According to the new market research report "Digital Therapeutics Market by Application (Prediabetes, Nutrition, Care, Diabetes, CVD, CNS, CRD, MSD, GI, Substance Abuse, Rehabilitation), Sales Channel B2C (Patient, Caregiver), B2B ( Providers, Payer, Employer, Pharma) - Global Forecasts to 2027", The global digital therapeutics market is projected to reach USD 17.7 billion by 2027 from USD 4.5 billion in 2022, at a CAGR of 31.6% during the forecast period.
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Digital Therapeutics Market Dynamics
Drivers: Need to control healthcare costs
Globally, healthcare costs are on the rise owed to factors such as the rising prevalence of chronic diseases, rapid growth in the geriatric population, soaring prices of medical services, the growing demand for healthcare services, sedentary lifestyles, and the use of expensive drugs and medical technologies. In addition, operational inefficiency and rehospitalization add to rising healthcare costs.
The rising requirement to curtail the growing healthcare costs is one of the key growth drivers for digital therapeutics. According to the Centers for Medicare Medicaid Services (CMS), in 2020, national health expenditure grew 9.7% to USD 4.1 trillion or USD 12,530 per person and accounted for 19.7% of the GDP in the US. According to the Centers for Medicare Medicaid Services (CMS), in 2019, US healthcare spending rose by 4.6% to USD 3.8 trillion, matching the growth rate of 4.7% in 2018. According to the World Bank, healthcare spending in Japan was 10.74 % of the GDP in 2019 and 5.35% in China. Rising healthcare costs increase the burden on the government, insurance companies, households, and national budgets.
Opportunities: Unexplored therapeutic applications
Digital therapeutics have demonstrated their ability to prevent and treat a variety of chronic diseases. Many players in this market are trying to explore innovative therapeutic areas for digital therapeutic solutions. For instance, Click Therapeutics (US) is exploring application areas such as irritable bowel syndrome, chronic pain, insomnia, and neurocognitive disorders to develop digital therapeutics. Similarly, Pear Therapeutics (US) has a pipeline of digital therapeutic solutions for unexplored disorders like schizophrenia, multiple sclerosis, epilepsy, post-traumatic stress disorder (PTSD), and traumatic brain injury. Similarly, Akili, Inc., has a product pipeline of digital therapeutic solutions for unexplored disorders like attention-deficit/hyperactivity disorder (ADHD) and autism spectrum disorder (ASD). Unexplored therapeutic areas present immense opportunities for the growth of the digital therapeutics market.
Restraints: Patient data security concerns
In many countries, various health apps are deprived of appropriate approvals, leading to concerns about product and data quality, reliability in treatment decisions, patient privacy, security, and the accountable use of data. Digital therapeutics providers have access to patient information and are forbidden from sharing the information with anyone not involved in treating that patient. However, with the integration of data using digital tools, the patient’s data is at risk of being accessed by any healthcare professional not related to the patient’s treatment program. Some countries, such as the US (with its Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act), have legislation aimed at the issue of data security. Additionally, the European Union has the EU Data Protection Regulation, which has implications for protecting sensitive health data. In many countries, a patient’s protected health information (PHI) cannot be moved out of the country of origin. Concerns over patient health data security create barriers to transferring this data among various stakeholders in the healthcare industry However, despite such federal initiatives and law, digital therapeutics users are subject to infringement and data breaching, which may restrain the growth of the digital therapeutics market.
Challenges: Unstable payment Models
The current prevalent system of benefits and payments focuses on favorable payment models for conventional treatment options. However, they are not as compliant with alternative approaches like digital health or therapeutics. The existing system of paying for healthcare entails paying for items of care. This payment system is incapable of changing behavior. Because digital therapeutics solutions are still in the early stages of development, the exact payment mechanism for digital therapeutics is unknown.Presently, digital therapeutics are not included in formularies; getting digital therapeutics on formularies requires thorough, double-blind, and controlled clinical trials, which are complex in terms of defining a control group for these products. Additionally, the required study size for these clinical trials is also larger, which increases the total expenditure of these studies. These costs rise if digital therapeutics are partnered with a pharmaceutical company.
