Healthcare Hackers: The challenges of 2020

Innovation in healthcare can often be a long, laborious process. Finding the right partners, the right investors, and plotting a path to market are challenges that all healthcare start-ups face. Some of Europe’s most innovative companies in the health field shared their stories with Emerging Europe this year, as part of a podcast series called Healthcare Hackers. We take a look at some of the lessons they shared.

To suggest that 2020 was a challenge for health tech start-ups is an enormous understatement that fails to underline the many difficulties faced by young firms across the region: from building a hardware device that depended on parts sourced from China, through solution validation to more prosaic challenges, such as access to funding.

It was these challenges, and how start-ups overcame them, that formed the basis of a ground-breaking series of podcasts, Healthcare Hackers, produced by Emerging Europe in partnership with EIT Health InnoStars.

Putting work on hold

For Tully, a Cluj-based Romanian start-up developing a wearable device helping children with ADHD, the Covid pandemic started at a critical moment.

“When everyone entered lockdown, we were about to start large-scale testing, and that testing involved schoolchildren in their natural environment – a school – having an observer present with them,” says Tully’s co-founder and CEO. Marius Rus.

That delayed the validation process, or, as in the case of Portuguese project Frade, which is developing a technological platform that makes it possible to detect, screen and thus prevent falls among the elderly, disabled the recruitment process extended the production process.

“We are facing several delays in the supply chain since several raw materials are running out of stock and some companies have gone bankrupt. On the other hand, we are not aware how the pandemic will evolve in the coming months,” says Joana Silva, a biomedical researcher at Fraunhofer Portugal AICOS, who manages the Frade project.

For Hungary’s Phoenix Orthosis, which helps patients suffering from hand spasticity, delays were caused by limited access to laboratories where they could run additional tests.

“It’s also very difficult to align these delays with the marketing plan because you don’t want to reach out to your stakeholders, and then let them hang loose for a year or more. You don’t want to waste all this energy and these contacts,” says Robert Ackermann, CCO at Phoenix Orthosis.

Matej Buzgo, CEO of Inocure, whose HepaMatrix delivers reliable models of liver tissue that assist in the trial of new drugs, helping prevent the toxic effects of drugs on the liver, believes his sales might be hampered by Covid within the next few years as a lot of funding would go to containing the pandemic instead of financing alternatives to animal testing in pharmaceutical development.

With innovation in healthcare so reliant on networks of expertise, it was crucial that channels of communication were kept open despite the limitations that Covid-19 restrictions placed on travel and personal interaction. Here, good habits already in place, often helped. But Covid amplified the old challenges like communicating a start-up’s value proposition to the market.

Playing the business game

“The biggest challenge for a start-up is to prove that the product can go to the market,” says Simona Rombo, an associate professor of computer science at the University of Palermo and one of the founders and the CEO of Italian Kazaam Lab.

“Rejection should never make you give up,” says Eduard Maron, the Estonian CEO of DocuMental, a unique decision support system which improves diagnostic and treatment reliability in mental health by implementing a structured and standardised digital workflow.

“You need to learn from the experts at EIT Health and listen to their feedback. It’s not just about the innovation you have come up with, it’s also about how it can made commercially successful.”

This is a challenge that Inocure’s Matej Buzgo also recognises. Most innovators in healthcare are researchers, he says, with little understanding of business.

“We need to learn how the business world works, how to communicate what we have come up with, how to find distributors, and bring it to market. You can have a great innovation, but if you do not have a pathway to the market then it is very difficult to succeed.”

Phoenix Orthosis solved this challenge by bringing in a chief commercial officer with a healthcare marketing background to plot a way to market.

“The two founders brought me in a couple of years after they had set up the company, at the time when they realised they were ready to go to market,” says Robert Ackermann. “They had figured out that they wanted to concentrate on the German market but had no idea how to do it. How to engage stakeholders, how to develop a marketing plan. That’s when I joined and was able to see what these amazing guys had developed, converting an idea into a prototype. It was a perfect match.”

Meanwhile, it took Romania’s Tully about 18 months to find a team member who would help build its wearable device.

“Nothing off the shelf included all the sensors that we needed. We got through three sets of co-founders until we found the right ones that clicked with us and that were also inspired by the idea,” says Marius Rus.

Tough nut to crack

For many firms, funding is the toughest nut to crack, such as Slovenia’s Neus Diagnostics, which offers a software solution for detecting mild cognitive impairment (MCI) combining eye-tracking technology, digitalised neuropsychological tests with an AI-based decision support system.

“We started looking for funding at start-up conferences, but this was very time consuming and not always fruitful. We found that investors didn’t always understand our solution, nor did they understand the market that we were trying to break into,” says Vida Groznik, one of the co-founders and the CEO of Slovenia’s Neus Diagnostics, which has developed a software solution for detecting mild cognitive impairment (MCI), a precursor to Alzheimer’s disease.

The Neus solution combines eye-tracking technology, digitalised neuropsychological tests with an AI-based decision support system.

“The investors we spoke to wanted a fast return, within one or two years,” she adds. “But innovation in healthcare is not fast. Medical solutions need to go through clinical trials, certification processes. It takes a lot of time.”

Alan Mutka, one of the founders and CTO at Croatia’s Cognitus, which developed a solution to measure leg length discrepancy, also points out that hardware-based solutions that require certification make the development process twice as long and twice as expensive.

“The great challenge when you do any type of project with hardware is that you cannot undo something as you can with software. With hardware you don’t have an additional 30,000 euros to build another machine because you didn’t think whether something was good or not.”

Fighting the resistance

But Mutka’s start-up had yet another challenge — trying to convince specialists that the health issue his start-up is trying to solves actually exists.

“There is no consensus about the leg length discrepancy that is detrimental to our posture or simply causes other health issues. I think this problem needs to be discussed more,” he says.

When DocuMental’s Eduard Maron was first working on his solution he heard that “psychiatry is an art” and that he was trying to replace this psychiatric art with machines, trying to replace humans with machines. “I faced very strong resistance and I left my idea aside for a few years,” he says

All Healthcare Hackers that Emerging Europe spoke with are unanimous when it comes to their advice to other health tech start-up founders: meet people, validate your idea but if you believe in your innovative solution, keep fighting and you will succeed.

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You can find the full Healthcare Hackers conversations on all podcast platforms.

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