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Deloitte Southeast Asia Innovation Insights

Healthtech and edtech: Southeast Asia’s new frontiers

Written by Deloitte Southeast Asia Innovation Team Published on     7 mins read

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As the COVID-19 pandemic forces businesses in Southeast Asia to adapt, the intersection of technology and two key industries in the region, healthcare and education, are burgeoning.

The COVID-19 pandemic has forced businesses to rapidly adapt to new operating challenges and keep an eye on the road ahead to identify new opportunities simultaneously. It is no surprise that investments into startups fell considerably last year, even though many showed considerable promise, as investors held off making big bets until the business landscape became clearer.

Much attention has been paid to the critical role of e-commerce and digital services, especially in the B2C space, that has allowed businesses to continue to operate as they recover and grow. However, equally important has been to ensure access to health and education for the 600+ million people in Southeast Asia.  This article looks at the growing intersection between technology and these two key industries, and how they will expand in 2021 and beyond.

 

The growing healthtech market in Southeast Asia

In Southeast Asia, healthcare expenditure is on the rise, with expectations that by 2025, total healthcare spending could increase to USD 740 billion from the current USD 425 billion. Notably, in a 2019 survey of 89 nations by CEOWorld magazine, Thailand was declared the sixth-best healthcare system globally, and is expected to further increase its healthcare expenditure by over 5% a year over the next five years. In the same light, two of the five largest healthtech deals in 2019 were Indonesia-based startups Halodoc and Alodokter.

Accelerated digital transformation due to COVID-19 and healthcare innovators breaking down barriers has led to a boom in the healthcare industry. Therefore, it comes as no surprise that Venture Capital (VC) firms show increasing interest in backing healthtech startups in the region.

 

Telemedicine is the new normal

With lockdown and restriction measures in place for many countries, venturing out for a visit to the clinic for non-threatening illnesses has been difficult for many and downright impossible for others. Thanks to telemedicine platforms such as GrabHealth, Malaysia’s Doctor on Call, and Singapore-based Doctor Anywhere, health providers and patients could connect directly through virtual means, thereby addressing consumer needs amid the physical constraints.

Other Southeast Asian countries are further behind the curve. For example, emerging Cambodian telemedicine startup MeetDoctor, which recently graduated from the United Nation Development Programme’s Bluetribe Incubation programme, is still appealing to the Cambodian government for an experimental ‘sandbox’ they can operate within.

Elsewhere in the region, online pharmacy services have been accelerated by the pandemic. Given fears around the in-person transmission of illnesses, consumers have found it very helpful to purchase medicine online and have it delivered right to their doorstep. Pharmacity, the largest pharmacy chain in Vietnam, rode on this trend and rounded off a very successful Series C funding (USD 31.8 million). They are intending to have 1000 stores by 2021. Another investment for Vietnam’s pharmaceutical industry came in the form of a pre-Series A funding of USD 2.5 million for BuyMed and their online pharmacy Thuocsi.

 

Growing innovation in digital therapeutics and diagnostics

Across Southeast Asia, there is greater demand for wearables and other new digital therapies. This has led to partnerships between large companies, startups, and government agencies. For example, Novartis and healthcare startup Biofourmis have collaborated to provide a solution for remote healthcare patients recently diagnosed with heart failure. Even Apple has gotten in on the act, partnering with Singapore’s Health Promotion Board to launch Lumihealth, an app that drives population health data collection and holistic health management. Not to be left out, insurance giant AIA has partnered with Holmusk to deliver a wide range of digital coaching tools and solutions to their clients with a data-driven approach.

Diagnostics help on many fronts on the global health stage, from eliminating diseases to detecting and curbing outbreaks, and its capabilities are being leveraged in the region. Singapore’s Ministry of Health (MOH) collaborated with the previously mentioned Biofourmis and their digital monitoring platform Biovitals Sentinel to remotely monitor COVID-19 positive patients, aiding clinicians and their teams in the early detection of deterioration. In Indonesia, genomics technology startup Nusantics refocused its capabilities to develop test kits to detect mutations of COVID-19. Simultaneously, Singapore-based Veredus Laboratories launched a test kit that significantly reduces the time needed to diagnose a patient.