Furthermore, high development costs are hard to justify if the product is not supported by FDA approval and patent protection. This compels most providers to compare the cost and efficacy of their treatment against already published historical control groups. This is insufficient to convince insurers to put digital therapeutics on the formulary for all patients, making companies consider the case insurer-by-insurer to file for coverage decisions. Even without rigorous trials proving value, most companies must accept pricing models complying with the current industry norm of USD 20–200 per patient per year (Source: Industry Expert), which is significantly lower than the average chronic drug cost of USD 200/month. This makes it imperative for digital therapeutics companies to identify better ways to support higher PMPMs. Such an unstable payment scenario poses a serious challenge to market growth.
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Key Market Players
The digital therapeutics market is a highly diversified and competitive market, with several emerging players. The prominent players in this market include are Noom, Inc (US), Teladoc Health, Inc. (US), Omada Health, Inc. (US), WellDoc, Inc (US), Pear Therapeutics, Inc. (US), CogniFit Inc (US), Ginger (US), Propeller Health (US), 2Morrow, Inc. (US), Canary Health (US), Click Therapeutics, Inc. (US), Akili, Inc. (US), Cognoa, Inc (US), Wellthy Therapeutics Pvt. Ltd. (India), Twill Inc. (US), Better Therapeutics, Inc (US), Mindstrong (US), Kaia Health (Germany), BehaVR Inc (US), Ayogo (Canada), Mindable Health GmbH (Germany), Virta Health Corp (US), Hinge Health, Inc. (US), Orexo AB (Sweden) and Freespira (US).The players in the market focus on providing effective products to cater to the unmet needs of customers, increase profitability, and gain a competitive edge in the market.
Noom, Inc. (US) is among the world leaders digital therapeutics market in providing high-quality solutions for weight management, diabetes prevention, and stress reduction. Noom has been awarded multiple grants from the National Institutes of Health and provided the first mobile application recognized by the US CDC as a certified diabetes prevention program. In October 2021, Noom, Inc. launched a program called Noom Mood to expand its behavioral change approach to other conditions, including diabetes, hypertension, and sleep. The company is present in New York (US), Berlin (Germany), Seoul (South Korea), and Tokyo (Japan).
Teladoc Health, Inc. (US) is one of the prominent players digital therapeutics market. The company uses proprietary health signals and personalized interactions to improve health outcomes. It mainly targets diabetes, hypertension, weight management, diabetes prevention, and mental health. In February 2022, Teladoc Health, Inc. launched the Chronic Care Complete program, a chronic condition management solution to help individuals improve their health outcomes while living with multiple chronic conditions. Its programs, such as Chronic Care Complete and myStrength, have been accelerated by the 2020 merger with Livongo, further developing Teladoc Health’s ability to deliver true whole-person care with fully integrated clinical and digital solutions responsive to market needs. The merger between Teladoc and Livongo is one of the most significant integrations of competencies and skills in digital health.
Omada Health, Inc (US) is one of the leading player digital therapeutics market. The company provides integrated, virtual care across chronic conditions, a top clinical need for employers and health plans. In June 2019, the company secured USD 73 million from its investors to develop digital care health programs focusing on preventable chronic conditions. The company is focusing on broadening its product offerings beyond diabetes—in April 2021, the company launched the Physician-guided Care Program, a virtual cardiometabolic clinic for hypertension and diabetes patients. The company also partners with many employers, payers, healthcare systems, and pharma companies.
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Digital Therapeutics (DTx) Market by Application (Prediabetes, Nutrition, Care, Diabetes, CVD, CNS, CRD, MSD, GI, Substance Abuse, Rehabilitation), Sales Channel B2C (Patient, Caregiver), B2B ( Providers, Payer, Employer, Pharma) - Global Forecasts to 2027
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