- This is an excerpt from a story delivered exclusively to Business Insider Intelligence Digital Health Pro subscribers.
- To receive the full story plus other insights each morning, click here.
UK-based telehealth chatbot Babylon Health is in the process of securing a $100 million to $500 million investment from Saudi Arabia's state-owned investment fund, which will lift Babylon into digital health's unicorn club, sources told the Financial Times.
Babylon's high-profile - at times controversial - platform leverages an AI-powered chatbot to generate diagnoses based on user responses, and pairs patients with providers for telemedicine consultations when necessary. The Saudi investment is part of a larger forthcoming funding round - to be announced as soon as this week - that will tally hundreds of millions of dollars.
Babylon's latest cash influx will support the startup's international expansion plan, which it's pursued aggressively over the past year. The funding round should help Babylon establish its foothold in both Saudi Arabia and the US - two markets it's demonstrated interest in: For example, news surfaced in April that Babylon planned to double its North American operations in preparation for US expansion.
And Babylon is no stranger to breaking into new markets: The startup has secured contracts and partnerships with Chinese tech firm Tencent, South Korean tech giant Samsung, and Canada-based teleco Telus since April 2018.
Babylon has broken into international markets as a channel to growth - and it's historically paid dividends. Babylon was valued at around $200 million and employed 250 staff as of 2017, and now counts more than 1,000 employees and will soon boast a unicorn valuation, the Financial Times notes.
But Babylon is likely to hit speed bumps on the path to growth as it enters the US market:
- Babylon has to contend with a number of companies with substantial early mover advantages in both the telemedicine and healthcare chatbot markets. For example, Babylon will have to battle for customers with Doctor On Demand and Teladoc in the US telemedicine market, both of whom were among the top 10 US medical apps by downloads in 2018. Some telemedicine companies, like MDLIVE, are also trialing AI-powered chatbots. Moreover, Microsoft recently released a chatbot service that includes services similar to Babylon's, like a symptom checker and the ability to triage complex medical questions.
- And Babylon may struggle to woo contracts from provider clients amid mixed evidence that its initiative with a high-profile UK health system was effective. In 2017, Babylon Health nabbed a landmark deal with the UK's National Health Service (NHS) that allows UK citizens to supplant their existing primary care provider with a network of remote doctors, which users can access digitally. However, an independent review of the service commissioned by the NHS concluded it had "not been able to fully address whether the BGPaH model is affordable and sustainable." Moreover, a December 2018 report revealed that Babylon's software recommended NHS patients visit the emergency room in about 30% of cases, versus the roughly 20% of people who are advised to seek care by the national health advice hotline, according to a Babylon staffer. A lack of conclusive evidence that Babylon's tech is cost-effective may dissuade US hospitals from partnering with Babylon, stymieing US growth.
Interested in getting the full story? Here are three ways to get access:
- Sign up for Digital Health Pro, Business Insider Intelligence's expert product suite keeping you up-to-date on the people, technologies, trends, and companies shaping the future of healthcare, delivered to your inbox 6x a week. >> Get Started
- Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to Digital Health Pro, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
- Current subscribers can read the full briefing here.
