During the last 10 years, the digital health sector has seen a dramatic expansion, with global financial and corporate markets increasing their investment from $2 billion in 2011 to $44 billion in 2021.

The Covid-19 pandemic has served as a catalyst for even higher levels of investment. Nonetheless, in the past year, investors have become more judicious with their decisions.

However, total digital health investment dropped sharply in 2022, with the Asia-Pacific region recording a decline. Although, the fourth quarter has signalled a recovery which warrants closer attention and analysis.

Experts from Galen Growth have identified a new development in digital health investments, with a shift from the heightened investment of 2020 and 2021 to a pattern more reflective of the preceding years. Private equity and business development funds remain devoted to the sector, targeting particular therapeutic categories and technologies. According to the Galen/FINN “Digital Health Ecosystem – Asia Pacific Report”, the research solutions and online marketplace clusters claimed 49% of all funds invested in 2022 in the region, and oncology and cardiovascular diseases were the most funded therapeutic areas.

Contrary to what is typically found in public reports, the data provided by the report reveal that venture capital investment in Asia Pacific’s digital health industry decreased during the first three quarters of 2022 but grew again in Q4, amounting to $5.79B, representing a year-on-year decrease of 41%. The deceleration of venture funding is largely attributed to this decline.

Public reports have a tendency to select data selectively. However, the Galen/FINN “Digital Health Ecosystem – Asia Pacific Report” provides verified trends such as:

• During the first three quarters of 2022, venture capital funding in Asia Pacific’s digital health industry diminished, culminating in a total of $5.79B by the end of Q4, a 41% drop from 2021.

• This was mainly due to China’s investment plummeting by 66% year-on-year, the lowest since 2017, due to stringent pandemic controls. Despite this, Northeast Asia’s funding soared to $1.9B, surpassing China and South Asia, which experienced a 30% decline compared to the previous year.

• M&A activity in Asia Pacific saw a 33% year-on-year decline, however digital health ventures represented 60% of the global acquisitions, promoting the industry consolidation. The diminished venture funding has enabled acquisitions, with only 34% of Growth Stage ventures in Asia Pacific able to get capital in the last 18 months.

• In 2023, digital health ventures encountered difficulties because of diminishing venture estimations. Nonetheless, the industry’s fortitude in 2022 will reinforce the venture pipeline, prompting development and business model practicality to demonstrate the worth of digital health instruments in improving healthcare research and delivery.