By Michelle Tempest and Marc Kitten, Partners at healthcare and life sciences consultancy Candesic
Dr Michelle Tempest and Marc Kitten, both Partners at healthcare and life sciences consultancy Candesic, explore the excitement around Digital therapeutics (DTx) as an emerging field in healthcare. DTx use technology to deliver evidence-based interventions to treat, manage, or prevent diseases. This article examines the current state of DTx in Europe, its challenges and opportunities, and the implications for healthcare providers, policymakers, and investors.
Introduction
The digital therapeutics market in Europe is rapidly growing, driven by the increasing prevalence of chronic diseases, the ageing population, the high cost of traditional healthcare and the rise of digital health startups. The COVID-19 pandemic has accelerated the growth of the market by increasing the demand for remote healthcare services. However, the market faces several challenges, including regulatory uncertainty and reimbursement issues. To maximize the potential of DTx in Europe, healthcare providers, policymakers, and investors need to work together to establish clear regulatory frameworks, incentivize providers to adopt DTx, and invest in only the most robust evidence-based and clinically validated DTx products. The success of DTx in Europe has the potential to improve health outcomes, reduce healthcare costs, and drive innovation in healthcare — so adopting DTx at scale and at pace is to be encouraged.
Background
DTx’s involve the use of software-based interventions to prevent, treat or manage diseases, either as standalone interventions or in combination with traditional therapies. These interventions are evidence-based, clinically validated, and have passed regulatory hurdles. They can be used to improve outcomes for patients with chronic conditions such as diabetes, hypertension, and depression. The use of digital therapeutics can evidence reduction in healthcare costs, increased patient engagement, and improved health outcomes.
The DTx market in Europe is driven by several factors. First, the increasing prevalence of chronic diseases, including diabetes, obesity, and cardiovascular disease, is placing a significant burden on healthcare systems. Second, the ageing population in Europe is increasing, leading to a higher demand for healthcare services. Third, the high cost of traditional healthcare is driving patients and providers to seek alternative solutions that are more cost-effective. Finally, the chronic shortage of human staff is encouraging people to search for digital solutions. These issues have come together in a perfect storm to encourage startups to get creative and develop DTx’s.
Current State of Digital Therapeutics in Europe
The DTx market in Europe is still in its infancy, but it is rapidly growing. In 2019, the European DTx market was valued at $560 million, and it is expected to grow at a CAGR of 24.2% between 2020 and 2025. The COVID-19 pandemic has accelerated the growth of the DTx market in Europe due to the increased demand for remote healthcare services.
Several digital therapeutics are currently available in Europe. For example, a DTx called CBT-i Coach helps patients with insomnia by providing cognitive-behavioral therapy through a mobile app. Another DTx called Dario Health helps patients with diabetes monitor their blood glucose levels and provides personalized coaching based on the data collected.
When we speak with DTx companies, they regularly report global regulatory confusion. While several DTx products have received regulatory approval, there is yet to be an agreed consistent regulatory framework for the industry across Europe. For some startups it has left them with high legal fees, for others it has meant time consuming and over-burdensome paperwork with an onerous paper trail. The result has been some uncertainty amongst investors left wondering on how long it will take to get DTx to reach their total accessible market (TAM).
Another challenge can be different reimbursement rates of DTx across Europe. While some countries, such as Germany and France, have established reimbursement schemes for DTx, others do not. This again can limit the speed of reaching their TAM.
Opportunities for Digital Therapeutics in Europe
One thing is clear. DTx are here to stay and there are significant opportunities for growth. One of the main opportunities is the increasing prevalence of chronic diseases. As the population ages and lifestyles become more sedentary, the demand for effective and affordable solutions to manage chronic diseases will continue to grow. DTx can provide a cost-effective and convenient solution for patients and healthcare providers.
Another opportunity is the rise of digital health startups. Europe has a vibrant startup ecosystem, and many digital health startups are developing innovative solutions to address unmet needs in healthcare. These startups can drive innovation in the DTx market and create new opportunities for growth.
The COVID-19 pandemic has also created opportunities for the DTx market in Europe. The pandemic led to an increased demand for remote healthcare services, which has accelerated the adoption of DTx. The pandemic has also highlighted the importance of technology in healthcare and the need for innovative solutions to address healthcare challenges.
Implications for Healthcare Providers, Policymakers, and Investors
Healthcare Providers: Healthcare providers play a critical role in the adoption and implementation of digital therapeutics in Europe. Providers need to be educated about the benefits and risks of DTx and how to integrate them into clinical practice. Providers should also consider the potential impact of DTx on their business models and patient outcomes. To encourage the adoption of DTx, providers need to be incentivized, and reimbursement schemes should be established to ensure that providers are fairly compensated for the use of DTx.
Policymakers: Policymakers have a crucial role in shaping the regulatory environment for DTx in Europe. Policymakers need to establish clear regulatory frameworks for DTx products and ensure that they are evidence-based and clinically validated. Policymakers also need to consider the potential impact of DTx on healthcare systems and establish reimbursement schemes that encourage the adoption of DTx. Finally, policymakers should consider the potential ethical and privacy implications of DTx and establish guidelines to ensure that patient data is protected.
Investors: Investors have a significant role in driving innovation and growth in the DTx market in Europe. Investors should focus on investing in startups that are developing evidence-based and clinically validated DTx products. Investors should also consider the potential impact of DTx on healthcare systems and the potential for reimbursement. Finally, investors should be mindful of the potential risks of investing in the DTx market, including regulatory uncertainty and competition from established healthcare providers.
Case Studies:
We have selected two case studies that illustrate the potential of digital therapeutics in Europe. There are of course many more to consider.
Kaia Health is a digital therapeutics startup based in Germany that develops software-based interventions for chronic pain management. The company has developed a mobile app that provides personalized coaching and exercise programs for patients with chronic pain. The app uses cognitive-behavioral therapy and mindfulness techniques to help patients manage their pain. Kaia Health has raised $50 million in funding to date and has partnerships with several healthcare providers and insurance companies in Europe.
HelloBetter is a German-based digital therapeutics startup that provides evidence-based interventions for mental health disorders. The company has developed a web-based platform that provides cognitive-behavioral therapy and other evidence-based interventions for depression, anxiety, and other mental health disorders. HelloBetter, too has partnerships with several healthcare providers and insurance companies in Europe and has received regulatory approval for its products.
Both companies are likely to disrupt their respective markets in several common ways,
What next?
There are several other disruptive digital therapeutics companies in Europe and the list is growing. Some other examples include Bold Health for gastrointestinal disorders, SidekickHealth and Oviva for chronic diseases, Psyon and Silvercloud Health for depression and anxiety, Cognitant for medication adherence, Ada Health for personalized health assessments and guidance and Nutrium for personalized nutrition coaching and support. Overall, DTx are here to stay from the wellness sector through to substituting and complementing traditional healthcare services. As with all startups — there will be winners and losers. However, savvy investors should be able to seek advice or discover the gems themselves, as DTx’s follow clinical evidence and as a result snake oil pitch decks should be easy to spot. The only fly in the ointment could be the slowness of policy makers to their reimbursement house in order. As soon as regulation and politics align — DTx’s will attract healthcare providers and investors like bees to a honeypot.