ISRAEL EXPORT INSTITUTE

South Korea: opportunities for Israeli digital health firms

 Introduction - by Alona Trivaks, Head of Health Tech Sector - Digital Health at the Israel Export Institute 

Israel has become one of the top global digital health innovators, shaping the future of the digital health industry. Moreover Israeli companies’ prospects internationally are considerable – with South Korea one of the world’s fastest growing Health-Tech markets - as we’ll further explain. 

Key reasons for the success of Israel’s Digital Health sector are: 

  • Early adoption of IT technologies in the healthcare system - since the 1990s
  • Strong integration and data flow between healthcare organisations – as a result of more than 25 years’ use of electronic medical records
  • One of the best ecosystems in the world for healthcare innovation, with a highly efficient healthcare system backed by strong HMO An example is the COVID 19 vaccination project.
  • A powerful entrepreneurial spirit 

Thanks to governmental support, incubators, academies, R&D centres, strong human capital, HMOs which invest in the field, multinationals and a robust venture capital industry, Israel is quite simply the best sandbox for developing healthcare technologies. 

Today in Israel, there are more than 1,500 life science businesses, with medical devices and digital health the largest, fastest growing segments comprising 1,200 active companies. 

These include businesses that are strong in AI, machine learning, voice recognition, Big Data, AR/VR and robotics – with disruptive solutions for diagnostics, digital imaging, precision medicine, decision support systems, clinical workflow management, telemedicine, remote monitoring and many more. 

Furthermore, Israeli medtech companies are involved in a variety of applications from cardiology to neurology, intensive care, rehabilitation, oncology and women’s health. 

There are huge opportunities for these firms to provide their technologies overseas – and nowhere more so than in South Korea, as Ruslan Tursunov, Seoul-based digital health specialist from Intralink, will now explain. 

Prospects in South Korea – by Ruslan Tursunov, Digital Health Specialist, Intralink

                                                                                                                                                            

All the fields highlighted in the introduction and more experience high demand from the South Korean healthcare market because of a growing need for the digitisation of medical practices, and for advanced solutions to serve a rapidly aging population.

With a track record of turning startups into successful scaleups, South Korea offers ample opportunities for Israeli firms seeking to become world leaders and looking for strategic investments and global partners.

Gaining regulatory approval in South Korea also opens doors to other East and South-east Asian markets where Korean companies are highly regarded. 

Aging population

The rapid aging of the South Korean population has become a major concern for the government and is one of the big drivers of growth in the country’s healthcare market. Sixteen per cent of the population is over 65 and this is expected to surpass 25% by 2025, bringing inevitable age-related diseases with all their complexities.

Hence the Government is looking for advanced solutions that will enable it to support such a large number of older people and continue to provide quality medical services at an appropriate cost – and this is a need many Israeli firms are well-placed to meet.

Another major concern is the prevalence of diabetes, which has increased from just 1.5% to over 10% of the population in the past 40 years, and is becoming common among children as well. This has increased the demand for diabetes care and related portable and wearable monitoring devices.

To combat the associated rising medical costs and ensure the sustainability of its world-class medical care despite these trends, the Korean government has long encouraged investment in its digital healthcare industry. Digital health technologies are already a central feature of Korea’s medical industry, and they’ve contributed greatly to the country’s swift and flexible response to COVID-19.

According to the Korea Health Industry Development Institute’s (KHIDI) ‘Digital Health: Industry Analysis & Forecast Research Report’ of December 2020, the country’s digital health market is estimated to be worth USD 5.3 billion, around a 40% increase from 2015. 

Health Information Technologies

Korean healthcare organisations also view Health Information Technologies (HIT) as a necessity to remain competitive in the market, and they are expected to spend USD 948.2 million on these this year.

The country’s medical institutions are already highly digitised and embrace HIT solutions to improve their delivery of care. According to a 2020 Ministry of Health & Welfare (MoHW) report, 100% of tertiary hospitals in Korea use electronic medical record (EMR) systems, followed by 95.8% of general hospitals and 90.5% of hospitals with 100 beds or fewer.

