelerated by the COVID-19 pandemic, making it an essential part of healthcare delivery. Many telemedicine platforms have been launched in the last few years. These platforms are usually established in the form of websites or mobile applications. The platform connects patients with general practitioners, where consultations take place through a messaging or calling service integrated into the application. The platform can either provide patients with a list of doctors available on the platform and let the patient choose the GPs to consult with, or directly connect the patient with specific GPs. At the end of the consultation, the healthcare professional can send a prescription online via the telemedicine platform, based on which the patient can purchase the required medication. Alternatively, health practitioners may also ask the patient to undergo certain tests to be able to properly diagnose the underlying medical condition.

​<div class="se-component se-image-container __se__float- __se__float-center" contenteditable="false"><figure style="width:auto; height:auto;"><img src="https://lh7-us.googleusercontent.com/2RN4gmSEbtLhM5bqqiVN7GwP3kgqM7ZBt-aOZW8zMRin9Xgym6gclJ7whN5yjF10Ls62P0-rNDmKHNXbfUBQ-I0pPQtnJuRX9qBhzeHZCHqRWyA8DkNYWIVg0a-q14zC7on4EvwcSlVUuQDQu1oGe1U" alt="" data-proportion="true" data-align="center" data-file-name="2RN4gmSEbtLhM5bqqiVN7GwP3kgqM7ZBt-aOZW8zMRin9Xgym6gclJ7whN5yjF10Ls62P0-rNDmKHNXbfUBQ-I0pPQtnJuRX9qBhzeHZCHqRWyA8DkNYWIVg0a-q14zC7on4EvwcSlVUuQDQu1oGe1U" data-file-size="0" data-origin="auto,auto" data-size="auto,auto" origin-size="909,434" style="width:auto; height:auto;"></figure></div>​ Telemedicine business model Telehealth Services offers remote healthcare services such as virtual consultations, remote patient monitoring and digital health information. To understand the teleconsultation business model, it is important to analyze how a telemedicine company generates revenue and what its main expenses are. There are various ways a telemedicine company can generate revenue, such as: Some of the main costs incurred by a telemedicine company are:<ul><li>Development and maintenance of technological infrastructure and platform</li><li>Hiring and training medical staff and support team</li><li>Marketing and promoting the Service to attract and retain customers</li><li>Compliance with legal and regulatory requirements and standards</li></ul>Some of the main costs incurred by a telemedicine company are:<ul><li>Development and maintenance of technological infrastructure and platform</li><li>Hiring and training medical staff and support team</li><li>Marketing and promoting the Service to attract and retain customers</li><li>Compliance with legal and regulatory requirements and standards</li></ul>

Key trends in telemedicine: <ul><li>According to a Mckinsey report, India could save up to $10 billion by 2025 by using telemedicine instead of face-to-face medical consultations.</li><li>The adoption of telemedicine has grown significantly during the pandemic. About 80% of doctors in northern India, 50% in southern and western regions and 35% in eastern India have adopted telemedicine.</li><li>Prominent telemedicine startups in India include Practo, Lybrate and Docsapp.​<div class="se-component se-image-container __se__float-justify" contenteditable="false"><figure style="width:auto; height:auto;"><img src="https://lh7-us.googleusercontent.com/RmsSDGdyBzjq4UsGJA-b2ou8qhdmq2ZdWuoXtePTOVwB-tRVb-4S9JuN3NcLWHEBN5Kj65aQxDiHZ_pu_lr0HAZsHKeGVyd7XXxL8KMFKyeLXVL7eXrlBVb5mDtPkn0oN7-EFryYLP9eKSUjS6UD4YQ" alt="" data-proportion="true" data-align="justify" data-file-name="RmsSDGdyBzjq4UsGJA-b2ou8qhdmq2ZdWuoXtePTOVwB-tRVb-4S9JuN3NcLWHEBN5Kj65aQxDiHZ_pu_lr0HAZsHKeGVyd7XXxL8KMFKyeLXVL7eXrlBVb5mDtPkn0oN7-EFryYLP9eKSUjS6UD4YQ" data-file-size="0" data-origin="auto,auto" data-size="auto,auto" style="width:auto; height:auto;"></figure></div>​ This chart illustrates market share and how the telemedicine market is segmented by service and solution. The telemedicine services segment includes a wide range of offerings that facilitate remote health care consultation, diagnosis, monitoring and treatment. ​Telemedicine Solutions includes B2B and B2C solutions, where B2B solutions are Telehealth platforms, remote monitoring and devices, online platforms. On the other hand, B2C solutions consist of: Teleconsultation and telepharmacy.​The telehospital and teleclinic segment is a significant part of the global telemedicine market. The industry is showing significant growth and the outlook is also phenomenal from various sources of income, including telephone consultations that further includes&nbsp;machines and devices. It includes telepharmacy which is the most important segment of revenue.&nbsp;</li></ul>

