Diabetes is a costly chronic condition, and according to the International Diabetes Federation affects at least 425 million people worldwide. As such, it’s little surprise that an increasing number of digital health companies have spotted an opportunity to help patients manage and control their disease.
In fact, that opportunity led the total revenue digital diabetes market to triple in 2017 to $98 million, according to a new report from Research2Guidance. And this growth shows no sign of stopping — thanks to additional revenue stemming from bundled sales of digitally-connected diabetes management and other sources, the research group expects the full market to be worth $742 million in 2022.
“The market is really ready to take off,” Ralf-Gordon Jahns, managing director at Research2Guidance, told MobiHealthNews. “It’s not really a big market currently, with $98 million revenue being made with digital solutions addressing diabetes patients. But we learned from talking to all the big players, and also looking at the facts and the data, that the companies have found a business model which seems to work, and that should be reflected in the future.”
That business model is primarily driven by bundled offerings comprising some combination of connected devices, test strip supplies, app-driven services, and coaching services, Jahns explained. These bundled offers are becoming the norm for companies offering any kind of digital diabetes products, according to the report, and unlike the last time Research2Guidance investigated the market in 2016, a substantial number of patients and payer organizations have become receptive to the bundled digital offerings as well.
“Bundled offers have become a real breakthrough in the market,” Oleksiy Danilin, senior analyst at Research2Guidance, said. “They integrate the best achievements of the current digital diabetes care and their value to customer is thus much higher than that of an isolated digital app. Moreover, numerous clinical trials and studies have proven that bundles help to decrease blood glucose levels and can eventually result in cost savings. Payer organizations, such as insurance companies, show an increasing willingness to include these offerings into their healthcare plans.”
As bundle sales, service sales, and B2B technology licensing grew their 2017 market share, the impact of standalone connected device sales, paid app downloads, and in-app advertisement revenue diminished, according to the report. For instance, while bundled service offerings comprised roughly 40 percent of the market’s value in 2017, only 10 percent of its revenue was collected through some kind of app store ecosystem.
“The market was very small in the beginning, and really focused on providing digital content and monetizing on that using the App Store channel, app purchases, paid downloads,” Jahns said. “Now, with those additional connected services the companies are able to link to an application — like coaching or connected devices or bundled test strip subscriptions — they are able to be monetize completely differently. You’ll see these services being monetized at around $40 to $50 per month per member, completely charged outside of the regular App Store payment system.”
Research2Guidance expects these service trends to continue over the next few years as the market continues to expand. With wore more than 2,000 different digital services currently available to diabetes patients and the company’s projected compound annual growth rate (CAGR) of 50 percent, Jahns stressed the increasing role these digital offerings will soon play in the larger diabetes care ecosystem.
“From now on, key players should really look at this market,” Jahns said. “It is ready to make money, it is ready to serve patients. The technology is there, the quality of the service is there, there are lots of clinical studies which in some way or another show that mobile supported or app-supported care have an impact on patients’ outcomes, … and studies are starting to show that some solutions have an economical impact.”