Prudential Asia, a business unit of British insurer Prudential plc., has signed a licensing deal with digital health startup Babylon Health to exclusively use its AI-powered software for its own apps across 12 countries in Asia. Prudential is paying approximately $100 million over the course of several years, according to sources close to the deal, to access proprietary software that includes an inference engine, simulation software and a medical-knowledge graph that over time aims to replicate and automate consultations with human doctors.
Babylon declined to comment on the deal pricing, and spokespeople for Prudential Asia could not be reached for comment on pricing. Babylon Health is best known for providing a virtual-doctor service in the U.K., where more than 26,000 NHS patients in London can get appointments with doctors via video calls and thousands more use its private service for $80 a year.
Babylon won’t provide remote doctors to Prudential; it’ll instead provide the software that powers the medical chatbot on its app. Its customers in the U.K. can consult its chatbot before requesting a video chat with a human GP. The bot is aimed at both reassuring customers so that they don’t need to see a human doctor (which costs Babylon more) and arming customers with better information about their ailment before they do speak to a doctor.
The deal is a little like Babylon’s partnership with Samsung, announced earlier this year, in which it offered health advice and access to its network of remote, virtual doctors. In this latest licensing deal, Babylon’s software will be integrated into a least one app that Prudential plans to release in Asia by the end of this year.
This will include the chatbot, along with an AI-powered simulation feature and broader health assessment that Babylon’s engineers are still developing, Babylon’s founder and CEO Ali Parsa said. The app’s users will answer a series of more than 50 questions to build a “health graph,” after which the app will offer probabilities for contracting a range of diseases and also give a grade on a user’s mental health.
One of the reasons Prudential Asia is spending money on such software is to attract more health-insurance customers. Nic Nicandrou, CEO of Prudential Asia, said the company’s upcoming mobile app, which will use Babylon’s health-assessment software, will be offered to people who aren’t customers and hopefully encourage them to buy an insurance policy. “It establishes a relationship beyond insurance with potential customers,” says Nicandrou.
Prudential has a vast, addressable market in Asia but its challenge is in convincing people to sign up to health insurance in the first place. The company has around 15 million customers, of which a third, or 5 million, pay for health insurance. (Prudential collects about $1.1 billion in premiums a year from those customers and pays out around $750 million on one million health claims, Nicandrou says.)
The vast majority of people in Asia pay for their healthcare without any backing from an insurer. “For every dollar spent on health by consumers in Asia, 42 cents is paid out of pocket,” says Nicandrou, versus 7.5 cents in the U.S. “What we’re trying to do is educate people about the benefits of health insurance.”
Nicandrou also hopes Babylon’s software will help prevent health problems among its existing customers. “If something is diagnosed earlier, the cost of treatment will go down,” Nicandrou says, adding that this can ultimately reduce the cost of Prudential paying out claims too.
Babylon Health is based in the U.K., and like many technology companies that are disrupting legacy industries, it’s still unclear how much freedom the country’s regulators will allow its software in the coming years.
Parsa says Babylon’s technology goes further than being a symptom-checker and describes its full suite of software as “clinical diagnosis.” He adds, though, that health regulators don’t condone the use of this term. “That’s what a doctor does,” he says. For now, Babylon’s AI-powered software provides information to its users and doesn’t go so far as to make decisions about diagnosis or prescriptions.
It’s also unclear which regulator should be policing Babylon’s technology. For the chatbot, it should be the Medicines and Healthcare Products Regulatory Agency (MHRA), which is Britain’s medical devices regulator and its equivalent to the FDA. The MHRA updated its guidance in 2016 stating that all symptom checkers must be registered as Class 1 devices to be classed as “medically safe.” Forbes emailed the MHRA to ask if it had launched any specific investigation into Babylon but did not receive a response at the time of writing.
Parsa’s long-term goal for Babylon isn’t to sell more licensing deals. “Licensing is more profitable, but we have to spend a fortune to be in a place that we can license it,” Parsa says, comparing the model to that of being a pharmaceutical company that spends years and millions of dollars developing a drug before it can finally be brought to market.
The bigger prize (and higher margins) is in providing end-to-end clinical care on behalf of insurers and government providers like Britain’s NHS. Parsa believes his software will help those clients keep a lid on rising health care costs for an aging population. “We will always make more money from the provision of clinical care,” he says.