US Industry Segmentation

Application

•  Allied Market Research, Grand View Research and TechSci Research are among the preponderance of industry experts that segment the US digital therapeutics industry by application.
• As highlighted within the following chart, the primary applications for digital therapeutics are diabetes, obesity, cardiovascular disease, central nervous system disease, respiratory disease, smoking cessation and gastrointestinal disorder.

 

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•  Allied Market Research and Grand View Research add that the diabetes sub-segment of America's digital therapeutics market was the "major revenue contributor" in 2019, with a share of over 24% of industry revenue.
• Moreover, diabetes is expected to continue representing the largest application within the digital therapeutics industry through 2027, owing to the high prevalence of the condition in America.
• However, obesity and central nervous system treatments are expected to "exhibit the highest growth" rate over the next seven-year period.

Product Type

• Market researchers (e.g., Allied Market Research, TechSci Research, ResearchandMarkets) also regularly segment America's digital therapeutics market by product type.
• Specifically, the industry is divided into software products and devices, with the software segment representing the "most lucrative" portion of the market.
• Moreover, software products are projected to grow most rapidly through 2027 and help "propel" overall growth across America's digital therapeutics industry, as the demand for lower healthcare costs will likely to create "immense opportunities" for developers to introduce more effective and affordable software services.
• However, both product sub-segments are expected to witness substantial growth over the next seven years, as depicted within the following graphic.

 

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End-User

• Meanwhile, Grand View Research is one of the leading researchers that also highlights the importance of end-user segmentation within the US digital therapeutics industry.
• As presented within the following chart, the primary end-users of digital therapeutics are currently patients, providers, payers and employers.

 

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• Notably, patients "dominated" the customer base for digital therapeutics goods and services in 2019, representing 33% of industry revenue in the US.
• Grand View Research adds that American consumers are particularly attracted to digital therapeutics because these products and services offer "effective health management" opportunities at an "affordable cost."
• In parallel, supportive government programs throughout the country are expected to "further boost" the adoption of these goods and services among patients in the US for the next several years.
• Meanwhile, employer adoption of digital therapeutics is anticipated to represent the "fastest-growing" end-user group in the US digital therapeutics industry through 2027, due to new emphasis on managing employee healthcare costs as well as the adoption of employee well-being programs.

US Growth Drivers

Overall Size/Growth Forecast

• Allied Market Research and Grand View Research are among the market researchers that valued the US digital therapeutics industry at between $1.05 billion and $1.16 billion as of 2019.
• Moreover, these industry experts forecast that digital therapeutics in America will growth to reach $1.49 billion by the end of 2020 and approximately $5.1 billion by 2027, with a forecast CAGR of between 19.2% and 22.2% from 2020 through 2027.
• In parallel, more bullish market researchers (e.g., ResearchandMarkets, Frost & Sullivan) predict that digital therapeutics in the country will grow a CAGR of up to 30.7% through at least 2023.

Smartphone Penetration

• Industry experts including Allied Market Research, Grand View Research, TechSci Research and ResearchandMarkets widely agree that a major driver of the digital therapeutics industry in America is the population's continued adoption of smartphones and other internet-connected devices (e.g., tablets, smart wearables).
• As evidenced by the following chart, Statista reports that smartphone penetration in the US is expected to continue to rise, despite already high levels of adoption.

 

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• This increased use of smartphones and other internet-connected devices not only makes digital therapeutics more accessible for patients and other end users, but it is also correlated with the growing awareness of health tracking and other digital therapeutics tools.
• As such, industry experts project that smartphone adoption in the US will be the "major factors driving the market growth" in digital therapeutics through 2027.

New Product Launches

• In parallel, market experts (e.g., Allied Market Research, Grand View Research, TechSci Research) indicate that digital product innovations and new product launches will further "fuel" growth throughout the digital therapeutics industry in America.
• In particular, TechSci Research asserts that increasing corporate investment in digital therapeutics and associated software product launches by competitive leaders will "positively impact" market growth, particularly "over the next few years."
• One example of these new software products is the June 2020 introduction of the IntroSpect Digital Therapeutics platform by ATAI Life Sciences.
• Grand View Research notes that this new digital psychiatry solution is just one of many current examples of healthcare companies launching new digital therapeutics products to enter or gain market share within this growing industry.