Korea’s adoption of EMR systems is much higher than the OECD overall average of 81%, and this mirrors the country’s almost-complete digitisation of patient data, digital storage of clinical images, electronic hospital administration databases and expanding use of remote sensor technology.

The government plans to develop smart medical infrastructure based on digital technology, highlighting in its Korean New Deal an aim to create 18 smart hospitals by 2025 to allow real-time monitoring, diagnosis and treatment of patients.

This means hospitals will need to implement HIT solutions to digitise their operations fully, providing significant opportunities for Israeli companies with suitable technologies.

And health data are set to become more mobile than ever, creating openings for Israeli digital health companies developing mobile HIT solutions.

According to the MoHW, the current use of mobile EMR systems by tertiary hospitals is approximately 45% and expected to double over the next three years, while smaller hospitals are expected to follow suit to stay competitive.

  

Telemedicine

Can you imagine a country banning telemedicine and some doctors, as well as medical associations, being against it? This is true of South Korea, where telemedicine practices are illegal.

But despite this, the Korean government is pro-telemedicine and has made significant technological advances in the field, presenting clear opportunities for Israeli firms with relevant products and services.

Although President Moon Jae-in made a campaign promise in 2017 not to allow telemedicine, the government has since designated Gangwon province as a regulation-free zone for digital health technologies, and has permitted telemedicine between doctors and patients there from July 2019.

In addition, during the COVID-19 pandemic, to limit face-to-face contact between doctors and patients and decrease virus transmission, the Ministry of Health & Welfare issued an administrative order allowing healthcare providers to implement telemedicine. In response, several hospitals have introduced applications for doctors to provide inpatient and outpatient care remotely. Furthermore, medication delivery services - which are normally prohibited in Korea under the Pharmaceutical Affairs Act - have been allowed.

Korea has also made significant advances regulation-wise and, in 2020, the National Healthcare Reimbursement Act was amended to enable telemedicine services to be covered under Korea’s National Health Insurance.

The MoHW recently announced that, under current regulations, doctor-to-patient telemonitoring is allowed for some diseases including diabetes and peritoneal dialysis. Furthermore, the Infectious Disease Control & Prevention Act (IFDCPA) was amended in December 2020 to include a legal basis for telemedicine in the event of serious alert levels relating to infectious disease.

So, telemedicine is allowed under the IFDCPA, even though no amendment has been made to the Medical Service Act.

No less importantly, most patients and doctors have shown satisfaction with the quality and convenience of telemedicine during this conditional period and have expressed a desire to continue using it - even after the pandemic ends.

Although the MoHW’s administrative order expired in November 2021, as the government relaxes restrictions and implements a ‘living with COVID-19’ strategy, companies and industry experts are lobbying for the continuation of telemedicine to help the domestic market to flourish.

Recent surveys have shown 54% of Koreans are open to trying it and its implementation could create a market worth USD 1.9 billion, even if only 20% of Koreans participate.

Throughout the pandemic, Korean hospitals have partnered with local and international telehealth solution providers to diagnose and monitor patients with mild symptoms. Some hospitals have also used imported robots to test suspected patients to protect doctors and other personnel from the risk of infection. And many Korean healthcare providers are continuously assessing both local and overseas solutions for implementation in their practices. 

AI-based solutions & precision medicine

Poised to become a leader in all sectors of AI by 2030, the South Korean government has long encouraged investment in AI-based healthcare solutions, making this another primary area of opportunity for Israeli companies.

Korea’s AI healthcare market was estimated to be worth USD 257.2 million in 2020 and is expected to reach USD 2.1 billion by 2025. As of last September, 85 AI-based medical devices were approved by the Ministry of Food & Drug Safety (MFDS) -- a sharp increase from only four in 2018.

Since May 2018, a consortium sponsored by the Korean government has been developing an AI-based medical solution called Dr Answer - Korea’s version of IBM Watson. Led by Seoul’s Asan Medical Center, it involves 25 local hospitals and medical institutions and 21 AI software developers including DEEP Bio, JLK Inspection and Kakao Brain. The state-sponsored initiative is developing a platform that analyses patients’ medical data to predict, diagnose and provide treatment plans for major diseases.

