This is a sponsored article from Julius Baer.
While COVID-19 has put a spotlight on the effect of spiralling healthcare costs and inequality of access, the disruption of the past two-and-a-half years has also highlighted the plight of those suffering from poor mental health.
In this article, Dr Damien Ng, thematic research analyst at Julius Baer, addresses how rising awareness of mental health conditions is driving heightened adoption of digital health technologies and investment applications.
The prevalence of anxiety and depressive disorders worldwide rose by almost 30% from 2019 and 2021, according to a paper published by The Lancet. The increase in Asia-Pacific was just under 14%, in comparison with around 23% in Sub-Saharan Africa and 27% in Europe and North America.
Higher Covid-19 induced anxiety and depression (2019–2021)
Source: The Lancet, Julius Baer
In addition to the pandemic, Ng noted that Russia’s invasion of Ukraine has also triggered a renewed surge of anxiety and fear. Globally, concerns over citizens’ mental wellbeing have prompted 90% of countries to look at how they can provide more support according to the World Health Organization. The importance of doing so is highlighted by the fact that people with severe mental health conditions die as much as two decades earlier than their peers due to preventable physical conditions.
Mode of virtual care by education and age in the US (2021)
Source: US Census Bureau, Julius Baer
In this article
Rising valuations
Against this backdrop, care providers and their recipients around the world are increasingly turning to digital health technologies to address such challenges. This makes sense, given patients with mental health conditions are more likely to seek advice online rather than visiting a physician.
Ng believes that the heightened interest in digital technologies is also underscored by the growing volume of fund inflows into the sector in recent years.
Last year, digital health funding activity surged around the world, especially in the US. Digital health start-ups in that country raised a record US$29.1 billion in 2021, nearly double the US$14.9 billion in the previous year. Meanwhile, the number of deals increased from 484 to 729 during the period. In 2011, digital health companies raised just US$1.1 billion globally – a mere 4% of 2021’s total – highlighting the catalysing impact of the pandemic.
Growing number and size of funding deals in digital health
Source: Rock Health, Julius Baer
Future investment opportunities
With an estimated valuation of US$5.1 billion in 2021, digital-health start-ups offering mental healthcare amassed more funds than any other clinical indications such as primary care and cardiovascular disorders. It was also nearly double the total fund volume of US$2.7 billion in 2020.
There are now an increasing number of digital mental health unicorns or start-ups valued at over US$1 billion. Digital mental health companies are also beginning to distinguish themselves by focusing on specific conditions, such as substance use and psychotic disorders. Ng believes it is easier for people in some cultures to seek advice from medical professionals over the internet rather than visiting a clinic.
He is also positive on the long-term investment opportunities in the digital health space. Investors can access the space through a variety of ways, ranging from equities to managed solutions, like funds. In the future, Ng believes digital healthcare innovation is set to flourish in areas including biotechnology, healthcare services, and medical devices. Investors would do well to keep an eye on the space.
This is a sponsored article from Julius Baer.