Expansion of Coverage

• Meanwhile, expanding coverage of digital therapeutics is a more recent shift that is expected to improve both revenue and profits for digital therapeutics companies in the US.
• According to Allied Market Research, the lack of reimbursement for digital therapeutics products and services in the US has historically restrained market growth in this space.
• However, DRG and Forbes report that formulary decision-makers in the country are increasingly receptive to covering digital therapeutic treatments.
• As highlighted within the following graphic, 70% of formulary influencers either covered or were interested in covering digital therapeutics as of early 2020.

 

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• Moreover, health plans in particular are increasing their coverage and/or openness to reimbursing these products and services.

 

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• As concrete evidence of this shift, CVS Caremark and Express Scripts (which comprise 53% of the pharmacy benefit manager market in the US) incorporated digital therapeutics into their formularies in late 2019, while major health plans including Blue Cross Blue Shield, Medicaid, Highmark Health and Competitive Health added digital treatments to their benefits lists.
• Meanwhile, the current pandemic has only accelerated the reimbursement of digital therapeutics treatments in the county, led by higher reimbursement rates from the Centers for Medicare & Medicaid Services (CMS).

COVID-19 Impacts on US Market

New Consumer Demand

• A preponderance of market researchers (e.g., Allied Market Research, Grand View Research, Forbes) report that the coronavirus pandemic has led to the "mass consumer adoption" of digital therapeutics products and services by Americans, owing to a related rise in mental and physical illness across the country as well as an increased need for virtual health solutions.
• Specifically, Grand View Research reports that social distancing and self-isolation across the US due to COVID-19 has increased anxiety and stress for Americans.
• As evidence of this assessment, Mental Health America reports that Americans experienced a 19% increase in clinical anxiety in the first week of February 2020 as well as a 12% increase in the first two weeks of March due to the pandemic.
• In parallel, KFF found that 47% of Americans reported negative mental health outcomes due to stay-at-home orders, with over 21% adding that the pandemic was having a "major negative impact on their mental health."
• Not only has the requirement to stay at home led to "less physical activity, unhealthy lifestyle, mental stress, and prevalence of chronic diseases" across the country, but social distancing has generated a new awareness and need for digital health solutions to address these challenges.
• As a result, Forbes reports that digital health startups and therapeutics companies are "experiencing extraordinary surges in consumer demand" across the US.

Improving Regulatory Environment

• In conjunction, Allied Market Research, Grand View Research and Forbes assert that COVID-19 has also created a more receptive regulatory environment for digital therapeutics, thereby "positively impacting" market growth for the foreseeable future.
• Allied Market Research and Forbes note that regulatory barriers have historically limited the reimbursement and overall adoption of digital therapeutics across the country.
• However, since the start of the pandemic, the US government has implemented a variety of new measures that have diminished these regulatory hurdles and "benefited digital therapeutics companies." Specifically:
• The Food and Drug Administration (FDA) issued new, more supportive guidelines for computerized behavioral therapy, non-invasive remote patient monitoring devices and other digital therapeutics solutions, which are "expected to fuel the growth " of digital therapeutics in the country.
• The FDA and CMS highlighted the "vital nature of virtual care service" as part of the country's coronavirus response strategy.
• On March 18, 2020, Vice President Mike Pence stated that healthcare providers would be allowed to practice across state lines in the US, enabling a more flexible supply of providers for digital health companies.
•  Two days prior, the DEA announced new guidance on the Ryan Haight Act, including the allowance for providers to prescribe controlled substances remotely without a prior in-person exam.
• Overall, Grand View Research and Forbes assert that the pandemic has diminished the regulatory obstacles that previously restrained the adoption of digital therapeutics across the country.

Top US Competitors

Selection of Top Players

• Pear Therapeutics, Omada Health, Proteus Digital Health, WellDoc and Noom were chosen as five of the top competitors within America's digital therapeutics market based on (1) their consistent identification as industry leaders by research experts, (2) their operation as pure-play industry participants as well as (3) their substantial annual revenue.
• Given the lack of credible, publicly available research on the relative market share of digital therapeutics companies in the US, the research team first identified a narrow set of competitive leaders based on the consistent recognition of these companies as "key" or "prominent players" by the following research experts: Allied Market Research, Grand View Research, TechSci Research, ResearchandMarkets, Frost & Sullivan.
• Next, the research team further prioritized this list of "key players" to include only those "pure play" competitors that exclusively operate within the digital therapeutics space.
• This decision was based on the analysis of ResearchandMarkets and Frost & Sullivan, both of whom assert that beyond this core group of pure play leaders, there may be an "inconsistent definition" of participating companies, due to the fact that digital therapeutics is such an "early market."
• Lastly, the pure play market leaders Pear Therapeutics, Omada Health, Proteus Digital Health, WellDoc and Noom were selected for further analysis based on their outsized revenues, as detailed further below.