The current iteration of the platform, Dr Answer 2.0, comprises 24 software programs and can help diagnose 12 diseases including cancers, cardiac disorders and Alzheimer’s. The unique selling points of these platforms are that the main database consists of Korean data and the platforms will become eligible for reimbursement once approved by the MFDS.

Korea is also a fast follower. The Secretary General of one of the three national precision medicine programmes recently commented that, although the country started later than other nations, significant developments have been made in precision medicine. And this has prompted overseas interest in Korean solutions and collaborations.

As an example, in July 2021, Korea’s Lunit announced a partnership with Guardant Health, a leading US precision oncology company which has invested USD 26 million in Lunit. As part of the agreement, Guardant Health will eventually use Lunit’s AI platform to develop new precision oncology products to improve cancer care.

While the number of approved AI-based medical devices continues to increase, an update to the country’s reimbursement model for AI solutions is still required as there is a gap between new technologies and the evaluation criteria used. Companies wishing to commercialise their solutions in Korea need to be wary of possible hurdles. Nonetheless, it is anticipated that changes to the reimbursement system will occur soon as the AI market develops.

Korea is also expected to continue to look for external innovation sources to fill its gaps around Big Data applications as rapidly as possible. These efforts, being coordinated by the Korean government, will result in significant opportunities for Israeli companies that are strong in precision medicine platforms, data analytics, data interpretation, and the application of analytics to develop Big Data-based medical diagnostic and treatment devices.

All these are necessary to boost the pace of adoption of Big Data solutions. And, to accelerate developments, the Korean Government recently initiated targeted regulatory reforms to implement clear standards for deidentification of personal information, and to provide a shortened approval process for Big Data and AI-based medical devices.

In addition, a regulatory sandbox system has been implemented to allow digital health companies to test their new services without a lengthy approval process and demonstrate the benefits to public health. And recent reimbursement guidelines for AI-based healthcare solutions set out in December 2020 signal the government’s commitment to support further the swift implementation of advanced medical technologies. 

Collaboration with telcos

Meanwhile, telecommunication companies such as SK Telecom and KT oversee the development of the mobile networks and ICT infrastructure needed to implement digital health solutions in Korea. These telcos have already established partnerships with hospitals across the globe from South America to EMEA, South-East Asia and Central Asia, and are providing healthcare solutions to them.

Furthermore, both companies are capitalising on their experiences in ICT infrastructure to help develop AI and Big Data-based medical technologies. However, as they do not have experience in the medical sphere, they need to partner with medtech companies to succeed – presenting yet another area of opportunity.

SK Telecom, for example, entered into a strategic partnership with US firm GE Healthcare in September 2021 to develop digital health infrastructure combining their respective know-hows in fast data networks and advanced digital health products.

And KT signed agreements with North American ICU-grade biosensor developer Sibel Health in November 2020, and with US bioelectronics developer NeuroSigma in June 2021, to boost its standing in digital health and transform itself beyond a telecommunications company.

There are many similar opportunities for Israeli firms with promising technologies. 

Significant opportunities

So, with the government, major hospitals, large conglomerates and a growing number of tech startups all investing heavily in the field, Korea offers significant opportunities for Israeli companies looking to license their technologies, attract strategic investments and establish partnerships to grow globally.

And, notably, success in Korea serves as an excellent gateway to Eastern and South-eastern Asian markets where Korean companies are held in high esteem. 

For further information from Intralink, please contact Eran Eizik, Intralink’s Israel Country Manager, on eran.eizik@intralinkgroup.com or 972-528-528-582. 

For further information from the Israel Export Institute, please contact: Alona Trivaks, Head of Health Tech Sector - Digital Health on alonat@export.gov.il or 972-3-5142-955.

Yarden Zinger, Head of Health Tech Sector -  Medical Device on yardenz@export.gov.il or 972-3-5142-939  

טעינה