A brand new research about the German digital health startup ecosystem revealed lots of valuable insights and implications to be applied to further develop our nationwide digital health ecosystem.
Below you find the main findings of Amanda Baum’s masterthesis at Nova School of Business and Economics in Lisbon, Portugal, that we supported.
Summary Master´s thesis
– The Digital Health Entrepreneurial Ecosystem – Take It to the Next Level
The Starting Point
Digitalization has arrived in the German healthcare industry, a sector that drives the country´s economy to a significant extend (BMWi 2018). As within other industries, it has been acknowledged that this transformational process is predominantly driven by startups which provide innovative solutions (Sarshar 2017).
In order for a startup to flourish, a breeding ground that contains several supportive elements was found to be important (Hanneken 2018). Thus, to assess places of entrepreneurial activity, the concept of an entrepreneurial ecosystem has been established.
Therefore, this master´s thesis examined the digital health entrepreneurial ecosystems in the two German metropolitan areas of Rhine-Neckar (MRN) and Hamburg (HH) to identify local opportunities and obstacles. A desk research and 13 expert interviews including founders and inter alia representatives from companies such as Philips GmbH Market DACH, BASF SE and the Techniker Krankenkasse revealed insightful results.
The Main Findings
Overall, both ecosystems provide relevant resources to digital health startups and constitute an interesting environment. Connected therewith, in the Rhine-Neckar region targeted supportive institutions such as the Medical Technology Cluster, CUBEX41, and the Heidelberg Technology Park protrude. While Hamburg is home to two active cluster institutions specialized on life sciences and the overall health economy as well as to the local Health Innovation Port (HIP) that provide pooled supportive services.
Moreover, the analysis disclosed a positive trend with respect to the openness of the main target market for digital health businesses (the primary healthcare market with the public and private insurances as service providers). While half of all experts interviewed emphasized the barriers digital health startups are facing (e.g. legal, rigidity of the healthcare industry, missing technological infrastructure), the other half referred to a general positive development. This was described in form of an increased awareness on behalf of the stakeholders that something needs to be changed within the industry and that things are slowly starting to move.
Comparing both Digital Health Entrepreneurial Ecosystems
When further comparing both ecosystems, the main differences were to be found in the local supportive culture, work talent available and the quality of networks between startups and established companies.
The Metropolitan Area Rhine-Neckar
In the MRN, the ecosystem´s supportive culture was depicted as relatively present which implies a lot of mechanisms in place however, initiatives are not effective on a big scale. This indicated that the ecosystem´s drive leaves room for improvement. Besides, the Tech-Hub Index developed and published by Deloitte (2018) shows the main cities (Mannheim, Heidelberg and Ludwigshafen) to be placed in the lower mid-table (or not to be mentioned at all). This was in line with the results of a survey conducted by PwC that showed the availability of work talent to be a challenge within the region (PwC 2018a). Nevertheless, when assessing the collaboration among digital health startups and established players, founders described a very positive picture and emphasized the environment supportive institutions pose for the exchange with the big industry players. When specifically addressing the barriers with respect to effective collaboration among startups and established firms, three aspects were emphasized: culture (different understanding of processes), diversity of interests (different priorities) and visibility (how to get to know one and another).
The Metropolitan Area Hamburg
In Hamburg, the local culture was observed in another light. Here, the supportive culture was described to constitute a solid basis for the region´s digital health ecosystem. Additionally, the Tech-Hub Index reveals the region to be placed among the Top 5 cities in Germany and is considered as one of the most attractive places to be for STEM students (Deloitte 2018). This was further highlighted as part of the results published for Hamburg by PwC. This study demonstrated the supply of relevant work talent as relatively good (PwC 2018b). Nonetheless, the assessment of the collaboration among startups and established players pointed out a diverse picture. While the intensity of collaboration was specified by means of an increased understanding that a cooperation at this level is valuable, the actual presence and openness to collaboration of established firms was depicted critically on behalf of entrepreneurs. This was referred to a slow progress towards intense collaboration. The main barriers to effective cooperation were specified using slightly different words. Here, culture was characterized as the existence of a trench between startups and companies; this entails talking about the same things and using the same words while actually having different processes in mind.
Taking the Digital Health Entrepreneurial Ecosystem Rhine-Neckar to the Next Level
Overall, the findings for the MRN revealed the supportive services as well as the well-functioning network among entrepreneurs as the main drivers within the ecosystem. These shall be leveraged on in order to take the local digital health ecosystem to the next level. Connected therewith, the main “to-do” is to improve the present culture in order to support the entrepreneurial ecosystem´s overall drive. Here, especially the use of synergy effect irrespective of federal state boarders could be a great point to start with. Through joint activities the scene´s self-esteem could be strengthened and an exchange towards an increasingly agile scene will be promoted. Moreover, the supportive services could make further use of the intermediary position in order to promote ways to further operationalize collaboration between startups and established firms. Thereby, barriers identified can serve as a point to start with. In general, the emphasis lies in the promotion of exchange at all levels in order to find ways to balance diverse interests. In order for young ventures to increasingly to increasingly break through the rigid German healthcare sector in an innovative manner.
BMWi. 2018. “Gesundheitswirtschaft – Fakten & Zahlen, Ausgabe 2017.” Accessed February 8, 2019. https://www.bmwi.de/Redaktion/DE/Publikationen/Wirtschaft/gesundheitswirtschaft-2016-medizinprodukte-medizintechnik.html.
Deloitte. 2018. “Deutschlands Tech-Hubs Performance Und Potenzial Der Deutschen Metropolen.” Accessed March 14, 2019. https://www2.deloitte.com/content/dam/Deloitte/de/Documents/Innovation/Tech-Standorte-Deutschland-Ranking-Deloitte-2018.pdf.
Hanneken, Jessica. 2018. “Market Access von Digitalen Start-Up-Produkten Im Deutschen Gesundheitswesen.” In Innovative Gesundheitsversorgung Und Market Access: Beiträge Für Entscheider Und Akteure, 270–87. Wiesbaden: Springer Gabler.
Pwc. 2018a. “Start-up-Unternehmen in der Rhein-Neckar-Region 2018.” PwC, September 3. https://www.pwc.de/de/startups/pwc-studie-start-ups-2018-rhein-neckar.pdf.
PwC. 2018b. “Start-up-Unternehmen im Raum Hamburg 2018.” PwC, September 3. https://www.pwc.de/de/standorte/pwc-studie-start-ups-2018-hamburg.pdf.
Sarshar, Kamyar. 2017. “Analyse der wirtschaftlichen Potenziale und Ableitung von Handlungsansätzen/ -empfehlungen zum Themengebiet eHealth am Standort Hamburg.” Abschlussbericht. Gesundheitswirtschaft Hamburg GmbH, June 6th. https://www.gwhh.de/fileadmin/user_upload/Abschlussbericht_eHealth-Studie_Kurzfassung.pdf.