Pear Therapeutics

• Pear Therapeutics (link here) is the "leader" in prescription digital therapeutics (PDTs), according to the company's most recent (June 2019) investor presentation.
• Among its accomplishments, Pear Therapeutics is responsible for the first-ever PDT market authorization, the first-ever discovery, clinical, and commercial-stage PDT deal with pharmaceutical companies, the second-ever PDT market authorization, the fourth-ever PDT randomized clinical trial and the fifth-ever PDT in-human clinical study.
• Business data aggregators (e.g., Crunchbase, Craft, Growjo, IncFact, Zoominfo) estimate the company's annual revenue at between $29 million and $52 million, adding that the company has raised $134 million to date in external funding.
• Specifically within the US, Pear Therapeutics currently sells its products to between 20 million and 30 million patients and generates revenue from its two FDA-approved products for treating substance use disorder (reSET) and opioid use disorder (reSET-O).
• In both cases, the company earns income from 12-week prescriptions of these products, often in the form of reimbursement from health plans.
• Most recently, Pear Therapeutics has also introduced the "first and only" PDT for chronic insomnia (Somryst) as well as the "first" patient service center for PDTs (PearConnect).
• Notably, the primary market channels for all four of these products are a combination of mobile apps (for patients) and desktop programs (for clinicians).

Omada Health

• Omada Health (link here) is one of several leading players in the digital therapeutics industry for diabetes prevention, and has also recently expanded into hypertension, mental health and other chronic conditions.
• Notably, Omada Health is differentiated in part by its 11 peer-reviewed studies and 2019 launch of the "largest ever" randomized controlled trial of digital diabetes prevention.
• Although Omada Health does not publicly disclose its financial information, business data aggregators (e.g., Crunchbase, Craft, Growjo, IncFact) estimate the company's annual revenue at approximately $119 million, adding that the company has raised $256.5 million to date in external funding.
• This revenue is sourced from Omada Health's approximately 600 employer and health plan clients across the US, which include Cigna, Kaiser Permanente, Health Care Services Corporation (HCSC) and Blue Cross Blue Shield Minnesota.
• Notably, apart from collecting user enrollment fees, Omada Health has a performance-based revenue model, wherein the company receives income based on how much weight patients lose and user improvements in blood sugar levels.
• Meanwhile, the company has a truly omnichannel digital service approach in supporting health plans and large corporations, and leverages a combination of connected health devices, mobile and desktop applications and even one-on-one coaching sessions to support its user base.

Proteus Digital Health

• Proteus Digital Health (link here) sells "digestible sensors and wearable patches" to monitor patient adherence to prescribed medications.
• Notably, these "smart pills" work in tandem with wearable patches that detect responses to medications, which send data to the company's smartphone apps and data analystics software for hospitals.
• Among its accolades, the company has received over 540 patents for its products and was recently valued at $1.5 billion.
• Additionally, business data aggregators (e.g., Crunchbase, Craft, Dun & Bradstreet, Growjo, IncFact) estimate the company's annual revenue at between $80 million and $95.7 million, adding that the company has raised $517 million to date in external funding.
• However, it appears that Proteus Digital Health has largely relied on royalties from partnerships for this income, while uptake among more traditional revenue paths such as clinician perceptions have been "limited."
• As a result of this revenue model and associated financial weakness, Proteus Digital Health was unable to close a recent $100 million funding round in 2019, and subsequently announced significant employee furloughs as well as formal bankruptcy this past June 2020.
• At present, it remains unclear how the company will refocus its revenue model and primary market channel(s) amid underway restructuring.

WellDoc

• WellDoc (link here) targets health plans, health systems and employers as the primary markets for its mobile app and accompanying AI-driven software for diabetes, prediabetes, heart failure and hypertension management.
• Notably, WellDoc's proprietary mobile app has been rated as the best personal health app by MedTech Breakthrough, the top clinical app for diabetes by Iqvia and the best overall established app.
• Moreover, the WellDoc software solution has received eight 510 (k) clearances as well as OTC and prescription approval, and is backed by both the American Diabetes Association and ADCES.
• Meanwhile, business data aggregators (e.g., Crunchbase, Craft, Zippia, Growjo) estimate the company's annual revenue at between $27 million and $30 million, adding that the company has raised $55.2 million to date in external funding.
• Although recent information about WellDoc's revenue model is somewhat limited, MobiHealthNews reports that WellDoc earns income by charging its health plan, health system and employer clients monthly fees of over $100 per patient.
• However, WellDoc asserts that these monthly fees are more than offset by the "average per patient per month savings" of $254 to $271 associated with WellDoc's app.