​<div class="se-component se-image-container __se__float- __se__float-center" contenteditable="false"><figure style="width:auto; height:auto;"><img src="https://lh7-us.googleusercontent.com/8hKQuLqEzStlhzriVBEHPXAtDvTpvWOx0Ayy3AxvjFKmkmNNaLn4jXrxekkMG2EO9v4sZ42wW_c2eghsTmWqPBFd82dEh3upMOhQ3YeveRJCYzJ3KPkqLRfSnFYktwRag1Y17TMMf_1VCj2q81F1qDE" alt="" data-proportion="true" data-align="center" data-file-name="8hKQuLqEzStlhzriVBEHPXAtDvTpvWOx0Ayy3AxvjFKmkmNNaLn4jXrxekkMG2EO9v4sZ42wW_c2eghsTmWqPBFd82dEh3upMOhQ3YeveRJCYzJ3KPkqLRfSnFYktwRag1Y17TMMf_1VCj2q81F1qDE" data-file-size="0" data-origin="auto,auto" data-size="auto,auto" origin-size="752,452" style="width:auto; height:auto;"></figure></div>​<ul><li>The graph indicates that the funding amount and the deal count have both increased significantly over the years, especially in 2021 and 2022, because of&nbsp; the COVID-19 pandemic and its impact on healthcare delivery.</li><li>Tata 1mg was the only health tech company to become a unicorn at a valuation of $1.3 bn, whereas telemedicine service provider Lytus was the only player to have gone public in 2022.&nbsp;</li><li>Sequoia Capital, Accel and Chiratae Ventures were recognised as the top investors in the Indian health-tech segment to date.</li></ul>​Key Players in Indian Telemedicine Startups Innovaccer is a platform that uses artificial intelligence to analyze health data and provide insights for improving care outcomes and reducing costs. PharmEasy is a leading cloud healthcare aggregator that connects consumers with pharmacies and diagnostic centers, offering convenient and affordable access to medicines and tests.1mg is a consumer health platform that enables online delivery of medicines and booking of doctor appointments, as well as providing health information and tips.Cure.fit is a holistic wellness platform that integrates fitness, nutrition coaching, and mental well-being services, aiming to help users achieve their health goals.The main challenges faced by telemedicine regarding its widespread acceptance as a method of health care delivery, is in validating its impact on clinical outcomes with scientific rigor. There are other issues like standardization of the methods and techniques used for health care delivery, payment by insurers and cost benefit analysis that need to be resolved. Metrics that investors looks into telemedicine startups are: To evaluate the profitability of a telemedicine company, some of the key metrics that should be considered are: Revenue growth, Customer acquisition cost, Customer retention rate, Customer lifetime value,Gross margin,Operating margin,Net margin. <ul><li>Revenue: This is the amount of money that a telemedicine startup generates from its products or services. Revenue indicates the market demand and customer satisfaction for a telemedicine startup. Higher revenue means higher sales volume and market share.</li><li>Annual Recurring revenue - It is the amount of revenue that a company expects to receive every year from its customers. It is an important metric for subscription based businesses like Practo and Mfine.</li><li>Gross Merchandise Value(GMV)- It is the total value of goods sold through a company’s platform. It is a key metric of e-commerce businesses like pharmeasy.</li><li>Customer Lifetime Value(CLTV)- It is the amount of revenue that a company expects to receive from a customer over their lifetime.&nbsp; and it usually depicts the true value of the business amount that comes in over the period of time.&nbsp;</li></ul><ul><li>Profit: This is the amount of money that a telemedicine startup earns after deducting all its expenses, such as cost of goods sold, operating expenses, taxes, and interest. Profit indicates the financial health and efficiency of a telemedicine startup. Higher profit means higher margins and returns on investment.</li><li>Growth Rate: This is the percentage change in revenue or profit over a period of time, such as a quarter or a year. Growth rate indicates the potential and scalability of a telemedicine startup. Higher growth rate means higher market opportunity and competitive advantage.</li><li>Customer Acquisition Cost (CAC): This is the amount of money that a telemedicine startup spends on acquiring a new customer, such as marketing, advertising, sales, and referrals. CAC indicates the effectiveness and sustainability of a telemedicine startup’s customer acquisition strategy. Lower CAC means lower customer acquisition expenses and higher customer lifetime value.</li><li>Customer Retention Rate (CRR): This is the percentage of customers that a telemedicine startup retains over a period of time, such as a month or a year. CRR indicates the loyalty and satisfaction of a telemedicine startup’s customers. Higher CRR means higher customer retention and repeat purchases.</li></ul>

