Digital health investment had a blockbuster year in 2021, propelled in large part by the shift to virtual care during the COVID-19 pandemic.
The first nine months alone brought in a total of $21.3 billion for digital health startups across 541 investment deals, dwarfing the $14.6 billion record of 2020, according to Rock Health, a venture fund dedicated to digital health.
That momentum is projected to continue in 2022 as digital health companies lead the way in healthcare innovation with the use of artificial intelligence, machine learning, data analytics and telehealth.
Here are five digital health markets to watch as investors look to pour major cash into the healthcare sector:
1. Telehealth 2.0
Following a telehealth boom in 2020 propelled by the COVID-19 pandemic, virtual visits have started to stabilize but at elevated levels compared to pre-pandemic demand.
Telehealth use overall has leveled off at levels 38 times higher than before the COVID-19 pandemic, ranging from 13% to 17% of visits across all specialties, according to an analysis from McKinsey released in July.
This, in turn, has fueled massive investment into virtual care companies. Globally, telehealth companies raised $4.2 billion in the first half of 2021, according to Mercom Capital Group, a global communications and research firm.
Industry experts say the telehealth industry is becoming more mature and is shifting away from just urgent care visits to focus on more specialized care, or what some call “telehealth 2.0”
The big telehealth players to start to build out specialized virtual clinics for high-cost conditions like kidney disease, MSK pain or migraines to keep up with startups flooding the market, Jeff Becker, principal healthcare analyst at CB Insights, told Fierce Healthcare back in October.
Bill Taranto, founding partner and president of Merck Global Health Innovation Fund, Merck’s $500 million venture fund investing in digital health,
“In 2022, entrepreneurs and investors will expand telemedicine into more chronic care spaces like cardiology. Today, someone in the U.S. suffers a heart attack every 40 seconds and heart disease costs the U.S. about $219 billion a year,” he said.
Telehealth offers a more convenient, cost-effective way to diagnose and treat cardiovascular disease.
“Overall, expect telehealth players to build out their offerings across the chronic care landscape in a meaningful way in 2022,” Taranto said.
2. Growing demand for wearable tech to monitor health
Consumers are buying more connected monitoring devices, spurred by the COVID-19 pandemic, and it’s a trend that’s expected to ramp up in 2022.
Deloitte predicts strong demand for wearable wellness technology in 2022 with 320 million consumer health and wearable wellness devices expected to ship worldwide in 2022. By 2024, that figure will reach 440 million units, the company predicts. This growth is likely being driven by new offerings hitting the market and more healthcare providers becoming comfortable using them.
People are increasingly using smart watches to monitor their health, not just their running pace, as new hardware, software and apps have turned them into personalized health clinics, Deloitte analysts wrote.
Heart rate monitors are now standard on most smartwatches, and some have FDA approval for detecting abnormalities such as atrial fibrillation, a major cause of stroke.
Major healthcare players are ramping up their investments in the wearable and connected device markets. Best Buy spent nearly $400 million to acquire Current Health, a remote patient monitoring and connected device company. Google shelled out $2.1 billion for fitness tracking giant Fitbit. And tech company Whoop, which makes wearable fitness tracking technology, raised $400 million to date, with a $3.6 billion valuation.
Smartwatch innovation is accelerating rapidly, thanks to advances in sensors, semiconductors and artificial intelligence. With more sophisticated health tracking features, consumer wearables can now act as a screening tool to flag a potential medical issue but are not sophisticated enough to be used as medical-grade devices, according to Mark Day, executive vice president of research and development at health AI company iRhythm.
“What [consumer wearables] can do is raise awareness of health and wellness, which allows patients to be easily identified and then come into the traditional healthcare system for diagnosis and treatment,” Day said. iRhythm is a digital healthcare company focused on cardiac care that combines wearable biosensor devices and cloud-based data analytics.
On the flip side, traditional medical devices will migrate more towards wearables, with consumer comfort in mind.
“We are pursuing an FDA clearance for a wearable form factor that operates at a medical-grade capability. I think consumer devices and regulated medical devices will move closer to each other and this is a trend that will continue over time. This will help improve population health as more patients can be engaged in proactive management and treatment at an earlier point,” he said.
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