Noom

• Noom (link here) is a mobile weight-loss company, that primarily sells and markets its services through its proprietary mobile application for patients.
• Notably, the company's revenue most recently reached $237 million as of early 2020, representing a quadrupling of earnings from $12 million in 2017 and $61 million in 2018.
• Additionally, business data aggregators (e.g., Crunchbase, Craft) report that Noom has received $114.7 million in external funding to date.
• According to Forbes, the "bulk" of Noom's income is generated from its 50 million app downloads and associated users.
• This income is derived from subscription bundles that range from one month to a year in length, and typically cost between $30 to $49 per month.

US Digital Pain Management Therapeutics Market

Methodology

• The research team executed an exhaustive series of research strategies to identify the size and growth trajectory for the US digital pain management therapeutics market, including reviews of:
• US digital therapeutics industry reports (e.g., Allied Market Research, Grand View Research, TechSci Research, ResearchandMarkets)
• US pain management therapeutics industry reports (e.g., ResesarchandMarkets, Acute Market Reports, Market Research Reports)
• Articles by experts in the digital pain management therapeutics market (e.g., Deloitte, MobiHealthNews, Forbes)
• Relevant scientific journals, research studies and clinical trials (e.g., Orion Pharma Clinical Trial, The Clinical Journal of Pain, Archives of Gerontology and Geriatrics)
• Statements by leaders in the digital pain therapeutics industry (e.g., Pear Therapeutics, Karuna Labs, Hinge Health)
• Statements by digital management therapeutics industry associations (e.g., The Academy of International Extended Reality, Agency for Healthcare Research and Quality).
• Notably, this rigorous research strategy highlighted that digital pain management therapeutics is not discretely reported, either as a key sub-segment of the digital therapeutics industry or the pain management therapeutics market.
• Moreover, as a newly emerging commercial area, quantitative reporting on the subject of digital pain management therapeutics typically covers the efficacy of recent clinical trials and research studies, rather than the potential market value of this developing industry.
• However, expert opinion (e.g., The Academy of International Extended Reality, Deloitte, MobiHealthNews, Forbes) also indicated that digital pain management therapeutics as a commercial industry is essentially synonymous at present with the use of augmented reality (AR) and virtual reality (VR) technologies for pain management.
• As such, the research team determined that the US VR/AR healthcare market specifically for pain management is currently the most reasonable, quantitative representation of the digital pain management therapeutics industry in America.

Market Size Triangulation

• According to Statista, the VR/AR healthcare industry in the US was valued at $976 million as of 2017, after growing at a CAGR of 13.2% since 2012.
• Assuming that this same CAGR of 13.2% remained relevant for three additional years, the US VR/AR healthcare industry reached approximately $1.4 billion as of 2020.
• Although additional information about the size of this market is limited by paywalls (e.g., Fredonia, ResearchandMarkets), data published by Technavio and Reports and Data help corroborate this market size, by stating that the global VR/AR healthcare market was valued at $2.2 billion as of 2018, while North America represented 44.2% of the industry or $972 million that same year.
• Meanwhile, Fortune Business Insights reports that pain management represented at least 15.2% of the global VR/AR healthcare market in 2018.
• By combining data from Statista about the size of the US VR/AR healthcare industry with information from Fortune Business Insights about the relative market share of pain management treatments across the VR/AR healthcare industry, the US VR/AR healthcare market specifically for pain management was approximately $213 million as of 2020.
• While this figure appears to be relatively small in comparison with the $1.49 billion US digital therapeutics industry, it is consistent with the fact that pain management is not currently reported as one of the top 7 applications for digital therapeutics in the US by market experts (e.g., Allied Market Research, Grand View Research, TechSci Research).

Market Growth Triangulation

• Meanwhile, ResearchandMarkets reports that the AR/VR healthcare market in North America, including the US, is expected to grow rapidly at a CAGR of 33.7% through 2026.
• In parallel, industry experts (e.g., Grand View Research, Fortune Business Insights, Arizton Advisory & Intelligence) widely assert that pain management applications will "drive the need for AR/VR solutions in healthcare" through the forecast period.
• As such, it is reasonable to assume that the pain management sub-segment of the AR/VR healthcare market will grow at a CAGR of 33.7% or more during that same period.