Let’s understand this with hypothetical example&nbsp; Using these metrics, we can compare four telemedicine startups in the healthtech sector: Practo, 1mg, Mfine, and Pharmeasy.&nbsp; We have considered these metrics to evaluate the performance of telemedicine startups for the FY22 :&nbsp; revenue, profit, and ebitda margins. <div style="margin-left:0pt"><table><tbody><tr><td>Companies</td><td>Revenue(cr)</td><td>Profit(cr)</td><td>Growth Rate</td><td>EbitdaMargins&nbsp;</td></tr><tr><td>Practo</td><td>200</td><td> &nbsp; &nbsp; -203</td><td>104.3%</td><td>-90.48%</td></tr><tr><td>1mg</td><td>627</td><td>-526</td><td>67.5%</td><td>-69.36</td></tr><tr><td>Mfine</td><td>50.5&nbsp;</td><td>-206</td><td>-100%</td><td>~-100%</td></tr><tr><td>Pharmeasy</td><td>5,729</td><td>-2,731</td><td>-4.3%</td><td>-39.66%</td></tr></tbody></table></div> Based on this table, we can interpret that: <ul><li>Practo has shown significant revenue growth of 104.3%, but its EBITDA margins are deeply negative at -90.48%. This indicates that while the company is growing, it is not yet profitable on an operational level. Investors may be concerned about the high operating losses.</li><li>1mg has also achieved substantial revenue growth of 67.5%, but like Practo, it has negative EBITDA margins at -69.36%. This suggests that, despite revenue growth, the company is not yet operating profitably.</li><li>Mfine has reported a substantial decline in revenue of -100%, indicating a significant drop in business activity. The approximate EBITDA margin of -100% indicates that the company is incurring significant operational losses. This combination of factors raises concerns about Mfine's financial health and sustainability.</li><li>Pharmeasy's revenue growth is slightly negative at -4.3%, and it also has negative EBITDA margins at -39.66%. While the revenue is declining slightly, the EBITDA margin shows that the company is incurring operational losses, though the losses appear to be somewhat less severe compared to Practo and 1mg.</li></ul> Therefore, based on these metrics, we can conclude that none of the companies have achieved positive EBITDA margins, indicating that they are not yet operationally profitable. While Practo and 1mg have shown strong revenue growth, their EBITDA margins are deeply negative, suggesting ongoing operational losses. Mfine has experienced a significant drop in revenue and incurred substantial operational losses. Pharmeasy has a slightly negative revenue growth rate and negative EBITDA margins.However, there may be other factors or indicators that can affect the performance and evaluation of telemedicine startups in the healthtech sector. Investors evaluating these startups may be concerned about their ability to achieve profitability in the near term, given the substantial losses incurred. Other factors, such as market opportunity, business model, and strategies for turning profitable, would need to be considered to assess the overall attractiveness of these investments. Additionally, investors might consider the startups' plans for managing operational costs and achieving profitability in the future. Exits trends in Telemedicine <div class="se-component se-image-container __se__float-justify" contenteditable="false"><figure style="width:auto; height:auto;"><img src="https://lh7-us.googleusercontent.com/bCEYdbUzqC9n2yig9ghxJtOr_bdXoNlx9NfBs_s0VgAWf4IxpQQH9ekKywJqs6ua9j0O_PSqEQzr2FBoGcJcC3ySQAmHhfiE_nuHAI5gz6TTtpNYr4yDoHMNsUTHGFPbouQQgOolpNLcmk1HoJj9Fr0" alt="" data-proportion="true" data-align="justify" data-file-name="bCEYdbUzqC9n2yig9ghxJtOr_bdXoNlx9NfBs_s0VgAWf4IxpQQH9ekKywJqs6ua9j0O_PSqEQzr2FBoGcJcC3ySQAmHhfiE_nuHAI5gz6TTtpNYr4yDoHMNsUTHGFPbouQQgOolpNLcmk1HoJj9Fr0" data-file-size="0" data-origin="auto,auto" data-size="auto,auto" origin-size="619,338" style="width:auto; height:auto;"></figure></div>​ Consolidation: Many telemedicine startups are merging or acquiring other players in the sector to expand their offerings, reach, and scale.&nbsp;For example, PharmEasy acquired Thyrocare, a diagnostic chain, for ₹4,546 crore ($610 million), marking the first-ever acquisition of a listed company by an Indian unicorn. Similarly, Medlife International merged with Aknamed, a B2B healthcare supply chain startup, in a deal valued at $200-$250 million. Diversification: Some telemedicine startups are venturing into new segments or geographies to tap into new opportunities and markets.&nbsp;For example, Pristyn Care, a health-tech startup that offers elective surgeries, acquired Lybrate, a doctor consultation platform, for an undisclosed amount. Pristyn Care also expanded its operations to Southeast Asia and the Middle East. Strategic partnerships: Some telemedicine startups are partnering with established players in the healthcare industry to leverage their expertise, network, and resources.&nbsp;For example, Practo, an online doctor consultation platform, partnered with Thyrocare to offer home-based diagnostic tests. Similarly, 1mg, an online pharmacy and e-health store, partnered with SRL Diagnostics to offer online booking and home collection of lab tests. Conclusion The HealthTech sector continues to grow and evolve, offering immense opportunities for innovative startups. However, securing funding in this highly regulated and competitive field is no easy task. Startups need to be well-prepared, with a clear understanding of the funding options available to them and the specific challenges they may encounter.The future outlook of telemedicine in India is very promising, as it has the potential to transform the healthcare sector and improve the access, quality, and affordability of health services for millions of people.&nbsp;In conclusion, telemedicine is a disruptive and transformative technology that can revolutionize the healthcare sector in India. It can provide better health outcomes, lower costs, and greater convenience for both patients and providers.&nbsp;

The healthtech sector is one of the most dynamic and promising sectors in the Indian startup ecosystem. The industry has been at the forefront of the response to the Covid-19 pandemic, which has disrupted the traditional healthcare system and created new challenges and opportunities for digital health solutions.

Startup Funding in Telemedicine

telemedicine is a disruptive and transformative technology that can revolutionize the healthcare sector in India. It can provide better health outcomes.