Kaiku Health offers intelligent patient monitoring software for healthcare providers, mainly in oncology. Structured capture and analysis of patient-reported data enables clinicians to evaluate the effectiveness of therapies and to detect and treat health problems early. Kaiku Health platform is used in routine care by over 30 clinics in Switzerland, Germany, Italy, Sweden, and Finland, and has been used by 64,000 patients (March 2018).

The company intends to use the funding to power its international expansion and further develop its digital therapeutics pipeline. Together with its partners, Kaiku Health will conduct several clinical trials validating the digital therapeutics offering.

“We have seen the significant positive impact our patient monitoring platform can have on people’s health,” comments Lauri Sippola, Kaiku Health CEO and Co-Founder. “This funding allows us to provide our platform to a growing number of healthcare providers and patients internationally. It is important that our investors also bring an extraordinary understanding of healthcare, life sciences and digitalization.”

“We are excited about the impact digital technologies will have on the patient journey and are particularly enthusiastic to help take the digital therapeutic approach in oncology out of the lab and onto the market where the benefits of this high frequency monitoring can be expected to bring real outcomes improvement,” says Tanja Dowe, CEO at Debiopharm Innovation Fund.

“We have studied the Finnish digital health sector thoroughly and found it extremely interesting from an investor’s point of view,” adds Joni Karsikas, Investment Manager at Tesi. “The Kaiku Health team impressed us with its strong technological know-how, for instance in the use of artificial intelligence. Kaiku Health has strong international customer references and a broad user-base for a young health-tech company.”

The investment was led by Debiopharm Innovation Fund SA and Tesi with participation from Prodeko Ventures Oy and existing investors Reaktor Ventures Oy, Metsola Ventures Oy, and Athensmed Oy.

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A wave of deals delivered disclosed amounts of nearly $9.5bn, up 140 per cent year-over-year.

Express Scripts’ $3.6bn acquisition of eviCore healthcare, the health benefit and claims management market serving 100 million people, topped the table as the Healthtech sector’s largest deal in 2H 2017.

The next largest deal was KKR-backed Internet Brands’ purchase of WebMD for $2.8bn. This brought a string of popular online health websites, including Medscape.com; DentalPlans.com and AllAboutCounseling.com under one umbrella company. KKR also closed a $1.45 Billion health care strategic growth fund during the same period.

North America led the way in Healthtech M&A, with 77 out of the 100 announced deals driven out of the U.S., to help meet the huge domestic demand and ability to thrive in the competitive private healthcare market.

Jonathan Simnett, director, Hampleton Partners, said: “Advanced healthcare systems around the world are struggling to deal with the perfect storm of spiraling costs allied to rising patient expectations, more expensive treatments, and the consequences of dealing with ageing populations and chronic lifestyle diseases.

“This vast healthtech sector where patient care systems have remained largely unchanged for decades is experiencing a seismic shift in funding and technology innovation. The customer care and logistics expertise that comes with Amazon’s market-moving plan to offer healthcare services is an indication of just how big this shift is going to be,” continued Simnett.

Other key points from the Hampleton Healthtech M&A Market Report:

• Bertelsmann’s Relias Learning and Royal Philips led the buyer table, with seven acquisitions each over 30 months

• Of the five announced deals in the Medical Hardware category, three involved a private equity buyer. The largest disclosed deal was the acquisition of Servelec Group, a UK-based automation systems & healthcare software firm, by pan-European buyout fund, Montagu, for just under $300 million and 3.6x revenue

• Indian investors ramped up spending when the country’s government introduced a new National Health Policy aimed at raising public health spending. Indian investors quickly contributed to two of top ten highest valued deals in the Health IT services and BPO space, including Tech Mahindra, the Indian IT Services, outsourcing & IT consulting group, paid $89.5 million upfront for an 84.7 per cent stake in CJS Solutions Group LLC, a US-based healthcare information technology consulting company. The remaining 15.3 per cent stake is to be acquired of a period of three years at an enterprise value of $110 million.

As for the coming year, Hampleton expects a raft of new players into the healthcare M&A market, driven by the likes of Amazon, Apple and Google, which have access to consumers, devices, data and vast resources to drive change even in a highly-regulated market.

Hampleton anticipates that the incumbents’ response to new competitive pressure will be to increase the intensity of their M&A activity with a resulting upward pressure on valuations.

Hampleton healthtech M&A expertise

During the period, Hampleton advised on the sale of BaseCase Management GmbH, a data visualisation software as a service (SaaS) company, headquartered in Berlin, Germany, with offices in New York, on its sale to Princeton, New Jersey-based Certara, the global leader in model-informed drug development and regulatory science.

As budget pressure on healthcare providers increased, the healthcare industry is under increasing pressure to demonstrate the value delivered by new medications and devices. BaseCase’s interactive platform improves how life science companies communicate and present that value, whether to C-suite executives, physicians and healthcare providers, or payers and health authorities.

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While the total number of medtech deals in 2017 to date remains stagnant, with approximately 2,700 deals each year for the past four years, this year has seen a slight rise in capital raisings, yet the number of mergers and acquisitions continues to decline.

Jennifer Ryan, Healthcare Analyst at GlobalData, commented: “A number of factors are contributing to the stagnant investment scene in medtech. Regulatory approvals are becoming more time-consuming and challenging to acquire, particularly through the FDA, the gatekeeper to the world’s largest medical device market.

“However, even a product’s market approval is no longer evidence that it will be successful. As the world’s population ages and requires more involved care, the reimbursement scene is becoming increasingly important.

”Additionally, favorable reimbursement is becoming more difficult to obtain. A growing focus on long-term patient outcomes and healthcare expenditure means devices must also now demonstrate that they will benefit value-based healthcare initiatives on top of the traditional safety and efficacy requirements.”

Despite the small uptick in capital raisings, including equity and debt offerings, private equity, and venture financing, medtech continues to struggle with investment and venture capital.

Many larger companies are resorting to strategic acquisitions of smaller market players who have managed to grow their technologies to a stage with positive market potential, rather than simply market approval.

Ryan adds: “Moving into 2018, players focused on innovating with digital medical devices are more likely to secure investments or be acquired more quickly than those focused on traditional devices, as physicians and patients alike continue to call for modern technologies.”

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