In all these, patient data and security need to be taken seriously; the data breach faced by SingHealth back in 2018 showed that more emphasis should be placed on enhancing organizations’ cybersecurity posture. With digitalization happening rapidly, users should make an effort to educate themselves on the importance of preserving their data and privacy, and technology providers need to have the latest cybersecurity protections in place if they are to stand the test of time.

 

Edtech may hold the key for the future of Southeast Asia

As recently as five years ago, education was viewed as a long-term investment better reserved for governments and a less attractive proposition for investors than other industries. However, with the success of online education platforms in the US, India, and China, coupled with Southeast Asia’s growing internet economy, edtech is now gaining traction and attracting more funding.

 

Southeast Asia’s budding edtech ecosystem

Southeast Asia is now home to a budding ecosystem of edtech startups, and has the digital tools that are helping to pave new roads in education and providing quality content and lessons to places that were once inaccessible. Indonesia-based Ruangguru, one of the most well-funded edtech startups in Southeast Asia, has cooperated with 32 out of 43 provincial governments and has more than 10 million users. Having raised a staggering USD 150 million back in late 2019, Ruangguru continues to grow from strength to strength, providing access to quality education for students through technology. In early 2020, another Indonesian-based edtech startup Zenius secured an undisclosed amount of pre-series B funding and claimed a ten times increase in user growth from its launch in March to December 2020.

In Myanmar, 360ed hopes to bridge the learning gap and empower Myanmar’s youth alongside other EdTech platforms such as MyanLearn and MMTutors. However, these promising platforms have hit a snag following the recent military coup and the ensuing internet disruptions. Myanmar’s rapid internet growth underscores the importance of digital literacy; according to numbers by World Bank, in 2010 under 1% of Myanmar’s population was using the Internet. As of 2020, Internet penetration has reached 40% of Myanmar’s population. Digital literacy will go a long way in curbing the negative impacts wrought by the weaponization of social media in the country.

For the rest of Southeast Asia, a strong internet economy and governments willing to address gaps will go a long way in revamping education for the region.

 

Immersive learning and artificial intelligence may be key to retention

In addition to structural challenges faced by countries in Southeast Asia, getting students onto learning platforms is difficult, and retaining them is a whole new ball game. Given the sudden pivot towards online learning, only simpler methodologies such as video conferencing have been adapted for online use. Relatively innovative methods such as gamification, artificial intelligence, and AR/VR have yet to make the transition. An early frontrunner is Thailand’s gamified learning app Taamkru. This app retains users with its engaging content by incorporating fun while teaching valuable skills in math and science.

Another innovative app is ELSA, an English learning app based in San Francisco that combines artificial intelligence and speech recognition technology to deliver higher accuracy in recognizing and understanding non-native English speakers worldwide. Having completed their series B funding, ELSA is looking to expand its offerings to Vietnam and other parts of Asia-Pacific.

Speech recognition is not the only way to utilize artificial intelligence for education either; Singapore’s Geniebook tailors worksheets based on each student’s performance and delivers customized assignments based on the individual’s weakest areas. Artificial Intelligence-powered learning apps and programs can potentially offer personalization at a scale no human teacher could replicate.

 

The Future of Healthcare and Education in Southeast Asia

These two budding industries have played critical roles for Southeast Asia during the pandemic, however, structural problems still exist in the region. In rural and underserved areas, the lack of digital infrastructure and weak internet penetration may present a market risk for healthtech and edtech platforms. Also, digital literacy remains a hot topic for developing nations in Southeast Asia at a time where technology adoption is rapidly increasing.

 

Yet, the upside for both industries is apparent. For edtech, the combination of compelling, gamified content, plus the plummeting costs of data and devices, and integration into classrooms has put the industry on a stable growth trajectory. Similarly, the digital health revolution to break conventional boundaries of health delivery is firmly underway. Apps promoting healthy lifestyles, platforms allowing patients to communicate with doctors remotely, and AI-driven patient care, combined with the region’s growing technology capabilities, can play a crucial role in delivering convenient, cost-effective, and high-quality healthcare.

As investor sentiment remains high for both industries, the spike in adoption alongside increased funding should propel innovation in healthtech and edtech, bringing them into the forefront as new frontiers for Southeast Asia.

 

About the authors

 Richard Mackender leads Deloitte Southeast Asia Innovation, a cross-function, cross-country unit dedicated to driving innovation as a long-term value creator across Deloitte’s Southeast Asia operations. This article was co-written with Tan Shuo Yan and Lim Shu Jun, members of the team.

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